Risks in Construction Projects

Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.

Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering

Risk or threat is common and found in various fields of daily life and business. This concept of risk is found in various stages of development and execution of a project. Risks in a project can mean there is a chance that the project will result in total failure, increase of project costs, and an extension in project duration which means a great deal of setbacks for the company. The process of risk management is composed of identifying, assessing, mitigating, and managing the risks of the project. It

Risk management is an ongoing process that must continue through the life of a project. It includes processes for risk management planning, identification, analysis, monitoring, and control. These processes need to be reviewed throughout the project’s lifecycle as new risks arise throughout the implementation of the project. It is the objective of risk management to decrease the probability and impact of events adverse to the project. On the other hand, any event that could have a positive impact should be exploited.

During an engineering project life cycle, the common risk management process (risk identification, risk impact assessment, risk prioritization analysis, risk tracking, and risk mitigation planning implementation) meet the required protocols for early and continuous risk identification. The first step, risk identification, brainstorms potential risks that may develop during the engineering system to include environmental or human hazards. The second step, risk impact assessment, clarifies and details the damage of the risk. The third step, risk prioritization analysis, creates a hierarchy of the risks and determines which risk needs to be addressed first then so on. The follow-on steps have two different paths, one path is risk tracking and the other is risk mitigation

As the world is chaotic (Djavanshir and Khorramshahgol, 2006) it is impossible to always predict the future accurately. Teller at al (2012) describes project management as balancing the “iron triangle”, where changes to any one of the planned costs, quality or scope will change the other elements. Risk management allows contingency to be put into project plans, (APM, 2012) minimising negative effects and maximising the benefits of uncertainty.

Cooper, D.F., Grey, S., Raymond, G, & Walker, P. (2005). Project risk management guidelines. Retrieved from The University of Phoenix eBook Collection database.

For example, in the building alterations, the tasks and the cost could be outlined with a quantitative modeling method. As well as a qualitative method, that includes a matrix, which will assist in developing risk responses that will be effective in mitigating possible risk. When a part was needed for a project deciding if it would be more economical to purchase or make the part. When presented with numerical data with cost, life cycle, and maintenance cost for up keep on two or more products that achieve the same goal. A risk management plan could be used to help access and handle project related risks. As for the risk tree, it could be used to help the project team decide on what the best option is for a task by giving a visual representation of the if then relationships in terms of

In order for a home building project to survive its purpose, risk analysis is essential so that occurrences that may affect the projects in the end can be identified, analyzed, assessed, managed and monitored. Because of the risky processes that are involved in the projects of home building construction, risk analysis and mitigation is the most useful tool in achieving good project and planning in home buildings as well as other constructions. If good risks management procedures are well conducted, the team’s level of confidence will be boosted, and this will enable or project to run and smoothly achieve its goals while facing and tackling each risk. Risk management will also come in handy as time will be saved as well as the

Firms need to build on their competitive strengths through a deliberate and managed process to improve the capacity and effectiveness of the industry, and to support sustained national economic and social objectives.

Risk allocation is performed as part of the development of the project structure, which takes into account the distribution of responsibilities and risks during the planning, construction, financing and operating phases (Corner, 2006). The aim is to identify an efficient and effective structure that optimises the costs of the project and ensures that the risk occurrences do not damage the project (Delmon, 2009). According to Grimsey and Lewis (2007) risk allocation has two elements: optimal risk management and value for money. The first implies that the

This assignment is included in the 2014 session of the Risk Management module of the MSc in Project Management course at University of Aberdeen. The main purpose of the assignment is to demonstrate my understanding of the issues involved in Risk Management and how they are applied in my current Project environment. The assignment is split in to two questions as detailed below.

Mac and Picken (2000) conducted a study on two types of projects, namely estimating using risk analysis (ERA) and non-ERA projects. They made comparison between 45 ERA projects with 287 non-ERA projects and found that ERA method helped to reduce the unnecessary risk allowances in projects. According to the authors, Hong Kong government was implementing this ERA technique in public construction projects. In the ERA method, they described that the cost determined for fixed and variable

Abstract – Risk is present in all projects irrespective of their size or sector. If risks are not properly analyzed and strategies are not developed to deal with them, the project is likely to lead to failures. Therefore, special strategies and processes should be established during the initial phases of the project and also monitored throughout the project life cycle. There are different techniques of risk identification and analysis in construction projects. Applicability of various risk assessment techniques has been demonstrated by many researchers. Failure Mode and Effects Analysis (FMEA) is a logical, proactive technique that is used to identify and eliminate potential causes of failures. The standard FMEA process evaluates failure modes for occurrence, severity, and detection. In the project various factors causing risks in construction projects of Mumbai city of multi-storeyed building are studied. Pareto has been applied to prioritize the risk obtained from FMEA analysis. RPN (risk priority number) is used to focus corrective action. Risk mitigation plans covers both preventive actions to prevent the risk from occurring as well as a suitable response in case the risk actually occurs.

In overall, it may be problematic to select the suitable method for risk assessment for each project. But these days, most construction companies are interested to use qualitative methods as opposed to quantitative methods since the quantitative techniques are rather time consuming and require a high level of knowledge by the analyzer (Banaitiene and Banaitis, 2012) and quantitative risk analysis is not always required in risk management( Mulcahy, 2010 ). (WSDOT, 2010), described that, qualitative method is very user friendly, quick and also cost-effective to characterize and identify on project objectives. In addition, this method is an appropriate technique in order to describe the threats rather than quantitative technique (Banaitiene and Banaitis, 2012). As a result, qualitative analysis by using probability and impact matrix is chosen for this research.