This document provides an overview of risk management concepts and techniques for construction projects. It defines risk and risk management, and explains the risk management process which includes risk identification, analysis, evaluation, and response. It discusses different types of risks in construction such as physical, financial, political, environmental, design, and construction-related risks. Methods for treating risks through elimination, transfer, reduction, and retention are also covered. The document emphasizes that risk assessment is important for construction safety and outlines the risk assessment process.

1. Project Management
Skills and Techniques
Risk Management
Seminar for Built Environment
Procedures and Organisation
Dr Andrew Kimmance
PhD, BSc (Hons), MSc-Eng, MCIOB, MAPM, CEng

2. Learning Outcome
 Explain the concepts and definitions of Risk
 Introduction to Risk (Session 1)
 What is Risk?
 Risk in Construction
 Types of Risk in Construction
 Risk Management
 Explain the types of risk in construction
 Risk Response Methods
 Risk Assessment (Session 2)

3. Definition of Risks
 Any definition of risk is likely to carry an element of
subjectivity, depending upon the nature of the risk
and to what it is applied.
 In the context of assessment, risk is defined as the
likelihood that harm from a particular hazard will be
realised; that is, the probability of an event and its
consequences. Where as,
 Risk management is the practice of using processes,
risk methods and tools for managing these risks.
 Risk Process : Stages or Steps
 Risk Analysis: Techniques Method Approach
 Risk Assessment: Product - Process Output

4.  All real projects carry risk through uncertainty, and
are faced with various levels (H,M,L) of risk
exposure.
 Each activity/task which make up the process of
completing a project faces risks that could
present threats to its success.
 Risk management focuses on identifying what could
go wrong in a project (and its activities), evaluating
which risks should be dealt with and implementing
strategies to deal with those risks.
 Construction managers that have identified the risks
within a project will be better prepared and have a
more cost-effective way of dealing with them.
Definition of Risk....Cont

5. Introduction to Risk
Time
Quality
Cost
Project
Scope
Constraints
Requirements
Success
Session 1

6. Introduction…Cont
Cost
overrun
Project
ConstraintsRisksDelays
Poor
Quality

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

8. Key Forms of Risk
Strategic
External
and
Internal
Financial
Operational
Hazards

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

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

11. Risks in Construction..Cont
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related
Acts of God
 Flood (heavy rains)
 Earthquake
 Landslide
 Fire (volcano)
 Wind damage
 Extreme heat

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

13. Types of Risks in Construction….
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related
Financial &
Economic
 Inflation
 Availability of
funds
 Exchange rate
fluctuations
 Financial default
 Delay in Payment

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

15. Types of Risks in Construction
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related
Design
 Incomplete
design scope
 Defective design
 Errors &
omissions
 Inadequate (site)
specifications or
investigations

16. Types of Risks…Cont
Physical
Risks
Financial
Economic
&
Acts
of
God
Political
Environ.
&
Design
Const.
Related
Construction
Related
 Labour disputes
 Labour productivity
 Different site
conditions (weather)
 Design changes
 Equipment failure

17. Risk Management
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

18. Control It
Share or
Transfer It
Diversify or
Avoid It
Risk
Management
Process
Level
Activity
Level
Entity Level
Risk
Monitoring
Identification
Measurement
Prioritization
Risk
Assessment
Risk Analysis

19. Risk Analysis
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
Evaluation

20. Risk Response Process
Risk Response Methods
Elimination Transfer ReductionRetention
Risk
Process
Evaluation Acceptance Identifying

21. Risk Evaluation
 Undertaken at regular intervals after risk
analysis is finished, and
 Need to compare against a risk criteria:
 Associated costs and benefits
 Legal requirements
 Social, economic and environmental factors
 Management, shareholders concerns
 Used to enhance the decisions taken to either
accept specific risks or ways of controlling or
treating risks

22. Risk Acceptance
 The systematic process using specific criteria
by which relevant stakeholders agree that risk
may be accepted
 Usually the final stage in risk management to ensure
that every risk has been reviewed at the appropriate
level
 Have everything been done that is Reasonably
Practicable to reduce the level of Safety Risk posed
by the identified Accidents, individually and in total?
And:
 Are they now Broadly Acceptable or Tolerable and
As Low As Reasonably Practicable?

23. Risk Acceptance Cont...
 Undertaken to ensure all risks has been reviewed at
appropriate management levels prior to approval of the
Risk (Safety) Assessment Plan and Report
 Various techniques can be used, such as:
 3x3 or 5x5 matrix , (1, 2, 3,..10), (high, median, low)
 SWOT Analysis (e.g., threats and opportunities)
 Questionnaires (surveys)
 Brainstorming and/or problem solving (sessions)
 Incident (accident) Investigation
 Auditing and Inspecting Criteria
 Risk assessments (health and safety analysis)

24. Identifying Risks
 Strategic Level: (capital, reputation, changes, legal,
agreements, political, environmental)
 Operational (day to day issues from strategic concerns,
contract disputes, performance and workmanship,)
 Financial (credit, exchange rates, interest rates,
markets, earnt value performance (EVM))
 Compliance (CDM, health & safety, regulations, EU,
environmental constraints, trade acts,
 Knowledge Management ( communication systems,
Information technology, suppliers, materials)

25. Risk Treatment
Risk Response Methods
Elimination Transfer ReductionRetention
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

26. Risk Treatment Cont….
Risk Response Methods
Elimination Transfer ReductionRetention
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.

27. Risk Treatment….Cont
Risk Response Methods
Elimination Transfer ReductionRetention
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.

28. Risk Treatment Cont….
Risk Response Methods
Elimination Transfer ReductionRetention
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 .

29. Factors Involved
in Writing a
Risk Assessment?
Session 2

30. Risk Assessments (facts)
 The construction industry is subject to more
risk and uncertainty from injuries, recession,
bankruptcies, than perhaps any other industry.
 Risk assessments form the cornerstone of
health and safety legislation in the UK, EU,
and
 The requirement for construction organisations
to prepare risk assessments are clearly
outlined in a number of health and safety acts
and regulations.

31. Risk Assessment Cont...
 A Risk Assessment is used in construction
safety to identify, document and eliminate or
reduce hazards in a particular work activity or
process.
 A risk assessment evaluates a company's work
activities, and considers areas where there may
be losses for employers, customers and
employees.
 A risk assessment should be carried out for
anything that has the potential (all activities) to
cause harm or injury to an employee (anyone).

32. Risk Assessments Cont....
 Ultimately a risk assessment is a process which
helps Construction Managers (employers) identify
such factors as:
 when a hazard may occur,
 the severity of that hazard,
 frequency of exposure, and
 possibility of minimising or avoiding harm.
 The process involves a review of workplace
safety, inspections, identification of task/hazard
pairs, and prioritising for elimination or control.

33. Risk Assessment Process
• Risk assessment also fits into a four-part
process for risk control, through the
setting of health and safety standards,
as follows:
1. Hazard identification.
2. Risk assessment and evaluation.
3. Risk control - the selection of suitable
measures to eliminate or control risks.
4. Implementing and maintaining
(monitoring) control measures.

34. Risk Assessment Cont...
In deciding upon preventive and protective
control measures, the following key
principles should be applied:
1. It is always best, if possible, to avoid the risk
altogether.
2. Combat risks at source.
3. Wherever possible, adapt the work to the
individual.
4. Take advantage of technological and
technical progress.
5. They should form part of a coherent policy
and approach.

35. Risk Assessments Cont....
6. Give priority to these measures which
protect the whole workplace.
7. Workers need to be involved, and
understand what they need to do.
8. A positive 'safety culture' should be
developed within the organisation.
9. PPE should only ever be relied upon as the
last line of defence against a known
hazard.

36. Risk Process Example

37. Exercise One
Prepare a Risk Assessment for a small
construction project of your choosing:
 The risk assessment will need to identify
and evaluate the risks that are presented by
the activities that are undertaken each day
on your construction project,
 You will need to develop control measures
to either eliminate or control the effects of
the hazards.