Importance Of Risk Management In Construction

959 Words2 Pages
bulb-icon

Recommended: Relationship between risk and project management

Risk is an identified uncertainty related to any act or decision. Risk is the focal topic in the management of any activity, let it be technology, construction, health management or event management. These risks can comprise of threats and opportunities. Threats are risks with negative consequences and opportunities are risks with positive benefits.
Identifying the various probabilities of uncertainties associated with any activity, analyzing its impacts on the project objective and the steps taken to circumvent its possible impacts whether long term or short term, objective or subjective is the key in risk management. In other words, risk management is the process of handling of risks through specific methods and techniques within the bounds …show more content…

Due to the increasing importance of risk management, it has become imperative for most industries to develop techniques to control the impact of potential risks. Compared to many other industries, the construction industry is subject to more risks due to its unique features of construction activities, such as longevity of projects, complicated processes, unreliable environmental conditions and financial implications. The process of risk management can be divided into risk classification, risk analysis and risk response. The risk response can further be divided into four actions, namely retention, reduction, transfer and avoidance (Berkeley et al., 1991; Flanagan and Norman 1993). An effective risk management method can help to understand not only what kinds of risks are forthcoming, but also how to manage these risks in different phases of a …show more content…

To avoid defective design, the design team need not only to fully understand the client’s want but also establish an efficient communication scheme among the designers. Inadequate program scheduling often appears in projects with tight schedules results in some programs getting reduced in order to meet the project timeline is perceived as another risk related to designers. In accurate cost estimate is another risk related to designers/ consultants which often results in deviation of estimated cost from the actual cost. Inadequate site information like soil test results, survey report etc. also can lead to unexpected risk of project delay and cost

Show More
Related

  • Millercoors Case Study

    1381 Words  | 3 Pages

    All organizations and industries experience risk exposure, from both internal and external events. Accordingly, with outcome speculation being uncertain, organizations can experience either negative or positive effects. In general, the IS31000 defines risk as the “effect of uncertainty on objects” (Elliott, 2012 p.1.4). Consequently, the application of risk management practices helps minimize the effects of risk uncertainty on an organization and is accomplished through coordinating an organization’s activities by establishing control and creating policies in regards to risk. Risk’s most evident category is hazard risk which encompasses risk from accidental loss. In addition, operational risk stems from controls,

    Read More

  • Clara Barton and The American Red Cross

    1966 Words  | 4 Pages

    Hillson, D. & Simon, P., (2012). Practical Project Risk Management, The ATOM Methodology: Second Edition. Vienna, VA: Management Concept Press

    Read More

  • Challenges In Construction Case Study

    1489 Words  | 3 Pages

    Construction mistakes and defective works are the fourth challenges to be considered as main challenges that hinder completion on-time project. There are three aspect of sub - challenges in construction mistakes and defective works that hinder project from completing on time were ranked based on relative important index from the perspective of contractor. Lack of workmanship was ranked in first sub – challenges. Besides that, negligence among parties to complete project on time was ranked in second sub – challenges and the last ranked that is shortcut that take will involves

    Read More

  • Grain Elevator Failure

    2423 Words  | 5 Pages

    ...icient geotechnical investigation for the given development, unrealistic soil performance for given development and development constraints and restriction leading to inappropriate equipment or techniques. Consultant’s design and specifications may impose unrealistic demands on solutions. Client’s brief may fail to convey end usage; insufficient geotechnical investigation could lead to inappropriate design while on site conditions may be different to assumptions or what has been written. On the other hand flawed design and insufficient site preparation may lead to construction of structures which are likely to fail in the near future. Poor methodology and planning practices include: inappropriate or poor choice of equipment, lack of experience and understanding, lack of awareness and consequence of failure, bad workmanship and shortcutting and lack of monitoring,

    Read More

  • The Sydney Opera House

    3125 Words  | 7 Pages

    This report clearly shows the importance of the role of ‘Risk Management’ for the project of Sydney Opera House and way the risk is supposed to be managed in the areas such as planning, budgeting, cost control, quality and scheduling of the project. Moreover, it demonstrates that risk has to be identified before it could be effectively managed. With the proper identification, the projects go into a blind mode and potential threats are ignored which can easily lead a successful project into a failed project. A poorly designed risk management plan will bring in further risks and uncertainties and this will only result in a more complex and out of control situation in terms of effective project management.

    Read More

  • Risk Management Framework Essay

    1318 Words  | 3 Pages

    These are the specific risks involved to a particular project or program. The organisations continuously undertakes specific projects, which should be managed with consistency with the legal obligations to be kept in mind. There are significant program management methodology which spell out the requirement and clear risk management approach within the project environment and align by the whole of the AS/NZS ISO 31000:2009 Risk management – Principles and guidelines.

    Read More

  • A Study on The Construction Industry in Malysia

    1605 Words  | 4 Pages

    The construction industry is one of the main engines of growth of domestic economy in Malaysia. Its cyclical growth is a barometric reflection of the economic climate, experiencing accelerated expansion when the economy is booming and sharp decline when the economic system is on the downside. Normally, the production of construction products is a risky, complex and extended operation. The full development of a construction project normally consists of several phases involving a diverse scope of specialized services (Abdul Rahim, n.d). Development of safety for personnel in construction environment is realized as a major factor for tranquillity of staff and should be adhered precisely in accordance with safety regulations. Despite the automation, the building industry is nevertheless founded on labour intensive, while working environments are frequently changing and include several different parties. The construction workers are one of the most vulnerable members in a project and are confronted with a broad assortment of hazards during their work (Aref, 2012).

    Read More

  • Importance Of Value Management In Construction

    1215 Words  | 3 Pages

    The main objective of any construction project is to assure that the project completes on committed time and within the budget allocated. Two major challenges faced are Time and cost which increase the urgency to adapt new and innovative techniques for the project to be successful.

    Read More

  • Reflection On Project Risk Management

    1157 Words  | 3 Pages

    Some include risks at the enterprise level, managing risks in complex projects and dealing with turnarounds and large capital projects. Liu, Zou, & Gong (2013) explore how enterprise risk management (ERM) may influence the ability and performance of project management risk (PRM) by considering the features of the construction industry, its businesses and projects. Managing risks within projects such as these has become an important process to achieve project objectives in terms of the scope, time and cost. The results show that enterprise risk management can positively influence the implementation of project risk management. This can be achieved through implementing a risk focused culture, setting up risk management departments and setting up risk procedures. This will help control the project risk and improve the performance of project risk management. Communicating the concerns with other team members can help identify the risks earlier on rather than later in the development of the project. If the Stakeholders and managers involved are satisfied then the project outline becomes a

    Read More

  • Risk Management: COSO and SHAMPU frameworks

    2000 Words  | 4 Pages

    Over the past decade, risk and uncertainty have increasingly become major issues which impact business activities. Many organizations are raising awareness to minimize the adverse consequences by implementing the process of Risk Management Framework which plays a significant role in mitigating almost all categories of risks. According to Ward (2005), the objective of risk management is to enhance a company’s performance. In particular, the importance of the framework is to assist top management in developing a sensible risk management strategy and program.

    Read More

  • The Importance Of Budgeting In The Construction Industry

    1082 Words  | 3 Pages

    In the construction business project, the most important is about awareness on safety on site. In an effort to reduce the accident rate for a construction project, the awareness is very important to be emphasized. Sufficient skills training should be given by the management before allowing those who are not skilled work. Liability on an errant employee according to the rules in site location should be enhanced to bring awareness to them that security is paramount and risks can be found anywhere. If the accident rate can be reduced, the construction project will run smoothly as planned and can also save operating

    Read More

  • Food Poisoning

    1294 Words  | 3 Pages

    Risk assessment is a scientific evaluation of risk associated with hazard either qualitatively or quantitatively .Risk management is the process where the relevant information of risk including risk assessment results are used to make decisions on how they will control the risk and implementing proper options.

    Read More

  • Essay On Importance Of Risk Management

    709 Words  | 2 Pages

    Risk Management allows us to identify the problems which are unknown during the start of the project but may occurs later. Implementing an efficient risk management plan will ensure the better outcome of the project in terms of cost and time.

    Read More

  • Project Management Issues in Construction Sites Environment

    3128 Words  | 7 Pages

    Zeng, J., An, M. and Smith, N.J. (2007) 'Application of Fuzzy Based Decision Making Methodology to Construction Project Risk Assessment', International Journal of Project Management, no. 25, pp. 589-600.

    Read More

  • The Importance of an OHS Management System in a Construction Organization

    598 Words  | 2 Pages

    Coble, RJ, Haupt, TC & Hinze, J 2000, The management of construction safety and health, A. A

    Read More

More about Importance Of Risk Management In Construction

Open Document