The Global Construction Newsletter

To protect against failure, construction organizations need to make sure all components of the project have been fully scoped out prior to the start of Detail Engineering, Procurement & Construction activities.

Construction project cost overruns and schedule delays occur on more than 6 out of 10 construction projects. Compass International is frequently asked to investigate the reasons and background of this critical issue.

We have written a number of articles, white papers & book sections over the last twenty five years on this important and persistent problem. Basically, it boils down to the following main issues. Listed below are some of the main reasons why Construction Projects overrun their budgets and fail to meet their planned completion dates:

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Cost Overruns & Schedule Delay problems

• Project Scope of Work (SOW) definition has many times not been nailed down, when the estimate & schedule are being prepared.

• Lack of Front End Planning at the pre-Feed, FEED & conceptual phase of the project.

• Estimating Errors mediocre, imperfect estimating methods that do not capture the magnitude of specific (SOW) component(s) that are not adequately reviewed & challenged by Senior Management.

• Over Optimistic / EPC schedules, that reflect best case execution program.

• Field Productivity errors, using best case field productivity performance expectations within the estimate.

• Underestimating the magnitude & scope of the Field In-Direct / Field Support & safety requirements needed on the project.

• Lack of early & ongoing Risk Management methods & systems, throughout the projects lifecycle.

• Lack of Project Control (Cost, Schedule & Productivity monitoring) & corrective activities during all EPC phases.

• Flawed Contracting Strategy / construction approach, i.e. direct hire, sub-contracted work packages, Lump Sum bid, schedule of rates or turnkey D/B approach.

• Inexperienced Project & Construction Management Leadership that are many times learning on the job, that lack the vital skills to supervise, motivate & encourage all project related personnel.

• Too many or too few construction management staff to successfully manage the construction effort.

• Absence of “seasoned” Owner Management individuals to oversee, help & facilitate in steering the project to a successful conclusion.

• Numerous (SOW) changes that disrupts the continuity of the construction effort.

• Lack of adequate communications between all key project members.

• Inadequate contingency / management reserve funds that can adequately deal with minor change orders.

If your Construction / CAPEX Project needs help contact: John G. McConville CCP – Operations Director of Compass International for additional information: Telephone (609) 577 4505 private e mail mcconvil@rcn.com

We can assist with Benchmarking, Estimate & Schedule reviews / Validating Estimates, preparing Turnaround of Problem Projects, Independent Probable Cost Estimates & Reducing CAPEX costs.