RESEARCH ROUNDUP
Risk Management Strategies
I
n 2011, McGraw-Hill Construction
challenge of increasing productivity
published a SmartMarket
and profitability in the construction
ReportTM titled Mitigation of
industry by responding to risks as they
Risk in Construction: Strategies
become evident. Given that Partnering
for Reducing Risk and Maximizing
also seeks to improve productivity and
Profitability. Through surveys and in-
profitability, it is worthwhile to use this
depth interviews with representatives
study to explore how Risk Management
from owners, contractors, A&E firms
can fit within the Collaborative
and risk management experts, this study
Partnering structure.
explored the various strategies being used to manage risk on construction
What is Risk?
projects. The surveys revealed that
In this study, “risk� is defined as the risk
many strategies are being used to assess
of increased cost, project delays, and/
and mitigate risk, and several best
or litigation and claims. According to
practices emerged.
those surveyed, the greatest risks to a
When asked if they had experienced the following, respondents answered: -Delayed completion: 84% -Budget overruns: 86% -Claims or litigation: 76% 21% run over shedule on more than half of their projects.
successful project are design/project The authors recommend that construction
changes and scope creep, budget/cost
The impact felt by varied risks is
industry players should: 1) address risk
overruns, project process approvals,
differentiated according to the player
management early, 2) communicate
safety, and site conditions. Of those
surveyed. For instance, owners feel
with the team throughout the project,
surveyed, 84% had experienced delayed
that the greatest negative outcome for a
3) implement risk assessment and
completion on construction projects,
project stems from schedule overruns.
mitigation measures beyond simple
86% had experienced budget overruns,
Contractors feel that budget overruns
checklists, 4) embed risk management
and 76% had experienced disputes and
pose the greatest risk of negative impact.
in the organization’s culture, and 5)
claims. 21% of those surveyed run over
How can you use this in your Partnered
assess the value of formal collaboration
schedule on more than half of their
Projects?
in projects.
projects. 19% run over budget with an average overrun of 14% of the project
Follow the recommendation above
The study is a great exploration of
cost. And the average claim is valued at
and address risk management early.
how actual players are meeting the
$3 million.
Experience has taught us that teams
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Partnering Magazine September/October 2015
www.partneringinstitute.org