Overview of the importance of Construction management

What is Construction Management?

Construction management is a professional service involving oversight and control over tasks
and activities in the construction phase. Typically handled by a Construction Manager (CM), it
covers all essential elements of the construction process, including its schedule, cost, quality,
function, and safety. This service is ideal for large-scale construction projects such as industrial
facilities, commercial properties, transportation infrastructure, and other capital projects.

Construction management involves planning, budgeting, coordinating, and supervising

construction projects from start to finish. As a construction manager, you may work on various
construction projects, including buildings, roads, bridges, and other structures.

What does a construction manager do?

Construction managers review proposals for projects to estimate timelines and milestones, cash
flow requirements, project protocols, resourcing needs, and requirements for human resources,
equipment, and resources at different stages of the project. They work closely with clients,
architects, subcontractors, and engineers to ensure every project aspect runs smoothly.
Construction managers may oversee a single construction project or several at once.

Cost management: Maintain awareness of all costs associated with a project; budget
management; anticipate any changes to project scope that could impact cost.
Contract administration: Create contracts for subcontractors and suppliers; manage
payments to contractors; source materials and suppliers.
Health and safety management: Ensure everyone on-site follows health and safety
regulations; prepare health and safety documentation; implement suitable protocols for
on-going practices and regular monitoring.
Quality management: Deliver projects that meet clients' specifications; ensure all work
complies with quality standards; facilitate regular checks throughout the project lifecycle;
use a total quality management approach (TQM) to help reduce costs in remedial work;
minimize delays; maintain relationships with clients, contractors, and staff.
The Importance of Construction Management

Construction management aims to deliver high-quality construction projects in the allotted time
and budget while meeting safety standards and the owner’s expectations. It establishes systems
and procedures to ensure all construction activities are completed according to plan. For this to
work, the CM collaborates with all key stakeholders involved in the project: owners, architects,
engineers, and general contractors. They are also responsible for the following tasks determining
what the project needs in terms of its construction; developing and weighing proposals for
construction materials, assets, equipment, and workers; and aligning construction costs within
the set budget. In other words, construction management handles all aspects of construction work
to guarantee its success and satisfy the client’s requirements.

How Effective Construction Management Can Ensure Project Success

Construction management plays a critical role in ensuring the success of any construction
project. Whether it is a small renovation project or a large-scale construction endeavour, the
effective management of resources, time, and budget is essential to achieving the desired results.
In this article, we will explore the importance of construction management and how it can ensure
project success.

 Planning and Scheduling

Effective construction management starts with planning and scheduling. A project manager must
have a comprehensive understanding of the project requirements, available resources, and
timelines to develop a detailed plan that outlines the scope of work, tasks, and timelines. The
plan should be communicated effectively to all stakeholders and continuously reviewed and
updated as the project progresses.

 Resource Management

Resource management is critical to the success of any construction project. Effective

management of resources ensures that materials, equipment, and labour are available when
needed, reducing delays and cost overruns. Construction managers must develop and implement
strategies for procuring resources, managing inventory, and coordinating with suppliers and
subcontractors.
  Quality Control

Quality control is another essential aspect of construction management. A construction manager

must ensure that all work is carried out according to the project plan and specifications. They
should establish a quality control program that includes regular inspections, testing, and
documentation to identify and address any defects or deficiencies.

 Risk Management

Construction projects are subject to various risks, including weather conditions, labour shortages,
equipment failures, and delays in delivery of materials. Effective risk management is critical to
mitigating these risks and ensuring project success. Construction managers should identify
potential risks, develop contingency plans, and continuously monitor and review risks to
minimize the impact of unexpected events.

 Communication and Collaboration

Effective communication and collaboration among all stakeholders are essential to the success of
any construction project. Construction managers must ensure that all parties involved in the
project are informed, engaged, and working towards a common goal. They should establish clear
communication channels, hold regular meetings, and foster a collaborative and respectful
working environment.

Construction manager key skills

Carrying out a construction project involves a lot of planning, organization, and problem-
solving. It requires a strong set of both workplace and technical skills. Here are some skills you
need to succeed as a construction manager.

Analytical and critical thinking skills

Construction managers must interpret designs, plans, and technical drawings. They must also
understand complex contracts and interpret building codes and regulations. They'll need to
translate all this information into easy-to-follow instructions for their on-site workers.

Motivational skills

Construction managers must ensure their teams meet deadlines, stay within budget, and produce
quality work. To do so, they must motivate team members with guidance, feedback, and
recognition, as well as resolve conflicts and keep the team focused on its goals. When engaging
with subcontractors, construction managers may have less positional power than when working
with employees because they may be self-employed or work for another company. Being fair
and consistent is important to earn their respect and loyalty.

Attention to detail

The construction manager is responsible for ensuring the quality of work on site is up to standard
with local building codes and regulations and meets client expectations. This requires attention
to detail throughout the entire process, including managing mistakes and minimizing their
impacts.

Communication skills

Communication is critical as construction managers interact with a range of people, including the
public, clients, and tradespeople, so they must have good interpersonal skills, both orally and in
writing. They may need to communicate changes to a team of tradespeople in the morning, run
through plans with an architect over lunch, and meet with planning officers in the afternoon to
sign off on building work. This requires a confident and well-rounded communication skill set.

Contract management skills

A construction manager may need to negotiate contracts, manage budgets, and ensure all parties
involved in a building project are satisfied. This requires persuading, compromising, and making
mutually beneficial, binding agreements.

Health and safety knowledge

Construction managers must be aware of worksite health and safety issues and understand
relevant legislation and regulations. This is vital because of the risks associated with construction
work. They need to know best practices to minimize risks to all project stakeholders.

Project management skills

Managing building projects requires coordinating a range of activities involving different people
and completing milestones on time and within budget. An understanding and experience with
project management methodologies can be important in complex projects.
In general Effective construction management is critical to the success of any construction
project. It requires careful planning and scheduling, resource management, quality control, risk
management, and effective communication and collaboration. By ensuring that all aspects of the
project are managed effectively, construction managers can ensure that projects are completed on
time, within budget, and to the desired quality standards.

The Ethiopian construction industry risk management

Risks significantly affect the development of construction projects with regard to cost, time, and
quality. As the size and intricacy of projects have expanded, the capacity to oversee changes all
through the development procedure has turned into a focal component counteracting undesirable
results “The construction industry is risky; however, it plays a vital role in driving the economic
growth of developed and developing nations.

Risks of construction industry

Construction is often a hazardous undertaking work. Risk, as a multi-facet concept is an

uncertain event or condition and can defined as the “probability that an adverse event occurs
during a stated period of time” If risk occurs, it has either positive or negative effects on project
objectives. In the context of construction industry, it could be the likelihood of the occurrence of
combination of events/factors or a definite event/factor, which occur during the whole process of
construction to the detriment of project.

Some defined construction risks as a lack of predictability about structure outcome or

consequences in a decision or planning situation. It is the uncertainty associated with estimates
of outcomes there is a chance that results could be better than expected as well as worse than
expected. A risk means, for a construction contractor, an event that will cause costs that were not
planned and from which no profit will result. Risk may result substantial cost and time overruns
that are detrimental the project objectives, and inherent to any construction project. Arising from
delays and additional costs in particular if it comes to public construction projects, not only
could project owners (clients), construction contractors but also community at large suffer from
losses. Not only the contractor, but also the client’s role can be critical to the success of
construction projects. Clients do not pay on time or dispute claims for change orders or file for
bankruptcy. Contractors cannot or do not reduce fixed overhead fast enough in rough times or
their cash runs short. Sometimes, subcontractors do not perform as required, or go broke. It is a
common fact among the participants within the construction industry continually faced with a
variety of situation, involving many unknown, unexpected, frequently undesirable and often
unpredictable factors.

The most common and well-known risks embedded in construction are the health and safety
issues, delivery scheduling and aspects related to finances. The sector is full of risks that relate to
planning, execution, communication and interaction with the surrounding society. A primary
classification of construction industry risks are natural and human risks. Natural risks occur
outside human agencies or systems, while human risks arise within humanly organized systems.
The sub categories of human risks relating to construction and project risks include social,
political, economic, financial, legal, health, managerial, technical and cultural risks.

Natural risks of construction

 Weather systems

Weather risks covers, adverse weather conditions, the probability of, tornado, flood, tidal wave
and lightning strike. If it rains for 2 months while the job is coming out of the ground, meeting
the schedules can be impossible. Pollution is a risk factor, because dust, harmful gasses, noise,
solid and all of the liquid wastes are harmful to nature and affect final quality of the construction.

 Geological systems

Geological risks covers, discrepancy in geology and topographic conditions, the probability of
earthquake, volcanic eruption and geotechnical fault. Physical risks, such as subsurface
conditions, are among the geological system risks of construction. Subsurface condition,
different from anticipated, can lead to excavation costs, which is greater than expected.
Although, geological investigation reports provide information on the type of soil that
contractors can expect to deal with, the contractor still has to rely on experience of the relative
occurrences of ‘adverse ground conditions’ among different soil types, site conditions and site
history to make judgments about the risk of adverse ground conditions on any site.
Human risks of construction

 Social risks

This type of human risks covers criminal acts, such as civil torts, such as trespass, damage to
fences, unauthorized graffiti and similar acts of vandalism, and substance abuse. While such
indices are likely to result in the project proponent appearing as plaintiff or as witnesses for the
prosecution, these can also lead to risks of counterclaims by the perpetrators. Social risks in
construction industry are becoming a more frequent occurrence on projects vulnerable to militant
protest lobbies. Social risks are one of the “soft” factors in risk management for major projects,
largely because of the difficulty of dealing with them quantitatively.

 Political risks

War, civil disorder, industrial relations action are among the political risks of construction. This
type of risks can arise from actions of the organization’s government against other countries,
such as trade embargoes. Another probability of political risks can arise from action within the
home country, such as statutory amendments made to industrial relations legislation after a
change in government. Disapproval of the required project permits one of the other political and
public risks. Political risks are also defined as foreign government interference with the normal
conduct of business.

 Economic risks

This type of risks can occur due to unexpected changes in supplying materials and labour,
availability of equipment, inflation, tariffs, fiscal policies and exchange rates. Cost escalation is
another economic risk of construction, profit planning and other managerial decision-making
aspects of construction projects. Economic conditions of the past decade have negative effect on
the climate of uncertainty with high inflation and interest rates. Inflation is an important risk
factor, because the price of construction materials rises with inflation. Sometimes, inaccurate
cost estimate, underestimation of construction costs due to lack of information, that when many
unforeseen factors may occur in construction activities causing the estimated cost to deviate from
the real cost is another risk factor. Long-term investment can be a risk factor, especially when
the project delivery approach requires the contractor to make large endowments in advance.
  Financial risks

This type of risks are about funding of the project and national and international impacts can
result unexpected changes in interest rates, credit ratings, capital supply, cash flows and rentals.
The pre-construction risk evaluation of the project in real life would have revealed its financial
feasibility. Sometimes the cost certain materials spikes unexpectedly. Other times, suppliers can
cut off credit. Unavailability of funds, which means client’s poor management of funding in the
development of construction projects, is another risk fact

 Legal risks

Risk allocation through the contractual aspect of building procurement covers contract clauses,
regulations, code and changed labour’s safety laws or regulations. Contractual risks, such as
risks assigned by contract over which the contractor has no control, are among the legal risks.
Amphibious contract means when the clauses of the contract are hard to understand because of
the loose or awkward way in which they written, is another important risk factor. Governmental
bureaucracy, which means excessive approval procedures in government departments, is another
source of risk. Since inability to know what will be required and how long it will take to obtain
approval from the regulatory agencies, the environmental protection movement has contributed
to the uncertainty for construction. When the problems continue, after re-evaluation of the
problems, additional costs can occur.

 Health risks

A construction site is an environment vulnerable to viruses and infectious diseases. Health risks
of construction are occurrence and impact of epidemic on construction projects. Construction
accidents resulting from operating errors or carelessness and the occurrence of safety failures in
construction forms an important health risk.

 Managerial risks

Inefficiency of owner supervisors, productivity of labour, and productivity of equipment and

labour disputes can lead to problems with the productivity on-site, quality assurance, cost control
and human resource management. Labour availability and labour productivity, strikes and safety
risks, such as worker injury or an injury to a member of the public, are the other managerial risks
of construction. Managerial strategies, which form managerial risks, can affect negatively or
positively worker safety behaviour and can make important contributions negatively or
positively to occupational health and safety knowledge for construction. Deregulation of safety,
which means poor safety awareness of project managers and inaccurate safety measures, is an
important risk factor. On the other hand, lack of insurance, in other words, if major equipment
and employees are not insured, it is another risk factor. Design variations, which may result from
issues such as changes by the client or defective designs is another source of risk.
Communication is very important for the sake of project, and poor communication, lack of
effective communication among project partners can lead important problems. Organizational
relationships are the other source of risk, since strained relationships may develop between
various organizations involved in the design/construction process. When the problems occur,
although the focus should be on solving the problems, discussions often centre on
responsibilities rather than project that needs at a time.

 Technical risks

Late drawing and instructions, defective design, availability of resources, suitability of materials,
defective work can result in design failure, equipment and systems failure, estimation error,
collision and accident. Faulty design not detected by contractor in tendering process and
contraction errors due to faulty design but not checked in time by contractor are among the other
technical risks. A project design that is not constructible, construction related risks such as the
inability of a subcontractor to perform also the technical risks of construction. Reworking or
delay of work, poor work man ship of subcontractor and material overuse by subcontractor with
poor technique or working habits are the other technical risks. Lack of high-quality staff is a risk
factor that poorly trained labourers may lead to poor quality outcomes for the project.

Defective construction materials that do not meet the building requirements are another risk
factor, Site location, and access, equipment and system failure, new technology failure, and
collisions and accidents are the other technical risks. The risk associated with the introduction of
new technology is an important risk factor, particularly with regard to information technology
and the building procurement process.

Construction technical risks can also be tracked from the bidding phase to the estimating process,
and thus, to the planning and scheduling of a project. The machinery break down is one of the
essential technical risks inherent in all types of construction projects. The maintenance program,
equipment life and haul road condition are the three input factors influence the probability of
machinery breakdown. Cost overrun and project delay are the major negative impacts on project
objectives are the results of machinery breakdown risk.

 Cultural risks

This type of risks can occur when there are religion or/and cultural differences. Cultural issues
can be related to the risks of major international projects, but can also be found on home ground.
Sometimes we should understand project risks as perceived by contractors from a perspective of
culture how culture influences contractor’s risk management. Project risks perceived and
managed differently in different national cultures. Risks are extended when the host country
cultures differs from a contractor’s expectation. International projects are inevitable that
contractors could make effective plans to manage project risks, minimize the influences of
cultural shock and develop a more realistic way of understanding and managing the differences.
Where the host culture is similar to the contractor, risks are fewer and easier to manage than
when the host culture is different.

The project success usually depends on the combination of all risks, although some of the
individual risk factors may be more significant. Respond strategies used to mitigate risks and a
company’s ability to manage them is fundamental. Sound management of risk is a crucial
determinant of the success of a project due to an increased attention to the variations in actual
quality, time and cost performance compared to the expected ones, as a consequence of a
growing pressure on reducing time and costs. Failure to deal with risk is one main cause for
exceeding budget, falling behind schedules and missing performance targets.

How to manage risk

Studies on construction risk management practices in Ethiopia are very limited. Based on some
studies findings, all the respondents had some knowledge of risk management however;
implementing risk management processes was limited. Moreover, contracting parties provided
insurance coverage to road projects to meet the demand of the clients, rather than to avoid
possible risks. The findings indicated that most of the parties in Ethiopian construction projects
lack adequate knowledge about the risk management processes. Individual judgment and
experience were highly used to deal with the risks in Ethiopian building construction projects’

Risk management task enables individuals or organizations to make appropriate decisions on the
uncertainties that surround them. Therefore, there is a requirement for a formal risk management
process since it is impossible to eliminate all risks. Most risk management commentators
illustrate a risk management process containing identification, analyses, and response. Others
classify the risk management process as identifying, analysing, assessing, treating, monitoring,
and communicating.

The Construction Risk Management Process

The process of mitigating risk for a construction project is no different than any other project.
The only difference is the type of risks that we are managing in the construction industry. Here
are the five steps of the risk management process.

Identification: First, make a list of every possible issue that could arise. Do the research, talk to
your crew and explore historical data from past construction projects that are similar to ours.
While this identification list is always open for edits and updates, we should have a set deadline
so that we don’t get bogged down in analysis.

Assessment: Not all risks are equal. Some are more likely to occur, others less so. One way to
assess your list of risks is to use a risk assessment matrix, which charts the likelihood of each
risk and the size of the impact it can have on your project. Creating a risk assessment matrix
helps you when addressing the risk if it appears.

Mitigation: This is where you implement a contingency plan that will reduce the likelihood and
impact of the risks you identified earlier. The top priority is those we defined as highly likely and
having the greatest impact. These should be given an owner, who will be responsible for
identifying the risk (if it occurs) and managing its resolution.

Monitoring: This step is always on-going, as you attempt to identify these risks when they show
up. That includes monitoring the effectiveness of your mitigation plan. Also, stakeholders should
be consulted and kept updated on these project risks. Engage other department leaders to help,
and empower the team to respond to risk. Have them note if a risk has moved to a different spot
on your risk assessment matrix.

Reporting: Your construction risk management plan should be analysed and shared with the
crew and stakeholders. These reports on risk mitigation allow you to evaluate the effectiveness
of the contingency plan. While this can be done with an Excel spread sheet, using project
management software is more efficient. Online tools gather the data automatically, create
dashboards to illustrate progress and even generate reports that are easily distributed.
Suggestions

Based on the some studies findings about in Ethiopian construction risk management, it
recommended that consultants, contractors, Government and other stakeholders consider the
following areas of improvement in managing risk in building construction projects in Addis
Ababa (Ethiopia).

 Practitioners of both consultants and contractors should have knowledge, skill, and
practice of risk management to minimize building construction project risks early:
 Through organizing training and workshop programs on risk management of building
construction projects for their employees;
 Facilitating continued development, education, and exchanging practices of managing
risk for their employees;
 Both consultants and contractors should give attention to risk management so as to
reduce/manage risk of time overrun and cost overrun to meet project objectives:
 Through developing risk management plan during the early stage of projects and
embrace risk as their essential part of project management;
 Through developing and organizing separate teams who have knowledge and
skill on risk management to identify, analyse risks and allocate response
strategies correspondingly;
 Government should encourage local construction material manufacturers by formulating
policies and strategies which facilitates to build their capacity and enables them to:
 Be competent in the international market on the sector;
 Produce materials with better-quality and less price to the required standard;
 Satisfy the local demand and facilitate import substitution; overall facilitates in
regulating the price escalation of constructing materials.
 Financial institutions need to require collateral with the reality of existing situations and
with appropriate time in the process of financing projects.
 Contractors should devise a strategy that improves their resource management
capability:
 Through organizing continuous training and development on financial,
procurement, and human resource management to their employees;
 Government, consultants, contractors, and other stakeholders in the industry should give
the necessary attention and work together cooperatively in order to minimize risk of
corruption:
  Government institutions and enterprises in the sector should give value to
professional ethics through creating awareness and developing organizational
culture that adverse corruption and attend for its achievement;
 Government should follow and took practical and strict anti-corruption
measures;
 Government should formulate well-organized construction policy: to implement and
improve the capacity and competitiveness of local building construction enterprises that
assists to the economic stability of the country.
 Critical risk factors, as revealed in this study, should properly handle accordingly by their
Respective companies or institutions for the appropriate allocation of response strategies
to achieve a successful result of construction projects.
 Identified risk factors can use as a checklist to contribute for risk management process in
building construction projects in Addis Ababa.