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Topics: Construction
In the Construction industry, why do you think most projects fail to meet schedule and budget?
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Ricardo McKlmon
PMI Team Member
Manager, Construction Strategy| Project Management Institute Kensington, Md, USA
In your experience, why do most projects fail to meet schedule and budget?
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Rami Kaibni
Community Champion
Senior Projects Manager | Field & Marten Associates New Westminster, British Columbia, Canada
Ricardo, Interesting question. How did you come to the conclusion that MOST projects fail to meet schedule and budget? Some, might be a more reasonable assumption.

Failing to meet project schedules and budgets can be attributed to many factors of which most are project specific so its not a one-size-fit-all or a clear cut when it comes to why.
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1 reply by Ricardo McKlmon
Feb 07, 2024 2:04 AM
Ricardo McKlmon
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Rami and Kiron
Here is the source material - 2020 PMI Pulse of the Profession (pulse-all-comparison-reports-final.pdf (pmi.org). While its important understand the root cause, thank you for providing some recommendation/ solution to overcome this.

Ricardo
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Kiron Bondale
Community Champion
Mentor| World Class Productivity Inc. Welland, Ontario, Canada
Ricardo -

To add to Rami's feedback, we need to clarify which targets we are referring to. If it is the original (pre-planning) desired time frame or funding expectations, those are usually subject to the normal distribution ranges related to a rough order of magnitude estimate so we would expect a reasonable percentage of projects to have final actuals which fall outside of those.

However, assuming an appropriate level of planning has been done including the selection of a suitable gating or phase-based delivery approach, effective risk management is practiced through the life cycle including sufficient contingency reserves and schedule buffers established, then unless there are some significant negative unknown-unknowns which materialize, the project should not get into too much trouble.

Kiron
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Ricardo McKlmon
PMI Team Member
Manager, Construction Strategy| Project Management Institute Kensington, Md, USA
Feb 06, 2024 4:13 PM
Replying to Rami Kaibni
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Ricardo, Interesting question. How did you come to the conclusion that MOST projects fail to meet schedule and budget? Some, might be a more reasonable assumption.

Failing to meet project schedules and budgets can be attributed to many factors of which most are project specific so its not a one-size-fit-all or a clear cut when it comes to why.
Rami and Kiron
Here is the source material - 2020 PMI Pulse of the Profession (pulse-all-comparison-reports-final.pdf (pmi.org). While its important understand the root cause, thank you for providing some recommendation/ solution to overcome this.

Ricardo
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Sergio Luis Conte Helping to create solutions for everyone| Worldwide based Organizations Buenos Aires, Argentina
Just because after the first estimation the numbers remains "writting in a stone" withour taking into account that estimations must be constantly reviewed. At least that was my experience when construction firms hire my as program/project manager consultant (what can be reading firefighter putting out a fire...hehe)
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John Malatji Projects Portfolio Manager | Noko-imp Johannesburg, Gauteng, South Africa

Ricardo
In my experience, the main issues are Planning and Risk Management.

Projects are rushed through planning and underestimated during the stage-gate approval processes.
1. In order to meet funding requirements, the project scopes get too limited to deliver the objectives sufficiently. This limitation becomes evident when Operational Readiness is conducted towards the end and scope changes become inevitable in order to have a fully integrated project.
2. In order to meet imposed tight timelines, gaps are covered with optimistic assumptions. Contractors also, in order to win tenders, tend to agree to meet unrealistic timeframes given by clients.

The Risk Register in Construction Projects do not cover the business risks adequately. This is partly due to lesser involvement by relevant stakeholders. Some of the Quantitative Risk Assessment specialists do not understand the nature of the projects and therefore build errors into their models.

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Rahul Barve Construction Manager| Penta Ocean Construction Co Singapore, Singapore
Dear Ricardo,
In my experience, the most prominent opportunity to improve the project success would be by improving the tendering process.
The largest projects within the Construction industry tend to be driven by governmental agencies. This means that the tender process requires a high degree of transparency. Although that is a good intention, one of the negative impact is on a healthy "Requirements gathering" since the Contractors do not have a easy two way communication with the Client until finally the Contract is awarded in a fair manner. By this time, the schedule and budget are already fixed.

Moreover, I completely agree with John that risk management is limited by the need for winning the tenders.

In addition, the Construction projects deal with working with existing environment which is not as predictable project habitat as projects in other industries. For example, a similar budget project of building a ship would have fixed design using a reliable material (steel) and thus is more predictable.

At our project, from a Main Contractor's perspective, the most important things to mitigate these risks are:
1. Maintaining excellent and constant record keeping and communication with the Employer to mitigate risks together as they are discovered.
2. Use extensive past project history and realistic estimations to prepare tenders within reasonable risk exposure.
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Richard Ruchhoeft Project Manager| LJA Engineering Houston, Tx, USA
Ricardo,
Them's fighting words. First of all, your assertion that most "projects fail to meet schedule and budget' would imply that less than 50% of the projects are either completed on schedule or on budget. The data you are referencing refutes that claim, though the percentages published are probably lower than I suspect construction as a whole is experiencing.
I suspect that the data within the report is a subset of all construction, as construction projects with a sizable repeatability are seldom outside the budget and schedule of the owner, though quite often will have a change order or two increasing the construction cost after an award to a contractor. Think in terms of gas stations and fast food restaurants, and even greenfield housing developments. There is enough data out there that the owner will "get it right" 80 to 90% of the time. Normally, the bust occurs on the business side; for example the customers aren't there or a pandemic changes the whole business model.
The larger, and sexier, contracts by governments and large organizations (think oil) tend to off budget and schedule more regularly. I would also add unsophisticated one-time small businesses to this mix, though for different reasons. The small guy is in the business for something unrelated and is trying to save upfront costs by doing it himself. That type of situation models well with the report -> no project management, PMO, etc. will lead to a late and over budget (and unsatisfactory) project. The big guys have the sophistication, but often have to use outdated tools to predict a project that will be realized years to decades later. I worked on a billion dollar governmental construction project. The planning for this one included private money so it occurred at a break neck speed of 10 years. Normally, planning spans 20 to 30 years. Since it was being constructed so early, the initial budget was pretty much spot on. If the project had been funded by the Federal Government, the timeline definitely would have shifted and become more expensive. So therefore, I am not at all surprised with the findings of the report, that only one in two massive projects is constructed within the original budget value without accounting for inflation.
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Kristian Soini Australia
Rushing through the design and planning to meet arbitrary deadlines set by stakeholders to please the client.
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Amit Khedekar Dy. General Manager| Reliance Industries Ltd Mh, India
Hi Ricardo,
Construction field being very dynamic is equally full of uncertainties right from the initiation. Frequent scope changes results in change in the design, change in quantity, change in materials, etc, This leads to new procurement which comes with lead time for each new material required. Thus, disturbing the budget and schedule.
Apart from this, sometimes there is a change in the stakeholders (new people getting involved). New stakeholders may dictate their requirements or change the requirements or change the priorities in approvals. This also, leads to failure in achieving schedule and budget.
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Navaid Ur Rehman Additional Director / Project Management Expert /Writer /Trainer| Confidential (Pakistan) Karachi, Sd, Pakistan

The construction industry faces numerous challenges that can contribute to projects failing to meet schedule and budget.
ere are some common reasons for project delays and budget overruns in the construction industry:



-Poor Planning and Design
-Funding
-Scope Changes
-Unforeseen Site Conditions
-Contractual Issues
-Supply Chain Disruptions
-Weather Conditions
-Lack of Communication
-Inadequate Risk Management
-Regulatory and Permitting Challenges
-Labor Shortages
-Technological Challenges
-Economic Factors

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