Successfully complete a project through Strategic Project Management

Construction is a highly risky venture. Each individual construction project is unique in its on right, and it comes with a several occupational hazards; a series of opportunities and threats. Identification of such risks is a tedious tasks, and finding solutions is as equally difficult; however it is not practically impossible.

Through careful planning and execution, a project can be completed with minimum blemishes. When a potential risks manifests into reality, it has the possibility of disrupting and derailing the entire project. Disasters can be averted, if the responsible agents properly assessed, monitored and controlled these risks proactively, once the slightest traces have been identified.

It should be noted that risks arent always a negative factor.

In the business world, it is believed that the end reward is greater in conditions with extreme risk. That does not mean that managers should dive in and shoulder every risk that could seem beneficial. Calculated risks are always advised which the project can face without leading to losses.

Effective identification and management of risks can yield more profits, which speeds up the payback period and the return on investment. It establishes healthy relationships with investors and clients. Satisfied investors are motivated to invest in future projects, which can be seen as means of expanding your business into new markets.

Every person who enters into the construction industry is aware of the fact that it has its own set of inherent risks. The Murphy’s Law is highly applicable.

This law dictates that whatever that can go wrong, will eventually go wrong. Therefore understanding what could happen is always a weapon which can be utilized when reality actually dawns. These risks may manifest in the form of financial, contractual, operational and environmental entities, and is caused by both internal and external sources.

The initial risk that is of concern are the safety hazards which might compromise the wellbeing of construction workers. Statistics dictate that the average rate which construction workers sustain injuries during projects have increased during the past few years.

This is a concern for the workers, as well as the management. Most contracts are obligated to provide medical aid during these circumstances. Therefore, it is an additional expense which has to be incurred.

Change orders are an obstacle that everyone in construction has to deal with at some point. The term “change order” is a technical term for an amendment to a construction contract. They often cause surprise delays and increased costs which can cause frustration among everyone on the construction team.

These change orders are often due to unforeseen conditions, errors, or owner requests. While some change orders are inevitable, there are others that you can avoid if you take the right steps.

Other threats that are ominous are incomplete drawings and a poorly defined scope, uncertain and unknown site condition, poorly worded/ documented contracts which has significant loopholes, material cost rise due to inflation, labour scarcity, damage or theft to equipment and tools, natural disasters which might destroy the achieved progress, conflicts and issues during negotiations with sub-contractors and suppliers, unavailability of building material and the overall weakness in the project’s management structure.

Once the potential risks have been recognised, it is best to sit down and evaluate each individual risk, severely considering the probability of such a risk becoming a reality, and the ultimate impact which it might leave on the project. Rank the impact, and the probability of each risk based on the nature of the hazard, on a scale of high, medium and low.

Extreme priority needs to be given to risks which have a higher risk, and an even higher probability of occurring. The priority order can be determined in accordance to that criteria. Consider and factor in the amount of time, money and work that each risk required to be dealt with effectively. One a rank is given, it is best to review each element carefully, and determine which could be avoided, eliminated, reduced, and which can be transferred or accepted as an inevitable loss.

Avoiding the risk is what a project manager should strive for. This entails turning down projects which is impractical, and disastrous in the long term. Furthermore, negotiations on the contact can be made to remove risks which might affect the managers side of the spectrum. There is no shame in saying no to a project with dignity, specially if the risks exceed the potential rewards.

Transferring risks is another option. The company which was handed the contract might not be the ideal fit to manage the particular risks which the project entails. Associate with other stakeholders and determine which entity on the project team is best suited to shoulder such a risk, since the resources available to manage disasters differ from company to company.

Discuss with the client what risks they will assume and which ones you will be responsible for managing. Work with your insurance provider to determine which risks are covered under your current policies along with other options for protecting your company against risks.

If the risk is inevitable, the most practical goal would be to mitigate it as much as possible. Eliminating and reducing risks takes careful planning, and there are instances where it cannot be eliminated. Breakdown each risk into actionable items. Refrain from overcommitting resources to handle multiple risks. Additional resources might need to be acquired for such instances. Hiring more workers or renting additional equipment might give ease to manage these risks effectively.

Finally, if all the above precautions fail, what is left is to accept the risk. Agreeing to accept is a decision which should never be taken lightly. It might seem dignifying to accept a few projects with low impact and low probability risks.

Agreeing to accept the opposite without any type of mechanisms to manage and mitigate risks will become detrimental to the project, which ultimately will bring down the company’s bottom line.

Good risk management requires a high level of collaboration and communication with all parties involved.

Keeping everyone on the same page and working together will allow you to identify and manage risks before they become a problem.

Remember, risks can lead to great rewards when effectively managed. Therefore, take calculated risks, the ones which actually makes a difference.