In the United Kingdom, the IHS Markit/Chartered Institute of Purchasing and Supply Purchasing Managers Index measures the performance of the construction sector and is derived from a survey of 170 construction companies. In August 2017, the index dropped to a one year low of 15.1 down from 15.9 the previous month and well off the expected 52 that was forecast.
A significant drop in commercial work created the drop in the index but this was offset by a rise in house building.
There are graphs and statistics to back this up are on this page.
With this in mind, there has never been a more important time to ensure that all costs are kept to a minimum. A recent survey by Cornerstone Projects (A leading supplier of utility plans to the construction industry) has highlighted that delays in construction projects are a major cause of escalating costs.
The survey also identifies the main causes of delays in major construction projects over the last few years.
Contribute to the survey
The results of the survey have been sent to a number of publications with many responding to say that the results are accurate and reflect the general feeling within the industry. The feedback suggests that these issues are, in fact, endemic across the industry in general and so with this in mind we have reopened the survey in order to get a more comprehensive understanding fro across the industry.
With the help of several industry publications we will be promoting the survey to as wider audience as possible over the next few months and updating the results as we go along.
If you would like to participate in the survey please click the link below.
Time performance is one of the most crucial factors when working on a project for the contractor company working on it. It is every contractor’s (as well as customer’s) aim that work is completed in time.
However, a good number of projects experience time overruns. The survey conducted included 61 respondents, all representing various players in the construction industry. 39.6% of the respondents were primary contractors, 32.8 consultants and 21.3% were designer. The remaining 6,6% was made up by subcontractors.
How prevalent are delays?
Out of all of the respondents, only 9 of them said that they have never been involved in delayed construction projects. The remaining has at some point seen their projects suffer from delays. Clearly, the prevalence is quite high, especially considering that these are professional companies.
The time overrun
From the survey, it was evident that the estimated delay, as a percentage of the estimated delivery time is less than 20% in most cases. Only 9.8% of the participants had experienced projects that went beyond 20% of the expected time. This is consistent with several studies conducted in other countries that suggest a 10 to 30% delay in delivery of some projects.
Delays are costly
There were varying responses from participants on the costs due to delays. This may be attributed to the fact that the financial consequences of delays are determined by the terms of the contract, and insurance covers of the companies. Sometimes, the client bears up to 90%.
The findings from the survey suggest that delays can cost the companies up to 20% more than the estimated cost. The largest group, 31.1%, point to a 0-10% increase followed by 26.2% of the respondents pointing to an 11-20% increase. Only 3.3% of the respondents suggested a more than 50% increase from the initial cost.
All of these increments are significant enough to affect profitability in the industry and show how deep the problem of delays cuts.
Delays are anticipated by every company
It is expected that every contractor or service provider should be aware of delays, but the extent of its anticipation is a shock. Most respondents reported a very high percentage of projects being subject to delays. For instance, one result indicated that over 91% of the projects are subjects to delays.
The largest group of respondents expected delays in up to 10% of their projects. This was followed by the second biggest group of the respondents, who said they expected 20-30% of their projects to be affected by delays. The next most common estimate was 11-20% being selected by 16.4% of people asked. This in general means that most contractors anticipate that up to 30% of their projects are subject to delays, which is not a good sign.
Is there apathy on the matter?
With the stakeholders being knowledgeable on the high prevalence of delays, it is expected that they would be taking measures to curb delays where possible. However, there seems to be little being done to prevent these projects from overstaying their welcome.
The only measure being taken by most companies is insurance. Most contractors and subcontractors have Contractor Controlled Insurance Programs (CCIPs), which may be making them less worried about the delays.
Reasons for the delays
There are multiple reasons that could factor into the delay of projects. In the survey, respondents were asked to specify the first, second and third most significant factors that could cause project delays. The findings are as follows:
1. Poor original planning/unrealistic scheduling
This was selected as the most common factor that causes project delays, being chosen by almost 40% of the survey takers. This is a common occurrence in the industry, especially in contractor-led procurement projects.
Contractors often quote short timelines when bidding for this job. In the spirit of competitiveness, they end up setting deadlines that cannot be met. In other cases, contractors are given jobs with predetermined timelines that can be unrealistic and hard to meet.
2. Lack or delay in information about the project
Not having the full information about a project was selected as the second reason, though it almost came in first by being selected by around 35% as the number one reason.
This is usually a shortcoming on the client’s side. It is the client’s duty to provide the drawings, design documents, and approvals in time. The client also has to provide all the relevant information about the construction site. Failure to meet this requirement often leads to delays.
3. Changes to the initial specifications
Changes to the initial specifications are a not so rare happening. Adjustments may be made to the original design, or material choice depending on the client’s needs or the contractor’s recommendations. This often affects the already tight schedule. Sometimes the changes may have financial implications, which cannot be immediately met, leading to the stalling of the project.
4. Resource availability
Shortage of material supplies or inadequate labour challenges can be encountered during construction. These often lead to slow progress or in the case of shortage of key supplies, a total pause.
Who is to blame?
There are several parties in every project, and any of them can cause delays. From the survey, over 45% of the people asked pointed to the client as the responsible party. The principle contractor came in second at 19.6% and the designer third at 16.4%.
There findings do not add up when compared with the reasons respondents gave for delays though. Most of the reasons given were those caused by contractors and designers. In this section however, the clients are pointed at for being the cause of delaying the projects.
Possible ways of mitigating the delays
From the results, the first choice that the respondents consider effective was improving information such as site investigations and drawings before work.
The second choice was better scheduling and project management, while both choices suggest better preparation and certainty before getting down to work. The other significant suggestion was improved monitoring and regular updates with all parties involved. This is pointing to the idea that a more cohesive approach in construction might minimise delays.
In conclusion, the prevalence of delays in construction projects is high. The companies are aware of this, and the reasons that cause these delays. It is important for all parties to ensure to get all relevant information and documents before the start of the project. This seems to be the best solution.