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By Duane Craig
March 29, 2017
“Failure is not an option” may be your personal life motto, but in the world of construction, it is often inevitable. But many construction project “failures” are not actually catastrophic. The projects eventually get finished, and the results are acceptable. But projects that overrun costs, end without profits to the builders, and reduce scope are all failures in their own right. Here are the typical causes for failed projects and ways to deal with them.
Regardless of who is at fault for creating delays in construction projects, they are still delays. And delays mean late completion and budget overruns. Among the causes for delays there are two that stand out: inadequate planning and surprises.
When planning is not up to par, you will get plenty of early warnings through delays. You will probably see the delays unfold before your eyes right in the schedule. Telltale signs include:
The longer the signs continue, the closer the project is to running completely off the rails. From a technical perspective, the only way to get a handle on it is to go back to the critical path and reassess the project timeline based on what’s really happening.
If yours is like many small construction businesses today though, you probably are not using a critical path in your scheduling. The answer here lies in taking a snapshot of where everything stands on the schedule. This includes where they stand from both a completion and a budget perspective. Then, it's back to the drawing board. You have to reassess each stage of the project, looking for delay–causing factors. Once identified, rank them according to priority, and get to work on finding solutions.
The second big cause of delays is surprise. Any manager or super who has worked in construction for any amount of time knows they should put surprise right on the schedule. But owners don't like to see the word surprise anywhere near their projects, so you have to take a different approach. Since surprise comes in many forms, your best defense is to have a plan for all of the surprises you can possibly imagine happening on a given project. There are some that are common across all projects such as weather events, unforeseen site work, and changes. But, there are also surprises that vary from project to project. If you aggressively look for those potential surprises as you plan each project schedule, you will know what they are, and be ready for them.
Assuming the scope didn’t change, and the original estimates were accurate, you face a couple of major reasons for cost overruns. The first goes right back to planning, and the second is rework.
A major area where cost overruns start to show up is the resources. Your original estimates used a considerable amount of optimism and guesswork to plan the resources for the project. After all, assuming nine carpenters, in prime condition, having all the right materials and the right tools, would be available on a cold Friday morning two months from today is nothing short of blind faith. But still, you need a schedule.
So, plan for the variables you can manage, and have a backup plan for the ones you can't manage. You should also spend some time vetting your resources. It's probably a safe bet that the building materials superstore near you will stay in business at least until the completion of your project. But, can you say the same for your sources of custom windows or custom doors? How about that heavy equipment sub that's been taking on a lot of new work? Should you be considering a backup source for that resource?
When things didn't get built according to plans and quality, it becomes re-work. And rework costs the construction industry billions of dollars every year. While there are different severities of rework, they all have similar, far-reaching consequences. There’s the cost of redoing the work, but there's also the cost of dismantling the incorrect work, the cost of rescheduling, and retooling, and the cost of the delays arising from the rework.
There’s a question that is often asked that sums up the absurdity of rework: “If there isn't enough time to do the work right the first time, how will you find enough time to do it right the second time?” The best way to avoid rework is to make sure that people are working from the current set, they know how to do the work correctly, they have the correct materials to do the work, and there is ongoing quality control while the work is getting done.
Construction is risky business, and when there are complex projects with tight schedules, they get even riskier. There are many risks that you can plan for and prevent, while for others you mitigate them the best you can and buy insurance to cover them. Knowing the difference between the two is the first step in reducing project failures arising from risk.
There is no substitute for knowing the contract and knowing the project to manage risk. Agreeing to build something when you don't understand it or signing a document with long term implications that you are unaware of, are short paths to project failure.
Construction projects depend on many different stakeholders, so no matter where you are in the project hierarchy, you should know your partners. Knowing the players in the project and knowing the risks those players pose will help you reduce your own risks. Making sure you have insurance to cover potential coverage gaps, not relying totally on certificates of insurance, and having legal counsel review all contract documents, are three other steps in reducing project risks.
Construction project failures aren’t always avoidable. After all, there are some things you just can’t foresee and plan for. But for all others, paying close attention to planning and risks will help avoid a complete meltdown.
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