- February 1, 2024
The recent cancellation of the HS2 project begs the question, why do construction projects these days always seem to be running late and over-budget, and what can we do about it? Firstly, we need to understand the different layers involved in completing a ‘single project’ in modern construction – typically:
- Client (the owner and primary funder of the concept) with their architects
- Design engineers (the translators of the design work into buildable work plans)
- Main contractor (primary accountability to estimate, coordinate, manage and complete the project)
- Subcontractors (primary responsibility to complete the work)
- Manufacturing supply chain (materials and machinery)
- Logistics and the installation teams
- Consultants (signing-off in line with regulations)
Prior to a project commencing, the key parties involved outside of the construction parties have the largest effect on the project’s status, finances and outcome. These external parties include the landowners, local authorities (sometimes even national government), the future operators/maintainers; and finally, the public – the end users. Once the project has started, navigating this multi-layer structure becomes one of the major managerial challenges faced, and one of the primary reasons for projects running late and overbudget.
With the rise in subcontractor engagement as a delivery model, the coordination of work becomes harder and more complex due to the inherent increase in the number of decision-makers and P&L statements to satisfy. With the increasing complexity that comes with new and smarter construction technologies, these parties have become increasingly specialised, separate entities, providing the industry with the skillsets to get the best technology safely and successfully installed, but also critically adding the layers which make the ‘single project’ harder to manage.
Irrespective of technology, safety and complexity considerations, there are numerous fundamental project activities which are rarely sufficiently considered in project timelines and budgets, which result in the secondary reasons for over-run and over-spend. These include:
- Time and cost required for design changes, and processing and fulfilling variation orders
- Time required to plan with the subcontractor throughout the project
- Time impact of the subcontractor’s planned vs actual production “pace”
- Subcontractor delaying mobilising their workforce until the bulk of the work is ready
- Changing costs of materials
It is imperative that these are accounted for and built into overall timeline estimates to avoid later issues and slippage.
Major infrastructure projects are usually under the most financial pressure as public funds are being spent; pressure which leads to the higher than usual risk of over-optimism and under-estimating, resulting in less than realistic budgets being put forwards for approval. Typical issues that can come up in infrastructure project can be that budgets are being setup and communicated as if final, even though in-depth costing may have not been completely finalised, with better consideration for items such as cost of inflation, specific tools and equipment, and land permits and purchases required.
As you can imagine, the management of all involved parties’ expectations and needs is becoming an art form, and there are now specific disciplines and education pillars dedicated to teaching this. It is now more important than ever that a deep understanding of the industry’s increasing number of interlinked parties’ as well as the dangers of over-reliance on ‘technology telling us the answer’ is a key focus of these teachings. Without this, end-to-end vision is substantially impaired and the ability of the ‘single project’ to stay on-time and on-budget dramatically diminished.
Luckily, hope is not lost, and there is a way to manage this and get the industry back on track, which relies on managing and coordinating the effort at each layer. The modern era construction manager must take nothing for granted and not assume that the party working for them will be autonomous. This requires taking individual party’s plans and working with them to break the work down into simple, measurable chunks – forecasts and units of measurements – using these from day one to understand, in detail, each layer’s progress.
If all layers of the construction industry do this, whilst incorporating the activities impacting time and cost listed, then together we can regain control, and reshape the reputation of the modern-era construction industry.