Taking Smart Risks in Construction

“Just taking risks for risk’s sake, that doesn’t do it for me. I’m willing to take risks that I think are worth it, and I’ve worked so hard to make sure that I survive.” – Chris Hadfield, Astronaut

Construction Dive recently forecast that contractors will be more cautious about project selection this year. Ok, on the surface that makes good sense.

Most contractors that survived the recession have got some battle scars to show for it.  They can relate to the quote above.  Now when they think about how many projects to take on, how large/complex, and how many hands they’ll need, they’re proceeding with more caution than before.

(You might even face similar concerns as a new contractor who doesn’t want to gamble big only to fail before your business has gotten off the ground. That’s equally understandable.)

But there is a flip side to that coin.

Being overly cautious can mean missing out on the risks worth taking: the jobs that widen your profit margins, help you see what you’re capable of, and sometimes give you the ability to grow your staff.

Many industry sources believe that if you plan right, and have access to the right project management tools, you can tackle more.

Big business, small business. Same worries.

Lately it seems like every other day you see construction trade stories about projects that have gone off track to the tune of millions and billions. In reality, most shops can’t relate to that scale. Their concern is whether or not it’s worthwhile to break from taking on smaller jobs with predictable paychecks, and take on a bigger project or another employee.

That makes sense, right? If you take on an employee to stretch and tackle a bigger job, and your estimate turns out to be off the mark, you’re going to be the one left holding the bag.

But while the scale might be different — and maybe some of the players — the risks contractors face with each project is pretty much identical. (Just like punch list is punch list on a project of any size, water damage is the great enemy of all jobs, and so on.)

During this slow growth period, risk management is on the minds of most contractors — not just a select few.

But how do you cut into it?

Assess potential risks, and keep them close

Whatever form it takes: a risk assessment list, chart, spreadsheet — document everything you can think of that poses a threat to your project. (Could be anything from occupational risks to financial ones.)

If you use some form of construction management software, it makes good sense to store this document where all your other project info lives. A risk management document is one you’ll want to hold up against what’s actually happening on the project — not one you’re going to want to dig for out of context, and out of time.

If you’re documenting existing conditions, do it right

Documenting existing conditions ahead of construction should also be done with due diligence, and should not be filed away somewhere apart from your living project record. Any photos and videos should be stored where your reports and other documentation of the project are stored on an ongoing basis.

It can’t be overstated: Managing all your key project documents and collaboration in one place will save you significant time when you need to access information — even months or years down the line.

Communicate better in the construction phase

If you haven’t yet, arm your project team with the right tools and procedures to communicate efficiently. If you’re not able to communicate with your entire team in real time, and in one place, you’re missing opportunities to get out ahead of risks (foreseen or unforeseen) and prevent things from going awry.

This is true, by the way, of your team in the field and your team back in the office. It even includes your client and other offsite stakeholders, because, as you well know, falling out of touch with them will catch up to you.

Many teams find success with a construction communication app because they’re light enough for the field to use and won’t require tons of training. They work particularly well for field teams to report any unsafe conditions that they see developing, as they see them.

And as a natural byproduct, they’ll also take care of the ongoing documentation you’ll need throughout the project.

Final Word

Slow, steady, and selective are wise ways to approach project selection. But don’t turn down jobs just because you aren’t equipped to manage risk throughout the project. Set yourself up right, and you stand a very good chance of seeing great returns.