Importance Of Risk Management In Construction

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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

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