Construction work is one of the riskiest professions. A recent study shows that in FY 2022-23, there were 5,61,000 non-fatal work-related injuries and 135 deaths due to work-related accidents. These numbers show the importance of managing risk and implementing safety measures to avoid untoward incidents. 

Construction risk management involves identifying and mitigating risks across the project lifecycle. Right from safely procuring Norfolk sand aggregate to offering fully-equipped 10-person welfare units for your workers to rest, risk management depends on a variety of factors. 

Majorly involving five stages, the process includes risk identification, risk assessment, mitigation, continued monitoring and reporting. Let’s explore the details of risk management in the construction sector and how to make your site safe.

What Makes a Construction Site Risky?

Let’s look at some common construction site risks, including:

Financial Risks

These risks jeopardise the construction company’s financial health and include overshooting the initial budget estimates, extending the timeline, risks associated with labour shortage, material availability, on-site burglary, and equipment accessibility and exceeding project scope. 

For instance, if there is a supply chain issue with Qonnect rivets, which might be one of the smaller things compared to aggregates or timber, but plays a huge role in ensuring structural integrity, the project can be delayed by a few days, leading to financial losses. 

Health and Safety Risks

The primary risk associated with construction is the health and safety of the workers. This includes trips and falls on any tool, such as pliers, or nail guns lying around on the ground, electrocution and machinery accidents.

Furthermore, the usage of poor-quality rivets, screws, drills and other equipment can also lead to accidents in the workplace. As a result, it’s crucial to ensure that you are only using high-quality components from trusted brands like Quonnect Rivets, Stanley fasteners, and more.

Workers who work on old buildings are often exposed to asbestos and other hazardous materials like paint, solvent, glue, fuel and cement dust. 

Project managers must ensure that workers have access to proper safety gear (high visibility jacket, helmet, harnesses and boots), have scaffoldings when workers work at height and on-site accommodation that complies with HSE regulations.

Project Delays

Project delays are a common construction risk that can have large repercussions. Delays happen due to several factors, such as unforeseen climatic conditions, supply chain disruptions, security issues, and labour shortages. It can increase project cost, reputational damage and even lead to contractual penalties.

Effective financial risk management involves assessing future stability under different potential scenarios and how to avoid those potential risks.

5 Steps to Construction Risk Management

Here is a look at the five strategies of construction risk management:

Step 1: Risk Identification

This is the first step in the construction risk management process. It involves working with historical data and identifying any negative loopholes that lead to project delays. In this stage, you’ll also note the strengths of the upcoming project. A SWOT (strengths, weaknesses, opportunities and threats) analysis is usually done by the project manager, and it’s a formal procedure that involves the important stakeholders across the entire project lifecycle. 

Step 2: Risk Assessment

Once you’ve identified the risk, you need to evaluate the probability of it happening on current and future construction projects. Usually, two types of risk assessments are undertaken: qualitative and quantitative. Compare the obtained results during the risk identification process and how they compare against the risk criteria. 

You must also prioritise risks based on how they will impact your business and its impact on the project timeline and budget.

Step 3: Risk Mitigation

This is the most important part of the risk management plan in the construction industry. These are the actionable insights that must be taken into account. Here are a few ways to mitigate potential risks:

1. Avoid the situation you are not equipped to handle; find a way around it. 
2. Look for a way to minimise the effect of the risk, like training employees or introducing new safety measures.
3. Transfer the risk to any other stakeholder who is better equipped to handle it.

Step 4: Continued Monitoring of Risk Assessment

Risk doesn’t follow a linear path; even when you try to instil all the precautions, you cannot eradicate risks 100%. Always have a contingency plan, if something doesn’t work, you must always have a plan B, C and more. 

By constantly monitoring risks and potential pitfalls, you can minimise the chance of risk escalation and take timely risk response. 

Step 5: Reporting

Documenting, recording and maintaining a risk register helps construction companies with future projects. The entire risk management process should be documented, as it will be the framework for all upcoming development work. Some of the risks are common, and having their solutions handy will help you expedite their solutions and reduce delays and financial loss. 

Top Benefits of Risk Management in the  Construction Sector

1. Better worker safety
2. Improved work efficiency
3. Better financial outcome 
4. Save a lot of time and resources

Final Words

Risk management has become extremely common in the construction industry, as more companies are waking up to the benefits of undertaking due diligence. If your project is constantly plagued by delays, you might lose bids to your competitors, making you lose money and reputation.

Project managers and the risk management team are responsible for implementing risk analysis and its remedial implementation. Don’t forget to take a risk analysis before starting your next construction project.