Risk Management in the Construction Industry

Question: Discuss about theRisk Management in the Construction Industry. Answer: Introduction In the construction projects, two major phases are vital, the pre-construction and the construction phase. The preconstruction phase is simply the preparation of the project, (Sears, S., et al., 2015). In the phase, there is the aspect of planning and initial formulation of the project whereas the construction phase is simply the implementation of the planned and designed arrangements. We should note that the risk management processes are conducted throughout the construction project; from its planning stage to its completion, inspection, and usage by the public. Therefore, my paper is describing the truth to the said facts about risks, in my case, it concentrates its scope to the risks incurred within the construction field, both in preconstruction and construction stages. Additionally, the paper gives an insight to the participants of the contract who have the responsibilities upon the risks. Similarly, the paper is also concerned with discussing the dispute resolution methods that can be used to dissolve differences within the project after mainly talking about the areas of which disputes can arise within the projects, (Sears, S., et al.,2015). Therefore, at the end of the discussion, the reader is expected to have understood as to why it is critical to have the risk management departments within the construction field. Available Risks within the Construction Industry In as much as the risks are always peculiar to each project and the project participants, it is confirmed that almost all the construction projects share common risks that result from the whole field. As such, below is a classification of some of the risks that can arise from both the preconstruction and the construction phase within a project. During the Construction Sector. Changes in the Work. Drastic change in the work can be at times very detrimental and can lead to loss of resources. Such can be caused by poor planning and designs, the level of complexity of the design presented, late drawings and instructions, even unavailability of the preferred materials and insufficient capital to purchase the preferred materials. As such the design team will have to give an alternative preference and ensure that the new designs meet the needed requirements, (Walker, A., 2015). However, if the sudden change in the work is not properly looked into, the design team might be at a risk of having a wrong implementation of their client's idea hence causing lack of quality in the planned project. Such lack of quality might bring other risks that result from a substandard work. Accidents such as Fires. Accidents are very much inevitable as such can happen without our knowledge since some are caused by the adverse weather conditions of which we have no control over. As such, we should be very prepared for such especially within a construction project. It is the work of the contractors to ensure that the site is a secure place to work, (Rowlinson, S., et al., 2014, p 187-198). Accidents such as the fire that can be caused by the lightening can be controlled by putting up proper fire prevention mechanisms such as installing fire extinguishers and fire sensors. If fires are not adequately handled, then there is a high possibility of damage to property and people. Financial and Economic Risk Adequate Resources and Equipment Commissioning Lack of sufficient resources and equipment to facilitate the work can be very detrimental hence lead to the collapse of a project. As such, the investment managers should ensure that there are adequate resources that promote the work in question. The contractors, on the other hand, should ensure that the budget of the resources needed and the program to be undertaken is correctly billed and is submitted to the financiers in time so as there is the continuous flow of cash within the project, (Walker, A., 2015). Therefore ensuring that the project does not come to a stop due to unavailability of resources in the form of material and equipment. Lack of adequate resources can lead to the construction of substandard work which promotes losses. Inflation With inflation, it means that commodities are becoming more expensive than they should. As such, the construction materials are very hard to purchase as such the design team, and the investment managers of the project are a force to spend more on the quality of the project. On the same time, they are compelled to acquire fewer quality materials to construct, (Walker, A., 2015). As such, the investment team should ensure proper communication with the designs team so as to help in making decisions about the types and quality of materials required for the project simply because the use of lesser quality materials can lead to an inferior product of the project. Performance Risk Productivity of Labor Labour is a vital part of the realization of any construction project as such; the contractor should ensure that the workforce is very able to carry out their mandated role. A small productive workforce will automatically lead to the project missing the set objectives and deadlines. Moreover, a lesser productive labor force can result in a lower quality work, (Simons, R., 2013). Therefore the contractors are advised to acquire very well skilled labor force that can provide both quality and meet the deadlines. Simply because, skilled labor is very useful in reducing expenses that can be incurred from injuries that occur in the line of duty, (Glendon, A., et al., 2016). Moreover, skilled labor promotes standard work hence saving some resources to be incurred in reworks. Other than labor alone, the investment managers of the project should consider the performance of equipment, of the materials, to be used in the project and also should promote cultures that help in the fulfillment of the work, for instance, proper remunerations so as to reduce the incidences of strikes. Security Risk The actual security of the construction site matters. The contractor in collaboration with the investment manager of the project should ensure that the construction sites are very secure and very free from any aspects of Vandalism, Terrorism, corruption, assaults, negligence and Intrusion which might lead to the collapse of the project. Such acts can be practiced from either within or from external participants of the projects, (Haimes, Y., 2015). Therefore, the contractor should ensure that the personnel are trustworthy and can be trusted with the resources provided by the project. Moreover, the contractors can help by installing security cameras that might help minimize looting from the labor force. Climatic and Environmental Risk Can be attributed to all the physical and environmental impacts of the project. For instance the topography of the area of which the project is to be conducted and the climatic conditions of the same, (Rowlinson, S., et al., 2014, p 187-198). Very wet sunny areas can adversely be affected when the rains start pouring heavily. The contractors and the subcontractors are mainly affected since he rains can affect their set programs. Moreover, the topography of an area has an immersed impact on the project as well since some areas are prone to landslides which are very detrimental to projects. Same happens when the project is situated in calamity prone areas for instance areas that are prone to floods or even tornadoes. Political and Societal Risk Land Availability for Construction In some areas, the policies that are set pertaining acquisition of lands are very demanding to any project. For instance, in some areas, where private ownership of land is illegal, a project done in such areas can be at risk of termination at any given time. Therefore, it is the work of the quantity surveyor to ensure there is proper documentation of the project's credibility to go on. For such a reason, the surveyor in charge of the project should properly advice the investment managers on such risks so as to avoid future trouble with the local authorities. Political Instability In areas which are prone to wars and regular strikes, the security of projects is not a concern to anyone. As such, it is the function of the quantity survey team to advice the project's investors to consider such a trait about the place. In the areas, the project is at the risk of damage or even destruction beyond repair, (Cruz, C., and Marques, R., 2013, p 473-483). Therefore, the reason as to why such war tone areas are not developing How to Solve Conflict within a Construction Project Conflicts are prone to arise within the building project due to factors such as; poor communication between the different sectors within the project management, lack of clarity of the contract, developed conflicts of interest by individuals, limited resources resulting to abnormal working conditions, or power struggles within the different departments. Meanwhile, it is the work of the project manager to ensure that mediation solves such conflicts. A third-party mediator will be hired to resolve the disputes between the two conflicting parties. This strategy is the cheapest and least time-consuming. Another way to solve conflicts is by Mini-Trial. Is held in an informal setting with an advisor or attorney that is paid. However, the agreement reached is nonbinding hence can be broken. A mini-trial is more expensive in terms of time and money than mediation. Lastly, Arbitration can be used to solve disputes. Arbitration is the most costly and time-consuming way to resolve a conflict. In volved parties are represented by their attorneys while witnesses and evidence are presented. Then, the arbitrator makes a ruling, and his final decision is a binding agreement that cannot be broken, (Fisher, R., 2016, p 37-71). Use of Mediation to Solve Construction Problems Mediation is amongst the most common ways to solve disputes that can arise from the construction industry. A third party mediator will be hired to resolve the disputes between the two conflicting parties. In our case, it maybe the workers who work in the construction site against the senior project managers. The strategy is the cheapest and less time-consuming as compared to the other conflict resolution strategies. In instances that there is conflict arising from either misunderstanding of the contract terms or any other problem, a third party who is neutral is useful in foreseeing the terms being agreed upon by both sides. As such the problem is solved by mediation therefore enabling swift running of the construction work. Conflict within a construction project can be avoided in many ways mostly as initiated by the managers of the project. For instance, the managers can ensure that the participants within the project understand their roles. Such can be promoted by simply organizing workshops and regular meetings where each department is educated on the role, it is supposed to play within the project. The managers can as well treat fairly their workforce by providing them with favourable working conditions, (Fisher, R., 2016, p 37-71). The managers also can facilitate the signing of contracts to their workers so as to ensure that their workforce is satisfied with what the project will offer them in the form of salaries. Moreover, they should ensure that they follow the signed agreements in the form of contracts. Conclusion The risk assessment is a crucial aspect when discussing of the success of any project as such; it should be properly conducted. Proper risk assessments are very useful to ensuring that the proper risk management systems are adequately implemented. The whole idea of risk assessment in the construction project is very useful and should be adopted in the upcoming projects; it ensures that the projects turn out to be successful in the long run, (Zhao, X., et al., 2014, p 27). To conclude, for adequate implementation of any construction project one has to consider all the risks that will be incurred in both the preconstruction and the construction phase. 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