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Risk Assessment And Management In

Construction Project
By
Mr. Suraj M. Markad
Mr. Kunal P. Nimbalkar
Mr. Rahul S.Angre
Mr. Shubham S. Mangire

Guide
Amol T. Pawar

Dept. Of Civil Engg.


RMD Sinhgad School Of Engg,Warje,Pune 58
CONTENTS

 INTRODUCTION
 HISTORY
 TYPES OF RISKS
 RISK MANAGEMENT
 LITERATURE REVIEW
 CASE STUDY
 FUTURE SCOPE
 REFERENCES
INTRODUCTION
Success
Cost

Project
Constraints

Quality Time
Cost
overrun

Risks
Poor
Quality
Project
Constraints
Delays
WHAT IS A RISK ?
Risk means uncertainty and the results of uncertainty…
risk refers to a lack of predictability about problem
structure, outcomes or consequences in a decision or
planning situation.”

Unknown

Unexpected
endeavor
Risk
action
Undesirable

Unpredictable
Problem Statement

1) High Rates of accident are caused in construction sites because


safety management is not developed in our country

2) National laws and regulation are not effective for health safety and
environmental management system in our country

3) To overcome financial risks in construction project

4) To Manage Contractual and legal documentation


AIM:
To analyse risks occuring in construction project and to resolve and
minimize them.

OBJECTIVE :

1.To Plan And Take Management Action To Achieve The Aim Of Removing Or Reducing
The Risks.

2.To Understand Risks Like Technical, Logistical, Financial , Socio-political & External
Risks

3.To Set Stretch Target As A Challenge to Project team

4. To Study The Financial Aspect.

5. This Approach Tries To Manage & Improve Construction Process With Min. Cost &
Max Value By Considering Customer needs

To be continued
6.To Determiner Profit And Loss In Construction Project

7. To Study About Project duration Effect

8. To Study The Risks Like

i) Technical Risks
ii) Logistical Risks
iii) Financial Risks
iv) Organizational Risks
v) Socio-political
vi) Contractual and legal
HISTORY

Newer projects pose more risk because the process has not been
refined with the passage of time. If a project of similar nature has
been done many times before, then the likelihood of success with
the current project is also enhanced.
Physic
al
Financial &
Natural Economic

Risks

Political Const.
&
Environ. Related

Design
Physical
Financial
&
Natural
Natural Economic
 Flood
 Earthquake
Risks  Landslide
 Fire
 Wind damage
Political
Const.
&
Related
Environ.
Design
Physical
Financial
&
Physical
Natural Economic
 Damage to structure
 Damage to
equipment
Risks
 Labor injuries
 Fire
Political
&
Const.  Theft
Related
Environ.
Design
Physical
Financial
&&
Financial & Economic
Natural Economic

 Inflation
 Availability of funds
Risks
 Exchange rate
fluctuations
Political
Const.
 Financial default
&
Related
Environ.
Design
Physical
Financial
&
Political &
Natural Economic Environmental

 Changes in laws
and regulations
Risks  Requirement for
permits
 Law & order
Political
Const.
&
Related  Pollution and safety
Environ.
rules
Design
Physical
Financial
&
Design
Natural Economic
 Incomplete design
scope

Risks  Defective design


 Errors & omissions
 Inadequate
Political
Const.
specifications
&
Related
Environ.
Design
Physical
Financial
&
Construction Related
Natural Economic

 Labor disputes
 Labor productivity
Risks
 Different site
conditions

Political
 Design changes
Const.
&
Environ.
Related  Equipment failure
Design
RISK MANAGEMENT
A systematic approach to control the level
of risk to mitigate its effects.

Risk
RiskIdentification
Risk Identification
Identification RiskMonitoring
Risk Monitoring
RiskMonitoring

Controlled
Risk Risk
RiskEstimation
Risk Estimation
Estimation Risk
Analysis Environment
Risk
Risk Response
Risk Response
Response
Risk
RiskEvaluation
Risk Evaluation
Evaluation

Risk Management Life Cycle


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

Risk Analysis
Techniques

Quantitative Qualitative

Probability analysis Ranking options

Sensitivity analysis Comparing options

Simulation techniques Descriptive analysis


Risk Response
Risk Response Methods

Elimination Transfer Retention Reduction

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 Response
Risk Response Methods

Elimination Transfer Retention Reduction

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 Response
Risk Response Methods

Elimination Transfer Retention Reduction

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 Response
Risk Response Methods

Elimination Transfer Retention Reduction

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 .
LITERATURE REVIEW
• Dr. Nadeem Ehsan (2010) IEEE ‘Risk Management in construction industry’
He focused on concepts of risk management and development of a survey
questionnaire and suggestions related to risk management practices in
construction industry of Pakistan. He developed a questionnaire by going
through literature on construction risk. He discussed with personnel working for
construction industry in Pakistan to identify and assess, the risk factors relating
to construction industry in Pakistan. He conclude that Formal risk analysis and
management techniques are rarely employed by Pakistani construction industry
owing to the lack of experience and knowledge in the area. The perception of
risk by contractors and consultants is mostly based on their intuition and
experience.

• Martin Schieg (2006) ‘Risk management in construction project management,’


Journal of Business Economics and Management, 7:2, 77-83
In his research particular importance is attached to the implementation and
realization phase. He concluded that Effective risk management requires
commitment as well as the risk conscious behavior of each individual.
Risk management can therefore only be implemented and enforced
effectively if communication channels in the enterprise are created,
which guarantee the direction of the information to the places concerned
in each case.

• Patel Ankit Mahendra, Jayeshkumar R. Pitroda, J. J. Bhavsar ‘A


Study of Risk Management Techniques for Construction Projects in
Developing Countries’ International Journal of Innovative Technology
and Exploring Engineering (IJITEE) ISSN: 2278-3075, Volume-3,
Issue-5, October 2013
In there research they focused on the general concepts of risk
management. Risk identification has been done with the study of
literature. A questionnaire was developed after the identified factors
affecting risk. They concluded that The risk management technique
should be applied into any construction project at the initial stage of the
project to get maximum benefit of the technique. Hence, there is
thriving need to have a well-documented procedure which should be a
one stop solution to all hazards that are likely to occur during project
life cycle.
FUTURE SCOPE
In this topic we can make the focus on the general concepts of risk
management. Risk identification can be done with the study of literature. A
questionnaire can be developed after the identifying factors affecting risk. A
risk assessment can be done with the aid of qualitative and quantitative
analysis. Risk response will be planned on the basis of the outcome of the
study. Risk control will be the last step in the process of risk management.
REFERENCES
• Dr. Nadeem Ehsan (2010) IEEE ‘Risk Management in construction
industry
• Martin Schieg (2006) ‘Risk management in construction project
management,’ Journal of Business Economics and Management, 7:2, 77-83
• Patel Ankit Mahendra, Jayeshkumar R. Pitroda, J. J. Bhavsar ‘A
Study of Risk Management Techniques for Construction Projects in
Developing Countries’ International Journal of Innovative Technology and
Exploring Engineering (IJITEE) ISSN: 2278-3075, Volume-3, Issue-5,
October 2013
• Ewelina Gajewska, Mikaela Ropel ‘Risk Management Practices in a
Construction Project’ Department of Civil and Environmental Engineering
Division of Construction Management Chalmers University of Technology.
• Mr. Satish K. Kamane, Mr. Sandip A. Mahadik ‘Risk Management in
construction industry’ IOSR Journal of Mechanical and Civil Engineering
(IOSR-JMCE) ISSN: 2278-1684, PP: 59-65
THANK
YOU