Comprehensive Risk Management in the Construction Industry Report

This report delves into the critical aspects of risk management within the construction industry. It begins by highlighting the inherent risks associated with the dynamic and complex project environment, referencing established research on risk management practices across various sectors. The report identifies six primary risk categories: technical, logistic, environmental, management, financial, and socio-political, providing specific examples of each. It then outlines the three stages of risk management: risk identification, risk assessment, and risk response, drawing upon the author's experience as a project associate. The report emphasizes the importance of ethical sourcing and the practical application of theoretical knowledge, advocating for proactive strategies to mitigate potential challenges and ensure project success. The author also discusses the importance of communication and collaboration in addressing risks, highlighting how these elements can be improved through effective training and development programs and also stresses on the importance of communication and collaboration in addressing risks.

Running head: RISK MANAGEMENT
Risk Management in the Construction Industry
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Section 1..........................................................................................................................................2
Background of the Context..............................................................................................................2
Section 2..........................................................................................................................................7
Reason for Trusting the Source.......................................................................................................7
Section 3..........................................................................................................................................9
Description of the Research process................................................................................................9
Timeline.........................................................................................................................................10
Section 4........................................................................................................................................11
Critical discussion on my proposal................................................................................................11
State reasons behind choosing this topic.......................................................................................13
Critical reflection...........................................................................................................................14
References......................................................................................................................................16

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Section 1
Background of the Context
Construction industry is quite prone to higher risks due to the dynamic and complex
project environment. According to Serpella et al., (2014) risk management is a widely used
concepts in every industry, such as IT sector, automobile sector, construction industry, or
pharmaceutical industry. We have learnt that each of the industries set their own RM standards to
mitigate the emerging risks and execute the contingency plan to resolve the issues (Darnall &
Preston 2010). However, the extensive research o these risk management strategies indicate that
the construction industry requires implementing the RM practices in a more clarified way
(Sousa, Almeida & Dias, 2014). I am working as a project associate in a construction industry
and I have been experiencing the dynamic atmosphere more closely. While working in dynamic
projects, I have identified the associates might face the considerable risks if they do not maintain
the proper precautions.
While working with the other associates from different department in the construction
industry, I have understood that the construction projects are generally much complex and the
risks are found both externally and internally. After working for a while in the construction
industry, I have developed better understanding about the projects undertaken by the associates.
Moreover, I have gathered ideas about the possible risks that may affect the project much
significantly. Therefore, in this study, I have set my aims to identify the major risks encountered
in the construction industry. I have observed that there are mainly six types of risks I have found

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in the construction projects. The literature study also provides the in-depth ideas about the
probable risks identified in a construction project. These risks are as follows:
 Technical Risks: Technical risks generally include anything, which creates the
restrictions in developing products as per the demands of the clients (Zhou, Goh & Li,
2015). For example, the lack of sufficient resources, unavailability of the materials,
incomplete designs of the construction sites or inadequate site investigation are some of
the technical risks that the construction company faces. Especially, I have noticed that
during the technical risks are found when there is the sudden change in the project.
 Logistic Risks: In a construction project, we always address various types of logistic
risks at the beginning (Esmaeili, Hallowell & Rajagopalan, 2015). For example, the risks
with the availability of transports or equipment including labors are the major identified
risks in a logistic process. The obtained idea from the reading of Cagliano, Grimaldi and
Rafele (2015) explains that the construction project would be much riskier if the logistic
issues were not addressed at the initial stage.
 Environmental Risks: According to the research conducted by Taroun (2014),
environmental risks in the construction industry mainly include the seasonal implication,
natural disasters, and weather depressions. Sometimes, we are unfamiliar with the local
conditions of a city where we are new. Therefore, we face the challenges with the
changing weather and natural calamity. If we are prepared for the weather related risks,
we would be more likely to avoid the possible losses and delays.
 Management Risks: Most of the management related risks occur when the project lacks
the sufficient resources. As opined by Demirkesen & Ozorhon (2017), every construction
project must be sure of the sufficient resources including the skilled staffs and adequate

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materials. These efficient staffs need to know their roles and responsibilities at the first
place before they involve into any project. If we fail to understand our responsibilities,
we may face the disastrous loss eventually.
 Financial Risks: The construction industry faces challenges in the financial aspects as
well. Some of the possible financial risks are local taxes, fluctuation in the foreign
exchange, and inflation rate (Cannon & Hillebrandt, 2016). While we are working on an
international construction project, it is essential for us to understand the foreign currency
exchange procedures. Moreover, while working in a different country, we need to pay a
different tax structure to the government (Wang, Dai & Ning, 2015). Hence, every
construction projects needs to take such financial risks into consideration. However, I
have observed that the financial structure would be different if we work in a tax free
country or city.
 Socio-Political Risk: According to Kerzner and Kerzner (2017), the import and custom
difficulties and restrictions are the major socio-political risks that occur during the
construction project. We need to be cautious about the location of the project.
Accordingly, we would understand the codes and regulations that are needed to be
maintained.
The learning from the literature study was quite helpful for preparing this research study. In
fact, my experience in a construction industry has improved my understanding regarding
probable risks. My aim for this study is to recognize these challenges that are backed by the
relevant literature study. The development of the practical and theoretical knowledge helped me
in this research study. The companies in the construction industry generally follow three stages
for managing risks. The first stage is Risk Identification, which identifies the emerging risks at

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the construction site (Titarenko, Titov & Titarenko, 2014). Experiences in this construction
industry help me in identifying the risks at the initial stage. After going through a different
projects and observing the scenario at the construction sites, I have gathered the fruitful
knowledge about identifying the risk potentiality. We generally use the checklist to identify the
probable risks that may occur during any particular project at the construction site. These
checklists and the manuals are usually used as the documents sat the construction site. We often
discuss the entire environment that may affected by the emerging risks. We develop such
discussion by gathering the relevant information from different sources. We have gathered the
primary survey session where the respondents also used their version of risk identification.
However, from my perspectives of identifying the risks, I can clearly state that it is essential to
presume the risks at the initial stage of the project. Hence, we can be prepared during the crisis
situation.
The next step, as defined by Qazi et al., (2016), in the risk management is Risk
Assessment, which is used as a discussion tool. With the help of this risk assessment process, the
associates and the management are gathered together to discuss the relevant solution for the
emerging risks (McDonald, 2016). Few meetings were arranged in this project to raise the issues
or the risks affecting the project functionalities. I would have to deal with the people of different
cultural backgrounds and attitudes. As a result, as a professional I would enlarge my skill and
competency that can improve my personality as a professional. We arrange such meeting just to
consult with other associates to share the problems with the experts who belong to the same
field. Mapping and systemizing were the major techniques of handling the risks discussed in the
meeting (Carvalho & Rabechini Junior, 2015). However, we often gather the diverse ideas from

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other associates to generate the solutions for the emerging issues. He diverse solutions provide us
he more in-depth analysis about the innovative procedures to deal with the risks.
The final process is Risk Response, which deals with the outcome of the discussion or the
process to deal with the risks. In many projects, I have identified that the management fails to
deal with the risks in a structured way. However, as opined by Zheng et al., (2016), risk response
strategy depends on the concerned types of risks encountered within a project. We have learnt
that the lower impact of risks is easily managed. Hence, we need to respond to the risks after
recognizing the severity. In my research proposal, I have tried to incorporate all those challenges
and risk factors that a construction industry has to face. This particular paper may help the
business individuals in overcoming the risk factors in the coming years. In addition, by
conducting an effective survey method I would be able to involve the employees for collecting
their necessary responses. People belonging to various geographical boundaries and attitudes
face immense challenges in being associated with the business organization belonging to
construction sector (Gajewska & Ropel, 2011). I have acquired knowledge on how an effective
training and development session can enhance the understanding and experience of a
professional. In addition, while communicating with the respondents I would be able to widen
my mental horizon. Numerous researchers and practitioners have raised their voice on how to
overcome the challenges of construction industry. While providing services they do not
exchange their thoughts and views with each other. As a result, communication barrier is one of
the most effective issues due to which employees fail to satisfy the needs and demands of the
customers (Wiengarten et al., 2016). I might have to face difficulties while conducting the survey
and collecting the response from the participants within limited period. However, I cannot deny
the knowledge and understanding that I have gathered while making the paper. The extracted

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ideas from this project study helped me in enhancing my skills and enriched knowledge based on
this very subject matter. Moreover, the practical experiences in the construction industry also
helped me in aligning my thoughts with the theoretical discussion to clarify the underling
concepts. Therefore, I can imply that the overall project journey has been much promising for
me.
Section 2
Reason for Trusting the Source
The sources from where I have gathered the extensive information about the risk
management process is authentic. The ethical considerations in a research subject demands for
the updated information sources that can generate the current working practices and the reliable
information based on the subject matter. The study provides the in-depth ideas about the risk
management study. While collecting effective data for my proposal I have observed that the rate
of inadequate managerial skill in the construction industry is very high. I have implemented the
point of views of different eminent scholars. The data collection methods and the methodologies
used in the sources are quite helpful for me to identify the core areas of the risk management
process applied in the construction industry. The source defines that the construction projects are
often much complex and prone to risks. I am associated with the construction company due to
which I have the ideas about the dynamic work environment. The information present in the
source is quite authentic and relevant for the project. On the other hand, the practical data
collection through survey process is quite effective in understanding the subject matter in a
structured form.

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The conducted interviews and the survey develop the idea about the risk project life
cycle, which is the integral part of the entire risk management procedure. While running the
entire process of business in construction industry, managers have to face risks and uncertainties
that create barriers in rendering organizational success. From IT industry to construction, every
business sector has to face innumerable barriers as well as risk factors at the time of business
expansion. I have gathered ideas about the possible risks that may affect the project much
significantly. Therefore, in this study, I have set my aims to identify the major risks encountered
in the construction industry. I have observed that there are mainly six types of risks I have found
in the construction projects. I have identified that the source of information provides the fruitful
knowledge about the different process of managing risks in a construction business. The
alignment of the theoretical study and my practical knowledge is quite helpful in strengthening
my analytical skills. The findings that are derived from the interviews and the survey are
developing the enriched ideas about the future practices that are needed to be undertaken.
Moreover, it provides the idea about the improvement of the existing practices by identifying the
loopholes. This practical research is conducted in a systematic and sequential way by using the
appropriate methodology. Therefore, I select the sources for managing the project study.
Section 3
Description of the Research process
In order to develop the entire project, I carried out the research in a systematic and a
structured way. My aim for this study is to recognize these challenges that are backed by the
relevant literature study. The development of the practical and theoretical knowledge helped me
in this research study. My work experience in the construction industry helped me in developing

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the enriched ideas about the subject area. However, I chose to utilize two method of carrying out
the research, such as primary data collection and secondary data collection. The literature review
develops the understanding regarding the conceptual forms of the variables and the practices in
the construction industry. The theory-based ideas are much helpful to develop the in-depth
knowledge based on any particular research area. On the other hand, the primary data collection
process is associated with the interviews and survey to derive practical knowledge from the
respondents who have been experiencing the real life scenario. I could relate to their responses as
I am also a part of a construction company. However, the ideas derived from both of these
sources helped me in aligning my ideas and experiences. In order to gain in-depth knowledge I
could have decided to conduct a systematic qualitative data collection method to directly
interaction with the managers of construction industry. As a result, I have gathered a complete
analysis of the risk management plan. Moreover, after identifying the gaps and the loopholes, I
could develop the implications for the future practices as well. I have completed this process
within 12 months. The following timeline would provide the ideas about the activities.
Timeline
Main
activities
/ stages
1st
Mon
th
2nd
Mon
th
3rd
Mon
th
4th `
Mon
th
5th
Mon
th
6th
Mon
th
7th
Mon
th
8th
Mon
th
9th
Mon
th
10th
Mon
th
11th
Mon
th
12th
Mon
th
Setting
out aims

Collectin
g
informati
on from
secondar
y sources

Contactin
g people
in the


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industry
Carrying
out the
survey

Compilin
g the
result

Writing
up
dissertati
ons
   
Finalizin
g the
dissertati
on and
submittin
g it
   
Table 1: Timeline
(Source: Created by the Author)
Section 4
Critical discussion on my proposal
I have gone through a wonderful learning experience while conducting in-depth research
on this very specific topic. While running the entire process of business in construction industry,

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managers have to face risks and uncertainties that create barriers in rendering organizational
success. From IT industry to construction, every business sector has to face innumerable barriers
as well as risk factors at the time of business expansion (McNeil, Frey & Embrechts, 2015). In
my research proposal however, I have chosen the topic like risk management practices of
construction industry. Behind choosing this specific industry, there is a specific reason.
Construction industry is considered as one of the challenging business sectors as it incurs
numerous project stakeholders (Hardin & McCool, 2015). Design risk and construction delay is
one of the most important factors due to which construction industry is facing innumerable
challenges in expanding their widespread wings of business.
While collecting effective data for my proposal I have observed that the rate of
inadequate managerial skill in the construction industry is very high. I have implemented the
point of views of different eminent scholars. From the opinion of different scholars, I have
analyzed that employees of different geographical boundaries and attitudes are associated with
construction industry. While providing services they do not exchange their thoughts and views
with each other. As a result, communication barrier is one of the most effective issues due to
which employees fail to satisfy the needs and demands of the customers. I have also acquired
knowledge on how managers associated with construction industry fail to control the entire
process of business due to the lack of time management skill, decision-making skill,
implementation of appropriate leadership skill and so on.
While making an in-depth literature review I have provided the opinion of numerous
eminent scholars. A group of research scholars believes that risk in the construction industry can
be managed in four major ways, which includes four major steps:

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 Identify the risk
 Analyze the consequences
 Male an action plan
 Implement the planning
In 12 month of project plan, I have decided to conduct the survey in the month of 4 so
that I can get an immediate response from the participants. I have decided to make an effective
survey method for getting direct response from the participants. In addition, collecting
appropriate data and information from the employees associated with construction industry
would help me in evaluating the research issue most effectively. Still my research proposal is
not devoid of major limitations. In order to gain in-depth knowledge I could have decided to
conduct a systematic qualitative data collection method to directly interaction with the managers
of construction industry. However, I could not get that much time form arranging an interview
session with the construction managers. In addition, due to the lack of time I have made the
entire research proposal for 12 months, which is not effective enough for conducting an in-depth
research on various data.
State reasons behind choosing this topic
I am associated with the conduction industry in the post of project manager for several
years. While controlling the performance level of team members I have faced immense
challenges. I have observed that managers fail to make an effective rapport with the team
members especially in this specific industry due to cultural barriers and psychological barriers.
As a result, customers have to face innumerable challenges in getting the services within proper
time. Numerous researchers and practitioners have raised their voice on how to overcome the

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challenges of construction industry . However, I have personal experience and knowledge on
how to overcome this specific barrier after being associated with this industry for several years.
In addition, while appointing in the post of project manager in construction industry I
have gain proper knowledge on how to overcome risk factors in construction industry. In quest
of starting up the project instantly, organizations tend to hire contractors without reviewing their
documentation properly. This particular step is the cause of failure of construction project. I have
also analyzed that employees from diverse cultural backgrounds and attitudes are appointed in a
construction industry. Therefore, the role of those employees is to maintaining effective
communication with each other for providing effective customer services. But I have observed
that due to the lack of proper training and guideline employees fail to exchange their thoughts
and views which results a delay in customer services. In my research proposal, I have tried to
incorporate all those challenges and risk factors that a construction industry has to face. This
particular paper may help the business individuals in overcoming the risk factors in the coming
years. In addition, by conducting an effective survey method I would be able to involve the
employees for collecting their necessary responses. The findings that are derived from the
interviews and the survey are developing the enriched ideas about the future practices that are
needed to be undertaken. Moreover, it provides the idea about the improvement of the existing
practices by identifying the loopholes. That would enhance the value of my research paper.
Critical reflection
It is undeniable that I have faced innumerable challenges while conducting the research
proposal especially at the time of collecting appropriate data and information. In addition, an
effective research proposal within twelve months is sufficient for gathering appropriate data and

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information. Therefore, I would have to face difficulties while conducting the survey and
collecting the response from the participants within limited period. However, I cannot deny the
knowledge and understanding that I have gathered while making the paper. In addition, people
belonging to various geographical boundaries and attitudes face immense challenges in being
associated with the business organization belonging to construction sector. I have acquired
knowledge on how an effective training and development session can enhance the understanding
and experience of a professional. The development of the practical and theoretical knowledge
helped me in this research study. My work experience in the construction industry helped me in
developing the enriched ideas about the subject area. However, I chose to utilize two method of
carrying out the research, such as primary data collection and secondary data collection. In
addition, while communicating with the respondents I would be able to widen my mental
horizon. The findings that are derived from the interviews and the survey are developing the
enriched ideas about the future practices that are needed to be undertaken. Moreover, it provides
the idea about the improvement of the existing practices by identifying the loopholes. I would
have to deal with the people of different cultural backgrounds and attitudes. As a result, as a
professional I would enlarge my skill and competency that can improve my personality as a
professional. The entire project was a complete new experience from me. I have identified my
drawbacks while gathering information. It would help me to improve my quality for making
better research paper in future.

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References
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techniques. A theoretical framework. Journal of Risk Research, 18(2), 232-248.
Cannon, J., & Hillebrandt, P. M. (Eds.). (2016). The management of construction firms: Aspects
of theory. Springer.
Carvalho, M. M. D., & Rabechini Junior, R. (2015). Impact of risk management on project
performance: the importance of soft skills. International Journal of Production
Research, 53(2), 321-340.
Darnall, R. & Preston, J.M., 2010. Project Management from Simple to Complex. Flat World
Knowledge, Inc.
Demirkesen, S., & Ozorhon, B. (2017). Measuring Project Management Performance: Case of
Construction Industry. Engineering Management Journal, 29(4), 258-277.
Esmaeili, B., Hallowell, M. R., & Rajagopalan, B. (2015). Attribute-based safety risk
assessment. I: Analysis at the fundamental level. Journal of Construction Engineering
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Gajewska. E & Ropel. M, (2011) Risk Management Practices in a Construction Project – a case
study. Chalmers University of Technology. 47. 5-50
Hardin, B., & McCool, D. (2015). BIM and construction management: proven tools, methods,
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Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
McDonald, C. (2016). Pollution risks for contractors. Risk Management, 63(9), 37-38.
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