Construction is a hazardous business. Each construction project is distinctive and comes with its set of challenges and opportunities. Identifying and managing construction project risks can be difficult, but not unfeasible with careful planning and execution. When a risk turns into reality it can upset and derail a project which is why construction risk management is so essential. In order to stay away from disaster, you need to be able to appropriately assess, control, and keep an eye on risks once they have been identified.

Risks are not always a negative. Being able to identify and manage risks effectively can result in augmented profits, establishing good relationships with clients that result in more projects, and being able to develop your business into new markets and sectors.

Construction Risks Types

For appropriate construction risk management, you should know the risk types intrinsic in construction ventures. These can be contractual, financial, environmental and operational and can be caused by both internal and external sources.

Common risks include:

• Safety hazards that result in worker accidents and injuries

• Managing change orders

• Incomplete drawings and badly distinct scope

• Unidentified site conditions

• Badly written contracts

• Unexpected augments in material costs

• Labor deficiencies

• Damage or robbery to tools and equipment

• Natural calamities

• Issues with suppliers and subcontractors 

• Availability of building materials

• Improper project management

When risks end, they can have an impact on costs, schedules, and performance of your project which will lead to postponements and arguments down the road. The great news is most of these risks can be controlled and reduced with appropriate planning and good project management.

Construction Risk Management Process

Once you have identified the prospective risks to your project, you now need to sit down and evaluate each risk based on the possibility of becoming reality and the impact they will have on the project if they occur. Rank the impact and possibility of each risk as medium, high, or low.

High impact, high possibility risks must be handled first, while risks with a low possibility and low impact can be tackled last. Factor in the amount of money, time, and work each risk will need to efficiently manage.

Good construction risk management needs a high level of teamwork and communication with all parties involved. Keeping everyone on the same page and working together will permit you to identify and manage risks before they become an issue. Remember, risks can result in great rewards when managed effectively.

Importance of construction claims management

Construction claim management documents, identifies, and pursues compensation for construction delays, cost overruns, and other problems. The objective is to reduce construction claims’ financial impact and guard the owner’s interests.

Claims can come up from several factors, including design problems, changes in the scope of work, poor coordination among contractors, unexpected site conditions, and delays in material deliveries. Construction claims are often difficult and time-consuming to solve.

They can result in significant cost overruns, schedule postponements, and legal disputes. An effective claim management system must be practical instead of being reactive. It must identify prospective claims early on and take steps to stop them from happening. When a claim does take place, the system must offer a clear process for review, documentation, resolution, and negotiation.

The first step in managing claims is to have a perfect understanding of the contract documents. The contract should spell out the responsibilities and rights of each party in case of a dispute. It should also establish procedures for resolving and submitting claims.

Next, you need to track performance and project milestones against them. This will help you identify prospective problems early on so you can take action to stop them from becoming full-blown claims. When a claim does take place, document it methodically. Include photos or videos if possible. Be sure to get supporting documentation from any third parties involved 

Significance of claims management

In a construction project, there are several opportunities for things to go wrong. Hence, effective claims management is so significant. Claims management identifies, assesses, and resolves claims coming up from construction assignments.

Claims management can help avoid or mitigate disputes, save time and money, and guard your reputation. It is an essential part of any construction project and something every construction manager should be recognizable with. Several varied types of claims can come up in a construction development. Examples include schedule delays, change orders, warranty issues, and contract disputes. And while some claims are comparatively minor and can be easily determined, others can be much more serious and expensive. That is why it is important to have a solid claims management plan before things begin going wrong.

Construction claims management is a complicated process that needs attention and precision. By following the steps outlined in this guide, you can make sure that your construction claim is handled as effectively as possible and that all parties involved are given their due consideration. With cautious planning and communication between all stakeholders, it is possible to negotiate an acceptable resolution for any dispute or issue that may come up throughout the life of a project.