No matter what type of business you’re in, we all deal with a certain level of risk management. When you’re considering doing a construction project, whether it’s a new custom home or a renovation, you’re dealing with a multitude of people that will be working on your project and thousands of dollars being invested.
It’s definitely easy to see how this situation is considered high risk. Every day we all do some sort of risk management. We consider the tradeoffs of areas of risk over others, and sometimes when the risk is too high, we make provisions to mitigate that risk or simply not take the risk altogether.
So how can you remove risk from renovations or home construction?
Assess the Risk
As I mentioned, we all deal with risks every single day. However, how we deal with them is a whole different question. When getting into a construction project you will definitely need to sit down and assess the risks involved. This isn’t a general risk but more of a point-by-point basis. For example, asbestos in your ceiling stipple would be a high risk. This is because it’s very hazardous to your health and often comes as a surprise when it’s found, so it can compromise your project budget if not planned for. On the flip side, a messy construction site can be considered low to high risk depending on how messy it might be. It’s good to understand all the possible risks that you might run into because then you can develop an action plan. Your contractor or builder should be well versed in what those risks are.
Probability of Risk
After assessing the risks of your project, it’s time to start to think of how likely they are to happen. This will help you determine what type of action plan you’ll develop to mitigate those risks. Let’s use a different example this time. You’ve done work with a painter that always starts late on your requested start date. Now you know that the probability of this is quite high, so as you are building the schedule for your project, you’ll call the painter earlier than required because of the past experience that you’ve had with him. If the probability is low on a project then the developed plan for the project should reflect accordingly as the risk is much lower.
Developing a Plan
Developing an action plan to mitigate these risks is key. This comes down to assessing the risk involved and understanding the likelihood of it actually happening. As the previous example was mentioned, the painter would be called in a few days earlier to compensate for adverse effect that they may have on the project. Now, if a plan wasn’t developed, then the schedule would have been affected and the results overall can be negative as the overall impact can be great. Having a plan of action for all the possible risks that you might encounter might seem excessive but when they come you can be sure that you won’t be caught with your pants down.
Following these steps can save you a lot of headache in the future if you take the time now to see what you might be running into. This is simple as it may seem, it really comes down to discipline and dedicating the time to following through with a thorough action plan.
Unless you’re an expert, it may be hard to determine all the risks that could be associated with a home construction project. It’s always a great idea to ask an expert, or question your contractor to ensure all the risks are predetermined and planned out as much as possible.