Whom do I involve in a risk assessment? When do I need to do a risk assessment? What is the precautionary principle? Implementation of risk identification process should be done according to the demand of the situation in that particular case. We can even say that it requires a lot of time and constant effort to achieve even then one cannot deny the possibility of missing out any probable risk.
It is hard to identify the entire risk factor one after the other. A general level risk which can be taken as common risk in all projects can be identified taking previous examples into consideration which can prove to be time saving as well as reference for the new project. Attributes of Risk: In risk assessment it is crucial to identify the different attribute of risk, such as if it is specific in nature or general, dynamic or static, etc.
This is due to the fact that risk allocation necessitates to understand the attributes of risks, thus to assign them to those who can treat them accordingly. According to the attributes the risk classification is done. Williams observed that it is primarily necessary to identify each risk as a foremost step in risk management and perhaps the most difficult one. There may be two sources in a construction project from where various risks are deduced.
They may be external or internal risks. External risks comprises of environmental impacts. Some specific definition of risk is as follows: Economic Risk: Economic risks are associated with supply of labor and materials, availability of equipments, price increment of the construction materials, various fiscal policies, exchange rates and inflation rates. Financial Risk: Financial risks are associated with the cash flows, capital supply, interest rates, credit ratings, rentals, etc.
Legal Risk: These are associated with the contractual clauses, codes and regulations, issuing and approval of drawings are done by contractual grounds of building procurement. Managerial Risk: Managerial risks are associated with the human resource management, productivity, cost and quality control. Safety risks, quality of work, faults, productiveness and competency are considered as the major risks in a construction project.
Technical Risk: Technical risks are associated with various technical factors related with the construction process, such as technology failure, design failure, equipment breakdown, error in estimation, health and safety aspects. Location of site, site accessibility, etc is some of the risks coming under this category. There may be differences in work procedures in cases of joint ventures, such as local-foreign joint ventures.
Political Risk : Political risks include interference of foreign government in the business activity, change in the law, etc. Public unrest, industrial relations activities affecting project progress, project approval delays are included in this category of risk. Environmental risks: Environmental risks deals with the soil conditions, weather condition and environmental impact risks.
The effect of the project on flora and fauna, geological aspects, people comes under environmental risk. The main reason of risk management is to cut down the possible loses and to compound the possible gains.
Practical goals are needed to make risk management operable for any company. For construction companies, risk management has a significant role in decision making process. Even because of risks and uncertainties, projects can undergo many harmful consequences.
The performance, quality, productiveness and the budget of the project can be affected by risks. Thus it can be said that the main reasons for which companies and organizations should adopt risk management are : loss minimization, to take hold of the opportunities, to cut down or limit uncertainty and for legal acceptance.
A chronologically developed risk management is required for the good practice in the industry. The project aims and objectives varies from the client to the designers, contractor, investors, stakeholders, etc. The parties involved in the project are often divide into phases which may develop gap between the parties in terms of communication and information flow may be hampered.
If we take into consideration the usual owner-contractor relation then problems of dispute is sometimes very adverse. This may lead to non-cooperation between the project team and the management.
Risk can occur anytime during the project life cycle. Problems should be analyzed taking into consideration specific approach of the party towards the risk but it should be dealt with respect to all other parties and their associated risks. For example operational management strategies to meet risk arising from it should also consider the effect of it on planning management. Only some parties involved in the project do have proper knowledge of the risk.
It requires strong organizational format to break the difference between owner and contractor in order to increase the efficiency and rate of production.
All the parties associated with the project agreed on the point that a proper synchronized approach is required for assessment of the project. A well structured tool and process can help in risk management.
It protects the most valuable assets of the project including the employees. A lot of people can be injured due to failure in risk management. Risk assessment is very crucial in protecting the workers and the business meeting the requirements of the legal issues. It helps to asses and finds the most important risk that can hamper the work culture.
The factors which have potential harm the environment. According to the legal formalities one cannot make the project totally risk free but ensure that precautionary steps are taken to meet those. It expects the individuals to be reasonably practical. The following gives guidance of how to be reasonably practical in handling risk.
Five steps to handle risk assessment principles: Step 1: Identify the hazards Step 2: take and decision regarding the individuals who may be harmed Step 3: Assess the risks and settle on safety measures Step 4: Document result and apply them Step 5: Evaluation of risk assessment and revise if essential IV.
In case of international projects, the project progress and the phasing decisions can be easily isolated from risk management. Various participants control the several phases of an international project. In most of the cases, owner is responsible for program analysis, to manage and control design and engineering a third party is hired, and to construct the project a contractor is hired, who in turn shows the results to the owner for production or operations. Kim and Bajaj , studied that in case of structuring projects, isolating the project participants increases the risk of minimal attention to the project.
Individual project participants become concerned with only their own project risks and either willingly or unwillingly tries to transfer these risks to other project participants. Chapman and Ward , elucidated that in risk management lessening the impact plays a vital role. By implementing in a proper way, a good mitigation strategy will reduce adverse effects.
There are four mitigation strategy categories which are used commonly are: Avoidance : When a number of lower risk choices are available from various alternatives. This leads to a better development of the plan and follow up of the plan. This is the most common approach in devising a mitigation strategy.
Download Free PDF. Risk Management in Construction Industry. Amarsinh B Landage. Of Engineering. Mehmood Alam. Nadeem Ehsan.
Basavaraj Konnur. A short summary of this paper. Download Download PDF. Translate PDF. Konnur, Amarsinh B. Technical Risks: The risks associated with the Incomplete complex and dynamic project environments which create an Design, Inadequate specification, inadequate site investigation, atmosphere of high uncertainty and risk. The industry is Change in scope, Construction procedures and insufficient vulnerable to various technical, socio-political and business resource availability etc.
The track record to cope with these risks has not been very good in construction industry. As a result, the people 2. Construction Risks: These risks include Labor productivity, working in the industry bear various failures, such as failure Labor disputes, Site condition, Equipment failures, Design of abiding by quality and operational requirements, cost changes, too high quality standard and new technology. Risk management is a process which consists of identification of 3.
This paper covers the concepts of risk management and various risk analysis 4. Financial Risks: Increased material cost, Low market demand, Keywords: construction industry, Risk Management, Risk Exchange rate fluctuation, Payment delays and improper Analysis estimation taxes etc. Introduction: 6. Construction projects are always unique and risks raises from a number of different sources.
Risk is defined as any action 7. Environmental Risks: Natural Disasters and Weather or occurrence which will affect the achievement of project Implications. Risk management is a technique which is used in many other industries from, IT related to business, automobile, 2. Risk Management Process: pharmaceutical industry, to the construction sector.
Risks and Risk management is the process which consists of identification, uncertainties inherent in the construction industries are more assessment, response and review. Many industries have become more proactive about using risk management techniques in project. Risk Identification: However, with respect to the construction industry, the same is Risk identification can be done by the following methods not used commonly.
Risk is an integral component of any project. Risk is present in all projects irrespective of their size or a. Brainstorming: This is one of the most popular techniques.
No project is totally free from risks. If risks are not Generally, it is used for idea generation; it is also very useful for properly analyzed and strategies are not trained to deal with risk identification. All relevant persons associated with project them, the project is likely to lead to failures.
There is one facilitator who is briefing about various aspects with the participants and then after note down 1. Before closing it the facilitator review the factors eliminate the unnecessary ones. Risk management is a process which identifies the project risks, analyze them, and determine the actions to avert the threats on b.
Delphi Technique: This technique is similar to brainstorming any project. All steps in the risk management process should be but the participants in this do not know each other and they are included to deal with risks, in order to implement the process of not at the same place. They will identify the factors without the project. Flanagan, R. Risk management and construction , Blackwell, Oxford.
Hilson, D. Hlaing, N. ISO Khan, A. Klemetti, A. Risk management in construction project networks , Helsinki University of Technology, Helsinki. KPMG Kutsch, E. Ling, F. Low, S. Mills, A. Mok, C. Ock, J.
Pennock, M. Rahman, M. Raz, T. Royer, P. Sharman, R. Simister, S. Tang, W. Thevendran, V. Uher, T. Wang, S. Ward, S. Wiguna, I. Woo, K. Delays of construction projects in singapore. Zhao, X. Zou, P. Download references. You can also search for this author in PubMed Google Scholar.
Correspondence to Bon-Gang Hwang. Reprints and Permissions. Construction project risk management in Singapore: Resources, effectiveness, impact, and understanding.
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