We all know construction is a risky business—but is your firm doing all it can to evaluate and mitigate risk?
The Managing Risk in the Construction Industry SmartMarket Report risk management report by Dodge Data & Analytics surveyed over 500 owners and contractors to see where we are as an industry today, with regard to managing risk.
The numbers are concerning. The study found that 75% of the industry has experienced a dispute or claim in the last five years. These claims range from construction defects and warranty issues to subcontractor default, termination or failure.
With that in mind, the respondents were further asked to identify the top risk mitigation practices and where these practices provide the greatest value. While owners see risk differently than general contractors or trade partners, 91% of all surveyed in the SmartMarket report agreed that increased collaboration reduces risk. Therefore, it’s no surprise that the top risk mitigation techniques according to the survey are all inherently designed to bring owners and project teams together.
Here are the top three collaborative-driven practices that you might consider employing and why.
1. Formal Brainstorming
Formal team brainstorming, and the inherent collaborative nature of the process is all about finding the best way to build. Done purposefully, the practice can increase reliability, improve safety and project schedule, reduce construction costs and increase a project team’s ability to innovate.
2. Checklists, Forms and Risk Registers
There is wide agreement among owners, general contractors and trade contractors that using checklists, forms and risk registers ‘allow the original intent for the level of project quality to be maintained.’
3. Expert Input
Whether internal or external, expert advisors reduce risk. However, more than 50% of owners and general contractors surveyed use external resources compared to only one-third of trade contractors. And, the study further found that ‘while owners equally value internal and external input, twice as many contractors prefer internal expertise to that secured from external parties.’ Further, for those market segments that heavily rely on external experts, such as general building and industrial, do so because they see a direct correlation to improved project safety—an area that we are all deeply invested.
The value of formal brainstorming, checklists, forms and risk registers and expert input, whether internal or external include: increasing the reliability in overall project performance, reducing the cost of construction and improving project schedule and project safety.
About the Author:
With over 20 years of experience in the construction industry, Joe Eberly has served in multiple roles at e-Builder from Business and Sales operations to Consulting to Sales Engineering. He has worked directly with owner organizations across multiple industries in scoping and designing modern solutions to improve project performance, streamline processes, eliminate data silos through multi-system integrations and cloud-based project management, and reduce overall program risk. He graduated in 1994 from Southern Illinois University with his BS in Instructional Systems Design.