Summer 2019 Advisor

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Managing Risk in Construction Management By Kristine A. Kubes, JD, Kubes Law Office

Risk management is synonymous with construction management. While there are many, many sources of risk in construction and design, we can group them into categories that are helpful for developing ways to prepare for and respond to those risks. If we boil it down, risk may present itself through people involved in the project, through words – both written and spoken, through project records (or the lack thereof), through ethics, through contracts, and through the form of disputes themselves. Consequently, managing those risks requires the construction manager (CM) to pay close attention to the following factors.

TENDING RELATIONSHIPS Despite the technology that drives the industry today, both construction and design are composed of people. In fact, people are still the most critical asset on a team, on a jobsite, in a company. But people are also the greatest sources of risk. Do they have the required skills? Are they on their game today to perform at 100%? Do they accurately understand their scope of work? Are they communicating accurately the situation in the field?

| Advisor Summer 2019

The CM does well to seek to understand the parties involved in the project – whether that is oneself, one’s client, or one’s colleague. What skills are needed for what roles? Is the best person/company in place to execute the work for success? Does the CM understand the owner’s priorities, timelines, and concerns? Risk rests in mismatched expectations, so the better the CM can understand the parties’ goals, the better suited the CM is to manage those risks.

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The CM’s role as coordinator is, essentially, tending relationships to streamline project performance. Whether coordinating trades, coordinating schedules, or sequencing work, the CM is tending these relationships and working with people. Which brings us back to the first point – the better a CM understands oneself and the people on the team, the better the CM can coordinate work and manage risk.

COMMUNICATIONS As a key communicator on the project, the CM does well to understand that one style of communication does not fit all. People learn differently and hear differently, not to mention communicate and resolve conflict differently. Consequently, the prudent CM will understand his/her own communication style first and then seek to understand that of his/her audience in order to be most effective and minimize risk. Because construction projects embody innumerable decisions by various parties, a strong written record is critical. The prudent CM stays on top of project developments by addressing issues promptly, documenting changes accurately, and following up verbal conferences in writing. In contemporary business, parties may use email as a written communication tool. Although email’s great benefit is the immediate transmission of information, email’s great risk is that it can never be erased and will always become evidence. Knowing that, the prudent CM maintains a professional tone at all times and observes a 24-hour cooling off period if at risk of responding in anger.

RECORDKEEPING Project records are the best source of facts related to project planning and performance. Records are critical to recreate a timeline, if necessary, of what occurred on site, whose decisions drove events, what changes occurred and when. The written record trumps verbal accounts that are susceptible to “he said/she said” controversies. The prudent CM appreciates these facts and takes the steps necessary to gather proper records and then keep them safe. Preservation of project data is more challenging today due to the number of data custodians – people on the site with electronic communication devices containing projectspecific data. All of that data may be critical evidence – the challenge is managing and preserving it. The CM as record keeper is aware of these challenges, takes steps to manage these records, and has a system for archiving the data that will make it accessible when needed. The period for data retention may be dictated by applicable law, contract, insurance, or government regulation.