Free «Risk Management in Construction Management» Essay Paper

Risk management in construction management is a field that experiences a lot of dynamism due to the nature of risks that construction industry is exposed to. This industry is exposed to such risks as project scope risks, environmental risks, technicality risks, legal risks, and natural risks. All of the listed risks are not predictable in nature since their boundaries are ever changing. Due to the fact that risk management is one of the areas in very dynamic construction industry, it makes it hard for the leaders to predict the risks and perhaps put measures in place to be able to tackle by either stopping them or mitigating their effects (Froese 531-538). This makes it hard for new graduates and stem employees in the management of construction project to deal with the construction risks. Construction management is mainly involved in formulating strategy functions rather than being completely involved in the technical aspects of construction. In most cases, construction management entails activities such as planning, organizing, staffing, and directing among other functions. The essay explores risk management in the construction industry in terms of how dynamic field it is and how new graduates and employees find it hard to handle.

 

Type of service

Type of assignment

Title of your paper *

Academic level

Pages

Timeframe

Spacing

Currency

  Order now

Type of Risks in the Construction Industry

Construction management is, however, becoming increasingly dynamic when compared to the type of mainstream management. Among the most compelling topics in construction management is risk management, which is the ever changing field given the changing nature of risks. Risk management in construction management cuts across different functions and sections of project management (Harris 84). The essay explores risk management issues in the project management while giving the significance of the topic to the future graduates and how changes may affect them in the course of carrying out their duties. Risk management in the construction industry often results in increased construction costs through increasing the cost of construction materials through damage or by increasing the time taken to undertake construction projects.

According to the international audit company, Price Waterhouse Coopers (PWC), construction management is a field experiencing a lot of dynamism in different spheres of the industry. In construction management, planning is a crucial function that gives a clear roadmap to every project that is to be undertaken in the project; when planning is faulty, it renders the whole project superfluous. It is, therefore, important to note that risk management in itself is a function of project management that affects different duties of the construction management. According to PWC, risk cannot be avoided; and due to its changing nature, it needs to be managed by: sharing, reducing, transferring, or accepting (Froese 531-538). Construction management is mostly involved with a large bulk of technical work with only a few individuals dealing with supervising and administrative functions. This makes construction project management features essential.

In the construction industry, which is the case of other sectors, if risk management is not done adequately and timely, it always has a negative bearing on company’s performance. The failure to undertake risk management result in: cost increment, reduction in profits or increased losses, disposal of projects or project redundancy, and, lastly, it may also cause damage to the reputation of brand (Jackson 27). The worst effect experienced as a result of failing to carry out proper risk management in a project is the disposal of the projects conducted or insolvency of the entire projects. There is, therefore, the need for ensuring that risks in project management give the seriousness that it deserves and by so doing to make sure that perils are identified and averted in time before they result in a negative impact on the whole project. This management function is very cumbersome for STEM members as well as for future graduates because risks are not physical. Instead, they depend on the judgment of experienced personnel of identifying perils and ways in which it can be dealt with. This type of analysis is only present among the most qualified staff since the former is purely a perception procedure. Therefore, one should be well versed with the dynamism of risks.

Stay Connected

Live Chat Order now

Construction is an industry that has several components in it to make up the whole section of the construction. This makes the industry risky due to its challenges of identifying the risks that are underlying in different projects given that they are entirely distinct from each other by nature most of the time. Risks in construction management can, therefore, be managed through minimization of it, routine assessment and quantification of perils, proper implementation of risk management/control measures, and regular monitoring of risks in order to ensure that they are manageable or stay within the manageable levels (Griffin 37). Risk management in the construction industry is an area of management that gives a lot of challenges to new managers. Such people find it difficult to manage risks due to the changing nature of the latter and perhaps due to their different types that exist in the industry.

The construction industry is a very broad industry, and the risks that arise in roads construction might be entirely different from the risks that arise in building or dams' construction (Froese 531-538). Differing nature of risks and their causes in the industry make the subject intricate for new and future managers as well. The reason construction management field is very dynamic, and negative impact still affects construction industries that include the most qualified or experienced project management experts in the area of construction management. Therefore, this adds a twist to new crop of managers and perhaps future managers as well. In all probability, it is usually the best practice for most organizations to have the best experts as a solution to management problems. However, this is not the case in construction management where risks are very dynamic thereby making it hard even for the best experts in the field to manage properly and avert them (El-Reedy 12). According to risk management experts, risk management in construction as well as in mainstream management is an opportunity in disguise.  If it is taken correctly, it presents great fortunes to the concerned company that is experiencing the risk.

To fully understand the concept of risk management and how intriguing it is regarding dynamism, it is important to break down different forms of risks that have been identified to exist in construction project management by visiting various portions of projects and how they live in modern society. The lack of knowledge of undertaking individual projects in the construction accounts for more than 30% of the total risks that occur in construction management (Harris 11). Managing risks that arise as a result of the lack of knowledge needed for the undertaking of construction projects involve proper analysis of personnel hiring process to ensure that competent personnel is engaged in undertaking of several projects.

Scope Related Risks

In most cases, the detailed analysis of the scope of the projects lacks identifying skills that are most appropriate for hiring appropriate personnel. Different projects require different expertise and different levels of experience. In most cases, project management staff are required to undergo an expansive apprenticeship in various fields even despite having acquired theoretical knowledge so as to enable them to gain practical knowledge that will be necessary for undertaking different projects (Griffin 103). The mistake that most companies in the construction industry make in as far as the hiring of personnel goes is that most of the companies hire the wrong people or those who are less qualified, and that they give them the mandate to undertake a project that requires different levels of both expertise and knowledge. According to project risk management experts, this risk can be solved by employing the right person for the job. This can be achieved through recognizing the need for a project to be undertaken and carrying out a thorough hiring process.

Construction companies that normally hire the wrong person for the job result in losing up to 100% of the project either because the latter will not fully meet the standards required or because it partly meets the quality. Choosing the right personnel is often a challenge and is also very dynamic in this industry because the nature of projects keeps on changing in terms of technology and the types of project requirements. Getting the right personnel is, therefore, purely a management function that will only be solved through the development of the good policy (Jackson 127). In most cases, the failure to follow the due process results in personnel risks which can be very adverse depending on the level of the project and the scope of it. Some of the chances that a construction firm may lose as a result of not handling this type of risk include the development of different designs from the intended ones which, when being found, are the cases that render the whole project redundant. Another common hazard that arises as a result of not taking risks posed by personnel seriously is the construction which does not meet the required quality.

Planning Risks

Planning is another function of a project management team that poses a serious risk if it is not handled properly. This feature is also very cumbersome to new members of the project management team more so to those who are under placement in different projects and, additionally. to the future teams; the top management can only handle it through strategy formulation. Planning is like a roadmap that sets up everything that the project will require for an explicit creation of a roadmap that will be articulated the different members who take part in running the project (Griffin 63). Making a mistake in the process of planning for a project results in the mistake gets transferred to the project. In most cases, proper planning of project entails drawing of its visual map, identifying different materials that are required, and then purchasing them. It also involves setting up timelines and milestones under which the project will operate and when it will be reviewed.

Planning is, therefore, not devoid of risks when planners make mistakes in the actual planning, in the identifying and purchasing materials required, or in the setting milestones and timelines. These mistakes will have an adverse result on the project which, in other words, is a risk (Harris 37). When a construction company fails to purchase right materials for construction projects, the risk of using materials that do not meet the required standard puts the whole project in jeopardy in case it develops weak lines in the event of construction of a building while the construction is still ongoing.

When a significant development generates faint lines when the project is still going on, such building in most cases is marked for demolition regardless of the percentage of project completion. In other circumstances, when a project develops weak lines, there may be required repairs to be undertaken which end up increasing the planned cost of construction. Planning risk is, therefore, a formative hazard. Thus, when it is not done properly, it ends up messing the whole project regardless of its level (Griffin 102). To avert this type of risk management, one has to undertake this function of management with the seriousness it deserves. Moreover, one has to ensure the plan for the project is done in an appropriate manner and in a manner that results in the construction of a successful project. This management function is hard to new managers more so those who are placed as STEM or even new graduates, because it is a feature that is typically run through experience. Therefore, it requires one to handle such project before or even projects that in some way resembles the ones being already undertaken (Froese 531-538).

Another reason that makes planning risk difficult for STEM and new graduates to handle is the changing nature of the risk. Most planning risks are caused by perils such as changes that might take place on the site of construction which is unforeseen when the plan is being drawn up changing the entire pattern of the project. To avert this type of risk management, one should carry out thorough risk assessment and identification process so as to enable realistic plans. Another type of risks that construction companies experience in the running of construction projects is legal liability risks.

Legal Risks

Legal liability risks are very common in a construction project, and they can occur at any stage of project development which can be at the start, middle, or end of the project. What happens when the legal risk occurs is that different interested parties sue the construction company. The suers can be the neighbors who border the project, they can be the local authority, it also can be an individual and/or one of the partners who are undertaking the project. Legal suits often take different perspectives, and it can result in the stopping of the whole project, the demolition of the project, or the proceeding of it (El-Reedy 56). The legal outcome of any suit differs depending on the nature of that suit. In most cases, when legal suits happen, most companies spend resources allocated for different activities in the project to defend themselves by meeting legal fees and so forth.

When legal suits are filed against an individual construction, it usually ends up halting the project through a legal notice that is issued as a cautionary measure against project development. The legal battle continues in this case since judgment outcome can go against the wishes of the company. Legal risks often result in increased costs of construction, and it is usually unforeseen at the start of projects, thereby making it impossible for STEM and new graduates to recognize and avert or just put measures in place to deal with it (Froese 531-538). This can, however, be handled by experienced construction managers; though it is not always entirely successful, it results in some percentage of success when experienced management are in control of projects. Legal liability risk, therefore, needs to be clearly defined and crafted at the planning stage of the project so as to allow project source or allocate enough funds for the construction of projects including the cost of unforeseen legal liabilities. According to PWC, legal liability risk is the most common type of risk that affects nearly 30% of all the projects that are undertaken in the world. This number is expected to increase in the future. According to the report, legal liability risk cannot be foreseen, and its magnitude cannot be established. Therefore, such risk can result in massive loss or complete redundancy of the project.

Natural Risks

Natural risks are another category of risks that affect the construction industry. Risks that arise through natural perils can be: floods, earthquakes, rains, and hailstorms. These perils just as they affect other industries seem to have hard effects on the construction industry, thereby making it hard to manage. Natural hazards such as earthquake and floodwater are, however, mitigated through reducing the bearing they will have on the construction projects. Natural risks possess the potential of rendering construction projects redundant given the magnitude at which they strike. When the risks strike hard on construction projects, the former sometimes bring whole construction projects into the ground which will require additional costs to resuscitate such projects again. In other terms, when natural risks happen, they may render part of the project redundant, which may not call for the abandonment of the project. However, it will call for additional costs to restart the project and restore the construction process (El Reedy 201). Therefore, to deal with natural risks, management ought to be able to carry out a thorough assessment of the construction site, dig history about site’s exposure to natural perils, and only after that establish the type of construction that will be suited for such areas which require experienced and well-versed construction managers.

Conclusion

Construction management is a very vibrant industry with a lot of developments in different fronts. The construction industry will have a lot of growing prospects in the future thereby making it necessary to manage various functions properly and more so taking into account the agility of the industry. Risk management in construction sphere  stands out to be the most dynamic role of management in ensuring the success of construction projects. Through proper risk development, management plans will have high success probability. Thus, risk management in the industry is, therefore, an inevitable control sub-function that needs to be addressed properly for the success of construction projects.