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Risk management can be sometimes overlooked in the project management of office interior construction projects. It is typically done only for large companies that have specified risk management teams; however it is an important component for all.
Key items to consider:
- Financial Risk: Exceeding your budget (either due to costs being higher than anticipated or additional costs not anticipated) or having limited (or zero) access to funds/lines of credit originally anticipated.
- Schedule: Not completing the project on time due to delays in procurement, changes in scope or sub-par contractor performance. This can become a financial risk if the tenant has entered into contractual obligations with landlords or other project stakeholders.
- Organizational Risk: In today’s market where people are consistently switching positions, it’s extremely helpful to have someone that is consistent throughout the project and understands the history as well as the vision.
- Construction Safety: Ensure you have a contractor with a good safety record and proper insurances.
Some ways to mitigate:
- Performance Bonds: Ensure construction is completed even if the contractor is unable to meet contractual obligations.
- Builders Risk Insurance: This can be held by the owner or the contractor to ensure that any issues during construction are properly insured.
- Project Management – Having an owner’s representative that is looking out for your interests to avoid problems rather than just help you deal with them once they happen.
- Construction Contract – Make sure your contractor shares in the risk.
These risks need to be managed not only at the beginning of the project but throughout. Risk management. however, is not a one stop shop. It is unique to each project and what is appropriate should be considered based on your particular project.
– Rebecca Finlan, Senior Project Manager with Watchdog