According to McKinsey, more than $57 trillion will be required for infrastructural projects globally by 2030. Out of this, two-thirds will be required in developing countries. This presents a huge opportunity for contractors, especially when they win lucrative mega projects. Megaprojects, though lucrative, do come with their own set of risks.
For example, it has been reported that nine out of every ten megaprojects have budget constraints. Railway projects have been found to exceed budget quotas by up to 44%, while bridge construction assignments have been observed to surpass financial allowances by approximately 35%.
Though there are hundreds of reasons why a construction project can go off track, here are three main reasons.
1. Overcomplexity of a project
To win contracts, contractors may hide some of the costs of doing the project so that their bid appears relatively affordable compared to others. In such a scenario, a project can be prone to failure. This mainly happens when dealing with lucrative and competitive government tenders.
Another example is when a megaproject involves multiple government agencies. Such projects automatically come with an augmented amount of complexity because a delay caused by one key player can stall the entire project.
2. Poor execution
Another reason why large construction projects stall is poor execution by contractors. This goes back to the low budget they presented when bidding to win the contract. When the contractor wins the bid, they are subsequently forced to cut corners to ensure low costs to protect their profit margins. This leads to sacrifices in quality.
3. Poor organizational design
Another problem that causes large projects to go off track, is the rigid organizational structure used by some contractors. Some of these organizational structures make it difficult for the project sponsor and representatives to be directly involved in the project.
As a result, the subcontractors will always look out for their best interests, usually working more hours to earn more money.
To mitigate these common mistakes, here are seven strategies aimed at keeping large construction projects on track:
1. Use an AI construction optioneering platform
To ensure a mega construction project is successful, it is important to upgrade your strategies. Modern technological innovations, such as an AI-based construction platform, are specifically designed to reduce construction risks and delays.
An example of an AI-based optioneering platform that you can use to reduce risk is https://www.alicetechnologies.com/product/manage. The platform can be used for large-scale industrial, commercial, and residential project planning and scheduling purposes.
2. Get your contracts right
Many contractors worry about starting construction, forgetting that a contract is, in truth, equally essential. The contract is important because it clearly defines the parties involved, their expected duties, and the risks they carry.
The project owner must ensure that risks associated with unforeseen circumstances are not passed to the contractor alone. The best way to avoid a dispute is to ensure that risks are fairly distributed between the owner and the contractor. When neither party can control risk, it should be carried by the project owner.
3. Have a reasonable schedule
A construction schedule is a plan for implementing a construction project based on specified timeframes and milestones. This needs to be done properly, with attention paid to several factors that may impact the timeline. Otherwise, you risk cutting corners to speed up the process, which can bring about poor work quality.
Another factor to consider is the time it takes to get the necessary permits required to start construction.
4. Have key performance indicators
A key performance indicator (KPI) is a quantifiable measure used by construction managers to gauge their performance based on set goals. KPIs will vary depending on what needs to be measured. Contractors can use several KPIs such as safety metrics to know the safety rating of their construction project. Other KPIs that can be used are:
- Bid and take-off performance
- Employee satisfaction
- Work quality
- Team performance
5. Have clear and open communication channels
If you are working on a major project, you can expect to be in charge of hundreds if not thousands of personnel. How do you ensure that contractors can communicate effectively with subcontractors and that subcontractors can communicate effectively with their workers? A cloud-based communication platform can help.
Finding a suitable cloud-based communication solution can make it easier for all key players to assign tasks and share documents. Another feature to consider is the security of your program and how effectively it is able to streamline your objectives. It should be mobile-friendly so that involved parties can access it swiftly and conveniently.
6. Peer review the design
When you peer review a design, you invite independent engineers and architects to review your plans and identify inconsistencies or errors. Peer-reviewing is important because it can save you a considerable amount in repair costs. If you do not peer review the design, you risk creating conflict as the project progresses, and this can cause customer dissatisfaction.
7. Document daily activities
Another simple strategy to ensure that your project is on track is to create a daily report. You can make this a requirement for your subcontractors to track your team’s progress. The best way to do this is to use an online platform to automate this process. Using such a platform will make it easy to identify how many hours workers were on-site and pinpoint who may have disregarded safety precautions.
In a nutshell, the larger a construction project, the riskier it is. Therefore, every general contracting team can benefit from a construction simulation and optimization platform. You will reduce risks and save time and money. Also, such a platform will make it easy for you to identify alternatives and options that would not have been easy to identify if you were to do it manually.
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