How to Manage Risk in Construction Projects
If there is one thing any construction owner, contractor, and subcontractor knows—construction is a risky business. This should not be a deterrent to choosing construction as a career because there are ways to limit your risk. One of the ways to do so is through an effective and efficient risk management plan.
What’s a Risk?
A risk is the likelihood that a loss may occur. There are many types of risks that occur in construction. The risks you will need to manage include financial, contractual, miscalculation of time and resources, people management, and health and safety issues.
Focus on Risk Management
Risk management is about being proactive. Before work on a construction project begins, owners and contractors need to figure out what risks are present and what measures can be taken to eliminate or reduce them. This involves contractors and owners coming together to share their perspectives on the risks they face and deciding how to balance the risk among involved parties.
Basic Steps to Risk Management
The way you handle risks on a project will determine your success in reducing risk. The following is a basic guideline for creating your risk management process.
- Assemble a team
- Identify hazards
- Determine the risk level of the identified hazards
- Decide which risk control measures to take
- Accurate recordkeeping
- Implement and communicate processes
- Monitor the process
Get an Attorney
One of the ways to reduce risk within the confines of a contract is through risk allocation provisions. When it comes to contracts, an attorney is a major asset. As Florida construction attorneys, we see the effects of poorly written contracts that often lead to a costly litigation process. This is why it’s important to hire a legal expert ahead of time to review your contract.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.