No matter the size or scope, every architecture, engineering and construction (AEC) project involves some level of risk. In recent years, economic factors have forced AEC companies to tighten their budgets and pay greater attention to the issues that could potentially slow a project.
AEC companies can mitigate the industry’s unique risks with the right strategies. AEC organizations should address the following key risk factors in their risk management strategies:
- Compliance: Every country, state and local municipality has its own regulatory and compliance requirements. Not keeping up can result in costly fines for noncompliance and may delay occupation of buildings. With the AEC sector facing increasing pressure to meet ESG standards in particular, compliance has become an issue of sustainability.
- Finances: A common complaint in construction projects is that money runs out more quickly than expected. AEC projects often require significant financial investment, which increases the pressure for good returns.
- Environment and weather: Seasonal issues, natural disasters and simple bad luck can all play a role in slowing down a building project. For example, tasks like painting and roofing cannot happen in a torrential downpour. There are also other environmental risks to consider, such as the shape and slope of a site and how easily workers can dig into the soil for foundations.
- Supply chain delays: The AEC industry was hit hard during the pandemic, and international supply chain issues continue to slow things down. A collapsed shipping route can quickly lead to crucial materials being stuck miles away from where they are needed.
- Stakeholder disagreement: Multiple stakeholders are often involved in a construction project, including architects, interior designers, engineers, builders, investors and clients. Even a single disagreement can force a project to come to a grinding halt.
Risk Management Best Practices
With the above risk factors in mind, the following are best practices for managing risk in the AEC industry:
- Establish clear communication: Much of AEC risk management requires open communication among all involved parties. Implementing effective construction communication strategies ensures that companies establish these lines of communication early in the project process so that everyone feels confident about how to report an issue and share important updates.
- Perform a risk assessment at the start: AEC projects require extensive planning before they begin. There needs to be some kind of risk assessment at every point of plan review. Are there issues with the site that a company will need to mitigate? Are there unusual regulatory hurdles in a private development that need to be addressed? Companies must consider all possible roadblocks well before a project gets underway.
- Use technology: Technology tools can help AEC companies manage risk more efficiently. Artificial intelligence and virtual reality can analyze risk factors and improve safety training for construction workers. Building information modeling software can enhance construction safety in a variety of ways, such as identifying how heavy machinery will interact on-site or providing ways for project managers to improve fall protection strategies.
- Get everyone involved: From the client to the contractor, everyone needs to be on board with helping mitigate risks. Pooling information and expertise is vital for avoiding the issues that can crop up.
- Pay attention to the hazards: Identifying potential project risks is just the first step. Once you have shortlisted everything that can harm your project, prioritize addressing those adverse outcomes based on their likelihood and impact. Risk matrices are vital at this point because they can support stakeholder decision-making by visually representing the various factors that can affect a project. Focus on critical processes and functions that can impact day-to-day operations.
- Invest in training: Falls, mismanaged materials and other safety hazards on a construction site can be avoided through frequent, thorough training. Investing in training and development empowers your team and gives them the skills they need to foster accountability.
- Have a backup plan: Sometimes the best approach to risk management is to go is to assume something will go wrong. This can help ensure you develop alternative solutions and have a backup ready if things go awry, which may limit further delays or problems.
- Encourage people to speak up: The sheer number of people on an AEC project can be advantageous for identifying risks. Having various eyes and ears on a job site can help spot things that security personnel or camera footage might miss. Encouraging people to speak up about safety issues or potential risks they have noticed helps ensure that nothing gets overlooked during a busy project.
- Schedule regular reviews: Site and planning visits are built into most AEC projects, but risk reviews need to be an equal priority to address any issue that may develop.
- Evaluate the success of risk mitigation: Historical data can quickly become predictive analytics. At the end of each project, review the risk mitigation strategies used and note possible improvements so that future efforts are even more effective.
Having great strategies in place can never completely eliminate the potential for things to go wrong with AEC projects, but it does make it easier to see risks before they become crises, allowing project managers to respond more quickly.