Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

College of Architecture and Build Environment
Department of Architecture

Course Code:
ARCH 30383
Subject:
PROFESSIONAL PRACTICE 3
Global practice for the 21st century

Professor:
AR. Maynard M. Muhi
Student:
Arce, Zendrick Merville B.

Date Submitted:
May 20, 2023
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

5 Reasons Construction Projects Fail

For commercial contractors, both GCs and subs, a successful project is one
completed on time and within budget. The client is happy with the finished
product and the contractor walks away with a tidy profit. Everybody wins.
When a project fails, it’s typically due to conflicts and issues that cause
cost overruns and delays in the schedule.

If not properly managed, it will eventually lead to going over budget and
blowing past the scheduled date for substantial completion. Going over
budget eats into the contractor’s profit in addition to being hit with
liquidated damages for every day past the agreed-upon completion date. It
can also impact upcoming projects if a contractor’s workers and equipment
are tied up trying to finish up a failing project.

So what causes construction projects to fail? Any number of factors can

lead to project failure, but most of the time it boils down to how well the
project manager or project management team performs overseeing the
project. Even the most difficult, issue-laden projects can be successful if
properly managed.

Here are five reasons construction projects fail and how to prevent it from
happening on your next project:

Inadequate Planning
Poor planning leads to poor execution. The more time and effort put into
planning out the project, the better off you’ll be when work gets underway.
This starts by carefully reviewing and fully understanding the plans,
specifications, scope of work, and client expectations. Good planning
involves working with the client, architect, subcontractors, and suppliers to
establish construction schedules and project milestones.

Planning goes beyond just creating a construction schedule. Additional

items include conducting a risk assessment and management strategy,
developing site-specific safety plans, establishing contingency plans, site
logistics, and lining up the delivery of materials and equipment. Keep in
mind that the plan and schedule are living documents that will have to be
updated and adjusted as work on the project progresses.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Failure to Communicate
Good communication is crucial to delivering a successful construction
project. When communication among stakeholders breaks down or is
mishandled, it can lead to delays, accidents, costly rework, and unhappy
clients. Keeping everyone up to date on changes to the work or schedule
goes a long way in preventing major problems from developing that cause
projects to fail.

Develop a communication plan and establish document control procedures.

Designate a main point of contact that all communication will flow through.
All communication should be documented and shared with the appropriate
stakeholders. These include meeting notes, submittals, requests for
information, invoices, daily reports, change orders, and submittals. All
correspondence, whether it’s emails, phone calls, or in-person
conversations should be documented and saved. This goes a long way in
settling any disputes or disagreements that might arise throughout the
course of the project.

The flow of communication affects the flow of a construction project.

Problems and delays occur when people stop communicating or responding
to inquiries. Projects run smoother and get completed on time and within
budget when everyone is communicating and collaborating effectively.

Scope Creep & Change Orders

Scope creep is the continuous expansion or changes to the project’s initial
scope beyond what was initially intended. Factors that lead to scope creep
include poorly defined scope, incomplete plans and specifications, poor
communication, mismanagement of change orders, and clients changing
their minds about what they want.

Change orders are similar in that they involve changes to plans outside of
the original scope. Change orders differ from scope creep because they can
involve both additions and deletions from the original scope. They can also
be initiated by the owner, but GCs and subs can also request change orders
and they don’t always result in additional costs or deadline extensions.

Obviously, you shouldn’t take on a project with a poorly defined scope or

incomplete plans and specs. All construction methods, finishes, and
materials should be determined long before you sign a contract and begin
work.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

The construction contract should clearly state how any work outside of the
original scope should be requested and documented. No additional work
should commence until a written change order has been executed and
authorized by the client. Additional costs and timeline extensions should be
determined and agreed upon. Don’t forget to work with your subs to
determine how change orders might impact their schedule before signing off
on additional work.

Productivity Issues & Delays

We’ll ignore delays caused by events, such as natural disasters, that can’t
be controlled by any of the parties involved. These excused delays are
handled under force majeure clauses in construction contracts and protect
the contractor from having to paying damages due to not performing or
completing the project on schedule.

Project schedules are based on productivity expectations. Each task or job

requires a certain number of man-hours to complete which are used to
determine how many workers you will need to complete each one within a
given amount of time.

When workers don’t show up, get injured, or goof off on the job, it can lower
your productivity levels, cause delays and throw your schedule out of
whack. This could force you to bring in additional workers or sub out more
work which in turn lowers your profit margins.

Labor shortages and fewer skilled workers have only made the problem of
productivity worse over the past several years. Newer workers don’t have
the skills and confidence to complete tasks at the same speed as
experienced veterans on your crew. Understanding the capabilities of your
workers is vital when determining your project schedule.

Conduct background checks and provide training to your employees to

ensure they have the skills to perform their job. Assign specific roles and
responsibilities so that everyone knows what they should be doing each
day. Equip your workers with the proper tools and equipment needed to
complete tasks efficiently. Work with your subcontractors to determine
whether they have the workforce available to perform their contracted work
as scheduled.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Ignoring Red Flags

When projects are running smoothly, it’s easy to ignore early warning signs
that trouble may be brewing. Little issues can quickly snowball into major
problems if left unchecked, causing projects to fail. This can be caused by
workers failing to report issues or not monitoring projects closely.

These minor issues are often put on the back burner while dealing with
other aspects of the project. All problems should be prioritized and handled
accordingly when they arise. Project managers should be able to analyze
and troubleshoot issues as early as possible to avoid delays. Quick thinking
and good decision-making are what sets great project managers apart from
good ones.

What Makes a Construction Project Fail?

A construction project requires a diverse set of expertise, from on-site
laborers and engineers to highly skilled architects and project managers. It
is unique due to its vulnerability to climatic and environmental
dependencies. It further adds to its complexity in addition to traditional
resource-related challenges. When project managers fail to tackle them or
slight deviation in any aspect is overlooked, it can lead to project failure.

In fact, according to the research by KPMG, over 50% of engineering and

construction professionals report one or more underperforming projects in a
year. The question is, what are the primary reasons behind the failure of a
construction project? This article addresses the same question and takes a
deep dive into different ways to overcome obstacles and improve the
probability of success.

How Are Construction Projects Unique?

Construction projects are one of a kind where each site is unique. The
projects are always time-driven and cost-driven and involve a multitude of
both human and non-human resources.

Resources involved in construction projects include;

Human Resources: contractors or subcontractors, architects,

engineers, suppliers, manufactures, workers, etc.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Non-human Resources: solid materials, machinery, equipment, etc.

Before the project initiation, all the project’s necessary elements, like the
scope, resources, potential risks, safety, and the environmental impact of
the operations, are considered. The timelines of construction projects are
also typically estimated in advance. Therefore, clients are required to
prepare a design and budget at a very early stage.

In modern construction, introducing new materials, methods, and

technologies for sustainable development can lead to a growing degree of
risk and complexity. Therefore, the managers need to be innovative and
have an appropriate project plan in place. Analyzing resource constraints
and their interdependencies will also enable them to mitigate all task-
related risks and improve chances for success.

The uniqueness of construction projects also addresses the external

influences and changing requirements that can alter throughout the project
timeline. These can include technological upgrades, financial restrictions,
market volatility, climatic changes, and changing client requirements.

Now that we know the characteristics of a construction project, let’s

understand the construction industry’s underlying issues that lead to project
failure.

Causes of Construction Project Failure

A construction project can be led to failure for a vast number of reasons.
Let’s take a glimpse at some of the most significant ones:

Lack of Project Leadership

The team is driven by a project leader who has the best expertise and
sound decision-making skills. They ought to make the right decisions at the
right time as poor choices will have extreme repercussions on the project’s
progress. The lack of supervision by managers will also deteriorate the
efficiency of the project, resulting in budget and schedule overruns. This
will give rise to conflicts among team members and affecting various
interdependent tasks and overall productivity.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Poor communication of managers with stakeholders and between cross-

disciplinary teams may lead to a communication gap which further causes
organizational chaos and low productivity.

Poor Project Planning

As rightly said by ‘Pablo Picasso’- “Our goals can only be reached through
a vehicle of a plan, in which we must fervently believe, and upon which we
must vigorously act. There is no other route to success.”

Insufficient preparation or an ill-defined WBS is one of the most prominent

reasons construction projects spin out of control. Project planning includes
defining management strategy, but the lack or insufficiency of efforts
towards the below-mentioned factors leads to project failure.

Project’s scope
Project work breakdown structure (WBS)
Task dependencies
Project resource schedules
Project risks (Financial/resource)
Project procurement/delivery schedules
Site surveys and logistics.
The use of conventional tools and silos of spreadsheets for project
management often causes inconsistencies as updates are not available in
real-time. Another issue is the alteration in scope or scope creep, which
means that the scope has undergone changes in the scheduled plans.
Miscalculations in work breakdown structure (WBS), and changing market
conditions (e.g., cost of supplies and labor) contribute to a massive loss in
business continuity for the organization.

Inaccurate Resource Capacity Planning

A construction project requires a diverse set of human resources such as
engineers, architects, site laborers, and other non-human resources like
assets, machinery, and equipment. However, during task scheduling project
managers often encounter many challenges due to the lack of foresight into
the capacity vs. demand gap. It mainly contributes to shortage or excesses
of resources that result in improper resourcing treatments such as last-
minute hiring or high-cost recruiting.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Here are the ways that poor capacity planning can impact project
deliverables;

Resource shortages restricting the project’s progress.

Resource overallocation leading to lower productivity and burnout.

Poor quality deliverables
Increase project costs.
In a nutshell, inaccurate capacity planning escalates project costs and
timeline, impacts project profitability, and eventually leads to a catastrophic
failure.

Incompetent Resource Allocation

Team scheduling and resource management are critical factors in any
construction project. Inefficient resource management leads to improper
resource allocation and discrepancies in task management (WBS).

For example, Improper resource allocation or allocation of under/over

skilled resources (mismatched skillset) on projects.

Allocating all available critical resources to a single high-priority task can

also create a resource crunch, as other tasks are adversely affected. This
results in budget spikes, compromised project quality, and delayed delivery.

Inefficient Resource Utilization and Tracking

Productivity expectations from resources are based on the project plans and
schedules developed for each construction project. The suboptimal use of
resources and poor tracking of their productivity in real-time can easily
cause delays in the project timeline and the profit margins immediately
decrease.

For example, a Highly skilled resource is allocated for some low-priority

mundane/BAU work. This leads to the under-utilization of resources which
causes low productivity of competent resources. Another reason can be the
double booking or over-utilization of resources resulting in deterioration of
the quality of delivery.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Resource utilization rate tracking enables managers with real-time visibility

of resource billable time and helps them to take corrective action if
necessary. The accurate monitoring of resource productivity also depicts
the project’s financial health.

Failure in Forming a Contingency Plan

Recall the time your team worked on a high-priority construction project,
but due to unprecedented pandemic conditions and state lockdowns, project
operations came to a halt. This resulted in substantial business losses due
to the cost and schedule overruns. To put that in perspective, Now, what
will be your approach in the future?

Construction is a risky business, and when there are complex projects with
tight schedules, they get even more difficult. There are many risks that
managers can mitigate the best by forming a contingency plan. For
example; Buying insurance plans, and hiring a contingent workforce, etc.

Thus, managers need to aggressively look for potential risks while planning
the project schedule to ensure the projects are delivered on time and within
budget.

Cost Overruns and Schedule Delays

Cost overruns are uncertain expenses that exceed initial budget estimates.
It is usually caused due to changes in scope/estimates and delays in
completing tasks due to incompetent resource allocation. On the other end,
schedule delays can happen for various reasons such as weather
conditions, resource shortages, risks/conflicts, machinery failure, etc.

Budget inaccuracies, resource constraints, lack of effective communication

between teams result in project schedule delays which eventually spike
project costs.

Over to You
Construction project failures cannot always be avoided. Scope creep in
projects that cause budget overruns end in the absence of income for the
contractors. After all, there are some things you can’t foresee and plan. But
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

for all others, using an intuitive tool and paying close attention to planning
and management will help avoid a total breakdown.

With an effective project management solution, managers can access risks,

leverage the workforce, and plan accordingly. The constituents mentioned
above will help managers keep a check on the project challenges and lead
the project to succeed.

Why Construction Projects Fail

Construction projects fail because of three core reasons: people, time, and
money.

To prevent failure, companies must do their due diligence with every aspect
of the construction project before work starts. Make sure you’ve got the
right people with the right skills and experience, that the schedule is
realistic and manageable, and that the budget can handle changes or
delays.

Construction projects are not small endeavors. These are community-

changing projects that impact so many people, therefore it’s critical that
construction stakeholders make their people, schedule, and budget a
priority.

Construction project cost overruns, schedule delays, and other project

infrastructure issues are so frequent that KPMG regularly interviews and
analyzes the underlying issues in the construction industry.

A 2015 KPMG Global Construction Survey revealed some interesting

findings and statistics that should have encouraged change, but all it takes
is a quick scan of the news headlines to see that construction projects are
frequently behind schedule, over budget, and mismanaged.

Consider these key findings from the 2015 KPMG Global Construction
Survey:

60% of organizations that spent more than $10 million on capital

construction projects reported that at least one project failed or
underperformed. These failures were primarily due to personnel issues.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

In the United States, 56% of project owners said they have trouble
recruiting qualified craft labor and 45% reported a lack of planners and
project managers.
Project owners said only 31% of their projects came within 10% of budget
and just 25% within 10% of original deadlines in the past three years.
“As engineering and construction projects get bigger, the complexity grows
exponentially. The improvements by owners in planning and risk
management have been significant, yet there is further work to be done to
reduce the number of project failures and bring more projects in on time
and on budget.” Geno Armstrong, KPMG’s global chair of engineering and
construction.

Subsequent KPMG surveys in 2017 and 2018 underscored the need for
construction companies and leaders to act. This meant addressing the
underlying issues that cause construction project failure and looking for
new ways to improve how people, budgets, and time are managed,
supported, and encouraged.

Our goal at PCS is to help change the message surrounding the

construction industry. Cost overruns, schedule delays, mismanagement, and
the trickle-down impacts of these core problems do not need to be part of
construction regardless of size, scope, or goals.

Project Management Process for Construction Projects

Whether you’re managing a construction project, leading a team of sub-
contractors, or managing the people on the ground, there are core project
management lessons that can help prevent failure.

Think about how these seven project performance factors and how they can
be applied to your construction project:

Focus on business value, not technical detail : a clear link must be

established between the project detail and how it will add value to the
community.
Establish clear accountability for measured results : a stable
baseline of requirements must be established before work can
proceed, to help mitigate scope creep and change orders.
Have consistent processes for managing unambiguous
checkpoints: use an established and successful project management
process to keep the project on schedule, budget, and scope. For many
construction projects, independent oversight by a team of construction
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

cost advisers is the ideal way to manage numerous project

interdependencies.
Have a consistent methodology for planning and executing
projects: a construction plan and schedule is mandatory. Inadequate
planning is the major reason why so many construction projects fail.
Include the customer at the beginning of the project and
continually involve the customer as things change so that the
required adjustments can be made together : the more the
stakeholders and construction team work together, communicate
regularly, and provide constructive input – the more likely the project
is to succeed. This can help prevent scope creep, change orders, last-
minute design changes, and other issues that result in schedule
delays and cost overruns.

Manage and motivate people so that project efforts will experience

a zone of optimal performance throughout its life : you need skilled,
experienced, motivated, and committed people working on every
aspect of your construction project. Project success comes down to
having the right people on the team – take the time to find the right
people and do not cut corners or settle during the hiring process.
Provide the team members the tools and techniques they need to
produce consistently successful projects : every person on the
project must know why they are part of the construction project. Make
sure roles are clearly defined and that people are empowered to
communicate openly.
Ultimately, to be successful, a construction project must stay focused on
the basics – people, time, and budget.

To get this right, you need to do the work before the project starts and
remain committed to consistent communication, oversight, and review
during the project. These project management processes can help prevent
failure and identify any barriers to success.

Independent Oversight for Construction Success

It all comes down to people, time, and budgets. When you get this right, it
is much easier to prevent scope creep, to limit change orders, and to be
part of a successful construction project.

However, it can be challenging to take a critical and unbiased view of your

construction project.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Trust PCS to provide independent and honest analysis, feedback, and

support through all phases of your construction project:

Assist with feasibility studies and review designer sketches and

measurements to determine project scope.
Study architect and engineer plans determine the costs involved and
set an overall estimated budget.
Benchmarks your project with others like it.
Plan costs to help the design team stay within the project or program
budget using an iterative process.
Prepare a final Opinion of Probable Cost report.
Assess cost effects when project changes occur.

Resolve scope creep with contractors.

Manage and resolve disputes between suppliers, contractors, and
designers.
Provide a thorough review of the project showing the actual costs.
At PCS, Construction Is Personal™. We want you to know that we care
about your construction project. We will listen to you and work for you to
ensure that your construction project is successful.