Types of risks in construction

Risk in construction is fully integrated with every facets of construction life cycle. Construction risk may put a threat to an organization’s success and debar to achieve the project objectives in terms of time, cost, quality, safety and environmental sustainability.

With construction risks construction projects may experience with ill defined scope, design and constructability issues and mismanaged vendors. This leads to a clear time-cost quality gaps.

Risks related to contractors

Inappropriate construction program planning
Insufficient program scheduling
Inventive design or contractors
Lack of knowledge in planning construction programs
Lack of coordination between project participants
Non availability of sufficient professionals and managers
Non availability of sufficient amount of skilled labor
Incidence of dispute exists in most
Serious noise pollution caused by construction
General safety accident occurrence

Risks related to subcontractors

An item of work is separated with the following five subdivisions In the total quantity method:

Low management competency of subcontractors
Without competent management skills, If subcontractors cannot successfully manage their resources to meet the needs from several concurrent construction sites.

The construction risks can be categorized in the following ways.

Technical Risks

Imperfect design.
Insufficient site investigation.
Ambiguity over the source and accessibility of materials.
Suitability of specifications.

Logistical Risks

Accessibility of resources - mainly construction equipments, spare parts, fuel and labor.
Accessibility of adequate transportation facilities.
Construction Risks

Indecisive production of resources.
Weather and seasonal implications.
Industrial relations problems.

Financial Risks

Price rises.
Accessibility and fluctuation in foreign exchange.
Interruption in Payment.
Repatriation of funds.
Local taxes.

Political Risks

Constraints on the accessibility and employment of expatriate staff.
Customs and import restrictions and procedures.
Difficulties in disposing of plant and equipment.
Insistence on use of local firms and agents.

20 Key Risks in Construction

Rigid project schedule
Design variations
Unnecessary approval procedures in administrative government departments
Incompatible construction program planning
Low management capability of subcontractors
Deviations of construction programs
High performance/quality expectations
Insufficient program scheduling
Variations by the client
Imperfect approval and other documents
Unfinished or inaccurate cost estimate
Lack of harmonization between project participants
Non availability of sufficient professionals and managers
Non availability of sufficient amount of skilled labor
Bureaucracy of government
General safety accident occurrence
Inadequate or insufficient site information (soil test and survey report)
Incidence of dispute
Price inflation of construction materials
Serious noise pollution caused by construction

Posted by Rajib Dey
Business Development
Global Associates
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