3 Risk Management Strategy For Engineering Consultancy
Risk management is defined as the forecasting and evaluation of business risks and identification of procedures to avoid or minimize the impact of such risks. Every type of business is susceptible to different types of risks. In the same way that engineers identify and assess potential hazards in their projects, adequate risk assessment and planning would be able to mitigate business risks.
Here are three potential risks to be encountered in an engineering consultancy firm and how they can be avoided.
In project management, a scope or requirement creep refers to the continuous, uncontrolled and undocumented changes in the project scope. This risk factor can cause a few problems. Two of those are decreased profit and dissatisfied client. For example, when your civil engineering Coffs Harbour agreed to client requests without documentation and it was not executed properly, it would result to a disgruntled client while the additional cost will eat away your profit.
To avoid scope creep, consider the following when preparing your written contract:
Clearly define the scope of the project. Be as specific as possible in outlining the scope of the project to avoid gray area that could lead to miscommunication later.
Include a clause that defines how additional work should be handled. Requests for additional work and changes should be done in writing and attached as an addendum to the contract.
Assessment every phase. The whole project should be divided into phases which has defined deliverables. At the end of every phase, an assessment should be done to evaluate the scope. This would enable the parties to determine if there are additional work to be done, changes in the budget or extension on the timeline.
Income in a consulting firm is not consistent. There are periods when projects come in consistently and there are periods when it’s challenging to close a deal. To avoid the feast-or-famine business, take note of the following strategies:
Job outsourcing. To focus into being a consulting engineer, hire people to do menial tasks like accounting and administrative functions. This way, you can spend more time looking for clients and closing deals.
Manage cash flows. Certain investments are good for the growth of the business but for the business to grow continuously, it’s basic operational costs should be financed. Plan your cash flows to cover operating expenses and invest excess funds to generate passive income.
Create a contingency plan. Plan for unforeseen events and purchase resources for business continuity. Back up generator, alternate temporary location, emergency fund and insurance plans are just some of the contingency plans you should consider.
Data Loss or Security Breach
Even though we try to protect company data from being stolen or having a security breach in our systems, hackers and data thieves proliferate the internet. To avoid data loss or breach, consider the following:
Purchase an antivirus software and encrypted could service.
Create a protocol of regular backing up data and use complex passwords.
Purchase a cyber liability insurance policy.
Risk management strategies does not mean you will not encounter these risks. Instead, you anticipate them so that you could avoid them from negatively affecting your business.