The most common risks in projects: Why 37% of projects exceed budget or schedule?
Many projects start with a clearly defined scope, schedule, and budget. Yet a significant portion of them end up delayed or over budget. In practice, such problems are rarely caused by a single unforeseen event. Most often, they are risks that were not properly identified, monitored, or managed during project execution. In this article, based on data from the KPMG report, we describe the problems that most commonly arise during project execution and how organizations can address them.
Key takeaways:
- what the most common project risks are according to research and organizational experience,
- why risks in projects often have a systemic nature,
- what an effective risk management process should look like,
- how the FlexiProject PPM system helps monitor risks in projects and project portfolios.
What the KPMG report says about risks in projects?
The KPMG Global Construction Survey 2023 report highlights the critical importance of effective risk management for project success. The study was conducted among project owners, investors, and organizations delivering large infrastructure and construction projects worldwide.
One of the report’s key findings is that, despite growing organizational maturity and the increasing use of digital tools, many projects continue to struggle with recurring issues related to schedules and costs.
The data presented in the report shows that:
- only around 50% of projects are completed on schedule,
- 87% of organizations report growing oversight and pressure regarding project delivery,
- 37% of respondents admit that projects exceeded budget or schedule due to insufficient risk management.
This means that risks in projects are not an isolated phenomenon, but one of the main factors affecting the success of project delivery.
The KPMG report also emphasizes that projects are becoming increasingly complex. Contributing factors include:
- a growing number of project stakeholders,
- complex supply chains,
- pressure to shorten project delivery timelines,
- a higher number of changes during project execution.
In such conditions, even a minor risk can have a significant impact on the project schedule or budget. That is why organizations are increasingly looking for ways to implement systematic risk management, which enables early identification of threats and monitoring of their development throughout project execution.
An analysis of the report’s findings also shows that organizations achieving the best results in project delivery far more often apply a structured approach to risk management. This includes maintaining a risk register, regular reporting on risk levels, and using tools that support risk analysis across projects and project portfolios.
Sources:
https://assets.kpmg.com/content/dam/kpmg/ie/pdf/2023/08/ie-global-construction-survey-2.pdf
https://kpmg.com/xx/en/media/press-releases/2023/06/global-construction-industry-cautiously-optimistic.html
Manage project risks effectively with risk register and action plans - start FlexiProject free today.
The most common risks in projects
In practice, many projects encounter similar problems. Analysis of organizational experience and market research allows us to identify the most common project risks that most frequently lead to delays or budget overruns.
The most common risks include:
Underestimation of the project schedule
Overly optimistic schedules are one of the most common causes of project delays. When no time buffers are included, even small issues can cause shifts in the schedule.
Underestimation of the project budget
Imprecise cost planning or lack of expense control can lead to budget overruns.
Changes in project scope
Changes in project requirements are a natural part of many projects. However, lack of control over scope changes may have serious consequences for both the schedule and the budget.
Lack of clear responsibility for risks
In many projects, risks are identified but no risk owner is assigned to monitor them and respond when necessary.
Lack of ongoing risk monitoring
One of the most common problems is the absence of regular risk monitoring during project execution.
Why the most common risks in projects are a systemic problem?
In many organizations, risks are analyzed only at the beginning of a project or during occasional reviews.
In practice, this means that information about risks remains in documents or presentations and is not used in everyday project management.
The most common missing elements include:
- a central risk register in the project,
- assigned risk owners,
- risk response plans,
- regular monitoring of project risks,
- reports showing the level of risk in the project.
That is precisely why organizations are increasingly implementing PPM-class solutions that enable systematic risk management and monitor risks not only within a single project but also across the entire project portfolio. One such solution is FlexiProject a PPM system supporting project management and project portfolio management.
How to manage the most common risks in projects in FlexiProject?
Effective risk management requires not only processes but also the right tools. FlexiProject is a PPM software that enables monitoring of risks in projects and analysis of risks across project portfolios.
Risk register in the project
In FlexiProject, you can maintain a central risk register that allows the project team to identify and analyze project threats.
Linking risks with the project schedule
The system allows risks to be linked with specific tasks or phases in the project schedule. This makes it easier to assess which elements of the project are most exposed to risk.
Risk owners
In FlexiProject, each risk can have an assigned owner responsible for monitoring it and taking appropriate action.
Risk reports
As a PPM system, FlexiProject enables the generation of risk reports showing:
- risk trends,
- risk categories,
- risk levels in projects,
- responsible owners.
👉 Want to learn more about risk management in FlexiProject and see how the risk register, risk matrix, and action plans work? Check out the risk functionality page.
Manage project risks effectively with risk register and action plans - start FlexiProject free today.
Monitoring risks at the project portfolio level
One of the greatest advantages of PPM systems is the ability to monitor risks not only within a single project, but also across the entire project portfolio.
FlexiProject enables aggregation of risk information from multiple projects and analysis at the project portfolio level.
As a result, organizations can:
- identify the most common risks in projects across the entire company,
- analyze risk trends across multiple projects simultaneously,
- monitor risk levels in project portfolios.
In FlexiProject, this can be achieved through:
- project portfolio dashboards,
- risk reports covering multiple projects,
- risk analysis at the project portfolio level.
This approach allows management to control risk not only within a single project, but also at the strategic level of the entire organization.
Systematic project risk management: the key to meeting deadlines and budgets
The most common risks in projects are one of the main causes of delays and budget overruns. Data from the KPMG report shows that 37% of projects exceed their budget or schedule due to ineffective risk management. That is why organizations are increasingly implementing a systemic approach to risk management.
Solutions such as FlexiProject, a PPM software enable organizations to maintain a risk register, monitor threats, and analyze risks not only within a single project, but across the entire project portfolio. As a result, organizations can manage risks more effectively and make better project decisions based on data.
