The supply chain and inflation crises have forced most contractors to re-evaluate their risk mitigation efforts. How do you meet price and schedule targets in a time when both are, practically speaking, unmanageable?
Watch Digging Deeper this week as Dennis emphasizes the importance of having a smart, thorough risk management strategy during uncertain and boom times alike and shares ideas for how you can better mitigate risks. We’d like to hear what you’re implementing to raise your risk management game. Please share with us in the comments.
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Timely reminder to really pay attention to the risk elements inherent in every project. Thank you. As a Senior Estimator I feel that we have a responsibility to identify the risks we see in any project for which we’re intending to submit a proposal. Having said that it seems that very few in my Preconstruction Dept want to spend much time on that piece of the overall puzzle. We have a format that we have employed sporadically but complete buy-in feels like it’s impossible. The idea is to make that a “living” document that continues on through the project to continue assessing risk since risks change in any project as execution occurs.
Any suggestions on how to help the buy-in so we can improve our risk management?
Andrew,
Process and discipline are generally good things. Just as you might schedule an internal pre-bid meeting 2 days in advance of a hard bid, why not schedule or add, as an agenda item to an already scheduled meeting, the risk review process. That could take place at the BD level first, once it gets to pre-con, before you go to contract and at turnover/launch once you establish the GMP. Would love to hear other ideas as well!
Dennis
Dennis, excellent illustration of how much volatility we have in our current market and how it should influence our pricing/margin decisions. There is one addition risk element that may want to be considered and that is source of payment by owner/financing. Today, the risk of lack of payment or full payment from owners seems to also be higher than ever.
Great addition, Kent. Certainly agree! and, I might add, with large price fluctuations, you must be certain the client can pay for base contract and any changes that they make or get added via any “Force Majeure” situations.
Dennis