In construction, effective risk management isn’t just about preventing delays or avoiding financial losses—it’s a cornerstone of compliance, safety, and successful project delivery. With the introduction of stringent regulations like the Building Safety Act and the growing emphasis on the Golden Thread of Information, construction companies face mounting pressure to manage risks more systematically.
A project-centric CRM can revolutionise how risks are identified, assessed, and mitigated, while simultaneously ensuring regulatory compliance. Let’s explore how this approach works and why it’s so vital for today’s construction projects.
The Challenges of Risk Management in Construction
Construction projects are inherently complex. Risks can arise at any stage, from the early planning phases to post-completion handovers. Some of the most common challenges include:
- Funding Uncertainties: For example, a client’s ability to secure financing may impact project timelines and budgets.
- Site Challenges: Issues such as soil instability, accessibility, or environmental constraints can significantly disrupt workflows.
- Compliance Risks: Meeting fire safety standards, structural integrity requirements, or other compliance mandates under the Building Safety Act can introduce delays if not managed early.
- Stakeholder Misalignment: Disputes or miscommunication among clients, subcontractors, and suppliers can lead to costly inefficiencies.
Traditionally, construction companies rely on spreadsheets, fragmented systems, or manual processes to track these risks. However, these methods lack the integration and visibility needed for proactive risk management—a gap that project-centric CRMs are uniquely positioned to fill. Moreover, the Golden Thread of Information underscores the need for auditable databases that provide digital traceability throughout a building’s lifecycle, from design to maintenance. By centralising data, a CRM ensures compliance with these principles, aligning construction projects with regulatory demands.
How a Project-Centric CRM Supports Risk Management
A project-centric CRM captures and centralises all project-related data, providing a single source of truth for teams. Here’s how it can streamline risk management:
- Early Risk Identification and Tracking
With a CRM, risks can be logged as soon as they are identified, linked directly to the associated project, and categorised for better analysis. For example:
- Logging funding uncertainties during the lead phase.
- Capturing potential site access issues during pre-construction.
- Risk Scoring for Prioritisation
Effective risk scoring is a cornerstone of systematic risk management, and it is often guided by industry standards such as ISO 31000, which emphasises structured approaches to risk assessment. A project-centric CRM allows you to calculate a risk score by multiplying:
- Likelihood: The probability of the risk occurring.
- Impact: The severity of the consequences if the risk materialises.
This method aligns with widely accepted practices because it ensures risks are evaluated both for their frequency and potential damage, providing a balanced perspective. For instance, a funding risk with a high likelihood (5) and severe impact (4) would score 20, flagging it as high-priority for mitigation efforts. Such scoring helps construction companies not only prioritise risks but also demonstrate a clear, auditable process that supports compliance with frameworks like the Building Safety Act.
- Proactive Mitigation Planning
Once risks are identified, a CRM facilitates action:
- Assign risk ownership to specific team members.
- Outline mitigation strategies, such as renegotiating timelines or sourcing alternate suppliers.
- Set deadlines and monitor progress to ensure timely resolution.
- Enhancing Compliance with the Building Safety Act
The Building Safety Act demands a clear and auditable trail of safety-related decisions and actions throughout a project’s lifecycle. A CRM helps by:
- Documenting risk assessments and mitigation efforts.
- Storing compliance-critical documents, like fire strategy approvals or inspection records.
- Providing a dashboard view of unresolved compliance risks.
- Supporting the Golden Thread of Information
The Golden Thread principle emphasises the need for accurate, up-to-date, and accessible project data. By centralising risks, stakeholders, and compliance records, a CRM ensures:
- Seamless handovers between teams.
- Transparent reporting for audits or reviews.
- Faster resolution of disputes or claims.
Real-World Example: Managing Funding Risks
Consider a construction company bidding on a large commercial project. During the tender stage, their CRM highlights a funding risk: the client’s financing is contingent on external approval.
By assigning ownership of the risk and tracking its resolution, the company takes proactive steps to protect itself:
- Contingency plans are developed, including flexible timelines and partial payments.
- The project’s risk dashboard monitors the client’s progress in securing funding.
- Regular updates ensure the team is prepared to pivot if the risk escalates.
The Benefits of CRM-Driven Risk Management
Implementing risk management in a CRM delivers tangible benefits:
- Proactive Decision-Making: Teams can address risks before they escalate.
- Improved Collaboration: Centralised data fosters better communication across departments.
- Regulatory Compliance: Ensures alignment with the Building Safety Act and other standards.
- Enhanced Efficiency: Automated workflows reduce manual effort and minimise errors.
Conclusion: Turning Risks into Opportunities
In construction, risk is unavoidable—but mismanaging it isn’t. By leveraging a project-centric CRM, companies can move from reactive risk management to a proactive, strategic approach that not only mitigates potential issues but also builds stronger client and stakeholder relationships.
If your organisation is ready to elevate its risk management practices, explore how our CRM solutions can help. Contact us today to learn more or schedule a demo.
A word from our Sales Director, Daniel Parkin:
“As outlined in the Building Safety Act 2022, it’s imperative for companies to manage risks in an auditable manner, with severe consequences for non-compliance, including unlimited fines and imprisonment of up to two years.
At KMS, we take pride in helping the industry perform to the best of its capabilities. Effective and appropriate risk management is essential to achieving this goal.”