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 Principles of Risk Management

Principles of Risk Management

Risk management in construction projects is of great importance. Although at the start of a project, through the introduction of risk management, and increased expense is incurred, this is compensated for, in particular through the advantages of risk management. In the planning phase, possible risks for the subsequent project success can be identified and reduced through their incorporation into the planning.

In projects, in particular, the following risks occur, which are broken down according to risk types:

  • Quality risks – Defect in interim results – Lacking application of project methods – Too few controls/ tests
  • Personnel risks – Lack of skills – Disagreements in the team
  • Cost risks – Planning changes – Complicated project conditions – Customer fails to pay
  • External risks – Natural occurrences – Political changes – Changes in society – A shift in the market/ new markets – Legal developments – Shifts in sectoral trends.

The customer’s way to deal with chance distribution may take the accompanying structures:

  1. Self-maintenance of the hazard;
  2. Protection, either by the customer or by the structure temporary worker;
  3. Passing the hazard to the structure of temporary workers by means of the agreement archives.

 

The risk assessment comprises the qualitative assessment and quantitative measurement of individual risks including the interrelationship of their effects. With the help of the results of risk assessment, for example, a risk portfolio of a project can be illustrated and compared with others. The following methods of risk assessment and risk comparison can also be used in construction projects:

  • Key performance indicators
  • ABC analysis
  • Risk map
  • Risk team analysis.

 

Controlling risks Controlling risk is the active influencing of the risks determined in the context of the risk analysis. Measures of dealing with risk can be differentiated between cause-related and effect-related measures. Strategies of controlling risk are accordingly the following:

  • Avoidance
  • Reduction
  • Passing on the risk
  • Bearing the risk by oneself.

 

Duty regarding completing the opportunity and hazard the executives are borne by the undertaking supervisor. The obligation of the task the board in case of hazard distinguishing proof is to find any developing dangers of development extend and incorporate these in a hazard list. From the area of project controlling, in particular, the following should be mentioned:

  • Plan of services
  • Pursuance of set dates/deadlines and progress
  • Pursuance of costs
  • Quality assurance
  • Analysis of contracts.

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