The construction industry has notoriously been known for being risky. The industry is always under pressure to save time and money, produce a high return on funds invested and complete projects efficiently. Each project will also come with its own set of challenges and opportunities.
This focus on speed in a hazardous environment can lead to health and safety concerns in addition to the evergreen concerns already posed for every project regarding budget and deadlines. When these risks become a reality, a project can be completely derailed. This is where a risk register comes in. Failure to plan is planning to fail.
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What is a risk register?
Managing project risk is often more complicated and subjective than managing performance. One of the most trusted and relied upon documents for managing project risk is known as a risk register.
Risk registers are used across a variety of industries. They are a critical tool used for capturing information about risks and risk management for a particular project. These are often used by project managers but can be used by others as well.
What is the risk register construction?
In construction, risk management is used to not only identify potential risks involving the budget and the timeline but also to identify potential health and safety risks.
Since there are project managers in construction, they are likely the ones who will be managing the risk register for your construction project in Australia. However, this is not solely designed for project managers.
When completing a risk register for construction in Australia, here are some risks to consider:
- Managing change orders
- Poorly written contracts
- Unknown site conditions
- Shortages for labor
- Natural disasters
- Issues with subcontractors and suppliers
- Safety hazards onsite that lead to worker injuries or accidents
A risk register can help you identify these risks.
Now that you are familiar with the types of risks that might be included in your construction risk register, it is time to talk about how to identify those risks using a risk register.
Identifying project risks should be done as early as possible in a project. In construction, it is ideal for these to be done at the very beginning of the preconstruction phase.
Once you know a project is coming down the line, hold brainstorming sessions with the project team and key stakeholders to identify these risks. Remember, you aren’t looking to solve any problems just yet.
The goal of these meetings should be to identify as many scenarios as possible that could negatively impact the upcoming project.
It is also a good idea to review your list of common potential project risks and maybe risk registers from other similar projects to see things that have happened in the past.
A risk register can help you manage these risks.
Identifying your risks is just the first part of a risk register. Now it is time to either mitigate those risks or develop a plan to, should they arise.
First, it is important to outline the probability of each risk becoming a reality. Next, you should outline how much of an impact each risk would have on the project. You can rank the impact and probability of the risk as low, medium or high.
If a risk is a high impact and high probability, it should be your top priority. Meanwhile, risks that are low impact and low probability can be tackled at the end. For each of these risks, it is important to note the amount of time, work and money that will be required to effectively manage each risk.
Now it is time to determine what you will be able to do with the risk:
Can you avoid it?
Avoiding a risk might mean turning down or negotiating a contract. There is no shame in walking away from a project where the risk is greater than the potential reward.
This can also help you earn the client’s respect, knowing that you won’t accept just any job that comes across the table. Your business takes on projects where you are confident both parties will be happy in the end.
Can you transfer it?
Work with other stakeholders to determine if they can help manage the risk for you. Depending on the risk and the identified mitigation process, it might be better to outsource the management of that risk.
Can you mitigate it?
Mitigation is the goal of each risk. But eliminating, reducing and accepting risks takes careful planning. Break each risk down into an actionable item and don’t over commit yourself and your business by trying to handle multiple risks.
Do you just have to accept it?
This option is last on our list for a reason. You want to think long and hard before deciding to accept risk. If something is low probability and low impact, then accepting it probably isn’t that big of a deal. But any risk with a greater impact and/or probability than that could be an issue.
The Benefits of a Risk Register in Construction
A risk register helps you identify potential project threats and either preemptively mitigate those issues, or at least make a plan to mitigate them. But it also goes far beyond that. Having a risk registers can help you increase your profit margins, establish better relationships with clients resulting in more projects and being able to successfully expand your business into new markets.
While you can’t prevent disaster entirely, you can plan for it to at least lessen the repercussions. A good risk management process and a successfully completed risk register, do require a high level of collaboration and communication with all parties involved.