Crisis Management in Construction Projects

Written by Durant Mangum

Abstract

A project is a temporary endeavor undertaken to create a unique product, service, or result. One of the most common types of projects are construction projects. Many construction projects are often subject to crises during their lifetime and must either be overcome by managers to achieve the perceived benefits, or the project will fail. A crisis is seen as “a situation faced by an individual, group or organization which they are unable to cope with by the use of normal routine procedures and in which stress is created by sudden change.” In the context of construction projects, this is usually something that disrupts the construction from continuing. The main goal of this article is to cover the various tools project managers have to prevent crises in relations to cost overrun in construction projects, and the available tools to mitigate cost after crises. The article will also offer a brief background in crisis management.

Theory

As stated previously, a crisis is “a situation faced by an individual, group or organization which they are unable to cope with by the use of normal routine procedures and in which stress is created by sudden change.”. Crises are also characterized by a high probability of occurrence . A project manager has two main ways to counteract a crisis, proactive and reactive

Four components of Construction Crisis

Whenever a crisis occurs within a Construction process, it is theorized that 4 main components can be observed. Social Adjustment, behavioral instability, social structure and diametric opportunities.

Social Adjustment

Social Adjustment: During crises, the normal patterns of social interaction are broken up as various interest groups, individuals, and organizations try and influence activities in one way or another. This creates tension between the forces of maintenance and change, as often the different groups are motivated by different interests. Interest groups will often display behavior to try and control the social structure ensuring resource distribution goes in their favor. The new social structures that emerge after a crisis are shaped by the overlap of interests, the balance of power, the sensitivity of managerial intervention, and the occurrence of natural environmental events.

Behavioral Instability

Behavioral Instability: Crisis have a destabilizing effect, which is why the management of unpredictable behavioral change is so important in crisis management. In crises, people become desensitized to the needs of others, which creates further tensions. Management must give continuous attention to the maintenance of stability. Any instability is more likely to gain traction and momentum towards negativity, which becomes extremely difficult to break.

Social Structure

Social Structure: Social structure is key in crisis management, because the social structure that emerges has direct effect on the reaction efficiency. The reaction efficiency is directly related to the social structure through the speed at which information is transmitted between groups. There are certain structures which ensure a smoother transition of information than others. This efficient information flow reduces the uncertainty levels driving a chain reaction in the reduction of misunderstanding, disjointedness, disagreement, frustration, tension, and conflict. This in turn reduces the time of resource redistribution and the efficiency and effectiveness of the response to crisis. How people align themselves within interest groups of an organization can reinforce, weaken, or reverse the influences of structure upon efficiency.

Diametric opportunities

Diametric opportunities: external factors outside the control of project participants will have a direct role in creating a supportive or destructive to the efforts of crisis management. Destructively, a crisis can induce managerial inertia and discourage the collective responsibility, teamwork, and effective communication when they are most needed. This managerial inertia tends to create a negative cycle prolonging the crisis and wasting managerial resources. Constructively, a crisis can provide opportunity for increased cohesion, harmony and efficiency. The constructive cycle can also shorten and reduce the investment of managerial resources in a crisis. (Loosemore, 1999)

Ironies

Three managerial ironies emerge during a construction crisis. At a time when effective communication is important it is less likely; at a time when mutual sensitivity between project members is important it is less likely; and at a time when collective responsibility and teamwork are important they are less likely.( Geraldi, Lee-Kelley, & Kutsch, 2010)