Risk management is important for all participants in a construction project. There are many types of risks involved in construction projects that can impact costs, schedules, and quality. These include physical risks from events like fires or earthquakes; financial and economic risks from inflation or funding issues; political and environmental risks from changing regulations; and construction-related risks from issues like labor disputes. A systematic approach to risk management involves identifying risks, estimating their potential impacts, evaluating them, responding through methods like risk elimination, transfer, reduction, or retention, and ongoing monitoring to control risks.

1. Topic: Risk Management
Submitted by: Sanjay Kumar. C

2. Introduction to Risk Management
• Construction projects involve risks. All project participants face varying
degrees and types of risks which are present during every phase of a
project.
• Risks normally determine many of the financial, contractual, and
practical relationships among the participants.
• Each participant must have a plan to manage these risks before making
any commitment to the project and other parties.

3. TimeQuality
Cost
Project
Constraints
Success
Constriants in the Project

4. Delays
Poor
Quality
Cost
overrun
Project
Constraints
Risks Involved

5. What is a Risk?
Risk
Unknown
Unexpected
Undesirable
Unpredictable
endeavor
action

6. Risks in Construction
Contractor Supplier
Project
Manager
Engineer
Architect
Client
Quantity
Survey
Inspector`
SocialFactors
Political Factors
Economic Factors
EnvironmentalFactors

7. Types of Risks in Construction
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related

8. Acts of God
Acts of God
 Flood
 Earthquake
 Landslide
 Fire
 Wind damage
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related

9. Physical
 Damage to structure
 Damage to equipment
 Labor injuries
 Fire
 Theft
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related
Physical
Physical

10. Financial & Economic
 Inflation
 Availability of funds
 Exchange rate
fluctuations
 Financial default
Financial & Economic
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related

11. Political & Environmental
 Changes in laws and
regulations
 Requirement for
permits
 Law & order
 Pollution and safety
rules
Political & Environmental
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related

12. Design
 Incomplete design
scope
 Defective design
 Errors & omissions
 Inadequate
specifications
Design
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related

13. Construction Related
 Labor disputes
 Labor productivity
 Different site conditions
 Design changes
 Equipment failure
Construction Related
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related

14. A systematic approach to control the level of risk to mitigate its effects.
Risk IdentificationRisk Identification
Risk EstimationRisk Estimation
Risk EvaluationRisk Evaluation
Risk ResponseRisk Response
Risk MonitoringRisk Monitoring
Controlled
Risk
Environment
Risk IdentificationRisk Identification
Risk EstimationRisk Estimation
Risk EvaluationRisk Evaluation
Risk ResponseRisk Response
Risk MonitoringRisk Monitoring
Risk
Analysis
Risk Management Life Cycle
Risk Management

15. Estimating the potential impacts of risk to decide what risks to retain and what risks to transfer to other parties
Ranking options
Comparing options
Descriptive analysis
Qualitative
Risk Analysis
Techniques
Probability analysis
Sensitivity analysis
Simulation techniques
Quantitative
Risk Analysis

16. Risk Response
Risk Response Methods
Elimination Transfer ReductionRetention

17. Risk Elimination Practices
 Tendering a very high bid
 Placing conditions on the bid
 Pre-contract negotiations as to which party takes certain risks
 Not biding on the high risk portion of the contract
Risk Response Methods
Elimination Transfer ReductionRetention
Risk Elimination

18. Risk Transfer
 Two basic forms.
 (a) The activity responsible for the risk may be transferred, i.e. hire a
subcontractor to work on a hazardous process
 (b) The activity may be retained, but the financial risk transferred, i.e.
methods such as insurance.
Risk Response Methods
Elimination Transfer ReductionRetention
Risk Transfer

19. Risk Retention
 Handling risks by the company who is undertaking the project.
 Two retention methods, active and passive.
 Active retention is a deliberate management strategy after a conscious
evaluation of the possible losses and costs of alternative ways of handling risks.
 Passive retention occurs through negligence, ignorance or absence of decision.
Risk Response Methods
Elimination Transfer ReductionRetention
Risk Retention

20. Risk Reduction
 Continuous effort.
 Related with improvements of a company’s physical, procedural, educational,
and training devices.
 Improving housekeeping, maintenance, first aid procedures and security.
 Education and training within every department .
Risk Response Methods
Elimination Transfer ReductionRetention
Risk Reduction

21. Thank You