Construction is a risky business by nature.
Exposure to environmental and safety hazards, unknown site conditions, material availability issues and labour shortages all contribute to high levels of risk.
The benefits of proper risk management are unmatched. Without it, your teams are liable to injury, your company liable to financial and legal risk, and your project liable to failure. With an effective risk management strategy, you’ll be better equipped to accurately identify, assess, control and monitor exposure to risk throughout the course of a project.
But what do we really mean when we talk about risk management?
Of course, health and safety springs to mind, but in construction it doesn’t stop there. And now industry leaders are grappling with a whole new world of COVID-19 specific risk since the pandemic.
All with pressure to deliver high returns to a stringent budget!
So, how can a project manager effectively manage all the nuances of risk with confidence, leaving customers and employees satisfied?
Identify the nuances
This isn’t about creating mountains of paperwork and admin. If anything, it should help lessen the load as you move forward with the project.
The nuances of risk will be prevalent within each individual division but may not always be obvious to those working from at the top.
Risks come in various guises – legal, professional, financial, practical and environmental.
Identifying the nuances early will help you understand where applications of risk control can be duplicated or need to be reinvented for the most effective impact. New instances of risk may occur as a project moves forward, and by gathering insight from those in the field dealing with those issues, you’ll have a more accurate picture of how to improve the agility of your risk responses.
Good business sense would see you involve employees from different teams at this stage to really understand the depths of risk exposure and how you can cultivate that insight to devise a better response.
Once you have a clearly defined risk management strategy for each division, and can assign accordingly, you’re better equipped to respond to uncertainties or unpredictability across departments.
Now, your risk responses.
Your risk threshold will determine the degree of uncertainty and range within which a specific risk will be accepted or avoided. In turn, this will determine how you implement your risk responses. Each risk response should accurately document how you intend to mitigate a negative project risk. The four types of strategies that usually exist within a risk response are:
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AVOID
What strategies will be put in place to avoid the potential of said risk?
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MITIGATE
How do you plan to minimise the impact of a risk event, such as delay on materials (for example, a request for time extension may be used to mitigate that delay risk)?
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ACCEPT
At what point within the risk threshold may a risk be accepted?
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TRANSFER
Have you outlined third parties to which the risk outcome can be transferred to enable you to continue with the project, such as an insurer.
Risk responses are unlikely to be repeatable. Environmental changes, staff changes, and a myriad of external factors means each new project should see risk responses re-assessed and revised. This might involve new insurance providers or agreeing early on with the contractor what would be acceptable in the event of a delay. With clear risk responses that are aligned with the company’s threshold, you are more likely to minimise the impact of said risk.
Opt for a tech solution
We’ve spoken before about a widespread resistance to adopt digital solutions in the construction industry. But aside from increasing the ability for collaboration, a digital solution could be just what’s needed to facilitate better risk management.
With greater visibility, and the ability to implement live changes that are communicated effectively across teams, transparency allows managers to implement reactive responses and act in real time. It also means data and communications are gathered in one place, rather than getting lost in email threads and excel spreadsheets. In the event of a review, those communications are easier to access and pinpoint.
Assign responsibility
To oversee and predict the possibility or a risk, separate managers will likely be assigned responsibility. For example, most construction companies will have a fully-fledged Health and Safety Manager, as Fascel Group does. This full-time role would require regular site visits, incident investigation, and promoting better working conditions. A good Health and Safety manager will be up to speed with COVID secure practices too.
It’s also worth taking into considering a Quality Manager who can ensure all materials meet and surpass the relevant specifications. Accreditations are hugely important to company reputation and customer satisfaction. As you assess the nuances in the early stages of risk planning, you’ll identify where additional responsibility is required.
A project manager cannot be present in more than one place. But having eyes and ears on the ground through optimised collaboration will help. Delegate responsibility where you can.
Take a continuous approach
You should manage risk in accordance with the environment, local laws, legalities, and people. This is why a continuous approach is absolutely necessary.
Risk can change throughout the lifecycle of a project. Agility, in addition to a continuous approach, allows managers to implement a leaner risk management strategy that is reactive and effective. Take the time to re-assess your risk responses in accordance with the individual factors and challenges a project presents.
First and foremost, the people delivering the project are entitled to do so in the safest of environments, and in the event of risk exposure, the correct procedures should be in place to minimise the impact. But in construction, risk extends even further. Project risk, safety risk, financial risk, legal risk – all are weighing in on the outcomes and success of a project.
An effective risk management strategy will be agile and responsive, it will be clear and defined, and it should be continually improved. But above all, it will instil confidence in your employees and customers.
