Question

Describe 3 different risks involved with costing systems when undertaking building and construction projects and a suggestion against each on how to mitigate that risk

Answer 1

The following are the risks involved in costing system when undertaking building or construction projects.

(1) One of the risks involved in costing system is accurately Estimation of the costs of the quantities and materials which might change and generally increase during the the time of construction increasing the project costs.

Mitigation:In order to reduce the errors and risks associated with this problem a brief study of cost of similar construction projects has to be done and pattern of variations in these cost estimates have to be taken into account and costing is done

(2) There is a costing risk in the project in case of change in designs or modifications in the designs which abruptly change the costs of project.

Mitigation: in order to reduce these risks and mitigate them costing has to be done taking into consideration of such changes in design and forecasting them.

(3)The main risk associated with the costing systems is using the same age old costing methods and processes without taking into account the changes and variations in locality, atmosphere and laws.

Mitigation: In order to reduce these risks and mitigate them we have to the take into consideration changes and variations and also accept new innovations and technology and implement them in the costing and construction process.