Adult Conversations: Managing Building Project Risk

Why do so many capital projects begin with promise but end in frustration and conflict? Why does the design and construction industry have such a bad rap for budget and schedule performance?

It’s because we often fail to plan for the uncertainty we all know is part of the process.  We don’t have serious conversations about risk at the right time.  We can do better…here’s how.

A few years ago, we commissioned a major study to identify major sources of building project uncertainty and the most successful ways of managing it. For the first time, the industry gained real data about project expectations and results. Research sponsors included the AIA Large Firm Roundtable, American Institute of Architects, Associated General Contractors, Design-Build Institute of America, Lean Construction Institute, Autodesk, and Graphisoft.

When the frequency and cost of various uncertainty factors were considered together, owner changes had the highest impact on project outcomes. This factor was followed, in decreasing order of impact, by design omissions, construction coordination issues, design errors, accelerated schedules, and contractor delays.

These industry groups, with the Construction Owners Association of America as a new sponsor, have now created the Project Planning Guide for Owners and Project Teams, published in June 2018 by Dodge Data & Analytics. The guide and the original study — Managing Uncertainty and Expectations in Building Design and Construction — are both available without charge at

The planning guide offers basic lessons from the Managing Uncertainty research and the experiences of successful owners, architects, and builders:

  • Strong and consistent leadership within the owner organization;
  • Formation of the whole project team at the right time, and in the right way;
  • Strong communication within the project team;
  • Complete definition of project goals and requirements;
  • Application of the best project design and management technologies.

The guide also provides a new tool to assist owners and their project teams in the early “adult conversations” that are so important.  Surprisingly, the Managing Uncertainty research found that most owners had no consistent method for assessing project risk and setting appropriate budget reserves.

With the “contingency calculator,” teams can discuss in advance various risk factors that could be encountered and assign a probability and potential cost impact to each one.  The calculator also considers how long each risk factor will be present in the design and delivery process, so reserves can be released as the work proceeds. The owner can save these funds or re-invest them in project enhancements. In either case, architects and engineers should always use base construction budgets – without the reserves – as their targets for design.

As a longtime design and construction firm executive, I know how exciting it is to win a new client or project. We want to show the best of what we do. But it is not so enjoyable to talk about challenges or things that might go wrong. The best way to serve our clients’ interests is by having early “adult conversations” about common risk factors and how to manage their impact on project cost, schedule, and quality. This is an opportunity to distinguish yourself as a real leader in the design and delivery process.


Clark Davis, FAIA, LEED AP is a Principal Consultant with Cameron MacAllister Group. He leads services in strategy, leadership development, and organizational change. If you are interested in learning how Clark can help your firm, contact him directly at 636-448-9227 or via email.

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