Project risk management has evolved into a proactive, data-driven discipline. By identifying risks early, leveraging historical data, using performance metrics, and collaborating in real time, construction teams can improve certainty—even in uncertain conditions.
Understanding Risk in Modern Capital Construction Projects
In construction, “risk” is defined as anything that disrupts the budget, schedule or scope of work. The larger and more complex the projects, the more opportunity there is for risks to occur.
When widespread disruptions hit, and construction was quickly deemed an essential service, risk began to be redefined across the industry—disrupting material sourcing and labor forces around the world. Project managers were left dealing with altered schedules and costs, stalled supply chains for materials whose production was halted, and the management of ever-changing job site protocols.
Yet because of this new adversity, we also learned how the capabilities of today’s software technology could help smooth some of the rougher project areas. This lesson is why more and more construction companies are now turning to project risk management software to help them better plan for and respond to both the anticipated and the truly unexpected.
Identify Risk Factors Early and Build Contingency Plans
Identify Risk Factors Before Construction Has Begun
Software helps alleviate a bit of the pressure on those who are responsible for project risk management. For example, risk identification, perhaps one the most challenging parts of the job, becomes more manageable and less overwhelming.
How? Risk management software enables you to input what-if scenarios that may occur, including those that surfaced during prior builds. With that information, the software adjusts the data so you can assess the degree of impact of each scenario on project timelines, budgets, labor and material resources — and your ROI.
Use Scenario Analysis to Inform Contingency Planning
But it can go a step further, not only identifying through artificial intelligence the potential risks beyond what you’ve input but suggesting ways to mitigate the consequences of those risks. Knowing these consequences are a key part of what informs contingency planning around them.
Use Historical Project Data to Strengthen Risk Planning
The best-laid plans are backed by qualitative and quantitative data—especially data gathered from similar past projects. Construction companies are increasingly recognizing the value of the actionable insights gained from that experience.
Historical project data can be used to:
- Inform “what-if” scenarios during risk planning
- Adjust assumptions for current material and labor costs
- Improve the accuracy of contingency cost and schedule estimates
As a result, backup plans become more rooted in firsthand experience rather than guesswork, making it easier to estimate the cost and timeline impacts of each contingency option.
Understand and Apply Project Performance Metrics
Get Comfortable Understanding and Using EVM Metrics
For large builds such as infrastructure projects, there’s going to be a lot of data generated. How do you know what data to keep track of? And how do you know whether or not there’s cause for concern in what the numbers show? This is where earned value management (EVM) metrics come in.
EVM is a common method used to monitor project performance throughout the life cycle of a build, tracking where things currently stand against the estimate at any given point in time. Because of its ability to flag potentially negative trends and sudden cost and schedule deviations, it’s also regarded as a strong project risk management strategy.
Monitor Cost and Schedule Performance Indicators
Two EVM metrics in particular — schedule performance index (SPI) and cost performance index (CPI) — are especially responsive to changes. But this where truly understanding the metrics comes in. The numbers will naturally fluctuate up and down. It’s when they fall outside of their acceptable operating ranges (determined before the project starts) that you should pay extra attention and determine whether corrective action is necessary.
The easy way to track this? Software with dashboard and reporting capabilities can serve up these metrics in visually understandable formats so you don’t have to sift through endless amounts of details.
Collaborate for Advanced and Real-Time Decision Making
Enable Data-Driven Collaboration Across Teams
Of course, risk management isn’t just about analyzing data. It’s about collaboration.
Sure, the data does the talking as far as showing progress and what may need extra attention as a potential or real risk. But there’s talking required about what to do with that data, particularly when creating contingency plans.
Project risk management software with a communication platform allows everyone access to the same data from which to base those discussions and decisions.
Involve Project Leaders from Key Risk Areas
That kind of collaborative decision making is more effective and strategic when it’s data-driven rather than emotion-driven. Especially when you’re able to involve team leaders from key risk areas, including safety, operations and environmental, those plans become more well-rounded, addressing the risk impact and mitigation options unique to those disciplines.
Gaining Project Certainty When Things Feel Most Uncertain
There’s a comfort level, isn’t there, in knowing that you’ve accounted for all you can, all backed by objective data?
And it doesn’t require an event as severe and truly unpredictable as the pandemic to see the value of project risk management software. Even though risk occurrence is inevitable, using such software to account for them upfront adds a layer of certainty at the project estimate stage as well, removing the surprise factor for when the inevitable “what if” scenario does play out and affects project timelines and budgets.
InEight provides construction project controls and risk management software that helps teams anticipate, analyze, and manage risk across cost, schedule, and performance. By enabling scenario planning, real-time analytics, and collaborative decision-making, InEight supports greater project certainty and more confident outcomes throughout the construction lifecycle.
