It is important to address the risks that may arise from the parking garage project because of the costs involved. It will also be difficult to compensate owners of cars be parked in the garage. Even though it is impossible to avoid risks in any construction project, understanding potential risks are crucial in responding to any accidents or cost overruns.
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Risks during construction projects are usually interdependent and interrelated. Each construction project often has its unique risks, although some of the risks are common. In the construction industry, risks are classified in various ways based on their sources.
Risks during the construction may arise from political factors, environmental concerns, safety and health issues, cost of the project, scope, and schedule uncertainty.
The risks may also arise from the quality, technology, and performance issues. Risks are classified as construction risks, financial and economic risks, performance risks, security, contractual and legal risks, physical risks, political and societal risks, technical risks, external risks, and project management risks among others. These risks are discussed in subsequent sections.
Some of the construction risks anticipated during the project include accidents because of fires or collisions and inaccessibility to the site because of traffic jams. Other construction risks expected include the availability of resources required during the project, geotechnical and subsurface geological conditions, and equipment commissioning, among others.
Financial and Economic Risks
Inflation is also a major risk during the construction project. This is because inflation will increase the prices of equipment, materials used, and labor costs. This implies that the project will need a time extension, and the total cost of the project may exceed the $32,500,000 allocated for the construction.
Some of the performance risks expected in the project include defective work, labor disputes, and behavior among the workers, which will prevent good work performance. Other performance risks expected include variation in workers and equipment productivity. This may result in delays in project completion and increase in funds used to buy equipment.
During the project, some of the security risks expected include vandalism, corruption, and intrusion, negligence by workers. Terrorism is also a major security risk during the project. Since the project is big and costly, all the security risks will be keenly looked into to make sure the project is successful.
Contractual and Legal Risks
Some of the contractual and legal risks expected include delayed resolution of disputes, changes in order negotiation, and bankruptcy of a subcontractor or the main contractor. In addition, delay in contract payment is another contractual risk expected.
The main physical risks expected during the construction project are natural disasters. Earthquakes and hurricanes are among the expected physical risks during the project. Threat assessment of earthquakes and hurricanes is through using historical data that will help in determining the credibility of these risks (Renfroe & Smith 2011). Due to the nature of the project, special attention will be given to the risk of earthquakes since they are devastating and may result in great losses.
Political and Societal Risks
Among the political and societal risks expected during the project include public disorder and pressure from environmentalists. This may arise from perceived hazards of the project or poor methods of disposing of wastes, and misuse or pollution of water. However, measures are in place to dispose of wastes properly to cut environmental pollution.
The project also seeks to respect and promptly respond to the concerns of the public to prevent public disorder. Other political and societal risks expected include changes in various regulations such as labor and safety laws and strikes by the workers. Strikes by workers will increase the time needed to complete the project, resulting in increased costs of the project.
Some of the technical risks expected include variations in seismic criteria, water consumption demand, and traffic demand, work permissions, wrong estimates of contract time, disruptions or delay in delivery of equipment and materials, inaccurate preliminary investigation of hazardous wastes, inadequate specialized staff because of issues such as dissatisfaction during the project.
Some of the external risks expected during the project include changes in priority during the execution of the project, political interference, fluctuation in exchange rates, changes in public safety regulations, changes in environmental regulations, and economic instability because of recession. Other external risks expected during the project include loss of important staff before completion of the project and unplanned increase in the workload of the project manager.
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Project Management Risks
Some of the project management risks expected include a reduction in resources and poor communication with the project team. According to Walker & Haahs (2006), it is important to have staff with knowledge of structural engineering, security and safety, parking operations, and behavior of materials.
As a result, inadequate staff and inexperienced workers are major project management risks to the project. Other project management risks include contractor or consultant delays and errors during estimation or scheduling of resources. Various teams should also harmonize their activities to make sure that the project is completed within the planned time frame.
Renfroe, N. A. & Smith, J. L. (2011). Threat/vulnerability assessment and risk analysis. Web.
Walker, C. & Haahs, T. (2006). Parking planning. Web.