This paper examines risk monitoring and risk management within the Australian building construction industry, which employs nearly one million people and contributes significantly to the national GDP. The paper outlines key risk monitoring strategies — including risk identification, periodic risk reviews, and formal reporting procedures — and explains how variances in cost, schedule, quality, and scope can be identified and remediated. It also presents methods for assessing the risk management outcomes of completed projects, comparing planned versus actual costs, schedules, and quality standards. The paper concludes with recommendations for improving documentation and incorporating lessons learned into future projects through a structured risk database.
The paper demonstrates applied problem-solution structuring: it identifies an industry challenge (project risk in construction), surveys management tools and techniques, and then shifts to evaluation — explaining how to measure whether risk management was successful after project completion. This move from prescription to evaluation is a hallmark of applied management writing.
The paper opens with industry context and economic significance, then defines risk monitoring and enumerates specific strategies (risk identification, periodic review, reporting procedures, risk charters). A subsequent section covers remedial actions and variance management tools such as trend analysis and TPM. A dedicated section addresses post-completion assessment by comparing planned vs. actual costs, schedules, and quality. The paper closes with recommendations for documentation improvement and a database-driven approach to knowledge transfer for future projects.
The building construction industry is one of the key sectors driving the Australian economy. Apart from generating employment opportunities for nearly one million people, it is also the fourth-largest contributor to Australia's Gross Domestic Product (GDP). In 2009, the building construction industry accounted for 6.8% of Australian GDP. It is also one of the largest employers of labour in the country; in 2009, there were 984,100 people working in the sector, representing 9.1% of the total Australian workforce (Australian Bureau of Statistics, 2010).
Despite its economic importance, the building construction industry is inherently risky and embedded with uncertainties arising from both internal and external factors that can influence the construction process. Project risks are critical factors that may affect the successful completion of a building project. They can extend the project completion date, bring a project to a standstill, and escalate costs if adequate measures are not in place. Risk monitoring is one of the most effective strategies for managing the risks associated with building projects.
The objective of this paper is to investigate strategies for implementing risk monitoring within a building project and to provide an assessment of the risk management outcomes of completed projects.
Over the years, there has been significant demand from stakeholders for project managers to execute building projects in ways that achieve the desired outcomes. Within a building project, risks are inevitable, and risk monitoring is the most effective tool for carrying out risk management. Risk is any factor that may potentially affect and interfere with the successful completion of a project. Recognising that a problem is likely to occur allows the project manager to take steps to avoid it. Project monitoring has been identified as a management tool used to achieve project objectives. It is defined as the process of ensuring that actual performances are achieved, that any deviation from the project plan is communicated to management, and that required action is taken to restore the project to its original plan. Project plan monitoring is an aspect of building projects that should not be overlooked if stakeholders want the project to meet the required standard, on time and within budget.
"Monitoring is the measurement of the actual performance against planned performance. Effective monitoring will therefore provide management with up-to-date information on the construction project cost, stage of work performance as performed by the contractor, from which decisions can be made" (Richard, 2009, p. xiii).
Risk monitoring is the systematic procedure used to track identified risks, identify new risks, and provide effective procedures for managing them. It occurs after the risk planning, mitigation, and allocation processes have been implemented. To enhance the successful completion of a project, risk monitoring must be carried out throughout the entire project lifecycle, since the list of associated risks is likely to change as the project matures (Project Management Institute, 2004).
Project monitoring also assists in identifying variances that might occur within the project lifecycle. A variance is a measurable change that can occur between what is expected from a project and what is actually accomplished. Variances are associated project risks that could affect successful project completion. Common variances include:
— Changes in project costs
— Changes in the project schedule
— Changes in the quality of the project
— Changes in the project scope
There are several strategies that can be used to monitor the project plan and the risks associated with building projects.
First, risk identification is one of the most effective methods for carrying out risk monitoring. It is the process of determining which risks are likely to occur and documenting them. Importantly, this must be accompanied by risk quantification — evaluating the risk analysis and its possible impact on the project.
Another important technique is the implementation of periodic risk review. This involves regularly repeating the processes of risk identification, planning, analysis, mitigation, and allocation. Regular risk reviews are essential to ensure that the project meets all anticipated objectives. During these reviews, the project manager identifies risks that could affect the project outcome; if unanticipated risks emerge, stakeholders must implement additional response planning to control them (Barber, 2004).
A third procedure is the development of comprehensive and consistent reporting procedures. This involves recording and reporting risks that emerge within the project. Effective risk monitoring requires maintaining adequate plans to record and document ongoing risk management activities. Formal documentation enables a more comprehensive risk assessment than undocumented efforts.
Risk monitoring also involves creating a risk charter that forms the basis of documentation. The table below reveals a method for documenting risk monitoring.
TABLE 1: Documentation of Risk Monitoring
Category | Status | Risk Trigger | Assessment (Quantitative or Qualitative) | Monitor and Control
Options or Definition | Active = risk being actively monitored; Dormant = risks not currently high-priority but may become active; Retired = risks that have been resolved | Event that indicates a risk has occurred; used to determine the appropriate time to implement a risk response strategy | Impact and probability of the risk — quantitative (percentage probability and monetary or time impact) or qualitative (very high, high, medium, etc.) | Responsibility = manager's name; Milestone check or status interval = point of review; Status, date, and review comments.
Source: United States Department of Transportation (2012).
There are several remedial actions that can be used to manage variances. Trend and variance analysis can identify the difference between the planned and actual costs of a project and flag unacceptable risks to the budget, schedule, quality, and scope. Trend analysis can also be used to observe project performance over time and determine whether performance is improving or deteriorating. Mathematical models can be used to forecast future performance based on historical data.
Project managers can also carry out Technical Performance Measurement (TPM) to identify deficiencies in project requirements. TPM assists in identifying technical problems that might arise, provides early warnings, and recommends that technical risks be closely monitored.
The implementation of a risk management plan is another tool for managing variances. A risk management plan is critical for successful project completion; its purpose is to achieve better outcomes by identifying risks, understanding their potential consequences, and making cost-effective decisions about how to treat them. Risk audits should also be carried out to document and examine the effectiveness of risk responses and their impact on budget and schedule. Project stakeholders should engage a risk auditor to perform this function (Project Management Institute, 2004).
Once variances within the project lifecycle have been identified, the project manager must implement modifications to the project plan to achieve the necessary remedial action.
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