This document discusses risk management, cost control, and communication in construction projects. It describes how risk management involves identifying, assessing, and treating risks through various models and communication is key to preventing defects. It also explains that cost control is important for meeting project goals and involves establishing budgets, monitoring costs, and controlling changes. Effective integration of these three areas is important for construction project success.

1. INTEGRATINGINTEGRATING
RISK MANAGEMENTRISK MANAGEMENT
WITH COSTWITH COST
CONTROL&CONTROL&
COMMUNICATIONCOMMUNICATION
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2. RISK MANAGEMENT
 Risks have a significant impact on a
construction project’s performance in
terms of:
 cost
 Time
 quality
 Size and complexity of the projects have
increased over the past 30 years.
 The ability to manage risks throughout
the construction process has become a
major factor for preventing risk.

3. RISK MANAGEMENT
Supply chain must share the risk.
Risk to a large extent is governed by
the procurement option and the
content of the related contract
documents.
Selecting an appropriate project
procurement option is a key issue for
risk reduction.

4. RISK MANAGEMENT
A systematic process of:
identifying
assessing and responding to project
risk
The aims and objectives of the risk
management process is to maximize
the opportunities and minimize the
consequences of a risk event.
A variety of risk management
models with different numbers of
stages can be obtained.

5. RISK MANAGEMENT
 The international standard “Project risk
management – Application guidelines”
(IEC 2001) is a good source for risk
management.
IEC suggest a model with 5 steps:
1. risk identification
2. risk assessment
3. risk treatment
4. risk review
5. monitoring

6. RISK MANAGEMENT
 PMBOK’s model (PMI 2000) is
similar but divides risk assessment
into two processes. They are:
1. qualitative risk analysis
2. quantitative risk analysis
 Baloi and Price (2003) include an
additional step of risk
management process it is:
 communication.

7. RISK MANAGEMENT
Risk Transfer &
Indemnification
Two most problematic areas
for construction management
teams are:
1.contractual risks
2.the insurability of projects.

8. RISK MANAGEMENT
 Risk management can reduce risk in the
different procurement options.
 Design and build contracts and
collaborative form of partnering.
 Better understanding is expected to
contribute to a more effective risk
management.
 Therefore, a better project output and
better value for both clients and
contractors.

9. RISK MANAGEMENT
A clear link between the
procurement option and risk
management
Design-build projects offer better
cooperative work by the architects
and contractors in early phases
Therefore, more thorough risk
management.

10. RISK MANAGEMENT
effective communication;
information exchange;
open attitudes and good
relationship;
all have open discussion of
project risk and a strong
determinant for project success.

11. RISK MANAGEMENT
RISK ASSESSMENT-SUPPLY CHAIN
1. identify risks
2. evaluated risks
3. ranked risks
4. use both qualitative and quantitative
methods for assessment
5. based on fuzzy estimates of risk
components or a better option
6. Identify risk to cover all KPI’s (TIME-
COST-QUALITY-CUSTOMER
SATIFACTION-SAFTEY)

12. RISK MANAGEMENT

13. RISK MANAGEMENT
Predictive
Metrics
Diagnostic
Metrics
Retrospective
Metrics
RISK
IDENTIFY
ASSESS
TREATMENT
REVIEW
MONITOR
Etc.

14. RISK MANAGEMENT

15. RISK MANAGEMENT

16. COST CONTROL
 Cost control is a key factor and an
important determinant during
construction for achieving project’s KPIs.
Construction costs control includes:
 performing an adequate constructability
review to minimize unexpected costs;
 establishing a construction cost cash flow
plan;
 monitoring cost performance to detect and
understand variances from plan;

17. COST CONTROL
ensuring that all appropriate
changes are recorded;
preventing incorrect, inappropriate,
or unauthorized changes from being
included in the project;
Informing appropriate stakeholders
of authorized changes;
Acting to bring expected costs within
acceptable cost limits.

18. COST CONTROL
Cost control must be thoroughly
integrated with the other control
processes such as:
scope change control;
schedule control and quality
control.
Any inappropriate responses to
cost variations can cause quality
or schedule problems.

19. COST CONTROL
Removing gang members from
one job to another can increase
the contract duration.
Decreasing gang members can
also increase the cost.
It also can produce an
unacceptable level of risk later
in the project.

20. COST CONTROL
construction costs include:
contractor costs;
the client cost;
consultant costs;
Any other hidden cost such as in
case of any major dispute
between contractor and the
client.

21. COST CONTROL
RESPONSIBILITIES
Project Manager (PM): The PM is responsible
for overall project cost control, running of the
project.
 The PM should work closely with the
Construction Site Manager, Site Engineers to
ensure that changes are minimized.
 Make sure the project is completed within
budget.

22. COST CONTROL
Construction Manager (CM)-Project
manager (PM)-Site Manager (SM)
 Once the construction work starts on site,
the management team on site will be
responsible for day-to-day cost control as
well as other responsibilities.
 The CM,PM, must not only know the
project’s costs to date, but also be able to
project costs For any additional work.
 The CM, PM,.. is responsible for
controlling costs to ensure that
construction is completed within budget.

23. COST CONTROL
 If any changes are anticipated during
the construction process, immediate
steps must be taken and they are:
1. the CM must notify the senior
management as soon as possible;
2. an informed decision can be made on
whether or not to proceed with the
change;
3. Once the decision is made can the
necessary funding be obtained?

24. COST CONTROL

25. COST CONTROL

26. COST CONTROL

27. DATA MODEL-ESTIMATED COST
COMPARED TO ACTUAL COST

28. DATA MODEL FOR LABOUR,
MATERIAL AND MACHINERY
COST OVERRUN

29. COMMUNICATION
Every year defects in the UK
construction industry cost at least
£20 billion to repair or rebuild
Some of the defects are as the result
issues such as:
 Poor communication;
 Poorly detailed drawing;
 Incorrect instructions or technical
information not being available on time;

30. COMMUNICATION
Meeting types and frequencies;
Method's of drawing transfer;
Use and control of revised drawings,
or unconfirmed drawings;
Reporting and tracking of defects;
Lack of knowledge in detecting
defects on time.

31. COMMUNICATION
Single points of contact
Consideration should be given to
appointing defined, single points
of contact at suppliers, design
offices and contractors.
This should help to avoid delays,
confusion and duplication of
effort.

32. COMMUNICATION
Upwards feedback
 Establish means by which
information can be effectively fed
back up through the formal
management structure.
 Two key areas where this can be
particularly important are as
follows:

33. COMMUNICATION
1. operatives to site office (e.g.
reporting on an incorrect drawing);
2. Site office to head office (e.g. where
an incorrect detail is discovered;
3. this should be reported back to the
design office and the drawings
corrected).

34. COMMUNICATION
There are different communication instruments,
such
as:
 e-mail
 document
 telephone
 meeting
 contracts
 specifications
 reports
 manuals
 schedules
 calculations

35. COMMUNICATION
 drawings
 computer files
 Disks
 print-outs
 photographs
 agenda’s and minutes of meetings
 The management of documentation and
communication used in a project is used
by a number of subcontractors, the
storage and retrieval thereof for further
use.