Understanding Schedule Risk in Project Management

Schedule risk in project management is a critical aspect of risk to consider when executing a capital project. Project timeline delays often occur due to poor planning as it pertains to scope development and project execution strategies. Therefore, managing schedule risk depends highly on a contractor’s ability to accurately and effectively develop project scope and a project execution strategy during front-end planning.

Below, we will discuss how schedule delays occur in capital projects, the effect delays have on project owners, and measures that can be taken to reduce the likelihood of such delays.

The Cause and Effect of Schedule Risk in Project Management

Understanding how to mitigate schedule risk for capital project executions begins with understanding common reasons for timeline delays. Delays may be the result of poor scope definition, changes in project scope, project complexity, among others. However, proper project management can substantially reduce schedule risk.

How Schedule Delays Occur in Capital Projects

It can be both costly and frustrating for project owners when a capital project is delayed. Delays can happen for reasons beyond an owner’s control. Weather, climate, and unexpected site conditions can set a project back by days or weeks. However, more often than not, delays occur because of poor front-end planning at the beginning of the project. 

Some of the most common schedule risks in project management include:

• Poor scope definition: Delays can occur when the project’s scope isn’t clearly defined or the project execution plan is inadequate. It’s important to define the scope as much as possible during the first stage of the project to ensure project success. 
• Change in project scope: Anytime a plan is changed, and a change order is required, time is needed to assess, review, and implement the change. 
• Project complexity: When the project has a high degree of complexity, there is an increased likelihood of items being missed during scope development. This oversight can cause multiple change orders to occur during project execution. Change orders often cause schedule delays as well as cost overruns. 
• Insufficient communication: A lack of communication with project stakeholders and contractors can tremendously affect the success of your project. Inadequate communication can result in:

1. Limited or no buy-in and dedication to the project from owner management.
2. Failure to correctly interpret stakeholder expectations on what is considered project success.
3. Negative campaigning against the project by stakeholders.
4. Failed projects due to unrealized expectations and objectives.

• Design errors: If a construction team encounters an error in the design, additional time will be needed to revamp and reassess. This follow-up and potential rework can lead to fabrication and construction delays.
• Inaccurate engineering estimates: Underestimating the cost of the project at the beginning can lead to cost overruns. If it’s found during the design phase that more material and equipment quantities are needed to execute the project, the schedule will inevitably be expanded. More quantities lead to longer installation times as well as more required labor. Allowing the construction team to participate in the design efforts helps to ensure the schedule stays on track.

Effect of Project Schedule Delays on Project Owners

Delayed project schedules affect everyone involved, but they usually affect project owners the most. Change orders often require more labor as well as more time. If a job is extended, not only are direct costs increased but also indirect costs which are often overlooked and can be significant. Indirect costs often include management, salaries, and other overhead. Cost overruns caused by schedule delays require more money long-term from the project owner and the project stakeholders to execute the project. 

When a project is delayed, project owners and stakeholders will want the project completed as efficiently and as quickly as possible to mitigate some of the cost overruns associated with the extended timeline. However, rushing a project to completion can also lead to quality risks alongside safety risks. Skipping important steps, cutting corners, and rushing through the engineering and construction phases can result in poor quality workmanship.

Reducing the Likelihood of Project Schedule Delays

Although some project schedule delays are unavoidable, many can be mitigated by implementing the following methods for project risk management:

• Strong project controls function: It’s important to have a systematic approach as well as dedicated professionals who understand the impact of a project schedule and produce routine and timely reports.
• Strong scope definition and early execution plan: Organizing a strong scope definition and project execution plan early in the project can lessen the risk for the occurrence of change orders once the project has moved into the execution stage. This review should be interdisciplinary with all functions involved in the project, including during the engineering, procurement, and construction stages as well as reviewing and commenting on the schedule and execution plan. 
• Advanced scheduling tools: Microsoft Project and Primavera are the primary tools used for small-to-medium-sized industrial capital projects. Microsoft Project is sufficient for small projects, and Primavera should strongly be considered when the projects are more complex and require more dependent steps and functions. 
• Efficient schedule management: The project schedule should be well-documented and accessible to everyone involved in the execution of the project. Adding an adequate time buffer and setting realistic expectations for the project timeline can help offset any delays caused by change orders. Setting up discussions about schedule milestones as well as reviewing the schedule regularly helps to mitigate some of the changes.
• Effective change management: Everyone involved in a capital project, including the project owner and the contractor, is responsible for effective change management. It’s important to identify changes to plans and execution strategies early in the project process. Changes bring risk, cause delays, and increase costs, so changes must be communicated so a plan can be implemented and the risks can be mitigated.
• Exceptional communication: Cultivating a good relationship between the project owner and the contractor can help ensure the project is executed smoothly and efficiently. Everyone involved in the project must be consistently aware of the project status. Maintaining transparency around project risks, such as change orders and safety hazards, helps align owners and contractors while mitigating potential delays caused by these risks.
• Take action: When a schedule shows slippage, it is sometimes tempting to make adjustments that incorporate unrealistic efforts. It is important to be realistic and recognize the slippage is usually due to some sort of inefficiency and misalignment. Use the schedule as an integrated tool in your project execution. An action plan should be created to mediate the issue. If you don't use the schedule to reassess your recovery plan, then you will not have good results. 

Hire the Right Contractor to Minimize Schedule Risk

When a project gets delayed, everyone is affected. Hiring the right contractor can help mitigate any financial, schedule, and safety risks that might arise when changes occur. EPC contractors who have in-house capabilities for all project phases, including full construction capabilities, can prove beneficial for avoiding these risks. 

At H+M Industrial EPC, the safety and quality of your capital project is our primary concern. We place focus on best practices for safety and quality control to meet your project’s needs. Our employees are required to complete safety training, from course work to practical work in the field. We provide all services in-house from engineering through construction to maintain the highest level of quality while meeting your timeline and budget requirements.