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Risk Management on the Construction Jobsite

Shelly Cochran
April 5, 2024

Construction can refer to towering skyscrapers, bridges, and backyard decks. No matter the size of the construction site, there are risks associated with building. They range from common safety hazards to unexpected financial setbacks. With so many challenges that could potentially derail even the most well-planned projects, is there a way to protect yourself? That's where risk management for construction site settings provides a roadmap to identify, assess, and mitigate potential threats. Let's look at some fundamental principles and practical strategies to keep your next project on track.

Why Bother with Risk Management at the Onset of a Project?

In construction, every project comes with its risks and uncertainties. The potential for problems is always present, from minor setbacks to major accidents. However, with adequate risk management strategies in place, you can minimize these risks, ensuring workers' safety and the project's successful completion.

Understanding the Most Common Construction Site Risks

Do you know the risks prevalent on construction sites? We can broadly categorize these risks into five key areas:

  1. Safety hazards. Construction sites are dangerous. Hazards include falls from heights, the potential for electrocution, machinery accidents, and chemical exposure. Sometimes, the structure itself fails, and a collapse creates danger.
  2. Financial risks. Budget overruns, fluctuating material costs, and project delays wreak havoc on a construction project's financial health. The same goes for working with clients who frequently change their minds or add to the build. Add quality control problems that require you to rework sections of a project. Moreover, the financial challenge of labor pool fluctuations could force you to pay more than you anticipated for skilled and unskilled labor.
  3. Environmental factors. Challenging weather conditions, ecological concerns that may not become evident until after beginning the job, and regulatory compliance issues may pose significant challenges. Think about pollution and erosion.
  4. Legal and regulatory compliance. Accidental non-compliance with local regulations, changing zoning laws, and outdated building code compliance lead to costly fines and subsequent delays.
  5. Supply chain disruptions. Do you remember when the ships were lined up on the West Coast at the ports? Plenty of building supplies were part of the cargo. Depending on external suppliers and subcontractors exposes construction projects to these supply chain disruptions, including material shortages.

How Risk Management in Construction Settings Protects the Project and the Company Undertaking It

With so many different risk factors, what can you do? Effective risk management emerges as a necessity for successful project execution. Before you even begin a project, thinking through the eventualities is significant. This approach minimizes losses because it lets you identify and mitigate potential risks early. As a result, you may minimize financial losses for your business and avoid costly project delays.

Risk management for construction site settings also boosts safety. When you prioritize safety through risk management measures, the well-being of workers takes the front seat in budget and time frame discussions. Therefore, it reduces the likelihood of accidents and injuries. You focus on proactive risk management by curtailing potential work stoppages due to injuries or accidents. Doing so leads to smoother project workflows, streamlined processes, and improved overall project efficiency.

And, because successfully managing risks demonstrates professionalism and reliability, you protect your company's reputation in the industry. Therefore, you are more likely to be tapped for future projects. Part and parcel of this approach lead to meeting stakeholder expectations. Clients, investors, and regulatory agencies increasingly expect robust risk management practices, making it a crucial aspect of project delivery.

Here is What Effective Risk Management Looks Like

What goes into identifying potential risks, assessing their likelihood and impact, and implementing strategies to mitigate or eliminate them?

  1. Risk identification. Begin by identifying potential risks specific to the project. Consider factors such as the location, project scope, and complexity. We recommend brainstorming sessions, site inspections, and consultations with stakeholders. Even if you've been in the business for decades, a client may know something about a project site that you don't.
  2. Risk assessment. Identifying and assessing risks are not the same step. Once you identified risks, assess their likelihood and potential impact on the project. Use qualitative and quantitative methods to prioritize risks based on their severity and the likelihood of occurrence. For example, building a commercial two-story deck during the rainy months will have a larger risk of encountering erosion problems. The same project will likely not face this issue during the sunny months when no rain clouds are in the sky.
  3. Risk mitigation. With risks identified and assessed, it's now time to develop strategies to mitigate or eliminate these identified risks. Possible steps for mitigation could involve implementing safety and environmental protocols, contingency planning, diversifying suppliers, or securing insurance coverage.
  4. Communication and collaboration. Effective communication and collaboration between project stakeholders are essential for identifying and addressing risks promptly. Establish clear lines of communication and ensure that all parties know their roles and responsibilities in risk management. Most importantly, have one go-to communicator for the client. It cuts down on missed messages and frustration.
  5. Monitoring and periodic review. Continuously monitor project progress and reassess risks as circumstances evolve. Things change quickly on a construction site. Regularly reviewing risk management strategies to ensure their effectiveness is critical to make adjustments as needed.

Best-Case Outcomes of Proactive Planning

Anticipating potential risks and implementing preventive measures has plenty of excellent outcomes. When project teams minimize disruptions, they safeguard against expensive setbacks. Teams with a good understanding of risks early in the project lifecycle allow sufficient time to develop and implement mitigation strategies.

As a result, you save the business and the client money. Something as simple as avoiding paperwork delays, reworking, and dealing with legal liabilities will save time and money throughout the project. The same goes for the outcome of improved safety. By prioritizing safety in the planning phase, construction teams reduce the likelihood of accidents and injuries on-site, creating a safer working environment for all involved.

Before you even break ground, clients and investors will be confident in your handling of the project. Simply demonstrating your commitment to delivering a successful project in the early planning phase goes a long way toward satisfying stakeholders.

Here are Some Practical Strategies for Construction Site Risk Management You Can Implement Today!

Armed with risk management principles, you can implement practical strategies to navigate potential pitfalls. These practicals in risk management for construction site settings may sound like common sense, but they result from successful planning.

  1. Safety training. There are plenty of protocols regulatory bodies have devised. However, they mean nothing if your workers don't know them, don't care about them, or don't realize you take them seriously. Invest in comprehensive safety training for all personnel and enforce strict safety protocols to minimize the risk of accidents and injuries.
  2. Contingency planning. Develop contingency plans to address unforeseen events such as adverse weather conditions, supply chain disruptions, or labor shortages, ensuring project continuity. If a full day of rain makes work on the structure impractical, what other tasks can the team take on? You want to keep the construction site open for the day.
  3. Contractual risk allocation. Clearly define roles, responsibilities, and risk allocations in contractual agreements with subcontractors, suppliers, and other stakeholders to mitigate legal and financial risks. Communicate the risk allocation to the client and the investors. Once they sign off on these plans, they should not blame you or hold you liable for a problem that a supplier is creating.
  4. Invest in technology. Embrace technological solutions. Examples include Building Information Modeling (BIM), drones, and IoT sensors to enhance project visibility, identify potential risks early, and optimize construction processes. Don't approach a contemporary construction project with the tools from the last decade.
  5. Buy insurance coverage. It's expensive, but you can't go forward without it. Buy comprehensive insurance coverage tailored to construction-related risks, including general liability insurance, workers' compensation insurance, and builder's risk insurance.

Risk management is a critical component of successful construction projects. By identifying, assessing, and mitigating risks, construction teams enhance safety, minimize disruptions, and safeguard the project's timeline and budget.

From implementing a construction safety plan to embracing technology and innovation, effective risk management requires a proactive and collaborative approach. Find out how we incorporate these steps in our deck waterproofing, construction, and design processes.