Ever heard the saying “No risk, no reward?” In construction, we could change that to “No risk management, no reward!” Of course, there are always risks when you undertake a construction project, but with foresight, planning and collaboration you can mitigate or even eliminate those risks. Here are some of the key risks (and Terlin’s mitigation strategies) to consider in our current climate:
Material and Equipment Lead Times: The construction industry continues to suffer from long delivery times for materials and equipment which have stemmed from the Covid-19 pandemic, shortages of materials and products used in manufacturing, the war in Ukraine, and a large volume of construction projects that require the same supplies.
Terlin’s mitigation strategy: We collaborate with subcontractors to identify all long lead items and recommend ordering these materials directly from suppliers before the project tender has started. Or, in some cases, we will suggest alternate materials and equipment that might be more readily available. On one of our current projects the roof top unit was not going to arrive in time for the client to take possession of the space on schedule. In consultation with the engineers and client, we were able to secure a temporary rental unit that will allow the client to move into their space as planned.
Labour Shortages: The construction industry is also suffering from labour shortages, specifically in the trade sectors. This makes coordinating work and staying on schedule more challenging.
Terlin’s mitigation strategy: Before making a contract award recommendation to the client, we review with each subcontractor their work force capacity, work in progress (WIP) and ability to meet the dates within the developed project schedule. This upfront planning ensures all parties understand the expectations and are prepared to provide additional manpower or additional hours if schedule creep occurs.
Budget Risks: On every construction project the budget is paramount to the success of the project in the eyes of the client. Risks to the budget can include the discovery of unknown site conditions, changes to the design or scope of work, fluctuations in material prices, and schedule impacts due to factors out of the team’s control.
Terlin’s mitigation strategy: Pre-tender, Terlin develops a Class A budget and recommends a contingency be carried to handle any design changes or site conditions that arise. Our Project Manager will manage the budget closely in collaboration with the client and consultants to ensure the best value is achieved for the scope of work. Any change orders are reviewed thoroughly with subcontractors to ensure any additional scope is properly identified.
Information Response Times: Delayed responses to construction processes such as Request for Information (RFIs), Shop Drawings and Change Orders can affect the project schedule, and consequently, the budget.
Terlin’s mitigation strategy: All stakeholders discuss and agree on required response times during the kick-off construction meeting and using Procore (construction management software), Terlin manages these processes in conjunction with the Consultants.
Though these are common risks for projects in 2023, your project likely has other risks. Start on the right foot by working with your contractor to identify those risks early, and devise a plan for mitigation.
If you’re considering a construction project this year, reach out to us right away. We can help guide you through the process and alleviate your concerns.
Contact Terry McLaughlin, President, at 1-888-791-9376 or firstname.lastname@example.org.