5 Reasons Construction Projects Fail
For commercial contractors, both GCs and subs, a successful project is one completed on time and within budget. The client is happy with the finished product and the contractor walks away with a tidy profit. Everybody wins. When a project fails, it’s typically due to conflicts and issues that cause cost overruns and delays in the schedule.
If not properly managed, it will eventually lead to going over budget and blowing past the scheduled date for substantial completion. Going over budget eats into the contractor’s profit in addition to being hit with liquidated damages for every day past the agreed upon completion date. It can also impact upcoming projects if a contractor’s workers and equipment are tied up trying to finish up a failing project.
"Failure is not an option." - Ed Harris as NASA Flight Director Gene Kranz in Apollo 13
So what causes construction projects to fail? Any number of factors can lead to project failure, but most of the time it boils down to how well the project manager or project management team performs overseeing the project. Even the most difficult, issue-laden projects can be successful if properly managed.
Here are five reasons construction projects fail and how to prevent it from happening on your next project:
Poor planning leads to poor execution. The more time and effort put into planning out the project, the better off you’ll be when work gets underway. This starts by carefully reviewing and fully understanding the plans, specifications, scope of work and client expectations. Good planning involves working with working with the client, architect, subcontractors and suppliers to establish construction schedules and project milestones.
Planning goes beyond just creating a construction schedule. Additional items include conducting a risk assessment and management strategy, developing site-specific safety plans, establishing contingency plans, site logistics and lining up the delivery of materials and equipment. Keep in mind that the plan and schedule are living documents that will have to be updated and adjusted as work on the project progresses.
Failure to Communicate
Good communication is crucial to delivering a successful construction project. When communication among stakeholders breaks down or is mishandled, it can lead to delays, accidents, costly rework, and unhappy clients. Keeping everyone up to date on changes to the work or schedule goes a long way in preventing major problems from developing that cause projects to fail.
Develop a communication plan and establish document control procedures. Designate a main point of contact that all communication will flow through. All communication should be documented and shared with the appropriate stakeholders. These include meeting notes, submittals, requests for information, invoices, daily reports, change orders and submittals. All correspondence, whether it’s emails, phone calls or in-person conversations should be documented and saved. This goes a long way in settling any disputes or disagreements that might arise throughout the course of the project.
The flow of communication affects the flow of a construction project. Problems and delays occur when people stop communicating or responding to inquiries. Projects run smoother and get completed on time and within budget when everyone is communicating and collaborating effectively.
Scope Creep & Change Orders
Scope creep is the continuous expansion or changes to the project’s initial scope beyond what was initially intended. Factors that lead to scope creep include poorly defined scope, incomplete plans and specifications, poor communication, mismanagement of change orders and clients changing their minds about what they want.
Change orders are similar in that they involve changes to plans outside of the original scope. Change orders differ from scope creep because they can involve both additions and deletions from the original scope. They can also be initiated by the owner, but GCs and subs can also request change orders and they don’t always result in additional costs or deadline extension.
Obviously, you shouldn’t take on a project with a poorly defined scope or incomplete plans and specs. All construction methods, finishes and materials should be determined long before you sign a contract and begin work.
The construction contract should clearly state how any work outside of the original scope should be requested and documented. No additional work should commence until a written change order has been executed and authorized by the client. Additional costs and timeline extensions should be determined and agreed upon. Don’t forget to work with your subs to determine how change orders might impact their schedule before signing off on additional work.
Productivity Issues & Delays
We’ll ignore delays caused by events, such as natural disasters, that can’t be controlled by any of the parties involved. These excused delays are handled under force majeure clauses in construction contracts and protect the contractor from having to paying damages due to not performing or completing the project on schedule.
Project schedules are based on productivity expectations. Each task or job requires a certain number of man-hours to complete and are used to determine how many workers you will need to complete each one within a given amount of time.
When workers don’t show up, get injured or goof off on the job, it can lower your productivity levels, cause delays and throw your schedule out of whack. This could force you to bring in additional workers or sub out more work which in turn lowers your profit margins.
Labor shortages and fewer skilled workers have only made the problem of productivity worse over the past several years. Newer workers don’t have the skills and confidence to complete tasks at the same speed as experienced veterans on your crew. Understanding the capabilities of your workers is vital when determining your project schedule.
Conduct background checks and provide training to your employees to ensure they have the skills to perform their job. Assign specific roles and responsibilities so that everyone knows what they should be doing each day. Equip your workers with the proper tools and equipment needed to complete tasks efficiently. Work with your subcontractors to determine whether they have the workforce available to perform their contracted work as scheduled.
Ignoring Red Flags
When projects are running smoothly, it’s easy to ignore early warning signs that trouble may be brewing. Little issues can quickly snowball into major problems if left unchecked, causing projects to fail. This can be caused by workers failing to report issues or not monitoring projects closely.
These minor issues are often put on the back burner while dealing with other aspects of the project. All problems should be prioritized and handled accordingly when they arise. Project managers should be able to analyze and troubleshoot issues as early as possible to avoid delays. Quick thinking and good decision making are what sets great project managers apart from good ones.