Managing a construction project and schedule seems straightforward and simple: estimate the job, bid on the job, win the job… do the job. And most importantly, finish the job by bringing it all in on time and under budget. Yet construction projects tend to be anything but simple.
Highly litigious and often fraught with delays and disputes, schedule overruns are not all that uncommon in the industry. While delays, disputes, and overruns have always been a part of the construction industry, SmartPM notes that it wasn’t always so intense. There was a clear shift when the industry went into decline.
And in fact, schedule overruns in the construction industry are now a global phenomenon the world over. One study cites that, the vast majority of construction projects completed in 20 countries over a 70-year period experienced cost overruns. And another study also found that 9 out of 10 projects or 86% experienced cost overruns as well.
Moreover, the longer the duration of the project and the larger the project, the more vulnerable it is to risk. Because construction projects involve a lot of different moving parts and also - as is the case of large commercial projects —usually extend for many years, managing project schedules can become quite tricky if not excessively complex.
Thus, in the remainder of this post, we’ll detail what construction overruns are, as well as the difference between cost and time overruns. Then we’ll outline five tips to avoid overruns when managing your construction project schedule going forward.
“ 9 out of 10 projects experienced cost overruns.”
What is a Project Schedule Management Overrun?
A broad definition of schedule overruns is: The extra time required to finish a given construction project beyond its original planned duration.
To be more specific, When the stipulated completion time of a construction project is pushed forward, the project has experienced a schedule overrun. Schedule or time overrun is then the late completion or late delivery of a project.
Alternatively, cost overruns occur when a project completes at a higher cost than what was budgeted. One or both can occur when managing a project schedule and often both occur at the same time, with one (cost overrun) usually being the direct result of the other.
Now that we know what schedule overruns are, how do we avoid them?
5 Tips to Avoid Construction Schedule Overruns
#1 Hire Expert Designers to Limit or Eliminate Defective Designs Early on
What happens at the genesis of the project can make a world of pain later on down the ‘schedule line.’
A critical factor to identify cost overrun is breaking ground on and executing incomplete project designs and/or deficient designs. Incomplete or deficient designs always result in substandard work. More importantly, errors made during the design process can have an exponential impact later on during the final phases of the project, as the longer the errors go on undetected the greater the chance for rework.
To avoid design deficiencies or errors, employ an experienced and qualified designer to draft highly accurate and detailed designs from the start.
#2 Check & Manage Your Project Schedule Quality
It's all about that project schedule.
Starting with a good high-quality schedule is key to project success and managing schedule overruns. To avoid delays, you want to check and ensure that your initial project estimates, task durations, critical path, planned costs vs actual, and resources in the project schedule are all within best practices guidelines and acceptable levels before you begin your project.
Start off on the right foot and make sure to assess the quality of your schedule, by checking it against the DCMA 14-Point Schedule Quality Assessment, or by running it through project schedule analytic software such as SmartPM.
“Rework in construction typically costs about 5% of the overall contract value.”
#3 Proactively Manage Rework
Actively work so you don’t have to re-work.
If you were not fortunate enough to avoid rework, the best approach is to manage it proactively. Rework, or the process of redoing or correcting work that was not done correctly is one of the biggest reasons for schedule overruns. Rework can emerge from both project design issues and/or project construction problems.
As Kitchell Progress states, “Rework is the single largest biggest contributor to delays, and the time/cost is not recoverable.” And furthermore, eSub illustrates how rework will impact the project's bottom line in the form of time and cost overruns, “ Rework in construction typically costs about 5% of the overall contract value. And the time or schedule overruns are worse, at roughly 7.1% of total work hours.”
To avoid this project pitfall, and practice quality control it’s best to take a proactive approach to building by diligently inspecting, recording, and correcting non-conformances as the work is placed.
#4 Anticipate and Minimize Schedule Change Disruptions
There’s no accounting for… change orders.
Changes to the project scope and schedule are right up there with some of the biggest reasons for project schedule overruns both in time and costs.
A primary change occurs when an owner or contractor introduces new specs, fixes, or requirements after project documents have been finalized and the schedule is completed.
This of course results in additional costs to cover the new expenditures and will send budgets soaring.
Brigiddetails two excellent ways to avoid and account for change orders. New technology now allows modeling and simulation of various scope changes during the pre-construction phase which can greatly prepare project managers and schedulers for these risks. Additionally, it’s recommended that project schedulers anticipate and prepare for change allowance. Buffer your construction project schedule against overruns early in the project cycle by allocating adequate resources both in time and cost to compensate for these adjustments.
#5 Unforeseen and Extreme Events out of Your Control
From record-breaking inflation and extreme weather to untenable site conditions and supply chain disruptions, every construction project has been hit with ‘unforeseen conditions’ and ‘extreme event’ surprises adversely impacting their construction project schedules.
While it behooves every project management team to perform risk assessment for unforeseen conditions and events, modeling can’t possibly forecast every extenuating circumstance such as an unprecedented inflation rate increasing materials costs; or a viral pandemic and war introducing schedule overruns largely out of their control.
In their new eBook, Managing the Construction Supply Chain, SmartPM breaks down ten strategies to successfully navigate these types of unprecedented ‘extreme circumstances’ such as supply disruptions brought on by a global pandemic.
They argue for strategic planning, early collaboration and decision-making, as well as practicing reliable supply chain management and holding large safety ‘stores’ of stock materials. Emphasis is placed on having a secure supply chain vs. an efficient one. Safe is better than sorry. If you are interested in learning about all ten suggestions check out the eBook here.
Just as in life, even with the best-laid plans, problems and surprises happen to the most seasoned project schedulers and on the most high-profile construction projects. The question is not whether you will face project crises that cause schedule overruns- because you will -but instead how prepared you are to respond to them when they do.
As the expression goes: An ounce of prevention is worth a pound of cure. With these 5 tips to manage your project schedule, you will be on your way to successfully avoiding future schedule overruns.