Construction has always been a risky business, but when it is done properly, it is quite profitable. The goal is to identify any risks early enough and manage them efficiently so that the business continues to grow.
Types of Construction Project Risks
- Poor project management
- Incomplete drawings and poorly defined scope
- Poorly written contracts
- Safety hazards that lead to worker accidents and injuries
- Unexpected increased in work materials
- Labor shortages
- Damage or theft to equipment and tools
- Natural disasters
- Availability of building materials
- Issues with subcontractors and suppliers
Identifying Risks
Identifying risks should always be done as soon as possible before the project even begins. The goal is to only identify the risks, not solve the problems. An excellent way to find risks is to review similar past projects and compare them to the one you are currently considering.
Managing Risks
Once you have determined all the risks, it is then time to decide on how high of an impact each one will have on the project. It is going to be necessary to determine the amount of time, money, and labor it will take to manage each risk.
After you have gone through all the risks and ranked them accordingly, you can then decide if you can avoid, eliminate, reduce, transfer, or accept each risk. If you decide to avoid the risks, then you will be turning down the project. There is nothing wrong with this if the risks far outweigh the benefits.
If you transfer some of the risks, then someone else will be responsible for part of the project and you will want to make sure that everything is in writing before anything is started. Eliminating and reducing the risks can be easily achieved by bringing in more employees or additional equipment.
When you decide to accept the risks on a project, you are going to want to make sure that the risks are low. After all, you do not want to lose money on any project, as it can really affect your bottom line.
There are risks in any business, but none are as bad as construction, where one wrong quote can cost a company thousands of dollars or more. If you are contemplating a project that seems risky and are not sure of what to do, you may want to seek the advice of another experienced construction professional. They may be able to help you put it into perspective or show you how you can avoid the risk all together.