Risk Management in Construction Projects: Vulnerability Assessment and Precautionary Analysis

This paper discusses the vulnerabilities and risks associated with construction projects, particularly bridge construction, and provides a vulnerability assessment and precautionary analysis. The paper uses a top-down risk management technique and recommends strategies to mitigate the risks.

Running head: RISK MANAGEMENT
RISK MANAGEMENT
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction:................................................................................................................................................................................................1
1. Vulnerability Assessment:.......................................................................................................................................................................2
Assets and the reason of selection:..........................................................................................................................................................2
Threats and method of selection of threats:.............................................................................................................................................3
The critical vulnerabilities:......................................................................................................................................................................6
Threats to treasury and finance:...............................................................................................................................................................7
Threats to assets due to natural calamities:..............................................................................................................................................7
2. Precautionary Analysis:...........................................................................................................................................................................8
Techniques to measure precautionary analysis:......................................................................................................................................8
Justification for selection of technique:...................................................................................................................................................8
Significance of risk vs effort:..................................................................................................................................................................8
Conclusion:..................................................................................................................................................................................................8
References:................................................................................................................................................................................................10

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Introduction:
Construction projects are subject to several vulnerabilities or risks. The risks which occur in the construction projects can stem
up due to several reasons like improper measurements of the engineers, use of inaccurate techniques and lack of funding. The factors
like improper measurements often result in collapse of bridges which leads to loss of the lives. The bridges which collapse on roads
below them result in damage to cars and structures below. Collapse of bridges also results in injury and death of people. Thus, risks to
construction projects result in huge losses both to assets and lives. The risks or vulnerabilities of construction projects have inspired
and inspire several researches. The aim of the research is to the vulnerability which construction projects and ways to mitigate them. It
is not feasible to reduce the risks to construction projects totally. However, taking of appropriate measures can enable in reduction of
risks due to construction projects to a great extent, thus minimizing loss of the assets and lives. The study would take into account of
the collapse of the Florida International University-Sweetwater University City Bridge City Bridge which took place in March, 2018.
The bridge collapsed on the eight lane road below smashing the cars below. The accident killed at least six people besides leading to
wastage of immense amount materials which went into construction of the bridge. The paper in order to delve into the assessment of
vulnerability of risks the collapses of bridges attract would be divided into two parts. The first part would consist of vulnerability
assessment while the second part would consists of precautionary analysis of manage the construction risks bridge collapses invite.

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1. Vulnerability Assessment:
Assets and the reason of selection:
The construction companies hold several assets which come under severe risks due to incidences like collapses of bridges. The
term assets according to Pimenova et al.(2016) can be defined as the properties which companies own and put to use to operate in the
market. Strouhal et al.(2018) on the other hand define assets as the resources which companies channelize in their business operations.
The authors here mentioned that the assets of construction companies consists of both tangible properties as well as intangible
properties. The tangible assets consists of items like land, building, machines and vehicles. The intangible assets consists of items like
knowledge, intellectual properties and goodwill which the companies own. Thus, it can be inferred from the discussion that assets
refer to the critical success factor which construction companies use to undertake construction projects. Gajfullina et al.(2017) enrich
the discussion by pointing that since employees actually acquire, management and use the knowledge capital in the construction
projects, human resources of emerged as one of the key assets which construction companies hold. The in short the main assets which
construction companies acquire to operate construction projects are fixed assets, intangible assets like goodwill and employees. The
intangible assets of the construction companies include public image, public and investors’ confidence.
The above mentioned assets were selected since without these assets the construction companies cease to perform. The fixed
assets like plant and equipment enable the construction companies to execute the construction projects. Similarly, assets like software
enable the companies to plan construction projects more efficiently. The intangible assets like goodwill and intellectual property rights
which the construction companies own enable them to differentiate their services from their competitors in the markets. Similarly, the

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employees are the ones who acquire, manage and channelize information towards execution of the business. Thus, in other words the
fixed assets, the intangible assets and the human resources are the critical success factors which enable the organisations operate
efficiently in the market. Thus, vulnerabilities to these assets actually attracts risks to the companies as a whole.
Threats and method of selection of threats:
The method selection of the assessing the vulnerability would be top down technique. The threats which would be considered
by the project management companies while performing projects pertaining to large scale construction projects like bridges are as
follows:
Threats to Construction project management companies
Risk
no
Document
control
information
Risk
identifier
Risk
Category Risk Description Impact of the risks
Risk
response
category
Owner of
risk
Precautionary
recommendations
Owner of
Risk
response
action
1
Profit and
Loss
statement,
balance sheets
Falling
profits in
spite of
strong
marketing
strategies
Market risks
1. Market risks
can originate due
to introduction of
new products by
existing
competitors
and/or entry of
new firms with
similar products.
2. Loss of
materials,
technological
resources and
manpower due to
1. Fall in revenue and
losing of consumers.
(short term impact)
2. Losing investors, and
supply chains due to
falling capacity to give
positive ROI.(medium
term)
3. Goodwill risk and
losing of global market
position (long term loss)
4. Reduced productivity
due to increasing
accidents and loss of
Strategic
decisions,
marketing
strategies
Finance
department,
Marketing
department,
Risk
manager,
Engineer
1. Formation of a
strong risk
management
strategy.
2.Use of moern
risk management
systems
3.Strengthening
marketing of
products,
introducing new
and innovative
products with less
competitors
Marketing
department

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fire and
explosions resources
2
Unjustified
loss of capital,
Unjsutified
loss of data,
Unexplainable
alter of
information
Employees,
customers or
any other
stakeholder
Cyber theft
risks
1.Cyber attack
would cause loss
of ICT data and
designs which
would attract
huge security
risks towrads the
company.
2. Cyber attacks
lead to loss of
customer and
financial data of
extreme business
significance. Loss
of customer data
and financial
resources online
lead to R1
1. Loss of sensetive
business data.
2. Loss of financial
resources.
3. Unauthorised access
to the business strategy
information of the
company.
4. R1
High
Apex
management
and all the
departmental
heads
1. Tightening of
security.
2. Allocating new
email ids and
passwords to each
employees.
3. Mandating
subordinates to
obtain approval of
superiors to
accede to specific
information.
4. Making it
compulsory for all
employees to
exchange official
information
exclusively on the
formally laid path
of information
sharing.
5. Employees
holding assistant
managers and
beyond should
lock their systems
using a four layer
password security.
Apex
management
and all the
departmental
heads
2 Cannot be
documented
Employees,
customers or
any other
stakeholder
Natural
disasters
Natural disasters
lead to loss of
resources,
inventory and
assets
Depends on the
seriousness and intensity
of the calamities
Immediate
Government,
security
personnel
etc
Evacuation
Government,
security
personnel etc
3 Government
and legal
websites
Apex
management
Change in
legislations
Change in laws
require companeis
to comply with
the new laws
1. Damage to
installations like towers
and terrestrial systems.
2. Damage to these
installation may lead to
explosions and massive
fuires.
3.Requires construction
companies adapt the
Immediate Apex
management
and all the
departmental
heads
Compliance, OHS
strategies
Apex
management
and all the
departmental
heads

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relevant areas of
operations as per the
laws
4 Financial
statements
Apex
management,
finance
department,
CFO
Economic
risks
1. Change in
international
currency
exchange rates
2. Change in
taxes.
3. Adverse
economic changes
4. Emergence of
economic policies
resulting from R5.
5. Scarcity of raw
materials.
6. Increase in
policies of
financial
institutions
Requires construction to
adapt the relevant areas
of operations as per the
laws
Immediate
or within
the date of
enforcement
specified
specified
Apex
management
and all the
departmental
heads
Compliance
Apex
management
and finance
department
5 Risk register
Apex
management,
security
officer and
any other
employee
Fire,
exlosions
Loss of materials,
loss of equipment,
injury of
employees, loss of
productivity,
casualty in case of
large scale
explosions
The Cosntruction
companies loses
productivity, employees,
resources
Immediate
or within
the date of
enforcement
specified
specified
Apex
management
and all the
departmental
heads
Risk management
strategies
Apex
management
and finance
department
6 Financial
statements
Apex
management
and top
managers
including
CFO
Goodwill
risks
1. Loss of
customers
2. Loss of
investors
3. Loss of
suppliers
4. Loss of market
position
Construction companies
loses productivity,
employees, suppliers,
patents and assets
Immediate
Apex
management
and all the
departmental
heads
Risk management
strategies
Apex
management
and finance
department
7 Financial
statements
Apex
management
and top
managers
including
CFO
Capital risks Weakening of
capital base due to
lower generation
of capital
Construction companies
lose productivity,
employees, suppliers,
patents and assets
Immediate Apex
management
and all the
departmental
heads
Strengthening
marketing of
products,
introducing new
and innovative
products with less
competitors to
boost revenue
Apex
management
and finance
department

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generation and
strengthen
goodwill
8 Financial
statements
Apex
management
and top
managers
including
CFO, R&D
head
Technological
risks
Modern
technology leaves
perevious
technology
versions
redundant
Requires construction
companies Institute to
carry on continuous
research on product
technology, operation,
ecommerce technology
etc
Immediate
Apex
management
and all the
departmental
heads
Requires
construction
companies to
carry on
continuous
research on
product
technology,
operation,
ecommerce
technology etc
Technologcial
officer
The critical vulnerabilities:
The critical vulnerabilities which the construction companies involved in construction of bridges are involved are as follows:
Threats to treasury and finance:
The threats of treasury and finance results in credit crunches and liquidity issues. As per Şener et al. (2015), collapse of bridges
causes immense damage to lives and property. For example, the Florida International University-Sweetwater University City Bridge
City Bridge collapsed reportedly killing six people and damaging several cars. The construction companies have to compensate the
losses suffered due to collapse of bridges which they are building. Thus, instead of generating higher revenue, the construction
companies have to bear immense losses due to the high amount of compensation they have to pay. Moreover, the construction
companies are not able to pay their creditors owing to reduced current assets, thus causing credit crunch. Thus, it can be pointed out
that bridge collapses cause immense threats to treasury and finance of construction companies.

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Threats to assets due to natural calamities:
The second critical vulnerability which construction companies face is threats to assets like fixed assets and human resources
due to natural calamities. It can be pointed out that construction projects like construction of bridges take place in the open which
make them more susceptible to calamities like floods and earthquakes. These natural calamities lead to several types of losses. For
example, natural calamities lead to collapse of the already completed portions totally or partially, thus leading to the total losses of
materials used in the construction of the fallen portions. Similarly, the entire financial capital invested in construction of the projects is
lost. Thus, it is evident that the natural calamities lead to threats and damage to the aforementioned assets.
2. Precautionary Analysis:
Techniques to measure precautionary analysis:
The technique which would be used to measure the vulnerabilities or risks shown in the above table would be top-down
techniques. The recommendations to deal with each of the risks indicated have already been shown in the table above.
Justification for selection of technique:
The selection of the top down risk management techniques can be justified on the basis of the fact that the process enables the
apex management form risk management strategies according to the business needs of the organisations (Scolobig et al., 2015). The
participation of the management ensure more efficient of the risk management strategies while planning complex construction projects

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like construction of bridges. Thus, the approach would lead to reduction in the incidences in accidents of bridge collapse and the
ensuing losses of resources.
Significance of risk vs effort:
The construction companies should conduct a risk vs effort analysis. Fleming and Koppelman (2016) mentioned that
companies should analyse the degree of risks which projects would attract and the impact of the risks of the stakeholders including
shareholders.
Conclusion:
Thus, it can be concluded from the analysis that the construction companies should assess the vulnerabilities or risks which
construction projects would attract. They should assess the impacts of the risks and take steps to mitigate them or at least reduce their
impacts to the extent possible. This would boost their revenue generation. It can also be pointed out that project management
compabies should use top down risk management techniques. This would ensure participation of the apex management in the risk
management. This would enforce more active participation of the employees in the risk management process.

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References:
Fleming, Q. W., & Koppelman, J. M. (2016, December). Earned value project management. Project Management Institute.
Gajfullina, M. M., Nizamova, G. Z., Musina, D. R., & Alexandrova, O. A. (2017, June). Formation of strategy of effective
management of fixed production assets of oil company. In International Conference on Trends of Technologies and
Innovations in Economic and Social Studies 2017. Atlantis Press.
Pimenova, A., Kuzmina, S., Morozova, N., & Mottaeva, A. (2016). The functional model approach to the consulting for vertically-
integrated construction group. In MATEC Web of Conferences (Vol. 73, p. 07018). EDP Sciences.
Scolobig, A., Prior, T., Schröter, D., Jörin, J., & Patt, A. (2015). Towards people-centred approaches for effective disaster risk
management: Balancing rhetoric with reality. International Journal of Disaster Risk Reduction, 12, 202-212.
Şener, S., Çağlar, Y., Benzer, M. A., & Şener, K. C. (2015). Vertical displacement of collapsed bridge in Palau. CHALLENGE, 1(2),
84-89.
Strouhal, J., Štamfestová, P., Ključnikov, A., & Vincúrová, Z. (2018). Different Approaches to the EBIT Construction and their
Impact on Corporate Financial Performance Based on the Return on Assets: Some Evidence from Czech TOP100
Companies. Journal of Competitiveness, 10(1), 144.