When people consider risk as it relates to construction of public works projects, they typically think of a project's physical aspects, such as “changed conditions” or “unproven technology.” They think of “surety bonds” and “worker safety.” Yet this view ignores the fact that most risk results from a lack of communication and information. Therefore, public works agencies and construction managers must adopt a comprehensive, institutional approach to identifying and mitigating risks that may be less obvious but can disrupt projects nonetheless.
What follows is an attempt to identify areas in which risk can occur within a construction management program and offer recommendations for addressing various risks. Based on these recommendations, public works departments and construction managers can prepare checklists to monitor their programs.
Ultimately, the industry must take this process to the next level by quantifying risk through such means as a survey of construction managers. Once risk can be quantified, public works departments and construction managers could use such a tool to measure the integrity of construction management programs.
Risk can be defined as uncertainty regarding an occurrence of an event. In construction management programs, risk typically results from inadequate communication and lack of information, particularly when no established process exists to facilitate communication among owners, architects, designers, contractors, and stakeholders.
The process of mitigating risk can be divided into four steps: identifying and classifying risk, analyzing risk, responding to risk, and monitoring risk. Individual risks can be classified according to one of nine categories: corporate environment, ownership, relationship management, project management, scheduling and estimating, scope and requirements, management of information systems, technology, and personnel.
By employing the four steps and applying them to potential risks within the various categories, project owners and construction managers can monitor and manage risks efficiently.
Within the corporate environment, risks relate mainly to organizational changes, such as mergers, downsizing, or new internal operating procedures, all of which can cause confusion and impair efficiency. Recommended approaches to address such risks include establishing standard operating procedures at the beginning of a program and developing a succession plan before any restructuring.