RISK MANAGEMENT PLAN PURPOSE The construction projects are developed under considerable uncertainty because it is very difficult

to control internal and external variables that affect the performance of the same in time and cost. Currently many projects are carried out successfully within the stipulated cost and time initially. One of the causes of delay and the cost is caused by the lack of prevention of risks during the planning stage of projects. The risk management is a tool that any construction company to use if you want to continue to grow in a market that is increasingly vulnerable to risk factors both internal and external. Today more than ever, risk management must play a central role in the life cycle of construction projects because they have become more complex and multidisciplinary by requiring the collaboration of many people with different abilities and needs. The consequences of not applying a systematic methodology for analyzing the risks lead to a decrease in profits by the construction company and a delay in the delivery time of the project that sometimes leads to a strong additional outlay of capital by the customer or to a significant decrease in the profits of construction companies. Therefore, a systematic approach to risk management to identify, assess and respond strategically to the risks that affect the performance of a construction project. The knowledge of the techniques that make up the various stages of the risk management more are known and applied by the knowledge of the construction and the perception in the construction industry is necessary to propose a method of administration risks. STAKEHOLDER RESPONSIBILITIES FOR RISK MANAGEMENT TABLE Distribution of risk Description of Risk Productivity of labor and equipment Quality of work Availability of materials, labor and equipment Security Defective materials Attitude contractor Inflation Number of actual work Difference in the work Defective design Access to and right of way Permits and Ordinances Changes in government regulations Delays in payment of contract % 98 90 88 81 78 71 70 70 94 83 83 81 79 79

Contractor

Customer

Both

No decision

Changes at work Financial Failure Changes in negotiations Allowances Delayed closure of contract Events of force majeure Delays by third Damage to third

77 89 87 79 73

The team work can say that the attitude of the contractors about risks to traversed for a transition period where the contractor has taken responsibility for the risks that were not within its competence, as shown by the trends in table of percent. Recently the use of insurance and bonds has increased significantly since the contractors have accepted certain risks through risk insurance plans such as: third party liability, defective material and force majeure events (earthquakes, cyclones and floods). RISK PROCESS STAGES OF RISK MANAGEMENT The processes involved in the risk management can be divided into four stages, same as described below: 1. Risk identification: of identifying potential project risks through the application of techniques. 2. Risk Quantification: is to quantify the impact of the risks of a project in terms of cost and time through the use of risk analysis techniques. 3. Developing risk response: is to analyze and select the strategy that counters the impact of project risks. 4. Administration contingencies. Is to monitor and control the resources allocated to the strategy implemented. CLASSIFICATION OF RISKS The classification of risks into three types according to the knowledge of the consequences and the likelihood of its occurrence (Diekmann, Sweater, & Taher, 1988). The types of risks are as follows. 1. Known risks: those circumstances where their probability of occurrence is common and reasonably understood. The variability in material prices caused by market conditions and low productivity are clear examples of this type of risk. 2. Known-unknown risks are those that have severe consequences for unemployment occurring probability of occurrence is low, so are not discarded. The highest price increase in materials caused by political problems 3. Unknown-unknown risks are those for which no one has even thought of their occurrence and their probability of occurrence is negligible and it is impossible to account. An earthquake in a low degree of seismic is an example of this type of risk. MAJOR SOURCES OF RISK.

According to Diekmann et. al., 1988, it also established the main sources of concern present in construction projects according to the main forces involved in the making of it. The main sources are: The project. The main source of risk is in the nature of the project itself. Below are the different elements of a project that involve risks, that is considered as sources of risk: 1. Technology: Those related to the uncertainty that is created around the new technologies used in a project. Some are using new structural design software that could represent difficulties for engineers, the use of new models of machinery, new materials or new prefabricated building systems. 2. Contract: those related to the rights and obligations as between the parties to an agreement. Examples of such risks include lack of clarity in the terms of a contract, lack of perfect communication between participants and the lack of any clause providing unfavorable conditions for both parties to the contract. The type of contract determines the distribution of risk between the owner and the builder. For example, a contract made on lump sum tends to protect customer more because most of the risks are absorbed by the builder. While the contract unit price based facts tend to protect more to builders because of the flexibility to incorporate and distribute the impact of risks. 3. Location and size of the project: the location of the place where the construction of the project and project size are factors those tend to cause greater risks. For example, there is less risk of delay if built in the autumn season in summer season because no show in autumn rainy season. 4. Regulations: there is the likelihood of changes in governmental regulations or rules under which the project is subject throughout its life cycle. MANAGEMENT ACTIONS. The individual or group performance of the participants in the organization and their responsibilities are factors that increase or decrease the risks of a project. Below are some broad responsibilities of risk: 1. Estimated cost of work programs: This task is one of the more important given the negative consequence that represents an error or omission in the preparation thereof. 2. Human Errors: refers to omissions, lack of judgment, and lack of knowledge or mistakes by the project staff. 3. Timely decisions: the lack of a prompt decision can have negative consequences that affect project performance. EXTERNAL CONDITIONS: This refers to the sources of risk that are outside the project boundary and whose control is beyond the scope of participants, either the project owner or builder. Some sources of this type are: 1. Increase in price: economic conditions impacting the level of risk in the cost of a project. 2. Availability of manpower and machinery: refers to the sudden change in the availability of labor before and during project implementation. 3. Market: market forces determine the price and demand for the project built. OTHER SOURCES OF RISK. In addition to the above sources, Shtub (1994) cites the following risks:

1. Technology: the rapid pace with which technology is expanding is a risk because the lack of experience on the part of users can cause complications. 2. Changes: All projects are subject to change through the same life cycle. A reassessment of needs and emergence of new technologies are factors that can change the original design of the projects. 3. Support: refers to the risk involved when purchasing a product, service, and this does not have enough counseling, training manuals and courses. REGISTER RISK TABLE Description of Risk Permits and Ordinances Access to and right of way Availability of materials, labor and equipment Productivity of labor and equipment Defective design Changes at work Differences in the workplace Events of force majeure Defective materials Changes in government regulations Labor disputes Security inflation Attitude contractor Changes in the negotiations Delays by third Delays in closing contract Delayed payment on contracts Quality of work Allowances Financial failures Actual amount of work Significant level Decline Average High High High High High Average Average Decline Average High Average High Average Average Average/High High Average High High Average

The effectiveness of risk management mainly depends on the experience and ability of the participants responsible for risk management within an organization. The main skills required are the powers quickly identify the wide range of risks and possible responses, considering all aspects of the project such as engineering, finance, human resources, commercial, legal and political aspects. This will ensure the participation of staff from each of the departments mentioned above and each will specialize in the risks pertaining to its generating area in all departments, a culture of research and creative thinking about risk analysis. Of utmost importance is that all participants have a clear and well-established knowledge of the risks that are under their responsibility, thus avoiding problems of confusion. The perceived degree of responsibility with no participants depends on the nature of the project and the skills and experience of the same.

The motivation is critical in any human endeavor is made. This, according to the risk register table, is influenced by the goals of the participants and the anticipated results of the project progress. Motivation has an important role in achieving effective management. Therefore be found that all project participants are aware of the benefits it can provide. It is important that risk management is developed within an organization provide significant benefits to all participants involved.

References Diekmann James E., Sweater Edward E., & Taher Khalid, 1988. Management of Projects Risks And Uncertainties, The Constructions Industry Institute (CII), The University of Austin Texas Shtub Avraham, & F Bard Jonathan, 1994. Project Management Engineering, Technology, and Implementation. Prentice Hall, New Jersey.