Risk Management in Construction

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Managing Risk on Construction Projects: All You Need To Know


Introduction

The first thing to acknowledge when discussing risk management in construction projects, is that risk in construction is simply unavoidable. From the initial planning through to the execution and completion of a project, risks exist. Risks can take many forms, but include risks to project delivery timelines, overall project success, budget and even the health and safety of construction workers.

An experienced Quantity Surveyor can mitigate and help manage these risks by identifying risks (and potential risks) on your project from conception through to inception and delivery. Once a risk is identified, a Quantity Surveyor can then look at options throughout the lifecycle of the construction project to mitigate or manage risk. These options include:

  • Early cost advice and regular financial advice throughout the project
  • Identifying the need for additional surveys
  • Construction method review and evaluation
  • Procurement advice

Early cost advice:
Mitigating Risk

Saunders Quantity Surveyors offer clients early cost advice to reduce the risk of additional costs should the client’s budget not meet their overall vision. Informed decision-making is at the core of construction project success, and this particularly applies to managing budget risk. Working closely with clients in the initial stages of a project enables the setting of realistic budgets and outcomes that match expectations!

The cost risks we aim to mitigate include identifying possible cost increases that could occur during the project and identifying opportunities to save costs by considering alternative designs, materials or other resources (referred to as ‘Value Engineering’ – read more about it here). These endeavours significantly reduce the likelihood of budgets being exceeded and contribute heavily to the overall success of the construction project.

Risk management construction site

Mitigating risk #2
Additional surveys

Whilst it might be tempting to cut costs by doing the bare minimum here, quite often we recommend additional surveys such as site investigations, structural condition surveys and asbestos surveys. These surveys give us the opportunity to identify risks and make financial and programme allowance for any resultant findings – forewarned is forearmed!

Construction method
Review & evaluation

Remembering that one of the risks we are trying to mitigate is budgets being exceeded, reviewing proposed construction methods is a crucial step in cost control; ensuring both efficiency and budget compliance.

Evaluating construction methodologies helps identify the optimal techniques for reducing expenses whilst maintaining quality. An example of how we regularly review construction methods is with regards to supply chain status and current market conditions. It could be that a certain trade or material is currently in high demand, and that we need to adjust plans to take these off the critical path.

This change leads to a reduction in the risk that the project will be delayed, which of course reduces the risk of cost increases.

Procurement & financial
advice

Procurement of the correct contractor is also key to avoiding risk on construction projects. This involves advising clients on the type of contractor who will offer the best value (not just best price) and ensuring we contract under the right procurement approach. We sometimes suggest for example that a Bill of Quantities is far better on a refurbishment project than Design-Build; where the client will pay for the risk before it has become apparent.  

However, in some situations, Design and Build or a management contract may offer the quickest, more cost-effective way to procure a contractor.  

We also see it is critical to the client cost risk that we regularly review and identify ongoing costs, items still to be expended and speed of cash flow.  These cost control elements become key risk mitigation tools as the project progresses, meaning we can identify any necessary contingency spend or forecast accelerated costs, which indicate a potential project overspend.

Contract management &
teamwork!

Fastidiousness in contract management is essential in reducing client risk.  Regularly reviewing and following the contract avoids the client paying for simple delays or late payments which could easily have been avoided.

One final point that we also discussed in our blog post on Value Engineering in Construction is the importance of effective communication and collaboration among all stakeholders on the construction project; encouraging open communication and sharing of information. A multidisciplinary team approach with open lines of communication ensures that diverse perspectives further contribute to risk identification and resolution.

conclusion

Effective risk management is key to successful construction project delivery. Being proactive, leveraging technology, fostering collaboration among stakeholders and maintaining a vigilant approach throughout the project lifecycle means construction professionals can mitigate risks effectively. Employing the services of a Quantity Surveyor for whom managing risk in construction projects is second nature, will help ensure the timely and cost-effective completion of your construction project.

If you’d like to discuss how Saunder Quantity Surveyors can help reduce risk on your construction project, please contact us today.

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