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Top 5 Risks & Mitigation Strategies: For Capital Construction Owners

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e-Builder.net 800.580.9322 info@e-builder.net 03/27/18 WHITE PAPER 2 Building owners and developers face a diverse range of risks managing capital improvement programs that can negatively impact schedule and cost-effective project delivery. Typically, these programs involve large expenditures, bring together parties with competing interests, and must address complex conditions and potential public scrutiny—all of which adds risk to already difficult undertakings. In a time where capital is tight, proactive owners have taken steps to minimize the chance for delays or overruns by enabling better project controls that provide measurable cost reductions. This tip sheet summarizes the top 5 risks facing building owners managing ongoing capital construction projects and provides unique case studies of how top-performing owners from various industries mitigate these risks. RISK is defined as an event, variable, process or activity that can create liabilities for an owner leading to: 1. Damage to reputation 2. Cost overruns and schedule delays 3. Claims and disputes 4. Regulatory noncompliance According to Dodge Data & Analytics 82% of building owners report having projects exceed budget. • About half (54%) report infrequent cost overruns (on less than 25% of their projects). • 18% say that a majority of their projects exceed budget. Building Projects—It's a Risky Business Defining Risk as It Relates to the Construction Industry How Much Over Budget? Among the projects where owners report exceeding budget, almost two-thirds (60%) are at least 5% over, with many (21%) citing a more than 10% overrun. More public buildings owners (26%) cite that worst level of schedule performance than private (15%). Know the Numbers! Owners Exceeding Budget Amount that Projects Exceed Original Capital Allocation Projects that Exceeded Budget Percentage of buildings in each of the five performance brackets for how often the final construction cost exceeded the budget anticipated at the time of captial allocation for recent projects. 5%-10% over budget 39% Less than 5% over budget 40% More than 10% over budget 21%

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