The Risk Management Process
The international standard ISO 31000 describes risk as the effect of uncertainty on objectives and sets out a process that works well for construction. Applied to a building project, it runs as a continuous loop:
• Set the context and criteria. Define the project's objectives for cost, time, quality, safety and reputation, and agree how likelihood and impact will be scored, so every risk is judged on the same scale.
• Identify risks. Workshops with the client, consultants, cost managers and, where appointed, the contractor capture what could happen, why and with what consequences.
• Analyse risks. Each risk is rated for likelihood and impact, and larger projects often quantify cost and time effects.
• Evaluate risks. Ratings are compared with the agreed criteria to decide which risks need action first.
• Treat risks. For each priority risk, the team chooses to avoid, reduce, transfer or accept it, and assigns an owner and a deadline.
• Monitor, review and report. The register is reviewed regularly, new risks are added, and closed risks are recorded.
Communication runs through every step. A risk known to one engineer and invisible to the client or contractor is still an unmanaged risk.
The four treatment options work together in practice:
• Avoid by changing the design or scope, for example relocating a basement away from high groundwater.
• Reduce through further investigation, redesign, testing or closer supervision.
• Transfer through contracts, specialist subcontracts or insurance.
• Accept with a contingency in cost and programme where the residual risk is tolerable.
Risk management sits within the wider project controls. Merka's article on running mega-projects in the UAE explains how risk, programme and cost are managed together.