Page 46 - Urban Construction Project Management

Risk Assessment and Problem Solving

2 (The bane of every construction project.)

RISK MANAGEMENT

Risk management is a methodology that has gained formal acceptance in construction
project management circles during the last several years. Risk management must be
done throughout the construction project. A risk management plan will provide the
guidelines for risk management for the construction project team. The risk management
plan will also serve as a baseline for the construction project to track variances, vali-
date assumptions based on objective information and the potential probability, and
impact of the risk of the events. Risk management, monitoring, and reporting need to
be integrated into project cost control and project management reporting systems for
the project. On large and complex construction projects, such as those encountered in
the urban environment, risk management must be performed in a structured manner, or
matters will soon become unwieldy. In many respects, the construction of a large com-
plex project is about identifying, mitigating, shifting, and managing project risks.

Risk can be defined as any event that is likely to adversely affect the project’s ability to
achieve its defined objectives, which is: completing the project on time, within budget, at
high quality, and with a satisfied client who is willing to give the construction manager/
general contractor (CM/GC) repeat business and a good reference. Risk is also the uncer-
tainty of the outcome of an event, which can cause a potential problem to the project or
project team. The aim of risk assessment and management is to ensure that risks are iden-
tified at project inception, their potential impacts allowed for and, where possible, the
risks minimized or eliminated. Risk management planning describes how risk will be
identified, structured, tracked, acted on in a timely and prudent manner, and resolved.

Risk management plans should be in place to deal quickly and effectively with risks as
they arise as follows:
1. Identify and assess the risks in terms of impact and probability.
2. Identify project risks and categorize them.

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