by Jeffrey C Kadlowec, Architect
Abstract
Sustainability and prefabrication are becoming increasing popular in construction. These methods incorporated technological trends to increase quality and efficiency while decreasing safety risks. Analysis of construction risks illustrates that managerial, technical and legal issues have the most potential impact. Probability theory, qualitative and quantitative methods, and process simulation models can be used to study these elements in further detail. With design-build becoming more common throughout the industry, understanding and applying these procedures will be critical in project success.
Keywords: risk analysis, prefabrication, design-build, project management
Risk Analysis
The concepts of green building and modular prefabricated construction have gained increased attention over the past decade. By applying technologies developed throughout the manufacturing sector coupled with those of the environmental movement, these types of structures present a solution to current global demands. Assembled buildings contain components that are created in factories, then transported to site and erected in place [Ly 2023]. This method incorporates many related advantages, increasing quality and efficiency while reducing safety risks.
Erection of assembled buildings has many advantages over traditional construction methods. This is evident by comparison of components, personnel, management, technology, and environment [Ly 2023]. Quality control and assurance in factories reduces the high consumption of materials on site. Standardization and production efficiency require less personnel and associated costs. Integration of design-build techniques increases mechanization and lowers uncertainties. Waste removal and recycling, energy savings, and environmental protection are more easily implemented, limiting pollution occurring at job sites. Construction is simplified resulting in decreased schedules, reducing delays common in complex projects. Focus on and assurance of worker safety can also be regulated far better in manufacturing.
Risk Management is the process of identifying and quantifying risks, then developing a response method to reduce or remove those risks. Construction risks can be categorized as financial, legal, market, management, political, environmental, technical, and social [Jagadeesh 2017]. At the top of those lists respectively are: 1) fluctuation in interest rates, 2) incorrect contract documents, 3) inter-company competition, 4) lack of skilled workers, 5) changes to government policies, 6) adverse conditions, and 7) time constraints. Analysis of surveys using a typical risk matrix [Dziadosz 2015] places managerial, technical, and legal risks as the most impactful: 1) lack of skilled workers, 2) changes to timelines, 3) sub-contractor issues, 4) project delays, and 5) incorrect contract documents; and the areas of political, environmental and social as the least.
Effective management requires understanding of uncertainty associated with these risks. While those mentioned are rather common, random events like tsunamis, floods, landslides, earthquakes, tornados, and wildfires are unexpected. These unknowns are not quantifiable or predictable, therefore cannot be minimized by precise or accurate measurements. The term ‘fuzziness’ describes this type of vagueness [Baloi 2012]. Probability theory is the only effective and reliable method to model and forecast those types of occurrences.
The presence of risk and uncertainty throughout a project schedule could result in severe delays, cost overruns and poor quality. Effective risk management procedures will enhance project performance [Nasirzadeh 2008]. Risk analysis can be made through qualitative or quantitative methods. Qualitative analysis may include checklists and ranking, probability and impact, cause and effect diagrams, and flowcharts. Quantitative analysis techniques involve expected value tables, decision trees, fuzzy logic, and portfolio theory. Since the combined effect of different risks can cause a cumulative impact or impact chain far exceeding that of the sum of each, employing a construction project process simulation model (CPPSM) may be necessary for complex and large-scale projects [Nasirzadeh 2008].
Design-build (DB) contracts continue to grow in popularity over traditional methods by offering a single point of responsibility for design and construction. Distribution of risk between owner and DB contractor varies with contract payment type (see Fig 1). Risk analysis tools like Monte Carlo simulation can be used to evaluate project costs throughout project phases. DB projects are extremely risky for many contractors. Knowledge and experience are crucial to project success. Risk analysis and management should be utilized in determining bid price and during decision-making [Öztaş 2004]. In addition, comprehensive projects specifications must be made by the client, and they should refrain from excessive change orders.
Figure 1. Risk Distribution Between Parties in DB Contract System [Öztaş 2004]
References
Baloi, Daniel. (2012). Risk Analysis Techniques in Construction Engineering Projects. Journal of Risk Analysis and Crisis Response. 2(2): 115-123.
Dziadosz, Agnieszka & Rejment, Mariusz. (2015). Risk Analysis in Construction Project – Chosen Methods. Procedia Engineering. 122. 258-265. 10.1016/j.proeng.2015.10.034.
Jagadeesh, P & Suma, Y. (2017). Evaluation and Management of Risks in Construction Projects. International Journal of Engineering Researches and Management Studies. 4(1).
Lv, Ran; Chen, Jiaying; Sun, Qiao & Ye, Ziyang. (2023). Design—Construction Phase Safety Risk Analysis of Assembled Buildings. Buildings. 13. 949. 10.3390/buildings13040949.
Nasirzadeh, Farnad; Afshar, Abbas & Khanzadi, Mostafa. (2008). Dynamic Risk Analysis in Construction Projects. Canadian Journal of Civil Engineering. 35(8): 820-831. 10.1139/L08-035.
Öztaş, Ahmet & Ökmen, Önder. (2004). Risk Analysis in Fixed-Price Design–Build Construction Projects. Building and Environment. 39(2): 229-237. 10.1016/j.buildenv.2003.08.018.
