How to Manage Risks across the Construction Project Lifecycle
Managing risk across construction sites is a critical area of focus for global developers Project Lifecycle. Improving visibility, insight, and predictive analytics within the risk management space is a vital asset that companies are maximizing. The impact of a construction project risk management software is significant in the area, as it centralizes control over all risk-based activities. From setting the right controls to unifying resources, cloud-based solutions simplify the complex domain of risk handling.
There are several strategies to effectively managing risk across the project lifecycle. While the adoption of technology streamlines workflows significantly, enterprises need a viable approach to understanding the depth of construction risk involved. The following aspects are vital to handling risk across the portfolio, employing best practices in technology, strategy, and management.
Auditing critical risk areas within construction projects
With the events of the global COVID-19 pandemic, developers are increasing their investment in risk mitigation and management tools. This is driving the critical need for better auditing solutions that are specifically designed to add greater structure to a wider risk network. The leading Highland INC Construction Southeastern North Carolina company, like Zepth and others, allow developers to ensure end-to-end risk mapping and auditing.
Procurement, financial, quality, and worker safety, are some of the most important aspects that can introduce risk to construction projects. Firms need to audit existing practices to find key gaps that can be resolved with better risk management and innovative technologies. E.g., 54% of contractors have experienced at least one type of material site shortage on construction projects.
Categorizing risks based on type, impact, and role
After successfully auditing current and potential project risks, either during pre-construction or during the lifecycle, it is important to categorize key risks. Through qualitative and quantitative methods, the following risk areas can be better identified and categorized.
Project delays – This is a critical risk area significantly impacting larger capital projects, with around 61% of them experiencing delays. Key secondary risks generated include excess cost exposure, lack of timeline, poor scheduling, etc.
Financial limitations – Projects can also experience limitations in funding, which can stall site work and introduce uncertainty.
Overruns in the budget – Overruns can add greater expenditure for the completion of site work beyond projected costs and risk acceptance levels.
Procurement challenges – Unavailability of the right materials can waste time on site and increase the risk of overruns.
Site quality issues – Quality issues can detrimentally impact projects while increasing cost through reworks, auditing, manpower allotment, etc.
Worker safety issues – Workers can be at risk of injuries on-site if the right safety measures have not been introduced.
Developing the right risk mitigation strategy
Mitigation is vital to lifecycle risk management, as it can help align resources to act strategically for best results. Key aspects that can significantly help developers are the elimination of bottlenecks, improving communication, enhancing visibility, consulting with experts, and performing regular reviews to mitigate risks. Close to 24% of developers are also investing in construction drones and robotics to boost safety, efficiency, etc.
Risk transference and planning are also viable for developers that can work with insurers, financial entities, and risk management firms to handle key areas. A more strategic risk response matrix can be developed based on the scope and scale of the project being constructed. Additionally, firms should focus on understanding their level of risk acceptance in relation to elements of cost, timelines, processes, etc.
Effective monitoring ensures that active and passive risk centres are being reviewed regularly. For more complex projects, developers may even opt for IoT-based sensor monitoring for better risk volume capturing. Having the right controls onboarded is also vital to effective risk management, as they can incorporate resources, assets, and strategies for setting the right limits and alerts.