The Construction Project
Explain various types of risks associated with the construction project could be classified.
Before getting into the depth of various risks associated with the contracts of construction, it would be better to define risk. Risk is nothing but the probability of the deviation of the actual result from the expected. The risks which the construction project management is exposed to is that the project undertaken would be completed within the required time frame or not, the completed project is free from faults and defects and whether the construction would be carried out having safety procedures so that it is exposed to little damage (Hayes et al., 2015). While undertaking the construction project , various administrative and technical risks needs to be identified. The risks could be identified as high, medium and low depending upon the degree of its potentiality.
The various types of risks associated with the construction project could be classified as follows :
Business risk :
Business risks is the uncertainty about the generation of profits or say income at its target level and it is associated with the possible capital expenditure and income.
Speculative risk :
Speculative risks can also be considered as commercial risks. This type of risks involves both negative and positive deviations and has a danger of loss and there can also be gain. Suppose that a new business has been set up which might provide competitive edge to the prior business and thus providing people with new market.
Financial risk :
This risk is significant in construction projects as the project duration is long and large sum of money is involved in the undertaking. Such types of risks are not under the control of the builder and it might result in financial capital loss.
Pure risk :
Pure risk arises in the event of uncertainty or when some contingency occurs. The future earnings from the projects and the loss is resulted from the same. It arises in the form of injury and expected death or from civil, criminal or legal prosecutions.
Technical risk :
The technical risk arises from the process of designing the construction which might lead to error in completion of project. The designs allowed might be inaccurate or incomplete or the materials selected for the undertaking the project is wrong.
Political risk :
The builder and the building owner is also exposed to political risks. The execution of project might be adversely affected by the acts of government authorities or some other agency or the legislation of the country. This risks arises due to the non market factors and might lead to the personnel and financial loss of the project. This types of risks comes from the government policies, changes in laws or when there is change in taxation policy.
Construction risk :
Construction risks involve several types of risk related to the execution of projects. The procedures followed for executing the construction and the occupational safety in the construction. The projects might not be delivered on time because of inaccuracy in estimating the time of contracts. It can also happen due to the inappropriate use of materials and equipments. Several risks relating to environment would also comprise the risks in carrying out the construction. Though this risks is under the control of the construction management but it has increased due to stringent legal liability relating to the incidents of environment which can impact the financial of projects in a adverse manner and can also leads to closure of the construction works.
Listed above are the various types of risks associated with the construction which needs to be taken into account before executing the construction projects.
Ascertaining the risks is an important part of managing then risks. The identification of risks have to be carried out in all the phases of the construction project whether it is a phase of planning or tendering the process or when the conditions of contract is drafted or when the contract is being carried out. There are several methods of identifying the risks which are as follows :
Using expert system :
One of the sophisticated method of identifying the risks is by making use of knowledge based and computer cooperative systems which assists the project manager in providing them with appropriate knowledge to deal with the risk very effectively and makes them acquainted of the risks that may follow with the construction. It is done on the basis of artificial intelligence system of experts .
Another method of identifying the risks is by using Delphi technique :
It is one of the forecasting method which is interactive as well as systematic and is has a panel of experts on which the method relies and it has a sequence of events.
After a risk manager is appointed the appropriate members of project team is forwarded with the questions and they are asked to give views on questionnaire and it is collected by risk manager and redistributed and are requested to reconsider their original answers and the revised results are collected and again redistributed and the process continues until the opinion has been reached (Kendrick, 2015).
Checklists and questionnaire :
Questionnaire provides with the consisted answers from different team members which has a meaningful comparisons so that the risk manager is able to ascertain apparent consensus and also consumes very less time.
We can use cause and effect diagram to identify risks which is also known as fishbone diagram. Here we need to enlist the cause on the right side and effects on the right side and then are categorized and then the main causes are grouped according to these categories.
Influence diagram :
The decision variables of a problem are represented through graphs containing nodes which is formed by decision, information and utility. The relationship between chance nodes and utility represents a probabilistic dependence.
In order to identify the risks ,several risks factors needs to be considered and should be classified whether they are internally or externally influenced . the variables whether economic or non economic should be taken into account in order to identify the various risks.
Quality management is a system of maintain quality and ensuring that the quality level of service or product is maintained. The documentation of quality management system includes several documents such as quality plan , quality manual, quality policy , work construction and records.
Quality manual :
The structure and content of the manual varies depending upon the size of the , personnel competence , and complexities involved in operations. The entire quality management system is documented in one manual if the construction company is small. On the other hand , a large c company may have different quality manuals. Several things are included in the manual such as scope of quality management system, process of business model, references which are relevant to the documentation and exclusions from the standard. some of the elements which are included in the quality manual are as follows :
• Versioning approval and information
• Objectives and quality policy
• Description of quality management system
• References which are relevant to documents
• Appendices which are relevant
• Personnel responsibilities should be defined
The first tier of the documentation of quality management is policy manual which defines what needs to be done and why. The manual should be precise and practical ,clearly written and easy to understand. It states the commitment by the organization toward the continual improvement and also toward the quality.
In order to perform and implement the policies, procedures needs to follow in documentation which include the strategies that would be used to ensure the quality. If the absence of procedure would adversely impact the activity then the procedures needs to be in place, though it is not mandatory.
Work instructions :
It usually involves machine, departments, task or product and it may be in the form of routine sheet or drawings in detail, photograph or a sample for conformity. The elements of procedures is also included in the workstations. It includes the activities to be realized in detail focusing on the methods, tools and sequencing of steps
The documentation of policies, procedures and work instructions are done through records. It may be a date or signature on some type of product. The data are provided in order to take corrective actions.
The documentation of the system establishes the processes which forms the backbone of the quality system. First of all, the processes needs to be identified and this include :
• The departments needs to be listed before categorizing.
• Quality control, sales , marketing, production control, customer service
• The processes needs to be related by using flow diagram.
• The flow chart needs to be included in the quality manual.
The quality procedures comes with a different structures and include the following elements:
• Title needs to be included for the identification of the procedure.
• Scope and purposes which explains the various aspects to be covered and not to be covered and the procedures needs to be described.
• Document control should include the change identification, reviewing date and version of documents. All this should be according to the practice which are established for the document control.
• The main section of procedure contain the description of activities which describes what needs to be done , when, where, how and by whom. The various outputs and inputs has to be explained and the resources which are included also needs ot be explained.
• Authorities and responsibility of the people to be included in the procedure.
• Records should be designed and listed resulting from the activities.
Documenting quality control :
Advantages of documentation system :
Documentation enables a detailed reconstruction , analysis of events and reviewing by providing a permanent records of the keepings. If there is any party to dispute then they can demonstrate a point of issue by bringing a contemporaneous documents document becomes one of the significant evidence in supporting the claims when the battle enters.
Documentation would facilitates effective communication between non technical and technical users. The plan of the organization and the ways of accomplishing the same would be easily explained by the documentation and it also gives an instruction to the staffs on the way of performing tasks (Love et al., 2013).
Specifications of raw material , quality manuals and the procedures relating to quality control, marketing, internal quality audits are included in the documents.
Documentation provides the basis of what actually needs to be done for ensuring the quality. It also provides the methodology performance of quality system of sub tiers suppliers and suppliers which ensures that the best quality of materials and product has been selected.
The other commercial benefits are as follows :
Operational expenses reduces : the rigorous registration process exposes the company to some drawbacks and when these are brought into light, the company can take appropriate measures to improve the processes and due to this improved efficiency , time and money would be saved (McCabe, 2014).
Increased marketability : the documentation system would help in acquiring the customers and endeavors to bring in the lucrative customers.
The list of construction documents has to be made with date when received and the contract files needs to be established in order to work effectively and it contains the information about construction documents, quotations, progress claims, site instruction, minutes of contract review, specifications and drawings.
It would attract the investors and improve the service provided to customers and it would also improve internal communication which would help the construction company in gaining the needs of the internal customers and also there is a better management of control.
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