ARC 515 - 18

SPECIALIZATION 2
First Semester 2022-2023

AR. OWEN L. RAMOS

ASSIGNMENT 1:
RISK MANAGEMENT PLANNING

TIERRA, MONIQUE C.
18 – 11329 – 958 | 5-AR1

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TABLE OF CONTENTS

ASSIGNMENT 1: ..................................................................................................... 1

WHAT IS RISK MANAGEMENT? ................................................................................... 3

WHAT ARE THE TYPES OF RISK IN CONSTRUCTION PROJECTS? ................................ 3

STEPS IN CREATING A RISK MANAGEMENT PLAN FOR A

CONSTRUCTION PROJECT ............................................................................... 4

WHY IS RISK MANAGEMENT IMPORTANT? ................................................................. 5

FUNCTION OF PROJECT RISK

MANAGEMENT TEAM IN CONSTRUCTION ................................................. 6

REFERENCES:.............................................................................................................. 8

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 ASSIGNMENT 1: RISK MANAGEMENT PLANNING

WHAT IS RISK MANAGEMENT?

Risk management is the process of identifying potential future risks and evaluating the
procedures available to mitigate their impact. In construction, this means planning, controlling,
and monitoring risks on each project. Since every project is different, they must be reviewed
individually to identify the pertinent risks and plan how to address them.

WHAT ARE THE TYPES OF RISK IN CONSTRUCTION PROJECTS?

In general, risk is anything that will delay the project or create further costs. There are
many sources of risk on a construction site. To create a better risk management plan, it’s essential
to know what risks there are, and where they will occur:

o Safety Risk: Your crew is your most valuable resource. Nothing can be done without them.
They are also subject to safety hazards, as many of the tasks assigned to them can be
dangerous. While your crew is skilled and experienced, accidents can happen. Know the
safety risks to your crew, what hazards they might fall prey to and create a safety plan to
ensure employee safety.
o Financial Risk: Without money, nothing happens. No one gets paid, you can’t rent
equipment—you get the idea. That’s why any factors that can interrupt your cash flow need
to be identified. This can include a cost increase for materials, competition in the market
and so on. The more you understand the financial risk, the more likely you’ll stay within
budget.
o Legal Risk: Managing a construction project involves more than the constraints of time,
cost and scope. There are legal constraints, such as regulations, code violations and contract
terms disputes with your clients, vendors and subcontractors. Any of these things can send
your construction project off track.
o Project Risk: Project risks are universal project management risks associated with
managing any project. These include poor management of the resources, missing deadlines
and falling behind schedule. The construction project manager must be thorough and aware
of difficulties that can throw the project off track.
o Environmental Risk: AKA an “act of God,” such as floods, earthquakes and other kinds
of natural disasters. Anything nature unexpectedly unleashes that makes the construction
site inaccessible is costly and potentially destructive for a construction project.

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BENEFITS OF A RISK MANAGEMENT PLAN FOR CONSTRUCTION
o Reduce on-site accidents: Creating a risk management plan can help reduce on-site
accidents and keep team members safe. Reducing injuries and accidents can also help make
sure the project doesn't experience any delays and finishes by the deadline.
o Minimize property damage: When a company or business plans for different risks,
especially those that might cause destruction to the project or surrounding area, they can
help reduce or eliminate any potential property damage. Minimizing property damage can
help reduce overall expenses and keep employees safe on the job.
o New business opportunities: Creating a risk management plan and successfully
completing projects can help companies attract more clients. Attracting more clients
through solid work can improve a company's customer outreach and increase its overall
revenue.
o Efficient future risk management: Understanding how to develop a risk management plan
can help companies create even better versions of that plan in the future. After establishing
their first risk management plan, companies can follow the same process and adjust it to
make it more effective and efficient for each project they pursue.
o Build team confidence: Establishing a risk management plan can help construction sites
feel more confident in their work. It also helps construction teams feel more confident in
their managers or leaders and trust them with their safety and well-being.

STEPS IN CREATING A RISK MANAGEMENT

PLAN FOR A CONSTRUCTION PROJECT
1. Identify major risks
It's important to identify major risks during the pre-construction phase of the project to start
mitigating challenges right away. When identifying major risks, it's helpful to talk with other team
members, such as the construction crew, company executives and clients, because they can offer
different expertise and viewpoints to find certain risks you can't see. Throughout the course of the
project, it's important to continue holding meetings with team members and stakeholders to
identify any new risks that might have presented themselves.
It's also beneficial to think about risks that might be unique to your project or area. For
example, if you're building a structure or building on a hillside, it might be a good idea to
investigate how often the land experiences earthquakes. Once you have a strong understanding of
the risks, it's important to make a list that you can continue to use throughout the project. That list
can also be helpful to review or consult when starting new construction projects.

2. Prioritize risks
After identifying the risks, it's important to prioritize them so you can confront any major
problems right away. When sorting the risks, using two guidelines can help you prioritize them
more efficiently. Those guidelines are:
o The impact the risk would have on the project or business.
o The probability of the risk actually occurring during the construction project.
For example, if you know there's a risk that the project might encounter a hurricane or
tropical storm, the impact of that risk might be very large, but the probability could be low or
almost nonexistent. After sorting the risks in order of priority, it's important to see which risks you
can remove or mitigate right away. For example, if there's a risk of the materials increasing in price
during construction, see if you can develop a contract with a vendor that eliminates the risk
altogether.

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3. Develop a response strategy
It's important to develop a response strategy for any risks that you can't correct right away
because it can help you react to the risks more efficiently if they present themselves. When
companies identify a risk, there are four ways they commonly respond to it, including:
o Reducing risk: Reducing the risk occurs when a company does everything in its power to
mitigate the risk and ensure nothing goes wrong. For example, if a company wants to avoid
injury on the construction site, it might spend extra time and resources on training its crew.
o Transferring risk: Companies transfer the risk when they don't want to be responsible for
solving the issues or challenges it might present. Though sometimes expensive, businesses
might pay more for insurance or develop a contract that states subcontractors will respond
to any risks if they present themselves.
o Avoiding risk: Avoiding the risk, by changing the project's design or location, is often the
first thing that companies and businesses try to accomplish because it can save them the
most amount of time and money. However, companies sometimes have to perform a cost
analysis on the risk, because changing the project or moving it entirely might cost them
more in the end.
o Accepting risk: If a company exhausts all other options, it's possible they might need to
accept risks that are out of their control. For example, if there's a risk that material prices
might increase and the company can't prevent the risk, it can try saving money in other
areas of the project to better prepare its budget.
4. Establish the risk management plan
Once you understand your risks and response strategies, it's important to compile them into
a cohesive document that team members can easily interpret and consult when necessary. The
document should include helpful information, such as steps individuals can take to correct the risk,
resources that can help them and if they should contact certain project officials. It's also beneficial
to have the risk management team conduct periodic risk surveys and frequently update the risk
management plan to ensure they account for all potential challenges or problems.
5. Evaluate and revise
Once you've had time to practice using the risk management plan, it's important to evaluate
it and make sure it's benefiting the project. While the project is ongoing, it's also helpful to talk
with the construction crew and company executives to understand their thoughts and feedback on
the risk management plan. If they have any suggestions on how to improve it, it's beneficial to
make adjustments to the plan so it can be more effective. Evaluating and revising the risk
management plan can also help you create new plans in the future more quickly and efficiently.

WHY IS RISK MANAGEMENT IMPORTANT?

Risk management is a proactive approach to evaluating potential risks in your operations
and developing solutions to help avoid those risks. A properly crafted risk management plan
outlines specific steps you can take to avoid safety and business interruption risks. Some potential
construction safety risks are:

o Falls
o Hazardous materials, such as asbestos, silica and others
o Burns and electrical incidents
o Noise exposure
o Equipment failure
o Fire and property damage

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 According to PropertyCasualty360, the largest number of fatal occupational injuries
occurred in 2019, increasing 2% nationwide during the year, and the construction industry had the
largest number of fatal work injuries. As risks continue to increase, it’s important to be proactive
in protecting your workers, clients and your company.
There are many benefits to creating a Construction Risk Management and Fire Prevention Plan,
including:
o Increased safety and wellbeing of workers
o Improved company reputation
o Avoid costs associated with workplace accidents
o Prevent damage to machinery, property and materials

FUNCTION OF PROJECT RISK

MANAGEMENT TEAM IN CONSTRUCTION
Project Risk management Team is a relatively new branch, but it’s a vital part of
construction. Approaching your construction projects from a different perspective is essential.
Take your project seriously if you’re determined to invest in profitable solutions. Risk
management Team will ensure you start constructing your plan in advance. You will predict
possible risks and similar outcomes. Once you determine what aspect of your ideas are risky, you
can begin to work toward modifying them.

Avoiding problems on the construction site is vital. That way, you will ensure no one will
get hurt. Another benefit of risk management is that it helps you save lots of finances. It points out
where to look and what’s not going to work. Every experienced project manager should consider
the importance of risk management. Once you start working towards preventing damage, it will
be easier to meet deadlines and complete your vision on time.
1. Planning for success
As the name says, risk management will help you identify and manage all the risks. With
a proper approach, you will determine all eternal and external factors that can potentially doom
your plans. Low risks, in most cases, barely affect the project costs. They won’t be a major problem
once the construction begins.
They do not influence the course of performance and are easy to avoid. It doesn’t take
much to find alternatives that will eliminate it, and thus it will have no impact on the construction
schedule. Moderate risks will take more time to manage. They require more investment, and they
are most likely to disrupt the main course of your plans.
High risk, on the other hand, is harder to predict. It will create a large decrease in budgets,
and disrupt your schedule to the point where you won’t be able to meet your deadlines. Once you
identify the risks, you will determine the course of your project.

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2. Communicating with other people who are included in the project
To ensure your project runs smoothly, you have to establish regular communication with
other members of your team. You will also have to discuss the plans with stakeholders and people
who choose to sponsor the project. That way you will be able to set a standard your sponsors want
you to reach. Negative outcomes will affect people who choose to invest a large amount of money
for this project.
Regular communication will ensure everything runs smoothly. You will be able to
guarantee every step of the process gets completed without delays and interruption. By resolving
any potential risks in advance, you and your employees can intervene on time. That way, you will
ensure everything goes according to plans.
3. Maximization of the results and meeting deadlines
If you define risk management methods on time, you will maximize the chance of success
for your company. Once you eliminate ideas that will negatively impact your plans, you can focus
on tasks that need to be finished on time. Elimination of the potential risks enables you to stay in
the budget and avoid spending more resources than you need.
You will also meet your deadlines. Nothing can disrupt a project like the lack of time your
employees have to complete it. Rushing your workers to face the impossible will lower the quality
of their work. That is not acceptable to investors, and your company will suffer the consequences.
A detailed analysis can help you set priorities.
It will also minimize the amount of time you spend on activities that will not give you a
return on investment. Without an adequate risk management strategy, your projects will become
vulnerable. Once that happens, it will be hard to fix the damage and finish the work on time.
4. Prediction of possible outcomes
A risk management solution will enable you to take steps before accidents happen. Instead of
working on the solutions for existing problems, it would be much better if there were no problems
at all. Of course, not every strategy is perfect.
You might overlook some important aspects of your plan. However, as long as you follow the
procedures from the moment your workers step on the construction site, you won’t have any
problems.
Create a team of experts that will work on the project with you. Building and construction
lawyers should always be by your side. You will often need to consult them on legal matters related
to your construction plans.
5. Protection of your employees
Construction workers are in constant danger once they approach their working
environment. Although protective equipment is a necessity, it can protect only from different
accidents. In some cases, it may not be enough to protect a worker.
Effective risk management will lower the risk of workplace accidents. When you determine
and work toward avoiding the risks, your team will feel a lot safer on the construction site. Apply
strategies you believe are the best, and the risk will be on the minimum.

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REFERENCES:
https://www.levelset.com/blog/construction-risk-management/
https://www.indeed.com/career-advice/career-development/risk-management-plan-construction
https://www.projectmanager.com/blog/construction-risk-management
https://www.grangeinsurance.com/tips/construction-risk-management
https://propertydivision.co.uk/importance-of-risk-management-in-construction/

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