Project risk management is frequently overlooked yet is one of the most critical elements to successful project delivery.

For the past decade the engineering and construction industry has been through a series of ups-and-downs and as market confidence picks up again it has become clear that effective risk management will be critical to staying afloat and riding the next big wave smoothly.

Looking back, risk management was identified as the number one concern facing engineering and construction industry leaders in KPMG's 2005 Global Construction Survey, however, by 2008 this sentiment had slipped and risk management dropped to fourth place. Around this time, only 50 percent of the respondents to our 2008 survey ranked their own risk management systems as adequate, yet by 2010 this confidence had increased to 75 percent, despite reductions in spending on risk as the sector – like many others – adapted to an uncertain environment.

Today, tighter cost pressures provide little margin for error. Given the substantial investments that engineering and construction companies have spent on risk management systems and protocols over the last decade, why then have these controls not managed to halt underperformance on projects or reduce damaging incidents fraud and corruption?

Simply put, there is no easy answer.

Generally, being able to deliver on the defined scope of a project, on time and within budget are characteristics of successful delivery on a project. These success factors, however, are often not achieved especially for larger, more complex projects, where both external influences and internal project requirements may change significantly over time. Too often, however, project risk management activities are seen as a "nice to have" when in fact, they should be a core component of project controls with a comprehensive and continuous process of identifying, analysing, prioritising and mitigating risks that threaten the likelihood of success on a project in terms of cost, schedule, quality, safety and technical performance.

Good risk management, however, is as much about people and culture as it is about putting the right processes and procedures in place. It is therefore most successful when it can be embedded into the day-to-day activities by creating an environment that embraces and promotes the pursuit of effective risk management at all levels of the company.

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