International Journal of Engineering Research ISSN:2319-6890 (online),2347-5013(print)

Volume No.8, Issue No.2, pp: 55-61 26 June 2021

Risk Analysis and Risk Management in Residential Construction Projects.

Ar. Gauri Patel1

Allana College of Architecture, Pune, 2nd year M. Arch (Construction Management)

Email- [email protected]

Ar. Naziya Mistry2

Associate Prof. at Allana College of Architecture, Pune, M. Arch. (Construction Management)

Email- [email protected]

Abstract:

Risk management is a concept which is very popular in

a variety of fields. Various firms often establish a risk
with unexpected events. The procedure facilitates risk
management plan in their practice for upgrading the
neutral decision making, which in turn will result in
efficiency and increasing the gains. The undertakings
superior performance. Systematic methods for
in the construction division are very dynamic in
obtaining more information about uncertainty on the
nature, having a substantial budget, and thus
project is needed to achieve that objective (Winch,
eliminating and controlling risks associated needs to
2010).
be a prime concern for every project manager. This
paper presents an application of risk management in Aim:
various stages of the project life cycle of a To review risk management, from the point of view of
construction project. The aim is to study the the impact that risks have on Time, Cost & Quality
awareness and practical use of risk analysis and construction industry, for Residential Projects.
management in order to find out how project
information is being used in this process. Additionally, Objectives:
based on the interviews, the research depicts how • To identify the types of risk.
• To review the perception of RM within the
risks impacts Time, Cost and Quality in the project.
construction industry.
Key words: Risk; Risk analysis and Risk management; • To review the impacts of risks on triple constraints-
Time; Cost; Quality Time, Cost and Quality.

Need for study:

To achieve a systematic approach over control and
Introduction:
eliminate accidents at work, through risk management,
According to Project Management Institute (PMI), Risk
in residential projects. It is an important fundamental
management, is considered a crucial element and
ingredient of any workplace safety system and
essential for project success. Construction projects are
comprises risks recognition, determination of control
extremely complex in character, in which uncertainty
methods to terminate the risks time, cost, & quality
arises from multiple origins. Risk management has
related risks or diminish them to a minimum.
hence become a core component of the management
of construction projects, aiming to efficiently deal

Research Design Structure:

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 International Journal of Engineering Research ISSN:2319-6890 (online),2347-5013(print)
Volume No.8, Issue No.2, pp: 55-61 26 June 2021

a) Secondary Data chance of a circumstance about which little is known

The nature of the topic dictates that the focus would be other than the fact that it may happen.
majorly on Secondary data that is collected. Project Risk Classification
Risks may be segregated into various types or classes or
Literature Review:
categories, the critical aspects of these are:
The conceptual skeleton in this study initially covers the
Known risks: These risk events are frequently
basics of risk management in residential construction,
occurring in all construction projects and are inevitable,
the varying risk attitudes and impact on time, cost and
thus including minor fluctuations in material costs and
quality.
productivity (Smith et al., 2006).
b) Primary Data: Unknown risks: It is the event of uncertainty in which
Carefully constructed questionnaires and interviews someone may have information about the risk origin
with design department, senior engineers, contractors, and probabilities but keeps the information to himself.
marketing dept, assistant engineers, accounts, quality
department, quantity dept, project in charges. What is Risk Management?
The RM process includes the systemic application of
•Part 1: Attitude towards Risk and the Risk management policies, processes, and procedures for
Management the tasks of establishing the context, recognizing,
i. Perception of risk evaluating, analyzing, treating, controlling, and
ii. Most important phase of RM implementation communicating risks.
iii. Most important Risks
• Part 2: Knowledge in Relation to Risk Management
Purpose of Risk Management
i. Impact of risks on time, cost and Quality
• The gains from RM are not only exclusively for the
ii. Provision of training
iii. Lessons from previous ventures project, but also for the people. The main motivation is
c) Analysis: clear recognition and awareness of possible risks in the
• Statistical analysis for types of risks and impact on project.
time, cost & quality. • Another benefit of application of risk management is
increased level of power over the entire project and
Literature Review: more effective analytic processes which can be braced
What is Risk? on a more authentic basis.
Risk always exists when taking decisions based on • It comprises of the basic phases: recognition,
presumption, expectations, and approximation of the assessment and analysis, and response. All steps in
time ahead. It characterizes situations where the actual RMP should be considered when handling risks, to
outcome for a specific event or activity is likely to efficiently implement the process in the project.
deviate from the estimated value (Raftery, 1994). Risk is
manifold and can be analyzed in terms of deaths and
injuries, sample of a people, in terms of probability and
reliability or in terms of the possible effects on a
project.

Uncertainty and Risks

The difference and interrelation between uncertainty
and risk can be narrated as risk being quantifiable
uncertainty whereas uncertainty is indeterminate risk.
Uncertainty can be viewed as the possible occurrence Image 1 Risk management process.
of some circumstance where the chance distribution Source: https://i0.wp.com/pmcenter.bellevue.edu/wp-content/
uploads/2016/06/risk-management.png?fit=438%2C438&ssl=1
truly is undetermined, that is, uncertainty relates to the

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 International Journal of Engineering Research ISSN:2319-6890 (online),2347-5013(print)
Volume No.8, Issue No.2, pp: 55-61 26 June 2021

likely scenario, and finally best-case scenario for every

task.
Risk recognition
The recognition of risk is known as the most Risk Response
fundamental step within risk management cycle. The The third step in the process of risk management
goal is not to get perfect forecast of events to come, signifies what actions should be taken towards the
but it is the recognition of prospective risk origins with various risks and threats previously recognized. P
great effect on a particular project, should they happen.
Risk Assessment • Avoidance
The next phase is to decide the importance of risks Avoidance can be justified if the risk is evaluated to
quantitatively, prior to response management. The goal have extreme consequences that may need a re-
in risk assessment and analysis is to narrate the risk examination of the entire project. One can use
situations as entirely as possible and to make them a avoidance to cope with risk by changing project plans in
priority. There are two fundamental categories a way that makes the risk irrelevant.
segregated in the literature on risk assessment,
• Transfer
qualitative and quantitative analysis.
This response approach involves transferring the risks
Methods for Conducting Risk Assessment and and consequences to third parties who are willing to
Analysis accept responsibility for its management and the
Bahar et al (1991) describes the first step in risk analysis liability of the risk. It involves the utilization of
and evaluation process as the collection of relevant insurance and contracts to transfer the liability to
data to the risk exposure, which might be historical another party, for example by contractor to
data collected through past project experience by the subcontractor and often involves payment of risk
contractor. premium to the party that is taking on the risk and
The utilization of a risk matrix is usually done when responsibility of the consequences (PMI, 2000).
working with static risk, i.e., risks that only have
• Acceptance
negative effects. A choice of handling risk is made
hinged on where the risk lies in the matrix. Each project It is unworkable in truth to to benefit from all
specifies what type of risk is tolerable or intolerable and opportunities and remove all threats to the project, but
the colours are chosen with the project in mind. it is feasible to be aware of the threats and
opportunities through the documentation and
• Qualitative Methods recognition of them. The utilization of this method is
Probability & assessment could be used to estimate the justified when it is impossible to deal with the risk by
probability of a certain risk to occur. The risk to project other strategies, or when the quantum of the risk
goals is evaluated in terms of chances and beneficial makes other responses defeated.
impacts as well as threats and negative impacts. It is • Risk Monitoring
necessary to evolve and define the likelihood according
Continuous monitoring and review of prospective risks
to the specific project.
is an important regarding the implementation of the
Quantitative Methods risk management process. It guarantees new risks are
Sensitivity analysis: The goal is to look at the detected and managed. The project manager should
sensitivity of most elements of the risk model on monitor a list of the major risks that have been
project output, by varying the values of one factor at a recognized for risk treatment action.
time and then representing them on the project.

Probabilistic analysis: It evaluates the effect of risks

on project timeline and budget and it utilizes three-
point evaluation such as worst-case scenario, most

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 International Journal of Engineering Research ISSN:2319-6890 (online),2347-5013(print)
Volume No.8, Issue No.2, pp: 55-61 26 June 2021

years putting the project feasibility in danger.

Interviewees identified the bottlenecks, as below,

(i) pre-execution phase

(ii) execution phase.

Hold ups in land acquiring, and handover is the main

cause for time overruns in pre-execution. Various
authority permissions from all agencies results in delay
of Construction. Poor management results in
ineffectual co-ordination and schedule hold ups.
Image 2 Risk Response.
Unsuccessful management of Project scope change is
Source: commonly seen, accessibility of resources, specs, etc.,
https://images.slideplayer.com/27/9043168/slides/slide
are not received by the contractor on time. Re-work is
be carried for issues like extreme climate conditions,
Risks in Residential construction projects natural calamities, etc. Various kinds of cost overrun
Because of the character of the construction industry, are seen in construction industry. Understanding the
RM is a very fundamental process. It is commonly used reason, lets us to classify course of action to navigate
in residential projects that have higher levels of cost overrun. The reasons of cost overrun were initially
uncertainty. These types of risk investments are inspected on the base of feedback from interviews. The
characterized by more formal planning, monitor and reasons are listed on the base of probability, effect and
control processes in residential projects. The quickest significance.
way to spot risk is to evaluate and extract an inference
from projects which tanked in the past. To make sure ―Slow-mowing decision making was the top cause
that the project objectives are met, the portfolio of with the highest chances of repeating and having a
risks associated with all actors across the project life bad effect, making it the prime reason of cost
cycle (PLC) should be considered. In later stages, RM overrun.
applied systemically, helps to control those critical
―Poor design came next in significance.
elements which can negatively project performance. In
other words, to keep track of previously recognized ―Poor scheduling stood next
threats, will result in early warnings to the project
manager if any of the objectives, time, cost, or quality These ultimately impacted the quality of work of the
are not being met. project.

Finishing a project is not deemed as a victory for the Risk perception

project head. The success of a project relies on various Risk catalog has been described as a combination of
factors; primarily completing the project within the threat and vulnerability which occurs when the two
budget and schedule with quality work and no safety conditions overlap. A threat is that which has an
extreme repercussion on the tasks of a company. A
issues.
weakness is distinguished by a system that, while not
The problem of cost overruns is widely encountered in being dependent of any threat, lets a threat to be
the construction of the residential projects. When utilized.
projects prolong, the contractor increases the speed of Analysis
construction, resulting in a rise in cutting corners, Application of the probability and matrix method
leading to poor quality work. An online questionnaire was circulated as a follow up to
the interviews. The main goal was to focus on the
Many residential projects are plagued by time overruns. previously recognized risks, to put in a probability and
These overruns differ from some months to 1.5 or more matrix and show an example of an RMP method. The
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 International Journal of Engineering Research ISSN:2319-6890 (online),2347-5013(print)
Volume No.8, Issue No.2, pp: 55-61 26 June 2021

respondents were asked to evaluate the probability of

the risk occurrence as well as the on time, cost and
quality.

Based on the type of likelihood, a rating between 1 and

10 is allotted to the risk and the impact is rated
between 1 and 5. This number is multiplied together
with the rate of impact in order to get a result. This
matrix is easy to understand and determine which
action needs to be taken against an analyzed risk. All
risks are ranked from least to most critical ones.

Finally, the results were combined in a table based on a

matrix. Risks marked with red color, are those with the
biggest negative on the project performance.

Results

No Impact Colour
Code

1 Low

2 Medium

3 High

Table 1 Legend

Table 2 Matrix of Results

Conclusion

The study depicts that risk management within the

residential construction industry depends on 2
processes, experience and personal knowledge of
individual project members and the explicit process
described within the management system and in the
internal documentation.

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 International Journal of Engineering Research ISSN:2319-6890 (online),2347-5013(print)
Volume No.8, Issue No.2, pp: 55-61 26 June 2021

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Acknowledgment project-risk-assessment-models-1386
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