Types Of Risks In Construction Projects; An Overview

Risk is defined as an uncertain event or a situation which if arises affects a project objective. Risk Management refers to the process by which these risks are identified, assessed and managed in a way to minimize the impact on the project.

Projects cannot have zero risks which is why management of risks in construction projects focuses on risk identification, analysis and its management to minimize the effect on the project objectives.

Depending upon the size of a project, risk management may be carried out by a professional; an individual or a whole organization.

Where repairing an office space could use the services of an in house risk expert, mega construction projects in the Gulf would require the services of a whole organization that has a panel of risk experts specializing in management of construction risks. Construction claims consultants in Dubai also employ experts in the field of risk, delays and damages.

Types Of Risks In Construction Projects

The following text provides an insight into the types of risks in construction projects:

Environmental

The most important yet easily overlooked risks in the construction industry are those associated with the environment. The environment has great influence on the schedules of the construction projects. This in turn affects the costs of the project too.

Factors like vulnerability to earthquakes, occurrence of natural disasters and weather patterns greatly influence the on-time completion of project schedules. Ignoring the risks may not only cause delays in case of occurrence but it may also result in cost overruns.

Financial

Local taxes, inflation in material costs and foreign exchange rates should be considered when working on construction projects. Contracts between parties tend to minimize the risk associated with finances. Both parties (buyers and sellers) can help draft contract terms that seem appropriate to both.

Technical

In the construction industry, technical risks are all those risks that hinder the project performance. These could include a range of problems from the unavailability of resources, to incompatible or incomplete design of the project site.

Majority of these risks occur when there are omissions or mistakes in the project design. Another factor that contributes towards technical risks is the change in scope and requirements without proper processing and information flow.

Logistics

These risks are often ignored when it comes to risk analysis. It involves the mode and cost of logistics. Fuel, labor, mode of transport, everything needs to be considered when chalking out risks in construction projects.

If these risks are identified earlier on in the project or even before the actual project begins, the project team saves themselves financial damage and other consequences.

Management

Perhaps the foundation of all other risks, when you start a construction project, it is extremely important to have the right people working for you.

Your project team should consist of people who know what they are doing and how it has to be done. Hiring experienced professionals to perform work may also be a practical way to avoid technical problems.

Socio-political

From custom charges and industry regulations of the host country to the rules dictating disposal of material, every policy needs to be reviewed and followed in order to ensure faultless working of the project.

Conclusion

No project is faultless. There is always room for error in the project design. However, the project team should ensure that their design is impeccable, detailed and well-structured the team working on the projects needs to work together to ensure project success.

Due to the critical nature of the risk assessment for construction projects, most organizations acquire expert services for the jobs. While some experts offer only risk management services other well-known construction claims consultants in Dubai tend to offer comprehensive management and minimization services.

Hiring experts for the job not only tends to eliminate the chances of faulty management of risks in construction projects but expert organizations may provide a wide range of services for a smaller cost!