Create Your Own Risk Management Plan for 2018
The new year is weeks away, and with it comes new opportunity. 2018 is the year to mitigate risks in your business. Creating a general risk management plan for your business and a risk management template will help you manage risks on site and off. Each construction project is unique, as are many of the risks associated with that project. However, by creating a handy checklist to go through every project, you’ll be able to easily assess and manage risks which can save your business money. Here are some things to keep in mind while you’re building your risk management plan for 2018.
Table of Contents
What Are Your Potential Risks?
With any project, you have to determine the possible risks that could turn into issues later on. Some areas of risks to think about while creating your risk management plan are:
Occupational: Worksite related risks of injury or death
Financial: Problems with the economy, increases in supply pricing, rising interest rates, unprepared growth, etc.
Project: Miscalculation of time or resources, lack of policies or applications of them, lack of project management, etc.
Contractual: Monetary penalties for not completing the job on time.
Competition: Pressure to deliver based on competitor pricing, possibly straining resources or risking a project.
Natural: Floods, earthquakes, hurricanes, and other natural disasters that could damage a site or delay work.
Figuring out the various risks associated with your project is the first step to crafting an effective risk management plan.
After listing the various risks that might occur for your project, you can assess the risks for importance. By looking at each risk and using past data, you can determine whether it’s likely to occur. Once you assign likelihood values to the risks, you can set impact values starting with those likely to occur. Impact values are the impact the risk would have on your business if it occurred. Sometimes you won’t be able to get exact numbers, but estimates are equally as effective. This will show you the high priority risks all the way to the low priority risks so that you can start tackling them.
Dealing with the Risk
Once you’ve determined which risks are a high priority for you and your project, you can start tackling them. When evaluating the highest risks, you’ll have to determine your approach. And some risks will present complex situations with unavoidable circumstances. However, many risks can be lessened. Some risks can be avoided. If you’re concerned about natural disasters, you can choose to not take projects on fault lines or flood zones. Other times you can mitigate or lessen the risk. Safety hazards are a risk that can be mitigated. By ensuring proper safety equipment and keeping workers up-to-date with their training, various hazards can be reduced. There is also accepting the risk and planning for it. If you live in an area that sometimes has construction delays due to weather, using your knowledge of the area you can plan for some of it.
So now you have a plan on how to deal with various risks for your project. You can now look at some resources that might help you in your risk management plan. For example, software can be a useful tool in managing risk. Project management or job costing software can help you manage the various costs and steps in your project. Preventing you from becoming overburdened and faced with unplanned costs. Some project management software even has Enterprise Risk Management software built into it.
Software won’t mitigate every risk, especially those concerned with safety and finance. On-the-job training can also greatly reduce risk to a project. Knowing that everyone is up-to-date with their training can help with workplace safety. Obtaining a construction business credit line can help alleviate risks on the financial side of your business. Receivables can be delayed anywhere from 60-90 days, and many projects require upfront cash. Having a line of credit you can pull from at the start of a project is a way to prevent delays and mitigate some risks.
Completing Your Risk Management Plan
Once you’ve decided how to manage risks that could occur on a project, it is time to implement your plan. To implement your plan, you should talk to your employees. Talking to them about how you want to reduce risks on the site will help reduce risks. Staying involved with the project and reviewing potential new risks will keep you ahead of any issues. It will also ensure that you have potential plans for any new risks that might occur.
While every project is unique, the steps involved in crafting a risk management plan are the same. Following through these basic ideas will help you craft easy to follow and effective risk management plans. Bringing you a more productive and profitable new year.