Risk Management in Building Construction Projects
Risk Management in Building Construction
Question 7
a. Identify Four Areas of Risk Associated with Building Construction Projects
- Resource Risk: Insufficient access to trades or material supply
- Financial Risk: Underestimated budget
- WHS Risk: Safety issues, such as working at heights or in confined spaces
- Market Risk: Cost overruns
- Political Risk: Changes in political parties may lead to changes in government policies regarding building construction, which will affect the company’s development planning.
b. Describe the Policies and Procedures You Will Use to Manage Financial Risk in a Construction/Building Project
- Develop a Plan: Estimate how much time and money the project will require.
- Perform Quality Control Tests: Ensure regular and scheduled inspections before proceeding any further.
- Keep Good Records: Establish a good record-keeping system to keep track of actual spending vs. the estimated budget.
- Adequate Project Scheduling: Efficiently monitor and supervise the project process. Allocate the right resources to the right place at the right time.
Question 8
a. How Does a Professional Builder Document Actual Progress Against Project Estimated Schedules?
- Review your pre-planned documents of the progression of work and keep them in line with the actual progress.
- Depending on the project and the nature of construction and building work, the pre-planned schedule is often updated on a regular basis, then compared with the previous one for evaluation purposes.
- Tools that may be used are Microsoft Project or a simple Precedence diagram.
b. Describe One Recommended Response for Remedial Action When Required
- Focus on the critical path items, efficiently schedule the critical path activities, and crush the program if needed.
Question 9
a. Explain the Process a Professional Builder Could Use to Modify the Program (Schedule) and the Risk Management Plan to Reflect Changing Project Objectives (i.e., Change to the Scope of Works)
- Collect all available information required to plan the change.
- Consider a number of scenarios, analyze and evaluate the risks involved, and any new risks that may arise.
- Make an informed commercial decision, as the decision needs to be feasible as well as maintain the project and business goals.
- Keep all records well-documented and communicate the decision to all who need to know. Get feedback if necessary, then plan and implement the change/modification.
b. Explain How This Process Is Managing the Risks
This can be explained with the Plan, Do, Check, Act cycle:
- Plan: Identify the problem or the issue. Perceive the final outcome. Gather the required data to achieve that outcome.
- Do: Conduct the action. Make the improvements. Implement the changes.
- Check: Review the actions, improvements, and changes. Are they all positive? Were there any negative consequences?
- Act: Document the improvements. Lock in the changes. If there were any negatives, conduct the planning process again.
Question 10
a. Describe the Process for the Review of Project Risks (Outcomes)
Reviews can be undertaken using ‘lessons learned’ that are documented from a risk perspective, together with any other aspects of the project where there have been quality issues and amendments. This can be achieved through:
- Focus groups enlisted from the project team members, project manager, and higher authorities.
- Questionnaires to capture responses to pertinent questions about processes used to manage risk on the project.
- Reports capturing the findings and recommendations for future projects against specific risk criteria, aligned with the risk categories identified in the Risk Register.
b. How Will This Help to Determine the Effectiveness of Risk Management Processes and Procedures in Future Projects?
This documentation informs the continuous improvement cycle and forms the basis of the iterative process of preparing for risk management of subsequent projects.