{"id":8331,"date":"2025-10-07T16:19:50","date_gmt":"2025-10-07T13:19:50","guid":{"rendered":"https:\/\/sumood.sa\/?p=8331"},"modified":"2025-10-07T16:19:50","modified_gmt":"2025-10-07T13:19:50","slug":"mastering-capital-project-cost-risk-with-smarter-models-in-risk","status":"publish","type":"post","link":"https:\/\/sumood.sa\/en\/2025\/10\/07\/mastering-capital-project-cost-risk-with-smarter-models-in-risk\/","title":{"rendered":"Mastering capital project cost risk with smarter models in @RISK"},"content":{"rendered":"
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All projects come with risks\u2014but scale them up, and the stakes rise fast. In fact, a\u00a02023 survey by McKinsey found that large capital projects overrun budgets and schedules by 30-45%. Traditional contingency planning\u2014 adding a fixed percentage to the budget as a buffer\u2014just doesn\u2019t cut it for complex projects, especially not in a post-COVID world where costs are so volatile. So how can risk managers effectively analyze risk for projects that can shape industries, economies, and communities for decades.<\/p>\n

Fortunately, there are smarter ways to approach capital project cost risk modeling. In the webinar, \u201cMastering Cost Risk: Smarter Models for Large-Scale Projects,\u201d Dimitris Leimonis, Founder and Manager Director at Financial Arena, demonstrated a process for using\u00a0@RISK<\/a>\u00a0to create cost risk models that evolve with your project\u2014no matter how large.<\/p>\n

Continue reading to gain the session highlights or\u00a0watch the webinar on-demand<\/a>.<\/p>\n

Traditional cost risk models vs. probabilistic models<\/h2>\n

Traditional cost control methods treat uncertainty and risk as exceptions, not the rule. Typically, risk managers create a single-point estimate for their project with a fixed contingency applied. The model is hosted in a spreadsheet that must be adjusted manually to conduct sensitivity testing.<\/p>\n

Most importantly, the estimate in that model is deterministic \u2013 it\u2019s based on everything going to plan. When the project inevitably doesn\u2019t go to plan, the result is overruns that lead to unpleasant surprises like delayed ROI, reduced opportunities, and erosion of stakeholder confidence.<\/p>\n

The limitations of traditional cost control methods<\/h3>\n

Below are common cost-control methodologies and the reasons why they are unsuitable for large projects. These methods treat uncertainty as an exception rather than the rule:<\/p>\n