The construction work site is inherently risky and dangerous. However, when projects are compared with other industries such as software and engineering, construction is less technically complex. In order to produce a project within a specified timescale, the project just has to have specialists in design and construction. Historically, the risks associated with construction are due to the following (Cooke and Williams, 2004):
- Poor record of completion to cost and time
- High dispute and litigation levels
- Intense work competition
- Low margins and profit risk
- Poor safety and occupational health record
- Pressure on health and safety provision
- Pressure to save money and time
- Pressure to produce high returns on investment
Ever since in modern construction history, risks were usually ignored or addressed arbitrarily. It鈥檚 common practice to include a 10% contingency fund unforeseen risks. Usually, it鈥檚 the unidentified hazards that have no provisions that have had the most impact on past projects.
So, in 2001, following the Turnbull Report, construction companies were required to produce provisions for managing risks in their accounts. It was not a government requirement but effects a severe impact when not included in the company standards.
Risk management became a way to prevent losses caused by exposure to risks like accidents, loss of time or money, damage to property, and/or loss of reputation.
Risk management
In construction, the purpose of risk management is to plan, monitor, and control measures needed to prevent risk exposure. In order to do this, it is imperative to identify the hazard, assess the extent of risks, provide measures to control the risks and manage any remaining risks.
The risk management process in construction
Adapted from , here is a that shows a sample of a risk assessment procedure. It illustrates the idea of residual risk (unidentified risks or risks remaining to persist despite following risk control