Contents

Risk Management in Construction Projects .................................................................................................. 2

Introduction .............................................................................................................................................. 2
Stages of Risk Management: ..................................................................................................................... 2
Risks Occurring at the above mentioned stages:...................................................................................... 2
1- Political Risks: ................................................................................................................................ 3
2- Economical Risks ........................................................................................................................... 3
3- Environmental risks....................................................................................................................... 3
4- Operating risks .............................................................................................................................. 3
5- Legal risks ...................................................................................................................................... 3
Identification of Risk: ................................................................................................................................ 3
Methods of Identification: ........................................................................................................................ 4
1- Questionnaires Method: ............................................................................................................... 4
2- Interviews...................................................................................................................................... 4
3- Experts System .............................................................................................................................. 4
Risk Assessment: ....................................................................................................................................... 5
Risk Mitigation: ......................................................................................................................................... 5
Conclusion: ................................................................................................................................................ 6
References: ............................................................................................................................................... 6
Risk Management in Construction Projects
Introduction
Management of risk is a concept being used by each industry from IT industries to automobiles
and to construction sector. Each organization has its own way of managing the risk. Risk
Management is a significant area of the construction sector and has received extensive
attention as a consequence of the current large-scale study. Moreover, it needs more attention
to be given to this relatively new field. There are several challenges affecting development
projects, including time, costs and reliability, which have a negative impact on projects. There
are two kinds of risk reduction strategies: corrective strategies, used before the initiation of a
project to handle the potential threats during the implementation of a task; and remedial
approaches used during operation, once the danger is already identified. The studies indicate
that the most serious risks for the bulk of building projects are financial problems for
construction, injuries at the site and faulty designs. As already stated, the builder is accountable
for the management of the most perceived risk in the implementation phase at sites such as
sub-contractors, workforce, construction equipment’s, material availability and reliability
whereas the client is accountable for the risks such as financial problems, architecture data
issues, changes to systems and rules, and the work scope. Closed monitoring and collaboration
within the projects are the most productive corrective risk-management strategy.

Stages of Risk Management:

There are three main stages of risk management in construction industry which needs to be
identified and assessed for successful management of project risks

Primary Stage: it involves Identification of risks

Secondary Stage: it involves assessment and analysis of risks

Tertiary Stage: it involves mitigation of risks

Risks Occurring at the above mentioned stages:

There are number of risks that occurs at the various stages of construction projects these
include
 1- Political Risks:
These Leadership risks for companies may be defined as "a risk for the company's tactical,
economic or private losses as a result of anti-market factors such as economic, and social
issues. Political risk includes level of risk such as law amendments, public payment failure, tax
rises and government changes.

2- Economical Risks
This risk is the highest number of risks associated with external construction financial growth,
which the project manager may not monitor. It arises from influences that may negatively
affect the economy. Financial risks fall under these categories: The risk of exchange rates
relates to the possibility of currency change to the exchange value of the project's cash flows.
The risk is important, since in many developing countries or countries with economies in
transition the exchange rate is especially volatile.

3- Environmental risks
Due to strict legal liability in connection with such environmental accidents, this threat has risen
and may have no adverse effects on the finances of a company but also a suspension of any
projects or operations of or in connection with the facility

4- Operating risks
Operational risks Throughout Construction and maintenance type services is any risk that can
arise in a building project. More specifically, the risk of loss from inadequate or failed internal
processes, human being and systems external factors may be defined as operational risks

5- Legal risks
Many of the potential risks faced by a construction project include leasing of land, property
rights and financial documents infringement.

Identification of Risk:
We must find out what they are, what effect they might have, and what measures are
necessary to prevent or mitigate their potential impact. It is a matter of identifying what they
are. The recognition of the risks should, if just in terms of giving a significant benefit to all
stakeholders through their increased understanding of the project be called the main step of
risk management, regardless of whether any action is taken or not. It is necessary to bring it to
the attention, when defining risks not just the risk itself, but the cause, the incident that can
materialize and the impact of a risk if it occurs
 Methods of
Risk
risk
idebtification
Identification

Risk Mitigation of
Assesment Risk

Figure: Risk Management process

Methods of Identification:
1- Questionnaires Method:
Survey questions generally consist of a mixture of familiarity with specific project criteria. There
are two types of questionnaires, one is a very generic type of ambiguous guidelines or
questions and another can be precise in conjunction with the specific project's specifications.
Due to number of repeated answers presented by public manager can easily draw a positive
consensus.

2- Interviews
This is a method that service departments as well as other consultants have traditionally used
to collect information. Risk managers are often used to predict potential risks in a construction.
The interviews can be done one but to-one or several-to - one. Most initiatives from various
disciplines should consist of one framework so that the subjects brought up can be presented
from different perspectives. This method has the problem that it takes time.

3- Experts System
There is a huge amount of research on machine intelligence and expert networks. In addition,
the use of knowledge-oriented systems or collaborative computer-based systems is one of the
most advanced template that can be established for risk management. This system is designed
to help the project managers achieve more reliable risk management through the acquisition of
requisite knowledge from other project managers and a level of expertise.
Risk Assessment:
Risk analysis is the mechanism by which the risk in the workforce will be measured and
discussed and whether it is appropriate. A cost analysis must be focused on this data and all
evidence available in the workforce and industry to perform a risk assessment. This may include
a number of current and historical accidents, the extent of injuries resulting from the defined
risk time taken as a consequence of injuries and the number of victims. The risk assessment
approach may also be accompanied with specific information, such as the environmental threat
measurement e.g sound levels, dirt levels and correlations between measurement at work and
the required by law measurement. The risk matrix shows the level of danger calculated by the
correlation between the likelihood of an accident that occurs from the threat and the risk. This
is either a number or an alphabet code. The correlation between chance and result defines the
dangerous nature of the risk. The degree of hazard or code calculated is referred to as the
priority risk score. This priority ranking allows employers to concentrate on the risks found in
order to first remove or monitor the hazard(s) of high possibility of causing an injury.

Figure: Risk Assessment matrix

Risk Mitigation:
The analysis of overall project priorities prior to a redesign of the entire project may include
the prevention of risks. Risk mitigation is often considered to be the main management
technique because it requires the termination of the company. It ensures deciding not to enter
the new way of working, as this would introduce an additional risk. The risk source and thus the
hazard itself must be excluded from this management process. Ideally, the best way of using an
alternative course of action is to take any approach involving prevention.
Conclusion:
The effectiveness of every project would be depends on how successful it is. A review of the
overall project priorities can contribute to a re-evaluation of the entire project. The manner in
which risks are managed effectively and efficiently varies. Unlike the preceding, every project
has different challenges and different approaches. Managing risk won't eliminate any task
threats. The key goal is to ensure the most effective management of risks Because of lack of
understanding and experience, structured risk analysis and control techniques are seldom used
by construction companies. Controlling and mitigation of risk is important tool for construction
industry.

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