Chapter | fifteen

Risk Management

Construction is a business fraught with risk. One of the greatest areas of risk is
controlling time and the cost of time. All parties can exercise better risk man-
agement in this area. By recognizing and planning, risks can be minimized and
controlled. This chapter addresses some risk management considerations for
each of the parties to the construction Project.
All parties in a construction Project must be keenly aware of the importance
of good Project documentation. The analysis procedures presented in this book
cannot be performed if good documentation does not exist. At the top of the
list are daily reports. Also important are photographs/videos taken periodically
over the course of the Project. Finally, detailed documentation on costs must be
maintained and must be amenable to segregation to discrete issues.

OWNER’S CONSIDERATIONS
The Owner’s considerations for risk start at the Project inception. First, the Owner
must consider external constraints concerning time. Must the facility be com-
pleted to meet a critical production date? Must the Project finish by a certain date
for political reasons? These factors influence the way in which the Owner pursues
the Project. For example, certain time requirements and other factors may indi-
cate a fast-track approach to the Project. The Owner must consider the realities
of finishing the Project within the required time frame. Merely because external
considerations require that a Project be completed by a certain date does not mean
that the Project can, in fact, be completed by that date. The Owner should consult
with knowledgeable advisors to determine a reasonable duration to specify in the
Contract documents. Bidders should themselves thoroughly investigate the time
constraints, but the Owner should point out any special considerations up front.
For example, if the required duration can only be achieved by an accelerated effort
such as multiple shifts and seven-day workweeks, the potential need for these
elements should be stated in the Contract or at least discussed during the prebid
meeting. The Owner is far better off alerting bidders to an urgent situation.

© 2009 Ted Trauner.

Published by Elsevier Inc. All rights reserved. 233