What risks are involved in a remodeling project? Certainly there are technical, monetary and scheduling-based threats. How can a project manager mitigate these risks?
All projects have varying degrees of uncertainty, which can create risks to achieving project objectives—finishing the project on time, on budget and with a happy client. Successful management of risks that jeopardize customer satisfaction is critical to a project’s success and, in the long run, to a business’ success.
Traditional project-management methods and systems may be satisfactory for a typical project, but may be inadequate on a more unusual project in which routine tasks can become risks the moment the walls come down.
Some risks are more difficult to anticipate, particularly high-impact, low-probability threats. Therefore, risk mitigation always should be a component of project management.
Types of project risks include:
- Performance, scope, quality or technical risks These occur when segments of the project fail to perform as intended or lead to schedule delays and cost overruns if technical problems prolong the project.
- Environment, safety and health risks Environmental or other hidden hazards are uncovered during the project execution, which can impact schedule and costs.
- Schedule risk The project takes longer than scheduled. Schedule risk can lead to cost overruns and performance risks, as well.
Risk categories may be encountered in a variety of forms and intensities during a project, but risk mitigators often identify two varieties: incremental risks and catastrophic risks. Incremental risks are not always significant by themselves, but cumulatively they can amount to major risks. Their snowball effect can turn a relatively minor problem into one that wreaks havoc.
Weather is a constant risk factor, explains Kevin Anundson, CR, CKBR, of the OAR Group in Elm Grove, Wis., and a consultant on NARI’s Certified Remodeling Project Manager (CRPM) program. “Being aware of the probable issues bad weather can cause, such as emotional stress to the client and the contractor, additional cost and prolonged project duration, is key to risk management. Interior work would seem to be a no-brainer, but if your client wants you to do your cutting outside, now you have a delay. You would mitigate that risk by planning to work in the garage during inclement weather or warning your clients that your crew can’t work if the weather is bad.
“Winter has its own incremental risk factors. Having to work in heavier clothing may slow the process or, in snowy environments, getting stuck in the customer’s driveway or not having access to it because it isn’t shoveled can delay a job. Lumber freezes if left outside, and cabinets can freeze and warp,” Anundson says.
Catastrophic risks include risks that are individually major threats to the project. The odds of occurrence are low but the impact is high. A catastrophic event could be the discovery of unexpected contamination or the failure of a single supplier to deliver critical materials. Anundson describes another weather-related risk in the catastrophic category. “Propane heaters are often used to keep additions or new basements warm, but an accidental fire caused by one of these heaters would qualify as a catastrophe,” he says.
Project managers with ongoing multiple projects especially need to hone their risk-management skills and should not expect employees and subcontractors to look out for the overall project interests unless they are specifically directed to do so. The project manager has direct control of efforts to mitigate risks from inception through completion. He leads the project team, schedules and oversees subcontractors, and tracks materials. An understanding of common risks and how to evaluate risk interactions and formulate alternate plans is essential.