Construction Management Mitigates Financial Risks and Ensures Return on Investment

Large-scale projects are intrinsically linked to substantial risks. The complexity of the developments, the volatility of material costs, and the pressure of deadlines demand a modern approach to mitigate financial risks and ensure Return on Investment (ROI). According to the PMI Survey on Cost and Schedule Overrun, conducted by KPMG India for the Project Management Institute (PMI), 79% of respondents believe that changes in the project scope/design lead to overruns in the overall construction schedule.

The same survey reveals that the main reasons for project cost overruns during the execution and closing phases are material price increases beyond projections and rising labor costs or inefficient use of labor. A global study by McKinsey & Company, published in the article “Optimizing performance in infrastructure project delivery”, shows that large infrastructure projects frequently face delays of 20% or more and exceed budgets by up to 80%. McKinsey analyzed 2,768 processes, which were used about 1.8 million times in large projects around the world. The Aconex platform supported this study.

These deviations represent economic losses that can compromise a company's financial health and its credibility with stakeholders and investors. Therefore, structured management based on interconnected pillars is essential:

Data-Driven Integrated Planning

Current planning is a multidisciplinary process that uses methodologies such as PMBOK (Project Management Body of Knowledge), enabling the integration of all project variables, beginning with a clear and unchangeable definition of what will be delivered, thus avoiding scope creep. A realistic and flexible schedule allows real-time tracking of progress, and the development of a detailed cost estimate must be continuously monitored, with specific allocations for contingencies and management reserves.

The Work Breakdown Structure (WBS) is essential for structuring the planning process, allowing the project to be broken down into smaller, hierarchical, and more manageable parts. This decomposition organizes the work into deliverable packages and sub-activities, ensuring that all deliverables are accounted for, reducing the risk of omissions or rework. Since each package is measurable, it becomes possible to track physical and financial progress more accurately.

BIM

Building Information Modeling (BIM) is a methodology that creates an intelligent three-dimensional digital model of the construction. It integrates all project information — architecture, structure, installations, budget, and schedule — preventing clashes between different disciplines (electrical, plumbing, structural) before construction begins, saving time on on-site corrections. BIM also makes it possible to simulate construction stages, material logistics, and even the future building’s energy performance. 

Even though the cost of projects developed with BIM tends to be higher in the initial phases, by the end of the construction the financial return occurs through the reduction of waste, fewer delays, increased productivity, and greater cost predictability, which makes budgets more reliable and facilitates physical-financial management.

Proactive and Systematized Risk Management

The Brazilian Association for Project Management (IPMA Brazil) reinforces the importance of a structured process that involves mapping all potential risks, both internal and external, that may impact the project; assessing the probability and impact of each risk, allowing for prioritization and focus on the most critical ones; and creating mitigation, transfer, acceptance, or elimination strategies for each priority risk.

Modern construction management protects capital, optimizes resources, and increases the likelihood of a positive ROI. Stecla Engenharia applies risk management from the beginning of the project, reducing the possibility of unforeseen events. With Stecla, the approach and execution of management activities are defined in advance, with the client, schedule, and cost as fundamental focal points. Learn about our construction planning and management service.