Risk Management in the Construction Industry

We have invited civil engineer Carles Cots, founder and owner of engineering and consulting firm C-REHAB to talk about his international experiences on construction risk management. Carles has over 20 years of experience in the construction industry and is a long-time partner of Master Builders Solutions.  

Practical experience shows that the calculated costs in public and private construction projects are already getting out of hand at the start of construction. As an experienced civil engineer, can you explain the typical mistakes that occur during very early stages of the project?

Risks can come from a variety of sources, depending on the nature of the project. With new-builds, for example, the chief risks are uncertainties concerning soil characteristics and the effect they will have on the structure. However, thoroughly investigating the soil is expensive and time consuming. With the sort of time and cost pressures most projects are under, this often means inadequate testing and diagnostics.

For renovation or refurbishment projects, the main risk is poor scheduling, which in turn leads to a lot of wasted time. Optimized scheduling relies on really understanding the materials you are working with in terms of their properties and how best to apply them. This usually means working closely with relevant experts, which adds cost. 

Given that most project decisions are made in favor of the cheapest proposal, certainly in terms of materials and execution, it’s easy to see where the mistakes are made. Cutting corners in the early stages invariably leads to higher costs over the duration of the project and beyond. What looked like a cheap solution at the outset can end up being very expensive to rectify later.

The materials intended for use in the project, usually chosen during the planning phase, generally are an area open to potential pitfalls. Materials that might be fine for a new-build may be unsuitable for the different demands of a renovation or refurbishment project with more complex technical requirements, such as structural reinforcement or corrosion control. Proposals that appear cheap by using standard materials are often inadequate in terms of meeting the durability and quality demands of developers and users.

In a nutshell: If your main criterion is the lowest possible price, you can expect to face some big bills later on. Using cheap or standard materials for technically complex and demanding projects is a recipe for failure. To avoid making such obvious and potentially costly mistakes, you need to balance cost against the technical demands you know you are facing. Spending a bit more to get the right solutions at the outset can save you huge amounts of money in the future.

Regarding tenders and specifications: Do you think that sustainability and operating costs are given sufficient consideration?

Private customers, private operators in transportation, industry, energy – all these people well understand that maintenance aspects and their future impact on availability and potential downtime can have a strong impact on overall costs. That’s why they should give good consideration to solutions that extend the construction’s lifecycle, reduce maintenance or enable faster and easier maintenance.

At the same time, new project management tools like BIM, which includes performance indicators, make it easier to understand the potential future costs for each solution. This in turn helps in identifying the solution that best fits the customer’s needs. So, in principle it should be easy to avoid costly pitfalls, but in reality, very often it is not.

Where the requirements for a given project are unclear during construction and operation, there is a high risk that the solution chosen for the task won’t match the needs. This lack of clarity is not uncommon.

If you are unsure of precisely what you aim to achieve, you leave yourself wide open to making potentially expensive mistakes. The most common of these is to go with the cheapest possible materials and methods, regardless of whether they are fit for the purpose.

If you had defined your project properly, this wouldn’t happen. At least, you would know what you were getting into. But still, I regularly see projects being inadequately defined for the sake of saving headline costs. The result is using materials that are not designed to meet the technical or durability requirements of the project and don’t take future maintenance into account.

In the projects you are involved in, how do you identify whether a service provider has the necessary expertise and reliability?

One key to success is to value the input of interdisciplinary experts. Even if these specialized companies are operating much like sub-contractors, it is crucial to listen them, understand what they can bring or add to the project, and respect their contribution. In identifying the right people to work with, you need to look at previous references and experience, as well as the sort of technical support, commercial promotion and guarantees they can offer. It is also important that these companies are financially solid.

How difficult is it to identify the right building materials and what factors influence the choice? I’m thinking here of on-site conditions, system downtime, climatic conditions, etc.

 Selecting the right product involves taking many additional parameters into account as well, such as environmental requirements, installation equipment, workmanship training, job security, future maintenance and so on. With international projects, this complexity is even greater. Where multiple people or companies from different countries are working together, it is crucial to check available resources in the country where the project is being carried out.

 Are there any sources or partners who can help you select service providers and the right building materials?

This is down to the networks available to the project owner. Today, all companies need strong networks to offer the best solutions to their customers. New technologies make it easier to find the relevant specialists. However, companies need to keep exploring the possibilities of new technologies and be creative if they are to continuously improve the service they offer their customers.