Construction risk management: What to do when your project goes wrong

construction risk management

Getting started with a construction project is always challenging. It is a thin line between success and disaster. There is a number of parameters that you should think about and efficient management of the risk is surely necessary. However, there is no recipe for someone to follow in order to be certain for the success of the project.

In other words, you can’t really define risk on the exact same way in every construction project. Different types of action are necessary in each case. Even within the same project, there may be distinct sources of risk. That’s why it’s imperative that the people who are in charge of a construction project have a good overview of the whole process and try to establish strong communication between all the involved parties.

How we could define risk in a construction project

It becomes clear that we could define risk as  any possible danger for the proper function and development of a construction project. Now, that we have a better understanding of what risk in construction is, it is also vital to know where to look for anything that can be threatful to your project. To achieve this, you have to be aware of the different types of risk that exist. Below we have listed some of the most prominent types of risk for a construction project.

Types of risk in construction

Types of risk in construction
There is a plethora of risks when you are putting together a construction project. All these different hazards can be divided to the following categories:

Project Management Risks
Anything that has to do with the proper management of the project is part of our first category. Before you start working on a project, you have to make sure that you have the right amount of resources both in terms of staff and tools. A detailed description of every party’s responsibilities is fundamental. On top of that, precise calculation of the time required for the completion of the project tasks is also something that you want to take in high regard.

Fiscal Risks
Financial risks may vary depending on where your construction project is taking place. In simple words, issues related to the local taxation, inflation and currency rates may pop up during the whole process more often than you imagine. For that reason, you have to analyze thoroughly all these parameters before you get started with a construction project. For example, your budget will be extremely different if you are working in a country with high taxation.

Legal Risks
The lack of detail in the signed contracts could be a great trouble-maker for you and your project. You want to be sure that during the contract process, you have covered every single possibility and that the responsibilities of each party are clearly stated. Otherwise, you may experience a number of serious disputes that can stall your project significantly. Hiring a strong legal team, if your budget allows it, should always be a priority.

Find Here: Construction Disputes: What You Need To Know


Risks Connected to the Natural Environment
Every country, or even city in some cases, has a different environment and its own natural phenomena. Keeping that in mind, you have to carefully examine the environmental conditions in an area before you begin your construction project. In that way, you will be able to efficiently protect your site by extreme phenomena such as earthquakes, floods and other natural disasters.

Job-related Risks
Working in a construction site is always perilous. It’s a tough job that requires great skills and attention. In that sense, it’s imperative that you have done your best in order to minimize the possibility of an injury on site. A thorough and constant safety check not only before but also in the course of the construction process is more than necessary.

Societal Risks
A type of risk that is often mistakenly underestimated has to do with local social and cultural norms in the city where your construction project is located. Failure to comply with the local regulations or unwritten laws may lead to serious problems for your project along the way.

How to efficiently manage risk

Efficient construction risk management
It’s easy to notice, then, that there are many different dimensions around a construction project that you have to take into account. In some cases, even if you have managed to identify the hazards, it’s very difficult to tackle them. However, there always are methods in which you can manage risk more efficiently. Here are the main ways in which you can upgrade your risk management game in construction:

Determine Risk
Start by identifying the types of risk that will most possibly stand on your way, sooner or later, during the construction procedure. In that manner, you know where you should shift your attention while putting together your construction project.

Assess Its Parameters
Gather all the information you can get about the different risk factors of your project. Categorize them according to their importance. Be ready for the worst possible scenario. Make sure that you have all the necessary resources and legal documents. This will allow you to protect your project from an unpredictable disaster.

Read also here: The Future of Construction – BIM

Act Against Risk
As soon as you have analyzed and define the potential perils for your project, it’s time to answer back and come up with a solid construction risk management plan. More specifically, you should carefully allocate responsibilities among the different project parties according to their areas of expertise. In that way, you can be sure that the right person will be in charge in the case that something goes wrong during the construction process.

Nevertheless, this is just the beginning of how you should act against risk. Read below the main actions that you could take when dealing with risk in construction:
Dealing with risk in construction
Take no risk
Refraining from a risky situation is always an option. In cases where the suggested construction project isn’t a realistic idea, the best solution is probably to avoid moving forward with it. There can be environmental reasons (eg. high earthquake probability) or factors connected to the local society that don’t allow the completion of the project. Under such circumstances, the readjustment of the project is also a possibility.

Relocate the risk
Risk relocation can be a very good idea when that’s possible. Insurance is the most common method of risk relocation. A good alternative to that could be some private agreement with the rest of the project parties (eg. subcontractors). Both options can help you feel more secure regarding the outcome of your project when risky situations are emerging.

Check out also: Online Certification in Construction Management – Is it worth it?


Focus on training
Training is definitely one of the most trustworthy assets you possess when it comes to risk management. It goes without saying that you should put extra focus on preparing your team for challenging and risky circumstances. Paying special attention to your staff’s training is a long-term investment that can save you from a lot of trouble.

Embrace risk
In some cases there are simply not much more that you can do. You just have to accept risk and move forward with it by your side. This can be a possibility for you if you feel that you already have the best team available for your project and that the completion of this construction plan is of tremendous societal/cultural value.


Taking into account all the above, it is understandable that construction risk management is a never-ending and quite complicated procedure. For that reason, a strong effort is necessary for your construction project to be protected against hazardous situations. You need all the help you can get when you are trying to keep away from risk in construction. Among other things, the use of an efficient and trustworthy construction software can be one more ally to your effort!

Topics: Digital construction

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