Is construction built on delays?
So, Crossrail is late, and the new football season has started with Spurs kicking off in temporary grounds while their new stadium is finished; both these examples aren’t a great advert for the current state of UK construction.
Today’s announcement that the Crossrail opening is delayed from December 2018 to Autumn 2019 will come as no surprise to many. Spurs and Crossrail are not the first and certainly won’t be the last of our major projects to run slightly off course but here’s some ideas as to why I think delays and budget overruns are part and parcel of construction and why as an industry we really need to look at how we work.
Pricing to win rather than the real cost
Trophy projects that will help a construction company enter a new market or give the industry the perception that their company is at the top of the game; are often reasons given to under-price a job to win it rather than price for the real actual cost to build.
The idea is that either they can then value engineer the design i.e. cut their costs to the bone, squeeze their supply chain to do more for less to claw back some margin and profit. Or the alternative more litigious approach where they constantly are trying to find contractual loopholes and ways to charge for changes to the scope as much as they can to close the gaps on potential losses.
This approach is still prevalent in the construction sector and let’s be honest the amount of profit warnings, write offs and lean years that we’ve been seeing from major contractors has shown that this approach doesn’t necessarily work out.
Being too optimistic
No one likes the truth; it often hurts. And for clients a dose of reality can make contractors come across as negative problem creators from the outset rather than solution providers, so they may well go for the contractor who they perceive to be the optimist but in reality, may turn out to be a fantasist. Construction is an industry where telling the client the cold hard truth is often frowned upon, it’s far easier to bury ones head in the sand!!
Unrealistic schedules and scopes
Many of our major projects are set up to fail from the outset with clients having unrealistic expectations and timescales in which contractors are meant to get things done. I’ll never forget one major project that I was involved in where the original client scope was for 18 months and it ended up running for 10 years!! When bidding for work the realistic contractors, who say a programme can’t be done or that the project scope is inadequate are often swept aside in favour of the ones who say it can.
Clients are often prepared to pay over the odds and ignore the potential risks to meet their desired timescales, but this is a risky game with them having to face last minute delays and penalties when their unrealistic initial timelines ultimately cannot be met. Quite often it’s a game of I told you so.
Major construction is full of unknowns
With major projects like Crossrail where new buildings, track, signalling and everything else are being created and having to be integrated with existing stations, infrastructure and signalling; is it any wonder that there’s been delays. Things do crop up and nowadays not that much contingency is put aside to cope with these issues and their inevitable impact on the programme.
Skills shortages
There is a major skills shortage brewing in construction. The old guard are retiring and let’s be honest – the construction industry has a bit of an image problem and just isn’t as appealing to the younger generation. There is a widening skills gap so when as an industry we need to install major systems and software; we don’t always have the capacity in terms of qualified trades to deliver all the jobs currently on UK PLC’s books.
Competition from other major schemes
Following on from the above-mentioned skills shortage – there’s also competition that major schemes face with each other. We’ve now got major projects in London and outside of it including mega projects like Hinkley Point C in Somerset. There are only so many electricians, mechanical or electrical engineers to go around so there’s major competition for contractors to not only attract labour but to also keep hold of them at a reasonable rate. When you’re paid by the hour a few extra quid an hour and an offer of free accommodation can easily entice you to join another project.
Safety critical systems and testing
Modern electrical systems such as signalling as well as safety critical systems not only need to be installed correctly but also need to be tested extensively which means for major projects which will be used by tens of millions of people they require a lot of time for critical testing.
Crossrail is a £15bn project and announced a £600m budget increase recently. They admitted that their delay to 2019, announced today was said to be down to not enough time for integration and testing. This is no surprise with the many interfaces that they’re now tackling to join existing infrastructure to new and connecting the new rail infrastructure to both Transport for London’s and Network Rail’s systems and stations etc.
So, what next for major projects?
I love construction and do truly believe we have some of the best companies in the world delivering major projects and programmes. But there are many systemic failures that really do need addressing by everyone across the board from the Government to consultants, contractors and everyone in between. Being realistic should be something that everyone does as standard and prospers because of it. Major projects should come in on time and on budget but that takes immense skill and honesty to make it happen something that we currently don't promote.
