Strategic Risk Management Tools For Construction Projects: A Case Study On Residential Tower Construction In Qatar (essay).

Strategic Management Tools for Risk Assessment in Construction Projects

Questions:

1. Identify strategic management tools from your Readings and credible online sources that could be used to analyse risk associated with your selected project (Residential Tower). Explain the impact of each of these tools on your project and how effective they are. 

2. Prepare a detailed response plan for the selected risk area. Your response plan should include a probability and impact assessment, prioritisation and identification of early warning indicators. In your response plan, also describe qualitative and quantitative tools that could be used to analyse risk associated with your selected project. Explain the impact and effectiveness each of these tools may have on your project. 

3. Explain how you considered stakeholder risk tolerance. Would your planning for individual risks change depending on a stakeholder’s tolerance for risk? If you had to prioritise the stakeholders depending on their risk tolerance, how would you still reassure those who were more risk tolerant?
 

Risk management is an important aspect of project management while developing a construction project. It is important to note that the change in the price level and the financial crisis has several adverse impacts on the completion of the project (Rostami, 2016). Along with that, there are several other challenges that are faced by a construction project due to the change in the external environmental factors (Rose, 2014). The paper has been developed to identify the strategic management tools that are required to identify the risk and analyse them to draw proper solutions to mitigate those issues. The paper will analyse the impact and effectiveness of the tools used to identify and analyse the risks. The paper also presents the stakeholders tolerance capability of the identified risks and its impact on the successful completion of the project.

The project has been developed to identify and analyse the risk involved in constructing a residential tower of twenty three storeys in Qatar. Construction of a mega building is always a challenge for engineers, not only because of the unique architectural demands but also owing to financial and legal constraints involved throughout the process. When planning for such a big project in a rapidly growing region like Qatar, the role played by the government should also be considered significantly to manage costs through applied infrastructure savings method (Oxford Business Group, 2016).

Some significant strategic management tools and techniques can be implemented to identify the risks associated with the construction project. In this given section, documentation reviews such as brainstorming, Delphi technique, diagramming techniques, and SWOT analysis can be identified as the most suitable risk assessment tools and techniques. In risk identification, brainstorming and Delphi technique can be utilized to distribute questionnaires to expert personnel (Forbes, Smith and Horner, 2008). On the basis of their comments and unbiased data, significant risks attached to the construction project can be identified. Invariably, SWOT analysis is another specific tool that can be effectively implemented to identify risk probabilities, adverse effect and risk ratings based on expert judgment (Wende, Herberg and Herzberg, 2015).

Identified Risk

In the case of discussing, qualitative risk analysis tools and techniques, probability and risk matrix, urgency risk assessment, risk categorization and risk impact assessment can be identified as the most significant tools. Through probability and impact matrix, proper quantitative analysis can be done using risk ratings (Cahill, 2007). Finally, after investigating the project objectives, quality assurance and risk issues, a significant level of risks can be accessed through interviewing stakeholders. Such risk analysis process will be highly effective for this particular construction project. 

In risk identification and risk management of a construction project, the importance strategic management tools and techniques are highly valuable. By implementing project specific risk management tools and techniques, the project manager can mitigate the risk factors and potential risk hazards to avoid any unwanted disputes to the ongoing construction project. Whether it is workforce related issues or financially oriented issues, effective risk management strategic tools can identify such risk factors at the beginning of a project to ensure the project will commence smoothly (Anderson-Cook, 2006). Meanwhile, effective strategic management tools can certify that the project will be completed within the estimated timeframe (Dey and Ogunlana, 2014).

Qualitative and quantitative risk analyses tool helps to observe the probability and impact of the risk on the project objectives. Furthermore, the qualitative and quantitative analyses tools make the project team aware of the facts and situation at which the operations of the construction project may face several issues (Stonham, 2015). On the basis of these analyses, the project team can prepare plans to minimise the occurrence of uncertainties that can help in proper and appropriate completion of the residential towers. The interview and surveys helps in continuous communication with the stakeholders that helps to observe their views and understand their thoughts regarding the construction project (Tworek, 2012). Along with that, the qualitative and quantitative tools also increase the accuracy and appropriateness of the risk management strategy that is quite helpful in proper construction of the residential towers.

Stakeholder risk tolerance is another factor in project development. In the case of high risk projects, the stakeholders such as workforce and investors would prefer to delay the project as much as possible. Unless the risk tolerance is satisfactory, the investors will not allow the project to commence (Malz, 2011). 

In order to monitor the stakeholder risk tolerance factor, the project manager must have a fair idea about the project and organizational environmental factors such as workforce, expertise, technological efficiency and financial strength to make accurate understanding of the risk tolerance. If the risk tolerance is high, the organizational standards must back up with resources. By identifying the assets and liabilities of an organization, a project manager can determine the risk tolerance of stakeholders (Gwanoya, 2007). Invariably, the previously completed projects must be taken into consideration to identify the stakeholder risk tolerance.

To certify the level of risk tolerance, project manager of the construction project must assess the risks correctly so that major roots of the risks can be identified. By prioritizing the level of risks, significant contingency plans and risk mitigation plans can be implemented in the project. Apart from that, remembering the stakeholder risk tolerance, prominent risk monitoring system can be promoted in the construction project (Hatefi and Seyedhoseini, 2012). In case of small investors, they have comparatively less risk taking capabilities. Hence, understanding the financial position of the investors will be key to identify the risk tolerance capability. 

Conclusion

At the end of all, it is mandatory to mention that stakeholder management strategy is highly impressive to prepare a strategic risk management plan. By identifying the stakeholder risk tolerance factors, the project manager must create a positive influence on the stakeholders by showing the project perspective and benefits. Also, there are some risks attached to the communication process. In addition to that, the external and internal environmental factors of the organization must be overviewed to create a purposeful risk management strategy suitable to meet the requirement of the construction project. Meanwhile, the risks analysis and strategic tools must be monitored at the highest standards to create a positive impact on the project stakeholders ensuring project deliverables, quality and cost.  

References

Anderson-Cook, C. (2006). Quantitative Risk Management: Concepts, Techniques, and Tools. Journal of the American Statistical Association, 101(476), pp.1731-1732.

Cahill, D. (2007). Target marketing and segmentation: valid and useful tools for marketing.Management Decision, 35(1), pp.10-13.

Dey, P. and Ogunlana, S. (2014). Selection and application of risk management tools and techniques for buildâ€Âoperateâ€Âtransfer projects. Industr Mngmnt & Data Systems, 104(4), pp.334-346.

Forbes, D., Smith, S. and Horner, M. (2008). Tools for selecting appropriate risk management techniques in the built environment. Construction Management and Economics, 26(11), pp.1241-1250.

Gwanoya, T. (2007). Quantitative Risk Management: Concepts, Techniques, Tools. By Alexander J. McNeil, Rüdiger Frey & Paul Embrechts (Princeton University Press, 2005). Annals of Actuarial Science, 2(01), pp.187-189.

Hatefi, M. and Seyedhoseini, S. (2012). Comparative Review on the Tools and Techniques for Assessment and Selection of the Project Risk Response Actions (RRA). International Journal of Information Technology Project Management, 3(3), pp.60-78.

Malz, A. (2011). Financial risk management. Hoboken, N.J.: Wiley.

Oxford Business Group, (2016) Overview, Infrastructure building to help sustain Qatar's growth past 2022. Available at: https://www.oxfordbusinessgroup.com/overview/infrastructure-building-help-sustain-qatars-growth-past-2022 (Accessed on: 25 May 2016).

Rose, K. (2014). Personal Effectiveness in Project Management: Tools, Tips & Strategies to Improve your Decision-making, Motivation, Confidence, Risk-taking, Achievement and Sustainability.Project Management Journal, 45(2), pp.e1-e1.

Rostami, A. (2016). Tools and Techniques in Risk Identification: A Research within SMEs in the UK Construction Industry. ujm, 4(4), pp.203-210.

Schermerhorn, J. (2013). Management. Hoboken, NJ: John Wiley & Sons.

Stonham, P. (2015). Financial engineering: Tools and techniques to manage financial risk. European Management Journal, 13(4), pp.456-457.

Tworek, P. (2012). Plan Risk Response as a Stage of Risk Management in Investment Projects in Polish and U.S. Construction - Methods, Research. Annals of the Alexandru Ioan Cuza University - Economics, 59(1).

Wang, D. and Ortiz, J. (2013). Introduction to Selected Papers from Risk Assessment and Crisis Response 2011. Human and Ecological Risk Assessment: An International Journal, 19(2), pp.385-388.

Wende, W., Herberg, A. and Herzberg, A. (2015). Mitigation banking and compensation pools: improving the effectiveness of impact mitigation regulation in project planning procedures. Impact Assessment and Project Appraisal, 23(2), pp.101-111.