The infrastructure industry landscape is filled with potential risks, challenges, and opportunities, both known and unknown. But no matter what these potential risks are, they can be mitigated, planned for, and managed with the right approach and execution. Building and managing infrastructure are complex undertakings, but it doesn’t have to be! Implementing proper and effective infrastructure project management can help reduce risks in your projects.
Project managers can face a number of challenges when it comes to de-risking their projects, including time management, cost overruns, and scope creep. However, there are a number of steps that can be taken to mitigate these risks. In this blog post, we will share five key tips on how to de-risk your infrastructure project and how infrastructure project management software can help you manage your infrastructure projects more effectively.
When should you implement a de-risking strategy?
There is no one-size-fits-all answer to this question, as the right time to de-risk will vary depending on the specific situation and goals of the business. There are a number of factors to consider when deciding when to implement a de-risking strategy. However, as a general rule, businesses should consider implementing a de-risking strategy when they are facing significant financial or operational challenges or when they are looking to increase profitability and shareholder value.
For effective, risk-informed project management, the following is essential:
- a thorough conceptual framework that introduces risk management across the value chain and highlights the most important issues and design choices to be made.
- a strong set of practical approaches and tools that assist governments and businesses in making these design decisions and managing risks more proactively and, therefore, more effectively.
- a framework for implementation that successfully introduces and ensures the use of discipline in day-to-day operations, beginning with the design phase and continuing throughout a project’s life cycle.
Why is infrastructure construction management important in reducing risk?
We believe that most project risks in any scale of infrastructure project are both predictable and preventable. Lack of expert, proactive risk management is the root of many of the issues we see. Large infrastructure projects have the potential to experience considerable undermanagement of risk at almost every point in the value chain and over the course of the project’s lifespan. Poor risk assessment and risk distribution, particularly early in the planning and design phase, for instance, through contracts with the builders and financiers, often results in higher manifested risks and subsequent private-financing shortages.
In the final stages of infrastructure projects, risk is also improperly managed, which significantly reduces their worth. Importantly, project owners frequently miss the fact that risks created in one stage of the project can significantly affect those risks in later stages.
Connectivity and infrastructure decisions are some of the most important decisions to make when planning for future cities, as these projects cover a wide variety of operational concerns and costs. They are crucial to the business strategy and profitability in the short and long terms. It is not unexpected that a company’s infrastructure strategy involves numerous hazards. The good news is that you can minimise those risks and create new opportunities by implementing a strategy of working with the appropriate technology enablers and providers.
Infrastructure construction management is key to reducing risk because it gives a clear picture of the project, its goals, and the work needed to finish it. It also sets a standard against which progress can be measured and deviations can be spotted. By finding possible risks and problems early, construction managers can take steps to avoid or fix them.
5 key tips to reduce risk in your next infrastructure project
When it comes to civil infrastructure construction, there are a lot of risks involved. That’s why it’s important to have a risk management plan in place before you start your next infrastructure project. Here are five key tips to help you reduce risk in your next infrastructure project.
Fostering effective team leadership and oversight
Good team management is the key to success for any infrastructure project. No matter how big or complicated the project is, strong and transparent leadership and communication structure are essential.
Creating a unique team management plan is crucial for every project. This plan must be made with all interested parties, approved by those in charge, and put into action as soon as the project starts. The plan should always be followed, especially for initiatives that are under a lot of political and media attention, because they are more likely to be influenced by people who are not educated on the topic. Having a strong governance system that is widely accepted and always followed is the best way to combat this.
Being reasonable with timelines
The schedule of work is the first and arguably most important document to be created for any significant infrastructure project plan. This activity schedule outlines the order in which events will occur, enabling precise resource and expense planning. The key dates that were set during the planning phase are crucial and should be kept in mind. Any effort to speed up the build phase could likely cause the project to go over budget, because of the strong relationship between time and cost in construction.Therefore, finding a comfortable balance between speed and spend is crucial.
Dividing up the risk load
It’s important that the whole team regularly identifies and resolves risks. Creating a comprehensive risk register right from the start will help ensure that all relevant factors are considered when making decisions. A uniform form of contract simplifies discussions with all suppliers, making it easier to identify any violations. If necessary, a suite of contracts for all engagements across the project can be used to speed up contract management.
By handling risks to the party most qualified to manage them, businesses can avoid writing back-to-back risk transfer agreements that ultimately result in the subcontractor taking on all of the project’s risk. This won’t lessen the impact on the client, and if the party taking on the risk isn’t in a position to manage or mitigate it, the strategy loses its effectiveness as a risk reduction strategy.
Tracking cash flow and properly accounting for project costing risk
Project risk costing doesn’t have to be difficult, but it does need to be done correctly. Make sure to value and account for all exclusions and costs when calculating risk. On many projects, the cost plan has a lengthy list of “exclusions.” All of these expenses will ultimately be covered by the project. Therefore, realistic planning should include them. Some sort of carefully thought-out estimate should be permitted if there is ambiguity over the actual cost. If the expenses are not well understood, this might result in inaccurate information, sometimes giving the impression that the project has gone over budget when it has not.
Delivering precise and consistent communication
The last element to consider in infrastructure risk management is ensuring excellent and consistent project communications. An effective way to generate enthusiasm and momentum for the project, as well as to guarantee that communications given to leadership, contractors, vital stakeholders, and the general public are regular and clear, is to establish a communication plan early on and uphold it until the project’s completion.
PlanRadar delivers a suite of fully adaptable project planning templates that can oversee the management of infrastructure projects, including green infrastructure. A project manager formulates and refreshes these templates, which are then made accessible to reviewers via any preferred device on the PlanRadar app. If you haven’t already, you can take advantage of PlanRadar’s 30-day free trial right away!
Professional project risk management has the potential to attract and bring in extra private capital, in addition to dramatically improving outcomes at all stages of the infrastructure project. There is a solid case for embracing risk management throughout the life cycle of individual projects as well as at the portfolio level, given the size and breadth of emerging infrastructure projects around the world.
Both imaginative and efficient builds can do wonders for your infrastructure profile. It is clear that there are ways to improve and streamline the infrastructure-building process so that it produces the best results, while also ensuring that projects are completed on time and within budget. The importance of careful planning as a crucial step in the infrastructure risk management process cannot be over-emphasised. Following the five key tips we mentioned can help you mitigate risks and guarantee the success of your next infrastructure projects.
If you want to learn more about how PlanRadar’s infrastructure management software can help you de-risk your infrastructure projects, click here to get a free demo.