Risk Management

Risk Management

BY: CHRIS GRAHAM
DIRECTOR
BRITISH VIRGIN ISLANDS

No construction project is risk-free. However, risk can be managed, minimised, shared, transferred or accepted. It CANNOT be ignored!

Once the project objectives have been set, ensuring that time, cost and quality are maintained are of primary importance to the client. Risks are events that may threaten those and therefore they need to be managed.

The principle behind Risk Management is basically that it’s better to “be prepared”. If clients and project teams accept this motto early on, they can identify and assess the risks associated with a project and prevent or “manage” them in order of priority.

The importance of Risk Management in construction is that inherently it’s a high-risk industry. Construction projects typically bring together a high number of skilled parties who may never have worked together before. These parties have their own requirements for making a return on the project, which can often conflict with the final objectives of the client.

Typically, construction projects are also unique – even if the substance of the construction may have been created before, it’s physical, social, financial and/or political environment will probably be completely new. Fully appreciating this inherent nature of construction is the first important aspect of effective Risk Management and it supports initiatives which immediately start to manage the strategic risks.

BCQS’s Risk Management strategy can be applied at any stage of a construction project but has the greatest potential to transform risks, into opportunities if applied early in the process. All stakeholders in the project should be involved in the Risk Management process to ensure that both the project objectives and individual stakeholders needs can be realised.

The four key stages of the BCQS Risk Management strategy are:

All projects involve some form of passive Risk Management, usually associated with the expenditure of a contingency fund. As these funds are almost always expended – whether problems occur or not – the introduction of an active Risk Management strategy will result in improved financial management, as well as better planning and better responses to unexpected events.

The main advantages of the BCQS Active Risk Management strategy are:

  • Improved understanding of the project by all parties involved.
  • Improved communications.
  • Enabling better informed decisions to be made.
  • Provide an objective view of the project risks upon which to base any design and construction decisions.
  • Provide a formal risk register to plan for, and actively respond to project risks.
  • Transfer responsibility of each risk to the party best placed to manage that risk.
  • Increased accountability – it generates an audit trail that can demonstrate that events have been foreseen and managed.

 

BCQS International provides structured Risk Management Workshops which can be undertaken at any stage of the construction process and have the trained facilitators skilled in management of project risks to ensure the optimum balance of cost, time and quality is achieved.

If you have any questions or if you would like to speak with us about risk management for your next project, please contact Chris Graham at cdg@bcqs.com.