Liga Asuransi – Dear reader, how are you? Now we will be discussing risk management and insurance in the construction industry.
As all of us understand that construction projects fall into the category of high risk. There are often accidents that happen with a large loss of value.
If not managed properly it can cause great losses for owners, investors, developers, and contractors.
As an insurance broker and risk management consultant, this time we will discuss the duties of a Project Manager in managing risk and insurance for the project he leads.
We do hope this article is useful for you, especially for Project Managers. These articles are summarized from various sources on the internet.
If you are interested in this article, please share it with your colleagues so that they also understand you.
Understanding the Project Management
Project managers need to be aware of risks and could mitigate them. Project management is about more than just managing projects; it’s also about minimizing risk.
The primary responsibility of a project manager in this regard is understanding organizational knowledge and new trends in technology to better assess and mitigate risks related to scope.
When it comes to project management, the role of a project manager is centrally entrusted with the responsibility of assessing and minimizing risks and mitigating them altogether.
Their duties can vary depending on the trade they work in, but this will often be construction, engineering, or IT. Depending on risks related to project scope, their decisions lie on a sound understanding of both organizational knowledge and the latest trends in new technology.
A project manager needs to have a sound understanding of the project details. They understand every aspect of the project to assess risk and then mitigate that risk accordingly.
It could include anything from identifying what kind of technology is used in new software development to understanding how a business’s culture impacts its processes.
What is the role of the project manager?
A project manager oversees and coordinates the process of project risk management.
The primary job of a project manager is managing risk, which involves identifying risks that may occur during a particular project and developing strategies (both proactive and reactive) to address these impacts to achieve the intended business objectives.
Achieving these goals can be done in many ways, such as by assigning resources or training staff members to deal with safety concerns and emergencies through cost-benefit analysis, using quantitative techniques, and qualitative decision-making methods.
In all cases identifying risks is part of the process. Another vital aspect is scenario planning, where possible future events are identified and analyzed to plan for responses before, they happen.
A project manager reviews risks in the project. They gather documented problems, negative feedback from customers/stakeholders, accidents or malfunctioning, and people’s perspectives on current problems or potential changes. Ultimately the goal is to assess risk so that it can be reduced if possible. The process of risk assessment for a project includes many aspects, including:
- Forecasting projects by identifying risks
- Assessing risks through assessing the likelihood and impact of identified events
- Planning responses to manage risks before they occur
- Implementing responses to minimize any adverse effects of identified hazards
- Measuring the effectiveness of the plan against identified vulnerabilities
- Monitoring existing activities that may trigger an adverse event.
Significant roles in project risk management.
Project risk management is defined as “a collection of activities designed to identify, analyze, and process knowledge among risk assessment practitioners. mitigate against potential impacts and provide discerning solutions for taking advantage of available opportunities.
A project team conducts the best-informed decisions about all the possible risks that might impact the success or failure of a project. Managing project risk begins with identifying, analyzing, and categorizing all the potential dangers of the respective project.
As each risk is identified, it is explored through cost and probability assessments and then classified by its likelihood of occurrence and impact on the client if it were to have an effect.
Project managers need to understand the risks that can impact and derail their projects. The company they work for will at some point need to defend itself in a court of law or against regulators if its executive does not comply with any business rules.
Risk management is an integral part of project planning, and it should not be something just left up to the risk analyst.
By getting input from other team members at these meetings on what risks they see in their areas of expertise/specific departments.
Project Risk Management Plans
As a Project Manager, mitigating project risk is an everyday activity that forms the crux of every role.
Whether or not we choose to recognize it, the risk is an integral part of each project we undertake. The following 5 steps are a basic understanding of management and mitigating project risk:
- Plan
From the outset, a Project Manager needs to define how to manage business risk. This could be encapsulated in a risk management plan, a risk management strategy or even simply assembling a checklist of how the business would control risk in any of their projects.
As a guide what this can entail is outlining:
- The company’s risk management procedures that define how each step will operate
- The risk tolerance threshold
- Tools or techniques to be used
- Risk categorization and severity
- Identifying your record-keeping requirements
- Roles and responsibilities outlined of each stakeholder
- A contingency outline of the risk budget
- Identify
Following the processes and procedures defined in the previous step, the role of the Project Manager is to then define what risks may affect the project and document such characteristics.
This will be logged in a risk register for subsequent management control and visibility. A clear expression of each risk is logged with its cause, the likely event, and the effect the risk could have on the project. This is part of a repetitive process where the timings and escalation requirements are reviewed and defined in the risk management plan.
- Analysis
To determine which of the identified project risks require subsequent management – an analysis of the threats and opportunities is required to be undertaken in a form of an assessment. It is worth considering project risk analysis in two ways, qualitative risk analysis, and quantitative risk analysis.
Qualitative analysis prioritizes project risks for follow-up assessment by combining the probability of occurrence and the risk impact. The latter is where a score or weight is assigned to each risk based on probability and the potential impact the risk can have on the project, highlighting whether further management is necessary. The risk register is updated with these results.
- Response
Risk response planning takes the evidence collected to date from the risk register and for each threat and opportunity that has been identified as falling within a certain range of risk tolerance threshold, a Project Manager will determine one or more viable risk responses.
This means developing options and actions that will enhance opportunities and reduce threats to project objectives. A response plan is subsequently embedded within the project plan and can then be actioned as appropriate. The plan then increases the probability and possible impact of opportunities identified within the tolerance range and reduces the impact of any threats.
- Monitor and Control
Throughout this process, a Project Manager is continually alerted to identifying risks, monitoring risks, and executing appropriate response plans.
If threats are not identified early and actioned accordingly this can have a detrimental effect on the overall project objective and the business bottom line.
A Project Manager’s role is to manage risk within their projects in a systematic manner. By doing so they are required to ensure threats have a reduced effect on the project outcome, whilst at the same time improving the likelihood of gaining from certain opportunities along the project life cycle.
Conclusion
In summary, project managers are central to the risk assessment and mitigation process. They need to be involved in every step of assessing risks for their organization’s projects – from meetings with stakeholders to actual decision-making.
The key is that they take an active role in understanding organizational knowledge and new technology trends to assess better and mitigate potential risks related to scope. Project management software will help them by providing a centralized system where all relevant information is stored.
It will also allow them to collaborate more efficiently and effectively, which is the key to any successful project.
Project managers play a crucial role in keeping projects on schedule, within budget, and within the scope while adequately mitigating risks. Project risk management is a specific function that requires continuous attention at all levels of the project team- from the project manager to team members and stakeholders outside of the organization.
The Role of insurance Broker for Project Management
Although all efforts to overcome the risks that can occur in the project have been done, all of it has not been able to avoid accidents occurring.
Various accidents can occur that come suddenly and unexpectedly. For this reason, there needs to be insurance protection that can protect all interested parties.
Because the risk is complex, it is not easy to take care of project insurance. It takes extensive knowledge and experience to get maximum coverage, guaranteed by a strong insurance company and with competing insurance premiums.
For that, you need help from insurance experts, and insurance brokers. An insurance broker that will help you design the best insurance program and seek protection from the best insurance company.
Insurance brokers will also negotiate premium rates at the most cost-efficient. Insurance brokers can get more competitive premium fees because of a much better bargaining position.
One of the insurance brokers companies that are experienced in the field of insurance in Indonesia is L&G Insurance Broker.
For all insurance needs, call L&G right now!
Sources:
- https://www.pm-partners.com.au/a-project-managers-role-to-mitigating-project-risk/
- https://riskpublishing.com/role-of-project-manager-in-risk-management/
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