Risk managers should involve construction experts early in construction projects in order to adequately assess and mitigate risk. This is important because design professionals and contractors often have agendas that, while initially parallel to the owner’s, diverge as soon as there are problems on the project.
That is the view of Mark Steele, senior managing consultant with Resolution Management Consultants.
According to Steele, several significant risks need to be negotiated by the owner (the hospital or healthcare system initiating, sponsoring, paying for, and ultimately using the capital project or program) during in a capital project. These include the gap in construction expertise and experience between the owner’s team and the design professionals and the contractors; the difficulty in reconciling the vision (what could be) with the design reality (what will be built); and the lack of adequate processes and systems within the owner’s organization.
“Early identification of project and process risks, from the owner’s perspective, can focus the owner’s project team on the proper priorities when it comes to managing these risks to avoid costly schedule delays, budget overruns, scope surprises, and disputes or litigation,” he said.
“The outside members of the project team (the design professional and the contractor) will look at the project’s risk from their own viewpoint and will attempt to manage their risks by transferring it to other parties (including the owner). The owner’s team needs the ability to understand this give and take in order to ensure an appropriate division of risk.”
Steele points out that it is impossible to effectively manage risk if all potential risks are not identified along with a realistic assessment of the likelihood of occurrence. To achieve this, it is important to include critical expertise for construction project management early in the process to adequately assess risk, evaluate project management processes and systems, and provide the owner with an additional edge in understanding and implementing an effective capital project.
“Remember that, most likely, construction is not the owner’s core business, whereas it is the core business of the design professionals and contractors with whom the owner’s team will be working. It is important for the owner to have available expertise that is focused on the owner’s best interests,” he said.
construction risks, mitigate, contractors, Resolution Management Consultants.