PROJECT RISK MANAGEMANT

IN CONSTRUCTION
SUBMITTED BY ::NIRMAL DUTTA
MBA Regd. No ::- 1402005119
UNDER THE GUIDANCE OF
Mr. JAYANTA NARAYAN DAS

PRIMARY CONCERN
The primary concern of this study report is to let everyone know what risk
management is, realize the procedure of risk management in construction
project and have a deeper study on the application of risk management in
construction period.

The construction industry, perhaps more than most, is overwhelmed with

risks iterated that it is highly risk prone, with complex and dynamic project
environments creating an atmosphere of high uncertainty and risk.

The industry is vulnerable to various technical, sociopolitical and

business risks.
The complicated relations include direct, indirect, obvious, implicit or
unpredictable, What's more, the various risk factors will cause different
severity of the consequences.
As construction projects are complex and dynamic in nature thereby
contributing to a significant amount of risks. The procedure of taking a
project from inception to completion, and then into use is a complex one
that entails time-consuming design and production process .
It is concluded that most of the respondents do not identify risk
management to be associated with the achievement of all project
objectives in terms of time, cost, quality and environmental sustainability

INDUSTRY PROFILE
I.

Today, India is the second fastest growing economy in the world. The
Indian construction Projects are integral part of the economy and a
conduit for a substantial part of its development investment, is poised for
growth on account of industrialization, urbanization, economic
development and people's rising expectations for improved quality of
living.

II. Investment in construction accounts for nearly 11 per cent of Indias

Gross Domestic Product (GDP). As opportunities in the sector continue
to come to the fore, foreign direct investment has been moving upwards.

Industry Segments
REAL ESTATE
I.
II.
III.
IV.

Residential (Housing & Development)

Industrial (Industrial Parks, Factories, Plants, etc.)
Corporate (Office, Research Centers)
Commercial (Retail: Malls, Shops, Showrooms; Hotels; etc.)

INFRASTRUCTURE
I.
II.
III.
IV.
V.
VI.

Roads
Railways
Urban infrastructure
Ports
Airports
Power

COMPANY PROFILE
Larsen & Toubro (L&T) is Indias largest technology, engineering,
manufacturing and construction organization with a record of over 70 years.
L&T Construction is the largest construction organization in the country.
L&T Constructions cutting edge capabilities cover every discipline of
construction civil, mechanical, and electrical and instrumentation engineering
and services extend to large industrial and infrastructure projects from concept
to commissioning.

BRIEF DETAILS ABOUT OIL INDIA AND UNDER

PLANNING CONSTRUCTION PROJECT OF PUMP
STATION UPGRADATION
Oil India Limited (OIL) is an Indian public sector oil and gas company based
in Assam, India under the administrative control of the Ministry of Petroleum &
Natural Gas, Government of India.
M/s Oil India Ltd. (OIL) operates 16 (406 mm) / 14 (356 mm) diameter,
1157 km long Naharkatiya-Barauni Crude Oil Pipeline (NBPL) since 1962. The
pipeline has a capacity of 7 MMTPA with 11 Pumping stations and 18 Repeater
Stations.

OIL is currently carrying out the up gradation of the various Pumping

Stations and Repeater stations ( NBPSU) replacing the old pumps, prime
movers, power generators etc for extending operating life of the system,
optimization of capacity utilization, improvement in overall system efficiency
etc etc

The overall project schedule has been considered as 36 months for

Mechanical Completion and 03 months for Commissioning.
Environment Impact Assessment (EIA) study shall be carried out as per
MOEF requirements for necessary regulatory approvals by Owner during
detailed engineering.

OBJECTIVES OF THIS
RISK MANAGEMENT
PROJECT

There are two objectives of this study:

1. To assess the most major and common risks which cause bad effect on
construction period.
2. To figure out reasonable solutions.

On the basis of the aim and the objectives, research

questions have been formulated---

1. What is the process of risk management?

2. How to apply risk management in construction projects?
3. What risks are there in construction projects?
4. How risks can be indentified during construction period?
5. How risks can be assessed during construction period?
6. How risks can be controlled during construction period?

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project risk management includes::

Risk management planning;

Risk identification;
Qualitative risk analysis;
Quantitative risk analysis;
Risk response planning;
Risk monitoring and control.

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LITERATURE
REVIEW
A project manager must be able to recognize and identify the root causes of
risks and to trace these causes through the project to their consequences. .

Construction projects can be unpredictable. Managing risks in construction

projects has been recognized as a very important process in order to achieve
project objectives in terms of time, cost, quality, safety and environmental

sustainability. Project risk management is an iterative process. the process is

beneficial when is implemented from the planning stage to completion.

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NEED OF THE PROJECT

AND
FACTS ABOUT RISKS

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The original Risk Management: Concepts and Guidance (Defense

Systems Management College 1986) classified risk into five facets ::
Technical (performance related)
Programmatic (performance related)
Supportability (environment related)
Cost
Schedule

The most common and major risks during construction period are
as given below ::
Customer risk
Political risk
Execution risk
Commercial risk
Financial risk
Design risk
Engineering risk
Resource risk
Country risk.etc.

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NEED OF THE STUDY ::

Risk management affects all aspects of project
Risks can be positive as well as negative
Risk management needs to be conducted from the start of the
project, constantly discussed & monitored, & involve all members of
project team.
How you choose to handle risks depends on your most influential
project stakeholders 'appetite for risk'.
Each identified risk needs to be assessed, a strategy for dealing
with it agreed upon by all appropriate parties, and tracked until
closure.
Project risk management is not the project manager tracking risks
in a Risks Register and sharing it occasionally when or if people ask
to see it it is much more than that.

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PRINCIPLE OF RISK MANAGEMENT ::

Risk management should create value.
Risk management should be an integral part of
organizational processes.
Risk management should be part of decision-making.
Risk management should explicitly address uncertainty.
Risk management should be systematic and structured.
Risk management should be based on the best available
information.
Risk management should be tailor-made.
Risk management should take into account human factors.
Risk management should be transparent and inclusive.
Risk management should be dynamic, iterative and
responsive to change.
Risk management should be capable of continual
improvement and enhancement.

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Risk management involves four processes, namely ::

Risk Identification: Determining which risks are likely to affect the project

and documenting the Characteristic of each.

Risk Quantification: Evaluating risks and risk interactions to assess the
range of possible project outcomes.
Risk Response Development: Defining enhancement steps for
opportunities and responses to threats.
Risk Response Control: Responding to changes in risk over the course
of the project.

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TOOLS / TECHNIQUES TO BE USED FOR DATA ANALYSIS:::

Samples
Observing well-defined events
Survey
Interviews
Visits to other construction companies.
Monte Carlo Charts
Risk Register of projects

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RISK MANAGEMENT
PROCESS

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A typical risk management process includes the following key

steps:
Risk identification;
Risk assessment;
Risk mitigation;

Risk monitoring;

Risk Response strategies Avoidance ::

Transference
Mitigation
Acceptance

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RISKS INVOLVED
IN
CONSTRUCTION
PROJECT

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1. Socioeconomic factors ::
Environmental protection
Public safety regulation
Economic instability
Exchange rate fluctuation

2. Organizational relationships ::
Contractual relations
Attitudes of participants
Communication

3. Technological problems ::
Design assumptions
Site conditions
Construction procedures
Construction occupational safety

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From the site managers aspects, there are four main risks that would
affect the construction period ::
1. Safety risk::

Based on plans for safety and health, all the works should have its own
precautions. The site manager has to make a safe working environment for
labors.
2. Material supply risk::

Under the influences of global economy crisis, many suppliers are facing
bankruptcy. By choosing a supplier without great reputation and funding, it
may lead the construction to facing delay on delivery.
3. Unforeseen extra work::

Most of the unforeseen extra works take place on soil work. It is because that
geological exploration datum cannot predict and analyze the exact condition
of geology.
4. Omissions of construction work::

Due to the consideration of cost, clients all wish to finish the construction as soon
as possible. This will bring a lot of pressure to the total contractor. They are
trying to do their work faster. When rushing into doing things, more mistakes
might happen.
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MAJOR UNCERTAIN
FACTORS
INFLUENCING THE
CONSTRUCTION
PERIOD

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1. The Nature risk:

Open air, upper air and the underground are the major building
operation field, so the weather plays an important role on the
construction period and safety

2. Innovation of design:

Using new technique, change of work method deficiency of design and

so on.

3.

Equipment failure:

Uncertainty of construction technology

Equipment breakdown

4.

Labor productivity:

The quality of construction teams

Mating between labor and equipment.

Employment dynamics

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5.

Materials delay:

Dissatisfactory material quality.

Uncertainty of equipment supply

Uncertain price of construction materials

Poor local transportation condition.

6. Soil situation:

Geological exploration datum cant give an overall and exact

explanation of the geology, so soil situation is an indispensable factor.

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The
countermeasures for
risks in construction
period

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Measures to avoid risk:: laying down the regulation that certain project
should be prohibited and avoiding the actions which may cause damage are
also good measures to evade risk.
Measures to reduce risk:: we can use project resources to cut down, for the
predictable or unpredictable risk, we should change it to known risk through
assumption and limited conditions.
Measures to prevent risk:: Implement technical supporting and effective

control planning to prevent risk. The aiming is to prevent new risk factors;
reduce existing risk factors; reduce the incidence of risk events.
Measures to transfer project risk:: Spread the risk to other objects,
including owners, subcontractor, partners, investors, suppliers, etc.
Measures to risk retention:: If the damage caused by known risks is not
serious, sustain it on ones own.

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A
CASE STUDY

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A study had been conducted in the case of the construction of the

MUMBAI - PUNE EXPRESS HIGHWAY starting at Kon near Panvel and
ending at Dehu road near Pune.
This road was planned to be constructed as a access controlled toll
road and to be constructed with the latest technology and incorporate
features such as guard rails, dual carriageways, and speed monitoring
equipment which would make it much more safer than the existing road.

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CONCLUSIONS
The

orientation of my study is the application of risk management in

construction projects. This report tells us what risks will occur during
construction period for that risks have an effect on the cost and schedule of
construction projects. I make my study and description mainly on the
schedule. Then presenting what are the major and common risks influencing
construction period that I choose from numerous factors. In the end, I got the
answers like how to ensure as soon as possible how to make reasonable
analysis and how to have a good control of these risks. As part of the final
semester work, I get down to my report and graduation project at the same
time. Considering the writing time and writing depth, it is a challenge for me.
Nevertheless, I still try my best to search literature and references and have
profound study. I treat a better final report as my pursuit.

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