David Emery MSc, offsite and MMC consultant at the Supply Chain Sustainability School, examines how to identify, assess and mitigate risk in construction projects
At its best, the construction industry is capable of delivering large, extremely complex projects in the most arduous of conditions. But the sector is characterised by low profitability, a fragmented supply chain and high risk.
We need our industry to become sustainable in all senses of the word, but especially in terms of having a sustainable business model. The sector cannot continue being unattractive to work in, harmful to its workforce and harmful to the environment; it has to find ways to increase profit margins and reduce the waste of resources.
Above all, it needs to minimise and manage risk much more effectively than in the past.
Where does risk occur and what does it look like?
The dictionary definition of risk is:
Risk, Noun:
- A situation involving exposure to danger.
- The possibility that something unpleasant or unwelcome will happen.
- The possibility of financial loss.
In construction projects, even if risk doesn’t become reality – remember risk is only the possibility that the worst might happen – the techniques that our industry deploys to respond to risk are in themselves detrimental to projects.
Firstly, most suppliers and subcontractors build-in margins to their cost analyses just in case; these margins cumulatively increase the cost of a project.
Secondly, companies are risk-averse and the tendency is for project participants to push risk towards other parties, where it often falls upon those least able to deal with it!
Risk can take many forms. Risk arises from activities which are dangerous, but which may nevertheless be unavoidable; for example, it may be impossible to avoid having to work at height, or in confined spaces, or with hazardous materials.
In such cases, the proper course of action is mitigation, which involves recognising the statistical likelihood of the worst-case scenario occurring and ensuring the consequences – should they occur – are eliminated or, at the very least, minimised.
Risk arises from the unknown. No one can be absolutely sure, for example, about whether or not inclement weather might occur in several months’ time. But risk mitigation measures will – or should! – be in place, nevertheless.
Often, though, risk arises from unpredictability.
But what causes a project to be unpredictable?
One of the most common causes is poor or missing information.
Finding the information you need and being sure that it’s up-to-date and compliant is certainly easier today than when I began my career in the last century!
But despite the well-established concept of the single source of the truth, actually having the correct documents at the correct location on site at the exact time you need them still presents challenges. Furthermore, much of the documentation might display design intent – or WHAT is needed – but often it relies on the skills of the operative to decide HOW to build it.
Other risks arise from delays in the project programme, cost overruns and quality issues. As any project manager knows, there is always a compromise in the Time-Cost-Quality triangle (no project can deliver on all three!), but it is equally true that once failure occurs in one area it often negatively impacts the other two.
In terms of risk to the workforce, multiple trades working in the same spaces increases accident risks and as we’ll see later, my own research suggests that the construction workforce is at risk of mental ill-health by the uncertainty inherent in ‘traditional’ construction.
How can we reduce risk?
Offsite construction reduces risk by taking much of the work away from the hazards and unpredictability of the construction site and into the safer and more controlled factory environment.
In factory processes, not only is design intent documented, the workforce is clear on the processes required to achieve the required outputs. The physical risks of working in hazardous conditions is reduced, but my research shows that the greater project certainty that offsite construction delivers is good for the on-site workforce’s mental wellbeing too.
Offsite construction minimises the risk of late delivery, since manufacturing is unaffected by weather or on-site hazards; costs are less likely to vary due to offsite manufacturers’ ability to procure in larger quantities, plus the shorter duration of offsite projects make them less susceptible to price increases; quality standards are easier to achieve in a controlled environment and through optimised, repeatable processes.
Indeed, optimised and repeatable processes are pre-requisites for automation and I personally envisage that automation and robotics will, in the fullness of time, bring even greater advantages to the offsite sector.
It’s possible to identify benefits of industrialised construction throughout the entire construction process, from inception, through design, procurement, delivery and operational phases – the whole construction lifecycle, in fact – and one of the most significant of these is the ability to capture and store accurate data about our projects through all of these phases.
Such a “golden thread” of information about our building projects supports compliance with legislation, helps us operate buildings more efficiently and, I would suggest, adds monetary value to our portfolios.
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