Constructing anything involves risk. This risks need to be managed and controlled as best as possible, although it is not always possible to foresee every eventuality.
In many ways construction actually carries less risk than other projects, many of the variable are known.
There are Many Reasons Why Risk Management is Essential
#1. Issues Regarding Completing on Time
Most construction contracts stipulate an end date and include a penalty if the project is not completed on time. This increases the pressure on contractors to cut corners in order to finish on time.
#2. Disputes After the Job or Even During it
It is quite possible that the expectations or understanding of a client are not the same as the build in progress.
This can cause disputes which need to be resolved quickly before they prevent the project from finishing on time.
#3. Competition for the Work
The high level of competition in the construction industry can mean that lower quality materials are used or corners are cut. This can be dangerous to the final build especially if the issues aren’t noticed until too late.
#4. Low Profit Margins
Just as the high competition can force cost cutting measures so can the low profit margins experienced by most construction firms.
Again this can lead to an issue regarding cutting corners to get the job completed.
#5. Safety Issues
There are huge arrays of things that can go wrong when heavy machinery is in use. Every person involved in a construction project must be properly trained and aware of the risks and how to minimize them.
An incident can shut down the project until the issue has been resolved. It can also cost your insurance company a lot of money; or you if they refuse to pay.
#6. Need for Return on Investment
Most firms need to borrow capital and turn to companies like Stornoway Captial Partners to get the best possible deal and assistance with their project.
However, this does come with risk to the lending firm and the construction company. Both can suffer huge losses if the project goes wrong.
#7. Health & Safety
There are also health and safety risks concerning the processes being used and the materials. These must all be assessed and confirmed safe before construction workers can get started.
Dealing With The Risks
The key to handling these risks is to make sure you are aware of what can go wrong before the project starts and have a plan to deal with any issue.
The best risk management plans will prevent an issue from happening but this is not always possible. You must, therefore, have a contingency plan to allow the project to move forward when an unexpected risk has happened.
It can be daunting to undertake a construction project once you are aware of all the risks. However, with careful planning it is possible to minimize the risk and the impact of any incident.
You may prefer to get professional advice regarding all the potential risks; this will help to ensure you are fully prepared.