By: Anthony Perrenoud, Assistant professor, University of Oklahoma
No one expects construction projects to be completed on schedule. Neither contractors nor owners believe the schedule they themselves have agreed on will actually come to pass. This sorry state of affairs is the “new normal” in the construction industry. It is more than just a bad belief. Disregarding schedule discipline leads to draconian cost overruns for both contractors and owners and deprives owners the use of the facility they contracted for, sometimes for years. What are the main causes of this perennial schedule and budget busting that plagues the construction industry?
The Current State of Affairs
An article in Architectural News on schedule delays in New York City public projects paints a picture of the problem.
“A report, produced in collaboration with Citizens Budget Commission, analyzed the details of 144 library and cultural buildings that were completed between the 2010 and 2014 fiscal year. The report found that the following factors contributed to delays:
- 86% of delays occurred before construction began.
- Many projects got tripped up in the initial scoping and design phases.
- Extensive reviews for public projects were a major source of the problem.
- Inaccurate cost-procurement processes caused many of the delays.
- City-initiated scope alterations often led to costly and prolonged change orders during construction.”
In addition to the bureaucratic logjam, the report also draws attention to certain state laws that both mandate a low-bid procurement system and prevent city projects from adopting a design-build process.
“…The Hunters Point Community Library, for instance, has been in the pipeline since 2008 and just recently experienced another delay regarding an unforeseeable glass shipment fiasco from Spain.”
The built industry continues to struggle to capture project metrics that will improve supply chain management. In 2005, a capital program at one of the largest universities in the United States found itself without metrics related to schedule management on their campus projects. The lack of performance information created confusion on what the common project delays were. We were asked to take a look at why performance metrics were not available to industry planners and how this situation might be corrected.
Performance measurements in the built environment are described as a quantifiable, simple, and understandable measures that can be used to compare and improve performance. Metrics have three purposes:
1) To ensure the achievement of goals and objectives.
2) To evaluate, control, and improve procedures and processes.
3) To compare and review the performance of different organizations, teams, and individuals.
Scheduling metrics have certain limitations.
- Metrics are retrospective. With markets frequently changing, continuous performance metrics are necessary for it to be meaningful to the current climate, as past data might only reflect past markets.
- Comparable benchmarks for measuring company performance are often unavailable. A reluctance to release proprietary information forces organizations to utilize benchmarks only from their own past metrics without developing meaningful comparisons across the industry.
Weekly Risk Report
A Weekly Risk Report was collected on 254 projects at the University of Minnesota from 2005 to 2012 to capture any event that delayed a project. The report was designed to:
- Provide basic project information.
- Track the project’s schedule.
- Track all project risks on the project and how they are managed.
- Track deviations to the schedule and cost.
- Track who and what caused deviations.
- Assign a level of project severity from the projects impacts for executives.
- Capture the client’s satisfaction ratings of contractor’s ability to manage risk.
We were able to isolate the following project delay factors:
- Owner interference
- Delayed decisions
- Project financials
- Ineffective planning
- Subcontractor delays
- Labor productivity
- Inadequate contractor performance
Contractor/Manufacturer Delay Attributes
The Weekly Risk Reports revealed the following contractor delay factors:
- Construction documents oversight
- Equipment ordered late
- Scheduling conflicts
- Incorrect installation
- Soil not compacted
- Damages incurred during construction
- Forgot to install equipment
- Shortage of materials
- Delayed delivery of materials
- Delivery lost
- Missing pieces
- Incorrect sizes
- Wrong equipment delivered
Client Delay Attributes
Certain delay factors were attributable to owners themselves:
- The majority of delay factors came from the client and the client project management team.
- Clients initiated frequent scope changes.
- Most of the design and planning was done without contractor input.
Against the common perception that contractors create large project delays, contractors were found to have a slight impact on schedule performance, only about 3% of the delay rate. The majority of the delays came from the client and their project management group. The contractor has very little ability to manage and minimize these delays from the clients. What’s more, even within the delays attributable to the contractor, the manufacturer and suppliers accounted for the largest portion of those delays. So, like so many other widely held beliefs, the common belief that contractors are the cause of project delay is completely false.
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