syed m. ahmed, ph.d. department of construction management risk management in construction syed m....

Syed M. Ahmed, Ph.D.Syed M. Ahmed, Ph.D.Department of Construction Management

Risk Management in ConstructionRisk Management in ConstructionRisk Management in ConstructionRisk Management in Construction

Syed M. Ahmed, Ph.D.Syed M. Ahmed, Ph.D.Department of Construction ManagementDepartment of Construction Management

Florida International University, Miami, FloridaFlorida International University, Miami, Florida

Syed M. Ahmed, Ph.D.Syed M. Ahmed, Ph.D.Department of Construction ManagementDepartment of Construction Management

Florida International University, Miami, FloridaFlorida International University, Miami, Florida


IntroductionIntroduction

TimeQuality

Cost

ProjectConstraints

ProjectConstraints

SuccessSuccess


IntroductionIntroduction

DelaysPoor

Quality

Costoverrun

ProjectConstraints

ProjectConstraintsRisksRisks


What is a Risk?What is a Risk?

Risk

Unknown

Unexpected

Undesirable

Unpredictable

endeavor

action


Risks in ConstructionRisks in Construction

Contractor Supplier

ProjectManager

Engineer

Architect

Client

QuantitySurvey

Inspector`

Soc

ial F

acto

rs

Political Factors

Economic Factors

Env

ironm

enta

l Fac

tors


Types of Risks in ConstructionTypes of Risks in Construction

Physical

Risks

Financial

Economic&

Actsof

God

Political

Environ.&

Design

Const.Related



Physical

Risks

Financial

Economic&

Actsof

God

Political

Environ.&

Design

Const.Related

Acts of God

Flood

Earthquake

Landslide

Fire

Wind damage



Physical

Risks

Financial

Economic&

Actsof

God

Political

Environ.&

Design

Const.Related

Physical

Damage to structure

Damage to equipment

Labor injuries

Fire

Theft



Physical

Risks

Financial

Economic&

Actsof

God

Political

Environ.&

Design

Const.Related

Financial & Economic

Inflation

Availability of funds

Exchange rate fluctuations

Financial default



Physical

Risks

Financial

Economic&

Actsof

God

Political

Environ.&

Design

Const.Related

Political & Environmental

Changes in laws and regulations

Requirement for permits

Law & order

Pollution and safety rules



Physical

Risks

Financial

Economic&

Actsof

God

Political

Environ.&

Design

Const.Related

Design

Incomplete design scope

Defective design

Errors & omissions

Inadequate specifications



Physical

Risks

Financial

Economic&

Actsof

God

Political

Environ.&

Design

Const.Related

Construction Related Labor disputes

Labor productivity

Different site conditions

Design changes

Equipment failure


Risk ManagementRisk Management

A systematic approach to control the level of risk to A systematic approach to control the level of risk to mitigate its effects.mitigate its effects.

Risk IdentificationRisk Identification

Risk EstimationRisk Estimation

Risk EvaluationRisk EvaluationRisk ResponseRisk Response

Risk MonitoringRisk Monitoring

ControlledRisk

Environment

Risk IdentificationRisk Identification

Risk EstimationRisk Estimation

Risk EvaluationRisk EvaluationRisk ResponseRisk Response

Risk MonitoringRisk Monitoring

ControlledRisk

Environment

RiskAnalysis

Risk Management Life Cycle


Risk AnalysisRisk Analysis

Estimating the potential impacts of risk to decide what risks to Estimating the potential impacts of risk to decide what risks to retain and what risks to transfer to other partiesretain and what risks to transfer to other parties

Ranking options

Comparing options

Descriptive analysis

Qualitative

Risk AnalysisTechniques

Probability analysis

Sensitivity analysis

Simulation techniques

Quantitative


Risk ResponseRisk Response

Risk Response Methods

Elimination Transfer ReductionRetention





Risk Elimination Practices

Tendering a very high bid

Placing conditions on the bid

Pre-contract negotiations as to which party takes certain risks

Not biding on the high risk portion of the contract





Risk Transfer

Two basic forms.

(a) The activity responsible for the risk may be transferred, i.e. hire a subcontractor to work on a hazardous process

(b) The activity may be retained, but the financial risk transferred, i.e. methods such as insurance.





Risk Retention Handling risks by the company who is undertaking the project.

Two retention methods, active and passive.

Active retention is a deliberate management strategy after a conscious evaluation of the possible losses and costs of alternative ways of handling risks.

Passive retention occurs through negligence, ignorance or absence of decision.





Risk Reduction Continuous effort.

Related with improvements of a company’s physical, procedural, educational, and training devices.

Improving housekeeping, maintenance, first aid procedures and security.

Education and training within every department .


Thank YouThank YouThank YouThank You

syed m. ahmed, ph.d. department of construction management risk management in construction syed m....

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