At a Glance
- Construction projects schedule overruns are a major challenge for the industry and these delays can have a significant impact on productivity, profitability, and reputation.
- Effective project management is essential to mitigate schedule overruns.
- An effective strategy to reduce these overruns should include not only the management of the project environment but also the organisation and the external environment.
The construction industry is both a catalyst and a reflection of a country’s growth, as it is a formidable force that shapes the trajectory of development. In 2020, the global construction market reached a staggering US$9.7 trillion, and projections for 2037 predict a surge, with the industry reaching US$13.9 trillion.
Behind this remarkable growth lies a persistent challenge that casts a shadow over its contribution to the global economy: construction project schedule overruns.
The challenge of keeping projects on schedule
Schedule overruns, essentially refer to the extension of the time required to complete a project beyond its initially planned duration. Schedule overruns are common on projects around the world.
Since 2020, delays on major construction projects have more than doubled, with nearly 85.5% of such projects falling behind schedule. These delays can occur with or without compensation, and these delays take a toll on the productivity and profitability of construction companies, which has a knock-on effect on their clients.
Successful project delivery, as measured by adherence to schedule, is critical. Deviations from the agreed schedule can lead to a cascade of negative consequences, ranging from project abandonment and financial loss to reputational damage, cost escalation, disputes, and potential legal entanglements. However, with the right strategies or measures in place, there is a way to mitigate construction delays and improve operational excellence.
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Tackling schedule overruns head-on
Dealing with schedule overruns is part of the wider business improvement processes of organisational design, operations management, and business process re-engineering. In the construction industry, projects are susceptible to many external and internal factors that can disrupt productivity and lead to schedule overruns.
Six primary factors often contribute to these delays: contractors, clients, materials, consultants, labour, and equipment. Identifying and addressing these drivers of construction productivity is critical to efficient resource planning and utilisation. Here are common problems and approaches to tackling them:
1. Managing late payments
In many construction projects, main contractors subcontract various specialised tasks to local subcontractors to lower overhead costs. However, late payment to subcontractors can have a cascade of negative effects. Disrupted cash flow for both main contractors and subcontractors can threaten their financial stability.
Project cash flow is essential for the purchase of materials and the provision of necessary tools. Any delay in payment can disrupt the project’s supply chain, causing delays that can last for months or even years.
To address this issue, establish clear contract terms that clearly outline payment terms, schedules, and milestones. Foster strong relationships with the main contractors to understand their working relationships with subcontractors. Monitor and document the performance of both main contractors and subcontractors. Maintain clear records of completed work, and milestones to deal effectively with delays or disputes.
2. Effective construction site management
Construction projects are complex undertakings, from planning through execution to final handover, often over long periods of time. These projects are susceptible to many factors, uncertainties, and challenges that can lead to schedule overruns and financial losses. Effective project management and careful planning can mitigate risks, ensure project success, and achieve project objectives.
Key construction management practices include comprehensive planning, risk assessment, continuous monitoring, and effective communication:
- Thorough planning: Develop a detailed project plan that outlines all project phases, potential risks, and key milestones. This plan should be continually updated as the project progresses.
- Risk assessment: Identify potential risks that could cause delays and develop mitigation strategies for each risk.
- Continuous monitoring: Continually monitor performance and on-site progress. Adjust plans and resources as necessary to avoid schedule overruns.
- Effective communication: Foster clear and open communication between all stakeholders, including contractors, subcontractors, consultants, and clients. Address issues promptly and avoid misunderstandings.
3. Effective reporting
Reporting is a critical administrative task in construction projects, but traditional methods can hinder productivity. Numerous types of construction reports are generated throughout the project lifecycle. Relying on traditional tools such as Excel spreadsheets and Word documents may have been sufficient in the past, but this approach can hinder productivity.
Technology or reporting platforms can be useful to manage the high volume of data from multiple sources throughout the construction project lifecycle. This streamlined approach also provides easy access to reports for all stakeholders, from foremen to project managers and architects.
Real-time technology applications help to optimise data collection, and visualisation processes, refining the entire data processing lifecycle. This, in turn, prevents or mitigates delays in field operations. Establishing a central data repository, as a single source of information, can improve productivity, minimise whole life costs, improve sustainability, and maximise user benefits.
Repeated schedule overruns on construction projects?
“What are the priority actions I should take to effectively manage construction projects to prevent schedule and cost overruns?”
“How do I structure my organisational design and project management processes to better support all current and future construction projects?”
If your existing construction projects are experiencing schedule, time, or cost overruns, it is time to intervene to ensure that all members of your construction teams are trained and educated to minimise these overruns.
An effective strategy to reduce these overruns should include not only the management of the project environment but also the organisation and the external environment. With over 25 years’ experience in delivering improved business outcomes for our clients, Renoir consultants and subject matter experts can analyse the weaknesses and opportunities in your organisation, and design a tailored, practical programme to help you implement solutions that last. As part of the engagement, we will also take projects through to full adoption using our behavioural and cultural change methodologies.
Seize the opportunities and optimise your capabilities to achieve the results you want.
