R I
S
K MANAGEMENT
TOPIC NO. 1
INTRODUCTION TO RISK PROJECT MANAGEMENT
• Importance of Risk Management
• Overview of Project Risks
• Key Concepts: Risk, Uncertainty, and Opportunity
CONSTRUCTION RISK MANAGEMENT 2
RISK
MANAGEMENT
Risk management system in a
construction industry deals with
planning and evaluating the
project risks, then, it must be
followed by the implementation
of processes, procedures, and
systems to mitigate the risks.
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RISKS IN CONSTRUCTION PROJECT
1. SAFETY RISK 3. LEGAL RISK
Workers / Staffs (Engineers, Architects, Regulations, code compliance, disputes.
Site Supervisors) and every personnel
4. PROJECT RISK
involved in the project.
Management of resources, schedules.
2. FINANCIAL RISK
5. ENVIRONMENTAL RISK
Budget of the project.
Acts of Gods (Floods, Typhoons, Earthquakes)
CONSTRUCTION RISK MANAGEMENT 4
SAFETY RISKS
PERSONAL PROTECTIVE EQUIPMENT
QUADRANT I: QUADRANT II:
LOW RISK, GENERAL PROTECTION LOW RISK, SPECIALIZED PROTECTION
• CHEMICAL RESISTANT GLOVES,
• HARD HATS, SAFETY GLASSES,
LIGHTWEIGHT COVERALLS, HEARING
REFLECTIVE VESTS
PROTECTION
QUADRANT III: QUADRANT IV:
HIGH RISK, GENERAL PROTECTION HIGH RISK, SPECIALIZED PROTECTION
• SAFETY SHOES, FULL-BRIM HARD • SELF CONTAINED BREATHING
HATS, SAFETY GOGGLES, SAFETY APPARATUS, FLAME RESISTANT
GLOVES, SAFETY HARNESS SUITS, ARC FLASH SUITS
CONSTRUCTION RISK MANAGEMENT 6
MOST COMMON TYPE OF INJURIES
• Superficial Injuries
• Open Wounds
• Discolorations, Sprains, and Strains
• Muscle and Tendon Injury
• Crushing Injury
• Traumatic Amputations
• Foreign Body Entry
• Burns and Corrosions
• Toxic Effect
CONSTRUCTION RISK MANAGEMENT 8
INSIGHTS TO OCCUPATION INJURIES
• Total Case: 2,309 total cases
• Workdays Lost: 810 injuries involved
workdays lost.
• Fatal Injuries: 27 cases
• Non-fatal Injuries: 783. with 27
resulting in permanent incapacity and
756 in temporary incapacity.
• Without Workdays Lost: 1,499 cases
that did not result in any workdays lost.
CONSTRUCTION RISK MANAGEMENT 9
LEADING CAUSE OF INJURIES
• Caught by or in Between Objects
• Over-exertion or Strenuous Movement
• Stepping On, Striking, or Struck by Objects
• Falls of Persons
• Exposure to Harmful Substances
• Struck by Falling Objects
• Exposure to or Contact with Extreme
Temperature
• Exposure or Contact with Electric Current
CONSTRUCTION RISK MANAGEMENT 10
LEADING CAUSE OF INJURIES
CONSTRUCTION RISK MANAGEMENT 11
FINANCIAL RISKS
12
FINANCIAL RISKS
COST OVERRUNS
Actual budget costs exceed
the budget for project.
PAYMENT DELAYS
Delay in receiving payments from
clients, leading to cashflow problems.
CONTRACTUAL RISKS
Financial losses due to unfavorable
contract terms or misinterpretations.
CONSTRUCTION RISK MANAGEMENT 13
LEGAL RISKS
14
CONSTRUCTION RISK MANAGEMENT 15
PROJECT RISK
PROJECT
MANAGEMENT CYCLE
CONSTRUCTION RISK MANAGEMENT 17
ENVIRONMENTAL RISKS
SITE PREPARATION FOR
ENVIRONMENTAL RISKS
• Secure loose objects and
construction materials on-site.
• Develop and practice evacuation
plans.
• Establish communication plans for
weather updates and warnings.
1/7/20XX CONSTRUCTION RISK MANAGEMENT 19
RISKS, UNCERTAINTIES, OPPORTUNITIES
RISKS UNCERTAINTY OPPORTUNITY
Risk in construction refers to Uncertainty refers to situation Opportunity in construction
the potential for an event or where the outcomes, refers to the potential for
condition to negatively impact probabilities, or impacts of positive outcomes that can
project objectives such as cost, events are unknown or improve project performance,
time, quality, or safety. unpredictable. reduce costs, or enhance value.
CONSTRUCTION RISK MANAGEMENT 20
TOPIC NO. 2
CYCLES OF RISK PROJECT MANAGEMENT
• Construction Risk Management
• Why is Risk Management Essential in Construction
• Main Risk Categories in Construction
• Known and Unknown Risks
CONSTRUCTION RISK MANAGEMENT 21
CONSTRUCTION
RISK MANAGEMENT
Risk management system in a
construction industry deals with
planning and evaluating the
project risks, then, it must be
followed by the implementation
of processes, procedures, and
systems to mitigate the risks.
CONSTRUCTION RISK MANAGEMENT 22
EXAMPLE:
WORKING AT HEIGHTS
• Identify the Risks
• Assess the Risks
• Mitigate the Risks
• Monitor the Risks
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RISK MANAGEMENT IS ESSENTIAL
STREAMLINE OPERATIONS
ENHANCE SAFETY
INCREASE CONFIDENCE
INCREASE PROFITS
CONSTRUCTION RISK MANAGEMENT 24
MAIN RISK
CATEGORIES
IN CONSTRUCTION
3 PORTFOLIO LEVEL RISKS
2 PROGRAM LEVEL RISKS
1 PROJECT LEVEL RISKS
1/7/20XX CONSTRUCTION RISK MANAGEMENT 25
MAIN RISK FLOW CHART
PORTFOLIO LEVEL
RISK MONITORING
CONTINGENCY
AND REPORTING
ASSESSMENT
PROGRAM LEVEL
CONTIGENCY ASSESSMENT
PROGRAM 2
PROGRAM 3
PROGRAM 5
PROGRAM 4
PROGRAM 1
RISK REGISTER AND
CONTINGENCY TOOL
(PER PROJECT/PROGRAM)
CONSTRUCTION RISK MANAGEMENT 26
KNOWN AND UNKNOWN RISKS
KNOWN RISKS UNKNOWN RISKS
These risks are identifiable events or conditions These risks are events or conditions that cannot
that can be anticipated and assessed before be indentified during project planning. The risk
they occur. matrix helps prepares contingencies, but these
Note: Predictable Challenges risk remain unindentifiable until they
materialize.
CONSTRUCTION RISK MANAGEMENT 27
KNOWN RISKS:
THE PREDICTABLE
CHALLENGES
These risks can be systematically
evaluated, quantified, and planned for
with specific mitigation strategies.
• Weather impacts on concrete pour
• Standard permit processing delays
• Typical material delivery timeframes
• Regular equipment maintenance
needs
• Common labor availability issues
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UNKNOWN RISKS:
THE HIDDEN THREATS
Managing these threats requires:
• Proactive Identification
• Regular Assessments
• Flexible Contingency
• Rapid Response
• Systematic Documentation
1/7/20XX CONSTRUCTION RISK MANAGEMENT 29
UNDERSTANDING KNOWN AND UNKNOWN RISKS
KNOWN RISKS UNKNOWN RISKS
EXAMPLES
(CERTAIN) (UNCERTAIN)
1. Weather Delays 1. Subsurface Conditions
2. Material Shortages 2. Design Changes
Known (Identified) 3. Regulatory Compliance 3. Market Fluctuations
4. Labor Strikes 4. Regulatory Changes
5. Equipment Failure 5. Funding Delays
1. Pandemics
1. Environmental Hazards
2. Alien Landing
2. Historical Site Restrictions
3. Development of AI that
Unknown (Unidentified) 3. Subcontractor Issues
overtakes Human
4. Stakeholder Concerns
4. Economic Collapse
5. Previous Project Data
5. Political Instability
CONSTRUCTION RISK MANAGEMENT 30
COMMON PROJECT RISKS
Risk Name Description Likelihood Impact
Delays can stem from numerous sources,
Project Delays including inclement weather, design changes, Almost Certain Moderate
or regulatory approvals.
Cost overruns occur when actual project costs
Cost Overruns Likely Major
exceeded the estimated budget.
Changes in project design during construction
Design Changes Likely Moderate
can lead to increase costs and delays.
It involves uncontrolled changes or
Scope Creep continuous growth in a project’s scope, Likely Moderate
leading to additional scope of works.
It arise from substandard workmanship or
Quality Issues Possible Moderate
materials, leading to rework and delays.
CONSTRUCTION RISK MANAGEMENT 31
TOPIC NO. 3
RISK MANAGEMENT PLANNING
• Risk Matrix Template
• Risk vs Issues
• Turning Project Risks into Opportunities
• Risk and Opportunity Matrix
• Key Risk Management Standards
• Future of Construction Risk Management
CONSTRUCTION RISK MANAGEMENT 32
R I
S
K MATRIX
COMPONENTS OF RISK MATRIX
RECOMMENDED
COMPONENT DESCRIPTION
DESCRIPTORS
• Rare
Also known as probability, this • Unlikely
Likelihood refers to how likely it is for a risk • Possible
event to occur. • Likely
• Almost Certain
• Insignificant
Also referred to as consequence, • Negligible
Impact this determines the extent of a risk • Moderate
event’s effects on the project. • Extensive
• Significant
CONSTRUCTION RISK MANAGEMENT 34
COMPONENTS OF RISK MATRIX
RECOMMENDED
COMPONENT DESCRIPTION
DESCRIPTORS
• 1: Very Low Risk
A numerical value is calculated by • 2-4: Low Risk
Risk Score assessing a risk’s likelihood and • 5-9: Medium Risk
impact. • 10-16: High Risk
• 17-25: Extreme Risk
• Very Low
The process of categorizing risks • Low
Risk Rating into levels of severity using the • Medium
Risk Matrix. • High
• Extreme
CONSTRUCTION RISK MANAGEMENT 35
RISKS MATRIX
IMPACT / GRAVITY OF CONSEQUENCE
Insignificant Negligible Moderate Extensive Significant
1 2 3 4 5
Almost Certain Medium Risk High Risk High Risk Extreme Risk Extreme Risk
5 5 10 15 20 25
Likely Low Risk Medium Risk High Risk High Risk Extreme Risk
PROBABILITY
4 4 8 12 16 20
Possible Low Risk Medium Risk Medium Risk High Risk High Risk
3 3 6 9 12 15
Unlikely Low Risk Low Risk Medium Risk Medium Risk High Risk
2 2 4 6 8 10
Rare Very Low Low Risk Low Risk Low Risk Medium Risk
1 1 2 3 4 5
CONSTRUCTION RISK MANAGEMENT 36
EXAMPLE:
START OF A PROJECT
Managing these threats requires:
• Resources (Manpower, Materials)
• Project Calculated Budget
• Possible Design Issues
• Project Scheduling
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RESOURCES (MANPOWER, MATERIALS)
IMPACT / GRAVITY OF CONSEQUENCE
Insignificant Negligible Moderate Extensive Significant
1 2 3 4 5
Almost Certain Medium Risk High Risk High Risk Extreme Risk Extreme Risk
5 5 10 15 20 25
Likely Low Risk Medium Risk High Risk High Risk Extreme Risk
PROBABILITY
4 4 8 12 16 20
Possible Low Risk Medium Risk Medium Risk High Risk High Risk
3 3 6 9 12 15
Unlikely Low Risk Low Risk Medium Risk Medium Risk High Risk
2 2 4 6 8 10
Rare Very Low Low Risk Low Risk Low Risk Medium Risk
1 1 2 3 4 5
CONSTRUCTION RISK MANAGEMENT 38
PRODUCT BENEFITS
Simple and efficient to use
Quick customer service assistance
Free 90-day customer support
1/7/20XX CONSTRUCTION
Pitch
RISK
deck
MANAGEMENT 39 39
RISKS AND ISSUES
TYPE EXAMPLES DESCRIPTION
• The potential risk of severe
weather, such as storms of heavy
Risk Unexpected Weather Conditions
rain, that could delay construction
activities
• A storm has occurred, turning the
risk into a reality. This issue has
Construction Delay due to
Issue halted construction and pushed
Bad Weather
the project timeline back by two
weeks.
CONSTRUCTION RISK MANAGEMENT 40
MANAGING ISSUES IN PROJECT MANAGEMENT
Monitoring
and Review
Identification
Implementation
COMMUNICATION
Documentation
Resolution
Planning
Analysis
CONSTRUCTION RISK MANAGEMENT 41
RISKS TO OPPORTUNITY
RISK ISSUE OPPORTUNITY
The glass panels have arrived The delay in receiving the glass
The glass panels could arrive at with some defects, which is panels allows the team to re-
a later date due to shipping currently delaying installation evaluate and choose a more
delays, potentially pushing as the team must asses the advance glass type that offers
back the installation schedule damage and arrange for better energy efficiency, enhancing
replacements the building’s overall value
Shortage of engineers - -
CONSTRUCTION RISK MANAGEMENT 42
RISK VS OPPORTUNITY MATRIX
Significant Extensive Moderate Negligible Insignificant Insignificant Negligible Moderate Extensive Significant
5 4 3 2 1 1 2 3 4 5
Almost Certain Extreme Opp. Extreme Opp. Rare Opp. Rare Opp. Great Opp. Medium Risk High Risk High Risk Extreme Risk Extreme Risk
5 25 20 15 10 5 5 10 15 20 25
Likely Extreme Opp. Rare Opp. Rare Opp. Great Opp. Weak Opp. Low Risk Medium Risk High Risk High Risk Extreme Risk
4 20 16 12 8 4 4 8 12 16 20
Possible Rare Opp. Rare Opp. Great Opp. Great opp. Weak Opp. Low Risk Medium Risk Medium Risk High Risk High Risk
3 15 12 9 6 3 3 6 9 12 15
Unlikely Rare Opp. Great Opp. Great Opp. Weak Opp. Weak Opp. Low Risk Low Risk Medium Risk Medium Risk High Risk
2 10 8 6 4 2 2 4 6 8 10
Rare Great Opp. Weak Opp. Weak Opp. Weak Opp. Very Weak Very Low Low Risk Low Risk Low Risk Medium Risk
1 5 4 3 2 1 1 2 3 4 5
CONSTRUCTION RISK MANAGEMENT 43
OPPORTUNITIES
IN CONSTRUCTION
• Maximizing Efficiency Onsite
• Program Management
• Bulk Procurement
• Modular Construction
• BIM Class Detection
• Value Engineering and Flexible
Design
1/7/20XX CONSTRUCTION RISK MANAGEMENT 44
ISO 31000:2018 KEY RISK
RISK MANAGEMENT GUIDELINES
MANAGEMENT
STANDARDS
Essential Framework Benefits:
• Tested methods that work across
different project types.
• Clear steps for identifying and
handling risks.
• Industry-accepted ways to measure
and track threats.
• Systematic approaches to protect
project value
CONSTRUCTION RISK MANAGEMENT 45
FUTURE TRENDS AND INNOVATIONS
CONSTRUCTION RISK MANAGEMENT 46
THANK YOU !
ENGR. RENZ BRIXTER B. LINGAMEN, CE, MP, ME-1, MSCE-SE