Cost and Schedule Risk Management
Large-scale capital projects – those facing tremendous risk due to their long time horizons, complexity, and resource requirements – will continue to experience sizable cost overruns or schedule delays if there is no rigorous analysis and thoughtful management of execution risk.
With decades of experience in large capital projects across myriad industries, SDG helps companies better anticipate and manage the risks of their major capital projects and lock in the full value of their investments.
Megaprojects are unlike other execution decisions. Each megaproject is a stream of highly complex decisions over a long time frame with increasing levels of financial commitment. Strategic decisions related to site selection, project financing and structuring, contracting, project scheduling, advance procurement, and staffing and training will have a material impact on the economics of a project.
SDG applies decision analytic concepts, tools, and processes to untangle the interrelated risk and value potential of large capital investments in every industry. Our risk maps show how the sources of risk affect not only the individual rudiments of cost, schedule, performance, and value, but also how they inflence other sources of risk. This approach, outlined below, produces a clear quantification of the impacts of alternative risk management strategies.
- Understand the full range of potential risks
- Assess the distribution of the cost, schedule, and performance impacts of these risks
- Clarify which risks are correlated and in what ways
- Assess the probability of these risks occurring over time
- Integrate these results into a full distribution on project schedule, cost, cash flow, and earnings over time, as well as overall NPV.
