The construction sector manages risk every day, but little is known about how risk management practices impact the productivity of the sector. A recent BRANZ-funded survey of the construction sector looked at the impact of a range of risk factors on project errors, delays, and productivity. Survey respondents were also asked about how they manage risk and uncertainty.
Key findings from the survey include:
- Those organisations that have good risk management practices in place have better productivity
- Those organisations who are resilient, that is, they plan for and are able to adapt to uncertainty, are more productive, and report less errors and delays
- Respondents believe external factors, such as clients changing their mind and design flaws, have the greatest impact on productivity, rather than internal capabilities
- Contractors adjust margins for risk but only when work is plentiful
- Horizontal contractors are more likely to attribute delays, errors and impacts on productivity to internal issues (communication, project management, team morale, etc.), compared to vertical contractors
- Subcontractors and smaller organisations are less likely to actively manage risk
The research is part of a two-year BRANZ-funded project being carried out by a team comprised of Resilient Organisations, Market Economics, and the University of Auckland. The aim of the wider project is to uncover core differences between risk management and resilience practices in the horizontal and vertical construction sectors and the impact of these on productivity. The project culminates in the creation of a system dynamics model of the construction sector, RiskFlow, that will help the sector to explore and understand risk and resulting productivity impacts in the construction sector, to inform industry transformation.
