The Complete Guide to Risk Management in Construction Projects
Protecting your employees, clients, and other passersby is critical for construction managers. Risk management in construction projects cannot be overlooked. And, it should be well-planned before the project even begins. Consider the types of risk your company will face and the factors that increase risk as you explore ways to avoid accidents, injuries, and fatalities during your projects.
What Is Risk Management in Construction Projects?
Every company carries risks in construction projects. The goals of risk management in construction projects include:
- Identifying those risks;
- Minimizing them where possible; and
- Protecting workers and others as well as the company itself from the fallout.
Risk managers must create detailed plans that are easy to follow to control risks. At the same time, they must make the right decisions on how to deal with risks.
Importance of Risk Management in Construction
Risk management in construction is paramount. If construction companies take appropriate measures to guard against risk, they can drive employee productivity and efficiency. These companies can provide their employees with safe work environments. They can avoid OSHA workplace safety penalties as well.
Construction Industry Risk Types and Factors
Before you can create a plan to manage risk, you must identify the types of risk that are prevalent on every construction project. Here are five major risk types and factors in construction:
1. Workplace Safety
Every construction site will have hazards that pose risks to workers and others who are in the work zone. These risks can include falls from heights, exposure to dangerous chemicals, and explosions. Workplace safety risks can be challenging. But, with proper training, workers are well-equipped to limit their impact.
Financial risk is another concern for risk management in construction projects, which must be dealt with before it happens. Some examples include:
- Unexpected increase in cost
- Changes in the economy
- Lack of sales
- Issues with payments from clients
- Competition from other construction firms
Financial dangers can compromise your business’ bottom line. Therefore, they must be managed accordingly.
3. Project Management
A construction project can quickly go off the rails if you’re not careful. In fact, common project management issues that can arise include:
- Mismanagement of time or resources
- Failure to meet deliverables
- Lack of jobsite policies
Project managers are responsible for keeping construction jobs on track. Failure to do so can cause financial losses for a business. It can also lead employees to rush to make up for lost time during projects, increasing the risk of workplace safety accidents, injuries, and fatalities.
Legal risk can increase if a contract goes unfulfilled. In this instance, a company can face a lawsuit due to its inability to complete a contract. There is also legal risk associated with OSHA violations. If a business does not comply with OSHA mandates, it is subject to fines and other legal ramifications.
Environmental risk comes in the form of natural disasters, which can delay work and damage a project site. For example, a hurricane or tornado can prevent a company from completing a project on schedule. Or, a natural disaster can put the business and its employees at risk of serious injury or death.
Risk Management Process in Construction
For those who want to capitalize on risk management in construction projects, here are steps you can take to do just that:
- dentify risks. Find jobsite risks and consider how they can harm your business, its employees, and others. In addition, consider how these risks can impact your bottom line and business operations.
- Evaluate the consequences associated with risks. Prioritize risks based on their probability of materializing.
- Develop a risk control strategy. Establish a strategy that allows you to avoid, transfer or mitigate risk. There may also be times when you need to create a strategy that requires you to accept and manage risk.
- Craft a risk management plan. Make a plan that accounts for each risk, its probability of materializing, and how to address it.
- Create contingencies. Have multiple backup plans in place relating to each risk.
Risk management in construction projects is ongoing. As such, you should review your risk management process regularly and update it as needed.
Benefits of Risk Management in Construction Industry: Here’s a Closer Look
Key reasons to consider risk management in construction include:
- Improved Workplace Safety: Risk management can help you detect and address risks before they put your business, its employees, and others in danger.
- Reduced Operating Costs: You can teach your workers risk management best practices, so they can become more productive and efficient than ever before. Then, your workers can perform everyday tasks with precision and care and help you reduce your operating costs.
- OSHA Compliance: You can comply with OSHA requirements, as well as avoid fines and violations.
Risk management can deliver immense value to construction companies and many others. By exploring available risk management options, you can find one that aligns with your business requirements.
What Risk Management Options Are Available?
When looking at the various types of risk, you must consider how to handle each one. The decision on what step to take will be unique to each risk faced. For instance, you might decide to turn down a project to avoid risk. This is one option to protect the company when the level of risk is too high.
Another option in risk management in construction projects is to transfer risk to someone else. The client may need to bear some of the risk, especially if their decisions are at least partially the cause of it.
Mitigate risk whenever possible. This may mean having backup plans in case an original plan fails. You may need to hire more workers or add in extra work time as a buffer for potential problems.
In some cases, your only option may be to accept risk. You prepare as much as possible, but you must move forward even if you can’t eliminate all of the potential problems.
One area where you can reduce risk is in the safety of your workers during operations. When they are working on aerial lifts or other aerial work platforms (AWPs), it is critical that they know what they are doing and how to look for and recognize problems.
Enroll Your Workers in AWP Certification Training
AWP certification training can offer a great starting point for construction companies that want to lower risk and improve workplace safety and productivity. The training enables workers to become OSHA-approved AWP operators. From here, these workers can safely and effectively use AWPs. Plus, they can lower the risk of AWP accidents and similar issues.
CertifyMeOnline.net can help you get your workers certified and ensure they know how to operate AWPs and meet OSHA requirements. We offer the following certification training courses:
- Train the Trainer Certification
- Aerial Lift and Scissor Lift Certification
- Class 7 Aerial Lift Certification for Rough Terrain Forklift Trucks, Straight Mast Forklifts, and Extended Reach Forklifts
- Fall Protection