All construction projects, whether large or small, come with some degree of risk. Failure to anticipate and prepare adequately for potential risks and challenges can lead to serious delays and, even worse, major losses. So what are some of the risks that can affect a construction project?
Here are 11 risks that can affect a construction project:
- Safety hazards
- Incorrect construction plans
- Unknown site conditions
- Poorly drafted contracts
- Natural disasters
- Labor shortages
- Inexperienced or unskilled labor
- Equipment damages and theft
- Poor project management
- Issues with suppliers and subcontractors
- Change orders
In this article, we’ll shed more light on the main risks that can affect a construction project and how best to handle them. Ready? Then let’s get straight to business.
1. Safety Hazards
Construction sites are relatively dangerous places to work where thousands of people sustain life-threatening injuries every year. This explains why construction projects must have adequate safety measures in place to keep all staff safe when on site.
The risk of falling when working at height is common, more so in poorly designed construction sites. Some of the main causes of falls include:
- Working on unstable surfaces
- Restricted accessibility and movement in high-up work areas
- Human error
- Failure to use safety equipment correctly
Besides falling, construction workers can also get injured when structures collapse either during installation, erection, or demolition. As a result, supervisors should always inspect the site to ensure that all the necessary safety measures are put in place to eliminate the risk of collapses.
Moving items like heavy machinery and vehicles can also lead to injury in the workplace. Supervisors should also ensure the construction site isn’t congested, as it increases the risks of trips, falls, and slips.
Falling objects and electrical problems can also lead to staff injury, which can negatively affect and even stop a construction project.
2. Incorrect Construction Plans
A professionally done construction drawing set should consist of multiple detailed sheets that include architectural, electrical engineering, civil engineering, structural engineering, and mechanical engineering plans.
Complex construction projects require more detailed sheets since incomplete sheets more often than not will lead to change orders once the contractor gets to work and uncovers the missing pieces.
Besides incompletion, construction plans can also prove problematic if they don’t coordinate. An example is when mechanical drawings don’t coordinate with architectural drawings or electrical drawings fail to coordinate with mechanical drawings. Such issues can lead to impossibilities like ducts running through steel beams, which will require a complete redesign and additional costs.
As a good rule of thumb, a construction project should never commence without complete construction plans. Consulting with skilled independent contractors will help you get a professional view or critique of your construction plan, which can go a long way in saving time and resources once the actual construction begins.
3. Unknown Site Conditions
Also referred to as differing site conditions, or DSC, unknown site conditions is a situation where the actual situation on the construction site differs from what was initially anticipated.
In some cases, you might find that the physical conditions you find on a site aren’t suitable for the project. This could include any of the following:
- Buried debris
- Hazardous wastes
- High water levels
- A large number of huge rocks
- Soil with poor bearing capacity
Unknown site conditions can lead to contractual issues, especially if a contractor agrees to complete the project within a specified timeline before discovering the issues.
To mitigate this issue, it’s always advisable to conduct thorough research on the construction site and its immediate environment. Additionally, if you’re unsure but still suspicious of unknown site conditions due to nearby projects facing similar fates, it’s advisable to include such clauses in the contract.
Fortunately, by consulting an experienced construction attorney, you’ll be well placed to include as many relevant clauses as possible to keep you on the safe side and minimize the impact of unknown site conditions.
4. Poorly Drafted Contracts
The construction industry is known to be complex and challenging, hence the need for keen attention to detail, specifically when drafting contracts. Poorly written construction contracts will almost certainly lead to increased claims, disputes, additional costs, and delays in project completion.
Failure to draft a detailed contract or even to draft one at all is a sure recipe for disaster. Not only will it increase the chances of workplace disharmony, but it also threatens to derail the project in the event of disagreements.
As a result, it’s always advisable to keep things professional and create well-detailed contracts with all necessary clauses. Doing so will keep you safe in the event of a dispute, which is never too far away when construction projects fail to go according to plan.
A good tip to observe is outsourcing the contractual work to construction lawyers who are skilled and experienced enough in all construction issues.
Good construction lawyers will assist you in submitting claims, making terminations, budgeting, scheduling, contracting, and fulfilling mandatory regulatory guidelines.
5. Natural Disasters
Perhaps one of the greatest threats to construction projects is the risk of natural disasters, which, if not well planned for, can lead to massive losses worth millions – if not billions – of dollars.
Unlike commercial properties and homes that have already been completed, construction sites don’t have the full standard safety measures in place that would help minimize the impact of disasters. Due to this, the damage that can occur to construction sites is usually a lot more costly compared to already completed structures.
Ideally, contractors should always conduct extensive research to identify the main weather-related risks that can affect the construction site. This means knowing whether you’ll be dealing with the risk of hurricanes, earthquakes, storms, floods, and even fires.
Large equipment like boom lifts, cranes, and steel erections will almost certainly attract lightning due to their height. This means that, during a storm, construction crews and the entire site will be at risk of lightning strikes, which can not only damage equipment and lead to delays, but also lead to serious injuries and even death.
Therefore, to be on the safe side, it’s highly advisable to factor in weather and set up the necessary safety measures to minimize the impact of natural disasters.
Training crew members to respond to unexpected weather disasters is also recommended as it’ll improve their chances of getting out unscathed.
6. Labor Shortages
According to a survey conducted by the Associated General Contractors of America, workforce shortage is a key issue affecting the country’s construction industry.
In the same survey, most respondents reported a relatively hard time hiring hourly craft positions, which can significantly slow down the project completion time.
In addition to prolonging the duration of projects, labor shortages have also forced contractors to place higher prices on contracts, which translates to significantly increased project costs.
The good news is that although labor shortage is a potentially serious cog in a construction project, there are more than enough ways a contractor can elicit change.
For instance, more firms are training their construction workers through in-house programs. Moreover, some contractors have adopted more technology-based solutions like drones, 3D printers, and virtual construction tools.
7. Inexperienced or Unskilled Labor
Similar to labor shortages, inexperienced or unskilled labor are among the serious risks that can negatively affect a construction project. This is because, naturally, most complex projects will require crew members with deep knowledge and vast experience.
However, finding people with relevant qualifications and skills can prove challenging, especially if looking to hire on a large-scale basis. And while this might not appear as an issue before a project commences, it can come back to haunt contractors as it can lead to lengthy delays.
Even worse, some contractors might opt to hire people that lack the needed qualifications in efforts to get the project underway without any delays. Doing so is a huge risk and can lead to on-site injury and even the construction of substandard structures.
8. Equipment Damages and Theft
While it’s normal for some construction equipment to get damaged or lost as the process continues, the loss of some tools can lead to significant delays and workplace disharmony, especially in the case of theft.
Heavy equipment that gets damaged might need a lot more time to repair, which can slow down project completion. Additionally, repairing (or replacing) heavy equipment and other damaged tools will bring the cost of construction higher than initially intended.
Another issue that can affect a construction project is the theft of equipment. Not only might replacing lost tools cause unexpected delays, but it can also lead to issues within the crew, especially if the thief’s identity is unknown.
To prevent issues of damage and theft, it’s crucial to have enough supervisors on site. Contractors should also set up enough security measures like CCTVs on-site to help keep all crew members in check.
9. Poor Project Management
A poorly managed construction project won’t run smoothly and can lead to unwanted outcomes, especially if rushed to completion.
You can expect poor project management to lead to overruns in project cost, which can lead to contractual issues further along the line.
Improper planning will frustrate both internal and external stakeholders and might lead to unexpected purchases and repairs, especially if the crew isn’t well supervised and trained.
Another obvious effect of poor project management is demotivation within the team. Staff demotivation is a huge risk that needs immediate addressing if the construction project is to be completed as planned.
Poorly managed construction projects also have increased risks of legal issues due to injuries to crew members. The lack of regular supervision and on-site training can negatively impact a project, more so if the issue isn’t sorted out early enough.
Therefore, to avoid issues related to poor project management, hiring the correct people right from the planning process is vital. All crew members should have clearly defined roles that act as guidelines of what’s expected of them until the completion of the project.
10. Issues With Suppliers and Subcontractors
Supplier management is one of the key issues that can hugely affect the completion of projects. As a result, companies need to identify reputable and cooperative suppliers that can maintain a steady distribution of top-drawer materials.
Contractors also need to assess supplier performance and honor contractual obligations to maintain good working relationships. Failure to monitor and hold suppliers accountable for timely deliveries will end up delaying the project, which can even damage a company’s reputation to its clients.
Procurement route selection is also a point of concern in construction projects as companies must look for the optimal route that fits a particular project and client demands. Choosing the right route isn’t straightforward, especially since companies must factor in the cost of purchasing new items and the speed, risks, and quality of items procured.
A long procurement cycle can also lead to delays in project completions. Procurement delays usually occur due to delays in:
- Preparation of terms of references for services
- Statement of works
- Technical specifications
As a result, the evaluation process should start well in advance to ensure the procurement schedule is well respected.
Outsourcing part of a construction project to inexperienced subcontractors can lead to undesired outcomes and unanticipated delays.
In efforts to secure contracts, some unscrupulous subcontractors lie about their skills, which in turn puts the entire project at risk. Similarly, others have poor project management skills that reduce the overall efficiency of crew members.
11. Change Orders
Change orders are common in different types of construction projects, especially the large and complex ones that require multiple, well-detailed sheets. Although normal, change orders can prove problematic if not well managed.
These orders are usually amendments or addendums to the original scope of work or contract and can be initiated by the general contractor, subcontractors, or the owner. Change orders point out the need for additional work due to errors or omissions and can end up delaying the project for a considerable amount of time.
Change orders also tend to interrupt workflow and increase project costs, which can lead to undesirable outcomes and demotivation of crew members.
Therefore, to ensure the change orders are well-received, it’s important to prepare beforehand and lay down the necessary milestones and, perhaps even more importantly, communicate effectively with all affected parties to ensure every stakeholder is on the same page.
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