All projects are characterised with risks and uncertainty. However, a construction project is more risky and challenging than any other project in other industries. A construction project is considered more risky because of the problem of rising in the estimated costs and court litigations which are common in construction industry. With complex and dynamic nature of construction project, lack of standard implementation of risk management is one of the major setbacks in the construction industry. In the UK, a construction industry has a very poor record of managing risks for many decades, and lack of implementation of risk management in the construction projects has led many projects not meeting the deadlines, and this has resulted to court litigations and consequent projects termination. Thus, risk management is very critical in the construction industry and to avoid these risks, there is need to identify uncertainties associated with a project. It is essential to realise it is impossible to eliminate entire risks in a construction project, however with adequate implementation of risk management, risks associated with a project could be minimised. (Mills, 2001).
The objective of this project is to provide a detailed risk management for the project of New Art Exchange Project Group (NAEPG).
The paper provides overview of risks management in order to enhance greater understanding on how NAE could mitigate the risks associated with the project.
Overview of risk management
Several definitions have been provided for risks. Office of Government of Commerce (2007) defined risks as uncertainty that can have positive or negative impacts on a project. On the other hand, Mills (2001) defined risks as adverse effect that can lead to loss in the value of a project. Typically, the risks and uncertainty are part of the construction project. To avoid risks complication, there is need to implement risk management in all construction projects.
For the NAE project, there is need to apply successful risk management in order to avoid risks complexity in the project. It is also essential to identify the risks that may have detrimental effects to the project because risks can come from different sources in a construction project. To enhance adequate risk management in NAE project, there is need to observe the following risk management process
Identifying , assessing the risks, and rank risks to make the risks explicit
Analysis of risk to find effective method to manage these risks.
Documentation of risks identified.
Focusing on the major part of the projects risks.
Making informed decision on risks mitigations as well as making provision for adversity.
Take step in minimising the potential damage if the worst happens.
Monitoring and Controlling the risks manifested in the project.
Develop excellent communication among team member.
Reviewing the risks in the project at regular interval
Identifying the opportunities in order to enhance the performances of a project.(Mills, 2001).
It is essential to realise that successful risk management involves identifying as well as assessing the impact of the risks on the project. There is also need to develop and maintain a risk register to establish the procedures to actively manage the risks throughout the projects life cycle. (Turner Townsend).
Risk register for New Art Exchange Project Group
Risk register is essential to identify the potential risks that NAE project could be facing during project life cycle. It is essential to note that identification of risks is essential to find solution to the risks facing NAE project. (Constructing Excellence).
During the project 9Government bureaucracy EELEnsure solid understanding on government policy on construction. Before project starts10Unsuitable project planning CCMEmploy experienced and competent project manager.Before project starts11Inadequate site information e.g. soil test CCMEmploy professional to provide geotechnical test before project starts.Before project starts12Noise pollution during constructionCCMUse machine that produce low noiseBefore and during the project.13Vandalism of the projectCCMProvide insurance for the projectBefore project starts14Fire outbreak AAHInstall Fire protection devicesBefore project starts15Likelihood of accident occurrence EELThe project should conform to CDM regulation.During the project.16Low subcontractors competenceEELEmploy competent subcontractor.Before project starts17Disputes among the projects team CCMEnsure solid agreement before the project startsBefore and during project starts18Insufficient skilled labour CCMExpatriates could be employed to supplement local labourBefore project starts19Sudden clients variation EELUnderstanding to be made among team memberDuring the project.20Bad weather condition EELConsult weather expert to ensure suitability of weather before project starts.Before project starts
With identification of risks that can affect the NAE project it is essential to find method to mitigate these risks.
Methods of mitigating the risks facing NAE project.
Having identified the risks that can mitigate the NAE project, the project team should employ these procedures to mitigate the risks.
Provision for sufficient projects funds One of the top risks that can delay the project completion is insufficient funds. Sufficient funds is very essential for timely completion of a project, and the project team need to make adequate provision for sufficient funds in order not to run out of money during the project life cycle. Many construction projects are delayed because of insufficient funds for projects completion. Thus, before New Art Exchange Project Group should embark on the proposed project, Mr Kumar needs to carry out the detailed projects feasibility plan on the project to understand the total costs estimation for the project. In addition, Mr Kumar should realise that the increase in the estimated cost of a project is inevitable since the rising in the prices of construction materials can lead to increase in the estimated costs. Thus, to avoid the problems of non-completion of the project because of the effect of inflation, the NAE should make a financial plan and a reasonable contingence should be incorporated in the construction budget.
Setting up a realistic deadline for the project One of the major risks that can affect the project is inability of project team not to set realistic deadline for the project. It is essential to realise that extension of project deadline will inevitably lead to the increase in the estimated projects costs. To avoid unnecessary increase in the project cost, the NAE should consult expert to set out the realistic deadline for the proposed project.
Make use of experienced project personnel The use of experienced personnel to manage and carry out the projects plan is essential in order to avoid problems. Essentially, many projects are being managed by inexperienced and non-competent personnel and this invariably lead to disputes and termination of the project. To avoid such risk being manifested, the NAE should ensure that experienced and competent personnel are allowed to manage the project. Before allowing any personnel to manage the project, the NAE should conduct background check on the person in order to evaluate the experiences and qualifications of such personnel.
Provide health and safety plan One of the major way of mitigating the risks in a construction project is to develop health and safety plan during the project life cycle. It is essential to realise that many building projects in the UK have collapsed because project team has not complied with laid down regulations of Construction Design and Management (CDM). It is essential to realise that non implementation of health and safety plan can lead to the escalation of projects costs. In order to avoid non-compliance with CDM regulation, the New Art Exchange Project Group must agree with contractor to follow the CDM regulations during project construction. The CDM regulations involve dealing with all matters that can affect health and safety of personnel during construction. To adhere to health and safety project, the team member of NAE proposal should make provision on how to deal with hazardous, toxic materials, fire outbreak, explosion etc in the construction site. Non-provision for health and safety plan can lead to the payment of damages in case health of people working at the site is affected, and this may lead to rising in estimated costs. Typically, fire out break is one of the major risks that can destroy the whole construction project. Thus, New Art Exchange Project Group should make provision in dealing with fire outbreak and other hazards at construction sites. Typically, the NAE should make provision for rescue plan in case of fire outbreak, and there should be Emergency Response Plan (ERP) in order to ensure health and safety of the people working at the construction site.
Provide detailed contracting document One of the major factor that can lead to the escalation of a project cost is inability to employ detailed contracting document. The contracting document is very essential before embarking on a project in order to avoid dispute among team member. It is very essential for all team members to understand the contents of the contracting document, and provide their signatures for binding.
The contracting document indicates what if something goes wrong during the time of the project. There is need to stipulate this in the contracting document and the appropriate method to resolve the issues if something goes wrong. Thus, the New Art Exchange Project Group should make provision for detailed contracting document which all team member must sign, and this contracting document should be detailed enough to provide all the terms and conditions that are related to the NAE project. Any term and condition that any of the team members supports and not support should be clarified before the commencement of the project. This is very essential in order to avoid disputes during construction period. (Hinchey).
Based on the risks identified in the proposal a following covering letter to Mr Kumar provides risk management on NAE project.
Covering letter to Mr Kumar
Quantity Surveyor Ltd,
Surrey, United Kingdom,
27 February 2010.
Managing Director,
New Art Exchange Project Group (NAEPG),
Dear Mr Kumar,
I am replying your letter based on your request to provide you the risks management process for the NAE project, and identify top 20 risks facing NAE project. For risk management process, there is need to identify the top risks facing the project, and the identification of the risks will help in mitigating these risks. There are many risks identified facing NAE project, and some of the top risks are insufficient funds, insufficient experienced and competent personnel. There other risks identified, and all the risks are stated in the risks register. In addition, you need to provide adequate documentation for the project risks identified in order to monitor and control these risks.
I have also developed the risks register and outline the top 20 risks facing the NAE project. From the risk register, these risks are categorised as High risks, Medium risks and Low risks, and the methods to avoid these risks are also provided in the risk register. Essential, some of these risks are very critical, and there is need to contact professionals before you can find solution to mitigate these risks. Before commencement of the project, it is very critical to find solution to mitigate high risks and medium risks identified in the risk register because these are the risks that can affect the success of the project.
I have also summarised how you can mitigate these risks. It is essential to follow the guideline that l have provided in mitigating these risks. For example, it is very critical that you put sufficient fund aside for the project because insufficient fund is one of the major risks that can make project to standstill if not properly managed. Moreover, it is essential to put aside some extra fund in case of inflation that can lead to the increase in the price of projects materials. There is also need to follow CMD regulations in order to safeguard the health and safety of the people during projects construction. If you implement the guidelines in the risk register, and mitigate the top 20 risks outlined in the risk register, the NAE project will be successful.
The objective of this project is to provide a detailed risk management for the project of New Art Exchange Project Group (NAEPG).
The paper provides overview of risks management in order to enhance greater understanding on how NAE could mitigate the risks associated with the project.
Overview of risk management
Several definitions have been provided for risks. Office of Government of Commerce (2007) defined risks as uncertainty that can have positive or negative impacts on a project. On the other hand, Mills (2001) defined risks as adverse effect that can lead to loss in the value of a project. Typically, the risks and uncertainty are part of the construction project. To avoid risks complication, there is need to implement risk management in all construction projects.
For the NAE project, there is need to apply successful risk management in order to avoid risks complexity in the project. It is also essential to identify the risks that may have detrimental effects to the project because risks can come from different sources in a construction project. To enhance adequate risk management in NAE project, there is need to observe the following risk management process
Identifying , assessing the risks, and rank risks to make the risks explicit
Analysis of risk to find effective method to manage these risks.
Documentation of risks identified.
Focusing on the major part of the projects risks.
Making informed decision on risks mitigations as well as making provision for adversity.
Take step in minimising the potential damage if the worst happens.
Monitoring and Controlling the risks manifested in the project.
Develop excellent communication among team member.
Reviewing the risks in the project at regular interval
Identifying the opportunities in order to enhance the performances of a project.(Mills, 2001).
It is essential to realise that successful risk management involves identifying as well as assessing the impact of the risks on the project. There is also need to develop and maintain a risk register to establish the procedures to actively manage the risks throughout the projects life cycle. (Turner Townsend).
Risk register for New Art Exchange Project Group
Risk register is essential to identify the potential risks that NAE project could be facing during project life cycle. It is essential to note that identification of risks is essential to find solution to the risks facing NAE project. (Constructing Excellence).
During the project 9Government bureaucracy EELEnsure solid understanding on government policy on construction. Before project starts10Unsuitable project planning CCMEmploy experienced and competent project manager.Before project starts11Inadequate site information e.g. soil test CCMEmploy professional to provide geotechnical test before project starts.Before project starts12Noise pollution during constructionCCMUse machine that produce low noiseBefore and during the project.13Vandalism of the projectCCMProvide insurance for the projectBefore project starts14Fire outbreak AAHInstall Fire protection devicesBefore project starts15Likelihood of accident occurrence EELThe project should conform to CDM regulation.During the project.16Low subcontractors competenceEELEmploy competent subcontractor.Before project starts17Disputes among the projects team CCMEnsure solid agreement before the project startsBefore and during project starts18Insufficient skilled labour CCMExpatriates could be employed to supplement local labourBefore project starts19Sudden clients variation EELUnderstanding to be made among team memberDuring the project.20Bad weather condition EELConsult weather expert to ensure suitability of weather before project starts.Before project starts
With identification of risks that can affect the NAE project it is essential to find method to mitigate these risks.
Methods of mitigating the risks facing NAE project.
Having identified the risks that can mitigate the NAE project, the project team should employ these procedures to mitigate the risks.
Provision for sufficient projects funds One of the top risks that can delay the project completion is insufficient funds. Sufficient funds is very essential for timely completion of a project, and the project team need to make adequate provision for sufficient funds in order not to run out of money during the project life cycle. Many construction projects are delayed because of insufficient funds for projects completion. Thus, before New Art Exchange Project Group should embark on the proposed project, Mr Kumar needs to carry out the detailed projects feasibility plan on the project to understand the total costs estimation for the project. In addition, Mr Kumar should realise that the increase in the estimated cost of a project is inevitable since the rising in the prices of construction materials can lead to increase in the estimated costs. Thus, to avoid the problems of non-completion of the project because of the effect of inflation, the NAE should make a financial plan and a reasonable contingence should be incorporated in the construction budget.
Setting up a realistic deadline for the project One of the major risks that can affect the project is inability of project team not to set realistic deadline for the project. It is essential to realise that extension of project deadline will inevitably lead to the increase in the estimated projects costs. To avoid unnecessary increase in the project cost, the NAE should consult expert to set out the realistic deadline for the proposed project.
Make use of experienced project personnel The use of experienced personnel to manage and carry out the projects plan is essential in order to avoid problems. Essentially, many projects are being managed by inexperienced and non-competent personnel and this invariably lead to disputes and termination of the project. To avoid such risk being manifested, the NAE should ensure that experienced and competent personnel are allowed to manage the project. Before allowing any personnel to manage the project, the NAE should conduct background check on the person in order to evaluate the experiences and qualifications of such personnel.
Provide health and safety plan One of the major way of mitigating the risks in a construction project is to develop health and safety plan during the project life cycle. It is essential to realise that many building projects in the UK have collapsed because project team has not complied with laid down regulations of Construction Design and Management (CDM). It is essential to realise that non implementation of health and safety plan can lead to the escalation of projects costs. In order to avoid non-compliance with CDM regulation, the New Art Exchange Project Group must agree with contractor to follow the CDM regulations during project construction. The CDM regulations involve dealing with all matters that can affect health and safety of personnel during construction. To adhere to health and safety project, the team member of NAE proposal should make provision on how to deal with hazardous, toxic materials, fire outbreak, explosion etc in the construction site. Non-provision for health and safety plan can lead to the payment of damages in case health of people working at the site is affected, and this may lead to rising in estimated costs. Typically, fire out break is one of the major risks that can destroy the whole construction project. Thus, New Art Exchange Project Group should make provision in dealing with fire outbreak and other hazards at construction sites. Typically, the NAE should make provision for rescue plan in case of fire outbreak, and there should be Emergency Response Plan (ERP) in order to ensure health and safety of the people working at the construction site.
Provide detailed contracting document One of the major factor that can lead to the escalation of a project cost is inability to employ detailed contracting document. The contracting document is very essential before embarking on a project in order to avoid dispute among team member. It is very essential for all team members to understand the contents of the contracting document, and provide their signatures for binding.
The contracting document indicates what if something goes wrong during the time of the project. There is need to stipulate this in the contracting document and the appropriate method to resolve the issues if something goes wrong. Thus, the New Art Exchange Project Group should make provision for detailed contracting document which all team member must sign, and this contracting document should be detailed enough to provide all the terms and conditions that are related to the NAE project. Any term and condition that any of the team members supports and not support should be clarified before the commencement of the project. This is very essential in order to avoid disputes during construction period. (Hinchey).
Based on the risks identified in the proposal a following covering letter to Mr Kumar provides risk management on NAE project.
Covering letter to Mr Kumar
Quantity Surveyor Ltd,
Surrey, United Kingdom,
27 February 2010.
Managing Director,
New Art Exchange Project Group (NAEPG),
Dear Mr Kumar,
I am replying your letter based on your request to provide you the risks management process for the NAE project, and identify top 20 risks facing NAE project. For risk management process, there is need to identify the top risks facing the project, and the identification of the risks will help in mitigating these risks. There are many risks identified facing NAE project, and some of the top risks are insufficient funds, insufficient experienced and competent personnel. There other risks identified, and all the risks are stated in the risks register. In addition, you need to provide adequate documentation for the project risks identified in order to monitor and control these risks.
I have also developed the risks register and outline the top 20 risks facing the NAE project. From the risk register, these risks are categorised as High risks, Medium risks and Low risks, and the methods to avoid these risks are also provided in the risk register. Essential, some of these risks are very critical, and there is need to contact professionals before you can find solution to mitigate these risks. Before commencement of the project, it is very critical to find solution to mitigate high risks and medium risks identified in the risk register because these are the risks that can affect the success of the project.
I have also summarised how you can mitigate these risks. It is essential to follow the guideline that l have provided in mitigating these risks. For example, it is very critical that you put sufficient fund aside for the project because insufficient fund is one of the major risks that can make project to standstill if not properly managed. Moreover, it is essential to put aside some extra fund in case of inflation that can lead to the increase in the price of projects materials. There is also need to follow CMD regulations in order to safeguard the health and safety of the people during projects construction. If you implement the guidelines in the risk register, and mitigate the top 20 risks outlined in the risk register, the NAE project will be successful.
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