The Construction Risk Management Plan: A Tool to Drive Cost & Safety Reductions
Construction projects are inherently risky.
Construction risks can be both external and internal. Some of the external risks are weather, environment, theft, vandalism, natural disasters, labor strikes, and political instability. Internal risks include poor planning, illness, poor tools, inadequate technology, and lack of skills.
Construction risk management is a process in which we identify and manage the risks that may happen during the construction phase. The goal is to produce a construction risk management plan that identifies all possible risks in a construction project and outlines what should be done to mitigate them.
It should be developed before construction begins, and include details such as:
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The purpose of the plan
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The scope of the project
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Risks that may affect the project
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How to control these risks
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Who will be responsible for each risk
Why you should consider a CRMP for your project
CRMPs, or Construction Risk Management Plans, are an effective method to reduce construction costs and minimize risks in the workplace. By having a CRMP in place, you can ensure that your project is completed on time and within budget.
What to Include in Your Construction Risk Management Plan
There are seven key elements in a CRMP. These are:
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Risk identification
The first step in any risk management process is to identify the potential risks that may affect the project. This involves considering the project’s goals, scope, budget, schedule, and any external and internal factors that may impact the project. It’s important to involve all relevant stakeholders in the risk identification process, as they may have valuable insights and perspectives on potential risks.
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Risk analysis
Once the risks have been identified, the next step is to analyze each risk to determine its likelihood and potential impact on the project. This can be done using various tools and techniques, such as probability and impact matrices, cause and effect diagrams, or fault tree analysis. The goal of risk analysis is to prioritize the identified risks based on their likelihood and potential impact.
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Risk response
After the risks have been identified and analyzed, the next step is to determine how to respond to them. There are four main options for risk response:
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Avoid: This involves eliminating the risk by changing the project plan or scope to avoid the risk altogether.
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Transfer: This involves transferring the risk to another party, such as through insurance or a third-party contractor.
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Mitigate: This involves taking action to reduce the likelihood or impact of the risk. This may involve implementing controls or procedures to minimize the risk, or setting aside contingency funds to cover potential losses.
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Accept: In some cases, it may be necessary to accept the risk and move forward with the project. This should only be done after careful consideration and only for risks that have a low likelihood and impact.
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Risk monitoring and control
Risk management is an ongoing process that continues throughout the project. It’s important to regularly review and update the risk management plan as the project progresses and new risks arise. This involves monitoring the identified risks and implementing controls to mitigate them, as well as identifying and analyzing any new risks that may have emerged.
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Communication
Effective communication is crucial for managing risks on a construction project. This includes communicating risk information to all relevant stakeholders and ensuring that everyone is aware of potential risks and how they are being managed.
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Documentation
It’s important to document all aspects of the risk management process, including the identified risks, the risk analysis, and the risk response plans. This documentation can be used to inform future projects and help identify best practices for risk management.
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Training
Providing training to project team members on risk management can help ensure that everyone is aware of potential risks and how to mitigate them. This can include training on risk identification, analysis, and response techniques, as well as on specific risks relevant to the project.
In summary, a construction risk management plan is a crucial tool for ensuring the success of a construction project. By identifying, analyzing, and responding to risks proactively, project managers and stakeholders can minimize disruptions and keep the project on track.
An effective CRMP is crucial to construction projects
In conclusion, risk management is an essential aspect of any construction project. By identifying, analyzing, and responding to risks proactively, project managers and stakeholders can minimize disruptions and keep the project on track.
The seven key elements of a construction risk management plan outlined above provide a framework for managing risks effectively and ensuring the success of a construction project. By following these elements, project managers can establish a robust risk management process that helps to mitigate potential issues and keep the project moving forward.
At ACB Consulting, we are committed to helping improve the communities in which we live, work, and play – including how they are conceived, designed and created. To leverage our experience in successful construction project management, contact ACB Consulting.