Construction risk management is a complicated subject. Given the many risks inherent in the construction industry, it’s easy to see why. In fact, a recent study showed that 77% of all construction projects experience significant delays, often due to overlooked or poorly managed risks. As KPMG’s 2023 Global Construction Survey revealed, many in the industry struggle to meet budget and schedule targets. However, a critical approach often left untapped is using schedule data.
Why Schedule Data?
Schedules are more than timelines; they’re essential maps that can reveal potential risk areas if analyzed well, often pinpointing issues early enough to prevent major setbacks. Aggregating and analyzing schedule data across jobs reveals patterns and trends that can impact both organizational risk and individual project health. For example, clusters of delays in certain project phases or types can point to recurring challenges or resource shortages that need attention. This helps construction teams address risks on two levels: individual project needs and broader organizational improvements.
Identifying Risks with Schedule Data
Analyzing schedule data has fundamentally changed how construction risks are identified and managed. By scrutinizing the schedule, you can pinpoint micro-level (project) and macro-level (organizational) risks. This dual analysis aids in spotting trends or recurring issues across a range of projects, providing a clearer picture of your company’s overall risk profile.
This approach includes examining key factors such as planned versus actual progress, schedule quality, and the effectiveness of current risk management strategies. By doing so, you can proactively address potential issues, enhancing the health and viability of your projects.
At the project level, various risk categories emerge from the data, including progress discrepancies, schedule data integrity, feasibility of the plan, and predictive analytics. These insights show the relationship between project health and risk level. Typically, well-planned projects with high-quality schedules face fewer risks.
Unfortunately, not all schedules are created equal. The difference can be attributed to two primary factors:
- Inexperienced Scheduling: Too often, schedules are managed by well-intentioned staff who aren’t scheduling experts.
- Bad data: A 2021 Autodesk and FMI Corporation study estimated that “bad data – data that is inaccurate, incomplete, inaccessible, or untimely, and can’t be used to derive actionable insights – may have cost the global construction industry $1.85 trillion.”
Even the best-developed schedule won’t provide meaningful insights unless the analytics are accessible and designed for clarity across all team members. A 50-page Gantt chart, for example, is overwhelming and impractical—people need analytics they can actually interpret and act on. Effective tools should be designed for real-time tracking, forecasting, and scenario analysis so the schedule can function as a true management tool rather than just a formality or reporting requirement. When the data is clear and actionable, teams can leverage the schedule to drive decisions and improve project outcomes.
Determining Your Current Schedule Data
Assessing the quality of your schedule data is essential to know how reliable it is. This means reviewing the schedule’s completeness, accuracy, logic, and adherence to industry best practices. A schedule audit can identify any gaps, inconsistencies, or unrealistic durations.
The audit should check whether the schedule includes all necessary activities, follows a logical sequence without errors or discrepancies, and aligns with the project’s scope and objectives. Improvements might involve refining activity durations, ensuring logic is correctly tied, and updating the schedule to reflect actual progress and changes in project scope – with assured buy-in from respective parties. Team buy-in is essential for this step to be effective.
Developing a Construction Risk Management Plan
Once you’ve assessed your risks, it’s time to develop a risk management plan. Bear in mind that risk management is a continuous process – setting up a plan and not revisiting it leaves projects vulnerable as conditions change.
- Identify Risks
Review contracts, policies, market conditions, and, most importantly, project schedule data.
This data reveals patterns of delays, inconsistencies, and other risk factors, showing potential issues early. For instance, an analysis of schedule quality can reveal high float, missing logic, or trade stacking that might indicate underlying risks.
- Analyze Risks
After identifying your risks, examine each one closely. Consider the potential impact of each: exposure, probability, timeframe, and classification. You can measure risk implications with the use of predictive analytics. By analyzing historical project data, you can predict future risks more accurately. For example, by analyzing schedule changes, you can see how they have historically impacted your projects or led to increased risks.
- Develop a Risk Response Plan
Developing a response plan involves deciding how to handle each identified risk: avoid, transfer, mitigate, or accept. Use data-driven insights to inform these decisions. For instance, if the data shows a recurring issue with a particular subcontractor, you might choose to hire a different sub in the future. Similarly, if your data indicates consistent delays in a specific project phase, you might focus on what is making that phase so difficult to navigate.
- Execute the Plan
Executing the plan involves prioritizing risks based on their impact and probability, often represented in a risk matrix. Utilizing specialized software, you can break down and visualize data for better access and understanding by all stakeholders. This step also involves developing contingency plans for risks that meet specific thresholds, guided by insights from both current and historical data analytics.
- Monitor and Control Risks
Ongoing monitoring and control are crucial. As the project progresses, you should track existing risks and identify new ones, reclassifying risks as necessary. Creating regular reports keeps everyone informed.
You also get ”bonus points” if you actively engage with real-time data, as it allows for the early detection of emerging risks, keeping your monitoring and control process up to date.
- Measure Your Construction Risk Management Process Efficiency
Post-project analysis is vital for continuous improvement. Reviewing project data, updating overall risk metrics, and conducting risk audits can reveal areas for improvement.
By conducting retrospective analysis, you can refine your risk management strategy over time, using historical data and experience to enhance future builds.
ABOUT THE AUTHOR
Michael A. Pink is CEO of SmartPM Technologies, a leading construction data analysis tool designed to enhance schedule quality, assess risk, review performance, and control project outcomes. You can follow him on LinkedIn at https://www.linkedin.com/in/mapink/.
