In our recent blog article, we looked at 5 reasons why Construction is a Risky Business.
Here we look at 5 ways to manage risks in Construction (AEC).
- Construction is a commodity business, and Nike is in the shoe business. They are both commodity businesses. Nike has been successful by associating themselves with excellence. Most construction companies struggle to distinguish themselves from the competitor, so typically compete on price. We propose creating value to the client from the first day of Request for Tender(RFT) to handing over the keys. We are talking about truly understanding the Client’s end goal and delivering above expectations. That doesn’t mean delivering gold-plated toilet roll holders. This means how to make Client’s dollar go far throughout the journey. Optimising the design, to improve User Experience, reduce Maintenance Cost, and reduce life cycle cost. This will help with referrals and repeat customers. Because no client is going to Yellow Pages to advertise their next $100mil build.
- Technical and Diverse Teams to look outside the box and push the boundaries. Our population is ageing. When the baby boomers go into retirement, it is going to create a void in the industry. So we need to build strong technical teams who can propel the business forward in years to come. We need Technical teams who have strong cognitive skills and are willing to learn from others. Lots of studies show diverse teams perform better. The industry need to accept people from different walks of life, in-house mathematicians, computers scientists and real Engineers. We need to look at alternatives to where one follows a prescriptive career path by studying construction management then cadet program, grad program, site engineer, project engineer, senior project engineer then Project Manager. Walk away from the mindset of engaging Contractors in an effort to de-risk, which is a short term strategy.
- Some Clients and Contracts are just unreasonable. First things first, the Builders must assess the risk profile unique to each project. When a RFT come in, the build team must workshop the potential and risks and opportunities and continuously track it. Use the lessons learnt from the past jobs to augment the next project risk profile. Due diligence is key. Going back to our earlier points: If you are continually delivering value through a strong team, it creates a strong and deep mutual trust. When the time come to have a hard conversation, they will be reasonable. If the client has a reputation for being harsh, there is no point of expecting they are going to be different in your job. So walk away.
- Technology can leap frog a company to the next level. But construction is people building buildings, not robots (at least for now) and Construction industry is known to set in their ways, and people don’t like change. We need to leverage technology to incremental improve the builds. That’s why diverse and technically capable teams are so important. They are innovators and early adaptors who truly understand the construction landscape. They are capable of evaluating the usability in construction. For example, when we built Tribus we tried to resolve a real problem. Check out our Blog here on challenges of technology adaptation in construction.
- Heuristics, Cognitive Biases and Big data working together Build Better and Smarter. We discussed in our last article, weather allowances based on experience often goes wrong with recent weather events. There are millions of ways to schedule a typical construction project if all possibilities are considered (Taghaddos et al. 2012). So the team can run multiple scenarios to find the optimal project program where weather forecast, experiences, and technical parameters are inputs. This combination is hard to replicate by competitors.