How the UK construction industry can better manage attitude towards risk

Industry attitude towards risk needs to change in order for improvements in project delivery to occur.



The mindset towards risk in the construction industry is largely conservative. This is to be expected considering how dangerous the work can be, and because of how competitive the market is.  While this means that the UK has cost-conscious contractors who deliver excellent infrastructure at value, it’s resulted in an industry constantly under pressure to seek a margin. According to the CFMA, pre-tax net profit for general contractors is between 1.4 and 2.4%.

The motivations for minimising risk are valid, but it does have the effect of working to hold back innovation and efficiency. If the industry begins to be more open to trying new ideas and new methods, the effects will further influence progress in delivering projects more efficiently and boost productivity.


Here are three ways the construction industry can improve approaches towards risk:



1. Actively seek innovators during the procurement process


Infrastructure owners should take fresh approaches to procurement, actively seeking out partners engaged in innovative research who can share ideas and pioneering approaches.

The built construction sector would benefit to move towards a mindset which is more focused on fostering innovation. One example is the take up of 4D BIM Modeling as a construction method. 4D BIM (construction sequencing) can drastically speed up positive change in the way we design, manage and develop construction projects.


With the help of 4D BIM, project managers can do their job with higher precision. Instead of building programmes as the proposals are unfolded, planners have now the opportunity to form proposals at a much earlier phase in a project. BIM systems can also integrate with construction management software, making it easier for construction managers to cost and time-estimate their jobs.


The ability to provide a detailed depiction of the project’s progress is extremely powerful as it can save the sector valuable resources both in terms of time and budget. BIM can also be a provider of visual risk analysis and give safety evaluations. By providing detailed reports of site conditions for workers, it's a really helpful tool for new construction workers who aren’t yet familiar with the worksite.



2. Stakeholders should move from transactional business models to enterprise


All construction stakeholders should consider how they can move from transactional business models to those that are based on the principles of an enterprise.


When interests are aligned and aimed at well-defined outcomes, projects are more likely to meet schedule and cost targets. To align interests, the industry must move away from the hostile contracting environment that characterises many construction projects, to a system focused on collaboration and problem-solving.

For example, by basing procurement on best value and past performance rather than cost alone, and incorporating performance and alignment incentives into contracts. Working collaboratively through an enterprise model could have great benefits for the sector. The potential costs of risk are substantial, and up to 50% of the final price is paid by the asset owner. When management and ownership of risk are kept where they can best be handled, rather than pushed around, resources will be freed up to improve practices and allow for innovation.



3. Increase funding for the testing and research of new methods


The construction sector as a whole must do more to increase funds for testing and research of new methods outside of active projects. Encouraging space for research and development and testing of methods allows for innovations to be proven. The result of which would remove some of the risk concerns about projects failing due to new and not well-understood techniques.


Innovation can bring value in many ways, and organisations who have embraced it report a variety of benefits in reduced costs, a more productive workforce, and safer work environments. These benefits also extend to employee job satisfaction, improved reputation and the ability to win work.



The UK has an enviable reputation in project management and project delivery through the implementation of excellent worker safety and by providing long-lasting, safe infrastructure. If risk is managed to allow for more teamwork and innovation, this can lead to reduced costs, safer work environments, a more productive workforce and a more sustainable sector.


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