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By Duane Craig
November 26, 2018
Flaws lurk within every construction project. By themselves, they cause delays and cost overruns. When a series of flaws occurs, however, your project is set up for failure. Here's what's behind a fatal flaw or critical issues analysis, what to consider, and how to pull it off.
1. Start Early To End Well
The best time for a fatal flaw or critical issues analysis is as early in a project's lifecycle as possible. No doubt, your owner will do one, but they don’t have your perspective. That’s why it’s crucial you have your own analysis.
Here are the major categories that often pop up on construction projects:
The factors behind each of these risk categories are the bell ringers. They're the events, decisions, delays in decisions, incorrect information, and unknowns that will move any of these categories into the red.
2. Know What You're Up Against
A starting point for your critical issues analysis is making a list of the potential critical issues that might arise. On projects with multiple parties performing the work, it's wise to include all of them in the analysis. All you need to do is to give them a template with a list of all the risk categories and ask them to tell you any critical issues they foresee.
Another approach is to get project partners in a room with a whiteboard and start brainstorming. A solid hour, regardless of the project size or complexity, should reveal the larger critical issues to focus on. Then, start the really hard work.
Deciding the likelihood of each risk comes next. Here, you're considering the likelihood the critical issue will arise, and its degree of impact on the schedule, cost, quality aspect or project objectives. You can do it by framing the impacts in percentages. For example, if a component built off-site is seriously at risk of not arriving when needed, mark it as 90 percent likely to occur.
4. Consider the Impact
Then, consider the effect on the project in case the issue occurs. Will it cause serious delays or cost overruns? If so, it means the impact is so serious you'll need to plan on how to eliminate the risk or insure against it. Address each risk in the same way until you're satisfied that you've identified and ranked all of the major risks.
Minor risks, on the other hand, are items that are unlikely to occur. Nevertheless, if they do occur, they shouldn’t pose threats to the schedule, budget or quality. Still, having these in a list will allow you to consider their impact when taken together. For instance, a minor risk coming from a new subcontractor who is unfamiliar with a construction method could fuel a risk in safety as workers learn the new method. Taken together those minor risks could add up to a major risk.
5. Decide Your Response
Once you know what risks you are facing, it's time to decide how to deal with them or manage them. Consider each risk and think of ways to eliminate them or avoid them all together. In the example above, you might organize some mandatory training to get all the workers up to speed on the new method.
When you can't eliminate or avoid a risk, you might consider transferring the risk to insurers, another party who is better equipped to handle the risk, or contracting with a specialist to manage the risk. Mitigation is another option you might consider. Here, you examine what you can do to lower the impact of the risk.
Finally, if there is nothing to be done, there's acceptance. This is a plausible option when the risk is unlikely to happen but has a high impact in case it does. However, just because you accept them doesn't mean you ignore them. Track these risks, and if they start to manifest, choose a response based on the most recent project information.
6. Monitor The Outcomes
The last aspect of your critical analysis is monitoring. You should document all the risks and responses, and assign responsible parties to monitor and respond to them accordingly. You should also have a reconciliation process for people to follow when known risks aren't responding to the strategies you established for dealing with them. It's also a good idea to monitor the project for new risks so you can manage them in a timely fashion.
Reporting is also important because it allows people to see how well the risk management program is working. Reports serve you after the project as well, by showing what worked and what didn't work. You can use that information on future projects to improve your overall risk management process.
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