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Risk burrows into every aspect of construction — costs, safety, labor, scheduling, profitability and even market leadership. In an inherently dangerous industry, risk is inevitable, but truly powerful risk mitigation doesn’t just patch up the damage from incidents. Diligent mitigation shaves risk to the bare minimum.

Slack resource management, scheduling and communications can also lead to risk, resulting in costly or time-guzzling operational inefficiencies. 

The remedy is impactful risk mitigation. This mindset gathers and applies every available tool, data set, report, person and procedure to the act of anticipating and preventing detrimental incidents. Learning from past experiences and thorough documentation becomes ingrained in daily procedures and "derisking" becomes routine through a culture built on safety, quality control and real-time data entry and visibility.

Approaching Risk in Construction

Effective risk avoidance begins with lookbacks. Lessons learned from history reveal the preventable errors, slip-ups, miscommunications and carelessness possible at the design tables, jobsites and back offices. 

In one case study, a contractor’s test of the sanitary system pipes failed, resulting in extensive water damage to the ceiling. A review revealed that the installer had been called away for another task, forgetting that he hadn’t sealed the joints. 

This kind of incident sends ripples throughout the project. The culprit company is back charged for the drywaller’s rework. Labor costs rise. Timelines are delayed. Personnel who could be moving the project forward are diverted to remediation that consumes time and money. 

Review eats up time, too, but the lessons learned are essential for informing procedural changes that derisk by guarding against repeats of the incident.

Documentation and Technology in Risk Management

At every aspect of construction that an incident touches, money is lost. Effective prevention that protects profit margins stands on thorough, methodical documentation of incidents of any size or nature. Capturing the who, what, when, where, why and how of an occurrence makes derisking actionable for every division. 

Even in the digital age, some companies still use spreadsheets to document risk and email to review incidents. By failing to use digital tools, these companies segregate invaluable information in siloes, hobbling collaboration by the full spectrum of people and divisions needed to understand the origins of the incident and prevent recurrences.

�մǻ岹��’s project management software collects and documents the myriad aspects underlying every incident. Every data point, photo and observation adds a piece to the puzzle, generating a complete picture that is clear and uniform to everyone involved. Global accessibility keeps everyone in the loop and out of their siloes.

More importantly, project management software is metadata-driven. is “data about data” – not the countless individual data points that build a firm’s knowledge base but the categorizations and tabs that make them manageable and searchable. 

With metadata capabilities to wrangle actionable insights from reams of data, risk managers can create and analyze reports that reveal trends and threads across jobs, jobsites and functions. 

Software-enabled risk analysis produces photo documentation and detailed incident reports that inform strategic prevention. These are the lessons learned that can then be overlaid on current procedures, for insights into preventive steps. 

With data-analysis capabilities, companies that specialize in particular projects, such as hospitals or data centers, can scrutinize incidents from past jobs for the lessons applicable to comparable future jobs.

Quality Control and Safety Measures

Documentation and data reports further solidify the intertwined relationship of risk mitigation and quality control. Risk managers can work with quality control managers to refine checklists and safety audits to a granular level, implanting known risks in jobsite checklists to assure compliance with protocols and proper equipment installation.

In the follow-up to the earlier case of the unsealed sanitary pipes, the quality control manager got a new item on the checklist — noting whether joints were sealed. If they weren’t, an entry into the software would generate a task to correct the oversight. Observation made, and risk averted.

For a complete look at potential risk, documentation procedures should also include “near misses.” The underlying missteps of a close call are worth examining and incorporating into safety training, because no derisking strategy should rely on luck to prevent costly incidents.

For example, an individual worker caught standing on the top rung of a ladder or not wearing a hard hat might get a notification or additional training. But when a site manager diligently documents daily violations, a disturbing trend might appear — that workers sitewide are regularly ignoring safety protocols. 

Systemic problems call for systemic change, to prevent the inevitable accident that will cost time, money and people. Documenting and analyzing trends and near misses can avert incidents by prompting training revisions that educate workers on the lifesaving benefits of adhering to safety protocols.

Financial Aspects of Risk Management

All risk factors ultimately impact project finances, but the project manager isn’t — and shouldn’t be — the only person responsible for cost containment. The hierarchy of financial risk evaluation, coordination and collaboration begins at the top. 

Upper management injects strategy into the process. With reporting provided by PMs, the VP of operations dovetails the risk from individual projects into the company’s overall profitability. 

The operations chief can step in with the following strategies:

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  Asking Questions About Items Exceeding the Budget

  How is the PM mitigating a labor extension or a materials purchase that exceeds estimates?

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  Contributing to Solutions or Actionable Items

  The PM can spot cost-saving synergies across divisions or leverage client relationships to renegotiate contracts.

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  Earning Back Overspent Funds

  The PM can help keep budget on track by earning back the money overspent on specific items — for example, when the price of lumber suddenly spikes, the VP of operations might find a lower-priced HVAC system to make up the difference.

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  Conducting Regular Project Reviews

  Conducting repeated reviews aid in assessing financial health and addressing potential issues on the horizon.

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  Allocating Resources Effectively

  PMs can rebalance labor allocations for cost efficiency, for example, reassigning excess personnel to alternative tasks can reduce hourly costs. 

BIM as a Risk Mitigation Strategy

Risk mitigation has a friend in Building Information Modeling (BIM) and Virtual Design and Construction (VDC). Increasingly, BIM has become the gathering point where a project’s designers, architects, engineers and contractors can collaborate on refining the structure’s plans. 

By detecting virtual clashes before they become physical headaches, BIM prevents the MEP rework that sap time and money. 

Plus, with its power to generate pristine specs, BIM is enabling prefabrication that, courtesy of offsite manufacturing, saves time and materials, reduces onsite labor costs and lessens the chance of accidents.

Company Culture and Training in Risk Management

For measurable impact, risk minimization strategies should be woven into company culture. 

Tactical strategies can infuse risk mitigation into core operations and values:

• Assign champions to lead the change.

  Make the transition to digital reporting and analysis a specific role. This advocate should bridge the juncture of risk mitigation and technology maximization. Responsibilities should include education that instills a derisking mindset into every team member and explains how proper risk mitigation improves the lives — and livelihoods — of everyone involved.

• Encourage routine entry of risk-related data into the PMS.

  Structure the software with required fields for users to fill out before they can progress to the next step of their jobs. 

• Make risk mitigation part of standard operating procedures.

  List steps in the order that mitigates risks to the project’s budget, schedule and safety. 

• Fortify PMS training beyond basic functions.

  Guide users to a comfort level that empowers them to seek IT support and resolve the frustrations that can make them jettison data entry and analysis protocols. 

• Establish two-way communications.

  Focus onc creating communication and mechanisms for collecting feedback from PMS users and briskly dismantling any roadblocks to its use. 

Go beyond OSHA regulations.

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Making a Dent in Risk

The kind of risk management that measurably improves outcomes comes down to the fundamentals. Companies should leverage technology to facilitate communications, analyze trouble spots and promote the uptake of SOPs that minimize risk to costs, scheduling and safety.

Document every incident and near-miss. Create procedures for reviewing them and applying lessons learned — and go trendspotting. For instance, watch for time-lag indicators, such as a slowdown in RFIs and submittals, that can harbor potential delays. Companies can also incorporate quality control directly into risk management by using reports from the QC and safety managers to identify indicators of heightened risk. 

Cultivate a risk mitigation culture. Coach every team member on why derisking matters to the company, their coworkers and themselves. Another big part of this step is creating risk management leaders and providing them with real-time reporting dashboards. Even in smaller companies, it’s important to elevate people who can view risk objectively, uncover the causes and consider the unique safety, scheduling and budgeting aspects of each MEP field.

During and after implementing heightened risk mitigation procedures, stay vigilant about procedural flaws. Listen to input from the field on the effectiveness and user-friendliness of the PMS system and derisking processes and make revisions whenever necessary. 

Time spent on risk mitigation and minimization is never wasted. In fact, risk mitigation generates savings all around — in time, money and lives. In the end, carefully cultivated derisking delivers projects on time and on budget. 

Derisking also strengthens relationships with grateful contractors and owners. The company keeps growing while maintaining a reputation for safety, operational efficiencies, data-driven decision making and a commitment to shrinking risk to the lowest common denominator across the enterprise. 

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