Mitigation planning in construction protects both the contractors and project stakeholders from possible financial or contractual repercussions from unforeseen circumstances during the construction process. Conversely, the mitigation planning process uncovers potential risks that could cause the project to fail or become delayed.
Risk mitigation planning is a critical element that project teams must explore to reduce the overall negative impacts of various risks to construction projects. The mitigation process includes mitigation planning, mitigation implementation, mitigation monitoring, and mitigation review.
Taking mitigation planning into account is very important for construction projects in Malaysia, especially when the project is extensive and complex. Although mitigation planning is mentioned briefly in most construction contracts, it plays a crucial role in ensuring projects remain within the specified timeline and budget agreed upon in the contracting phase.
A Brief Background On What Mitigation Planning Is
Those who pursue a profession in the construction industry understand how crucial mitigation planning is in project planning and implementation. Aside from minimising the negative impacts of potential risks to a project, mitigation planning also increases the probability of reaching successful project completion.
Generally, construction projects are complex, involving numerous teams working simultaneously to complete project goals and milestones. Additionally, large scale projects also require significant investments that stakeholders must protect to ensure the feasibility of the process. With that in mind, project leads should take the time to outline a solid strategy that addresses all the potential risks that may arise during project implementation.
Such strategies need to include a plan of action and methods of monitoring and evaluating the results of the steps taken to gauge whether or not they can likely be applied again to address similar risks. Here, we will explore the seven common construction risks and how mitigation planning can avoid or curtail the negative impacts of such project risks.
Project Risks The Malaysian Construction Industry Faces
The construction industry has faced rapid growth and development within the last century. As more governments and businesses focus on expanding their infrastructure, more and more projects have been initiated to fuel demand. Construction remains a vital aspect of modernisation and sees the most potential for risks that require the sector to have concrete plans of action that mitigate the effects on the project goals and objectives.
But, what exactly are the risks most commonly faced in construction projects? In the next section, we’ll go through the types of risks and outline how project risk management can avoid them through proper risk mitigation planning. You can remember then with the MNEMONIC of OPEN-CCD.
- Organisational Risks
Like project management risks and organisational risks that a handful of construction companies face at one time or another. An organisational risk arises when a project faces an unskilled workforce, a sudden turnover of staff, or changes in stakeholder point person.
In cases where a project assumes an organisational risk at any point in the project lifecycle, the project manager and their team would benefit from reevaluating the current stand of all parties involved to pinpoint alternative solutions that would keep the project schedule and budget in check would it occur.
- Project Management Risks
A project management risk to construction projects is brought about by internal issues. For example, a team member may cause the project to go off course by making management decisions that are not approved or considered. Other project management risks include poor quality control, lack of coordination among workers and teams, insufficient training for all relevant parties involved in the construction process, failure to complete milestones or goals on time, and others.
The failure of a project management team to create an organised and cohesive plan of action can result in a lack of proper coordination and understanding among project managers, coordinators and teams. This often leads to an inability of the project team to effectively communicate and resolve issues that may arise during construction.
Project Management mitigation planning includes creating a clear hierarchy within the task force and providing thorough orientation to all relevant parties involved. Moreover, a project management risk can be dealt with by ensuring that managers, planners, schedulers, and analysts are all involved in the project’s planning stage. By doing so, even if one is unable to fulfil certain tasks, there is someone who can step in and manage from that point onwards without risking discrepancies in the workflow.
- Economic Risks
Economic risks are considered external risks that can impact a construction project due to the inherent market volatility of economic conditions. These risks are often in the form of shifting government policy in the approval and submission of construction approval paperwork or the fluctuating prices of materials and equipment. Other areas include market or currency fluctuations, which could change at any time and leave the contractor with an unforeseen rise in materials and labour costs.
In order to cull the impacts of economic risks, project managers can incorporate preventive measures such as accounting for potential price increases of materials. Working directly with a delay analyst in predicting market behaviour allows project management teams to plan by purchasing or finding alternative sub-contractors for essential materials and equipment before prices are expected to increase.
Mitigation plans that address economic risks may likewise incorporate budget and scheduling leeway. This allows project teams a certain amount of elbow room to manoeuvre the cost and timeline of the project should the risk expected to take a different turn or is more drastic than expected.
- Natural Risks
Natural risks to a construction project are external risks that can cause unwanted delays and financial overruns if not accounted for. Countries like Malaysia experience severe rainfall seasons, making projects prone to time delays due to work cancellations brought about by inclement weather.
In such cases, the project’s mitigation plan should include a precise course of action in dealing with the natural risk most likely to occur during the project implementation. Planning around expected weather conditions can lessen the likelihood of unexpected non-working days.
When it comes to other natural risks such as earthquakes or nearby forest fires, construction projects that face these potentials must likewise create a detailed plan of action that safeguards the construction site as much as possible and allows work to resume undeterred after the fact.
- Construction Risks
As mentioned earlier in this article, construction projects require a certain degree of complexity that makes a risk mitigation strategy essential. This is more true when it comes to construction risks caused by potential accidents and on-site work hazards such as heavy machinery and harmful chemicals used in the proper project.
Construction risks are those that pose a danger to the health and wellbeing of the onsite team and workforce. Accidents and injuries on construction sites must be avoided at all costs, so mitigation planning should include ways in which an accident on a construction site can be reduced or avoided altogether.
A thorough risk assessment will often bring up construction risks when high-risk activities like operating heavy machinery or working on upper levels begin. With that, a mitigation plan can be set in place to ensure such risks do not come to light or can be minimised to the extent of becoming less likely to occur.
- Contractual Risks
Risks brought about by requirement gaps or omissions are classified as contractual risks to the project. Such risks include:
- Additional requirements not outlined in the contract
- Changes to the agreed-upon budget & timeline
- Requests for additional items to be included in the project
- Changes to the scope of work
- Changes in workforce or subcontractors.
Creating a mitigation plan for contractual risks involves setting specific milestone goals that meet the standards and objectives of each project phase. By creating clear cut goals, project teams can pinpoint exactly where the contractual changes are applied and how best to address the change without significantly impacting the deliverables.
- Design Risks
A design risk occurs when the project’s planning phase takes longer than expected or if a crucial element has been overlooked for errors and is discovered during the implementation phase. This is a more specific form of contractual risk, wherein the project’s scope may change due to implementation scenarios that were not considered during the planning or contracting stage.
Suppose the project team or stakeholders feel there is an aspect of the project that cannot fully be outlined until implementation. In that case, both contractors and stakeholders should incorporate contingency funds and reasonable flexibility to the project scope. Doing so allows for more fluid changes to specific risks that may arise without impacting the project deadline date more than needed.
Ideally, all design elements are included in the plans before implementation. As a way to prevent design risks, using construction software that can predict the impact of changes to a complex system proves helpful in assessing the effectiveness of mitigation plans in dealing with the risk events.
Benefits of Risk Assessment in Project Success
The mitigation planning process can be highly beneficial to construction projects in more ways than one. Firstly, mitigation planning can reduce the risk of a project failure by identifying potential risks and creating concrete contingency plans to deal with them if and when they arise.
A mitigation plan followed through from start to finish will lead to more effective responses that reduce the potential risk of construction getting out of control and completely derailing the project timeline, budget, or feasibility.
Secondly, a well-thought-out mitigation plan can prevent or lower the possibility of a breakdown in communication, which is crucial to construction projects as they require consistent and clear communication at all levels and phases.
Without a cohesive plan of action in dealing with common construction risks, each team is left to its own interpretation and strategy in dealing with risk. This leads to indecisive planning among teams and a breakdown in communication, as everyone has their own idea of dealing with the situation.
Lastly, mitigation planning reduces financial risks for construction projects. Risk management plans will establish how events should be mitigated. The mitigation plan can help ensure that strategies are effective and the timeline is executed efficiently.
Rationale Behind The Risk Management Process
Mitigation planning takes a pessimistic approach to project planning. This is because project team members can only fully assess risk by seeing it in the light of the worst possible scenario. The construction industry can turn high probability risks into low probability risks with steps that maintain the project’s goals and objectives. Supported by proper risk monitoring, teams can manage risk without compromising the agreed-upon project deadlines and cost estimates.
Within the Malaysian construction industry, mitigation planning against common construction risks provides a “cushion”, so to speak, that works to ensure projects do not reach a point of gridlock wherein no progress can be made. Instead, it will keep the flow of work and progress even when difficulties arise.
- 7 Key Elements of a Construction Risk Management Plan: Manage Your Project Risks – https://www.jonasconstruction.com/blog/construction-risk-management-plan/
- Seven major risks in construction projects and how to avoid them – https://www.planradar.com/builders-risk/