There are a large number of risks involved when undertaking a construction project due to the heavy equipment, hazardous materials, accidents and contracts. Construction workers usually have to work from a large height using dangerous tools and carrying out dangerous tasks. 

Effective risk management is essential for the safety and planning of a construction project. Implementing a risk management strategy can ensure you mitigate common risks and protect your business from financial loss, as well ensuring the safety of your employees. 

Construction risk management involves evaluating and implementing processes and procedures to reduce the impact of risks in construction projects. This will usually involve thorough planning and analysis to create a risk management plan and will be carried out by the project manager or an appointed risk manager.

What risks are involved in construction?

1. Health & Safety – first and foremost managing the risks of health and safety is a daily priority for construction workers. 
2. Financial risks – Many factors can affect a business’s finances such as cash flow shortages, late payments from clients or increased costs of materials. 
3. Environmental risk – The nature of construction work means that projects often produce large amounts of waste and noise pollution. Environmental risk management should consider the impacts of the construction work including on the environment, on the local community and to the landscape. 
4. Quality management – Construction work must be completed to a high standard to ensure that it meets the required standards and doesn’t cause reputational damage or future cost for repairs. 
5. Information and data protection – Risks such as data breaches, unlawful collection of data or non-compliance with GDPR should be considered. 
6. Legal risks – such as following regulations, codes and contracts to avoid disputes with your client or the law.

Risk management is designed to plan, monitor and control these potential risks and create measures to prevent exposure to these risks. 

This requires a project manager to identify the hazard, assess the extent of the risks, provide measures to control the risks identified and manage any residual risks which may occur as a result of something else going wrong. 

Project Manager provides a list of steps contributing to the risk management process which are as follows: 

Identification 

This involves making an extensive list of all the possible issues which could arise by undertaking research, talking to your team and exploring historical data about similar projects. This list of potential risks should always be open for edits and updates. 

This will include:

• Identifying the hazards
• Identifying who or what may be harmed
• Evaluate the risks arising from the hazard
• Determine the control measures required
• Evaluate the remaining risks
• Record the findings of the risk assessment 
• Make contingency plans for residual risks
• Review and revise your plan

You should also consider losses which could be caused as a result of these risks including accidents to workers or general public, loss of skills, damage to property, loss of time, money or reputation/future business. 

Assessment 

As all risks have a different level of severity, you should have a code to assess the level of each risk. One way to do this is to use a risk assessment matrix to help you calculate project risk quickly and effectively. 

To create your own risk assessment matrix you will need to identify the scope of the project and identify each area with the potential risks (using the risks set out at the start of this article). 

Risk assessments for health & safety are a statutory requirement, however it would be useful to consider all the risks you could face with your project and categorise these to ensure you have covered all bases and set your project up for success. 

Mitigation

This is where contingency plans will be made using the risk assessment which will reduce the likelihood and impact of the risks identified. The top risks which have the greatest impact should be given an owner who is responsible for identifying the risk if it occurs and resolving it. 

Everyone on your team should know and understand what role they plan in keeping the site safe, ensuring risk is mitigated at every step. 

Some mitigation strategies include: 

• Risk avoidance – For example choosing not to undertake a certain activity or practice to avoid any threat posed by the risk
• Risk acceptance – Accepting the risk for a period of time to prioritise more serious risks
• Risk transfer – Allocates the risks between different parties depending on their abilities to prevent or protect others from the risks
• Risk monitoring – Watching projects for changes in the impact of identified risks

Monitoring 

This is an ongoing step of the risk management process which involves various members of your team identifying risks when they arise. This also involves monitoring your mitigation plan and constantly updating your risk assessment in line with this. 

You should call on all members of your team or other departments to empower everyone to be able to respond effectively to risks. 

This can be implemented with a risk register which tracks risks on a project. These should be created at the start of your project and updated as new risks are identified. As well as this you can regularly undertake risk audits, status and safety meetings or risk reassessments. 

Reporting

Your risk management plan should be analysed and shared with all members of your crew and other important stakeholders. 

Risk reporting should provide an easy way to regularly update risks and provide the right information to the right stakeholder. Risk reporting enhances the quality of your organisations decision-making and strengthens the overall vision of a project. 

There are a variety of reports you can use including: 

• Principal risk report – Providing an overview of principal and emerging risks.
• Deep dive report – Providing a detailed assessment of the nature and management of potential risks.
• Risk radar – This report will highlight and summarise emerging risks and is used to monitor risks with a high likelihood or high impact/threat.
• Risk moderation – Used to provide senior leaders with rationale to support changes to a proposed risk assessment. 

GOV.uk provide an extensive PDF with a guide to good practice for risk assessment.

Constructive risk management involves a lot of tracking and should use project management software to provide up to date insights into the progress of your project. As well as this, an appointed project manager will help your team to stay on track and mitigate the possibilities of risk.