What makes a construction project successful?
Many construction projects are unsuccessful. (Based on a
study by KPMG last year only 31% of respondents’ projects over the previous
three years came in within 10% of their budgeted cost and only one quarter of
projects over that period came in within 10% of their original deadlines.) This
judgement is based solely on the fact that they were finished over budget or
late. But even when projects are finished within budget and on time are they
necessarily a success? Well that answer often depends on your association to
Let’ ask these questions
· What happens when a project is finished on time and within the customer’s budget? Certainly the customer may regard the project as being a success. But what if the contractor lost money – obviously the project isn’t a success for the contractor.
· What if the project is completed on time, within budget and the general contractor made money, but some subcontractors lost money? Well of course the project wasn’t successful for the subcontractors! What if the subcontractors weren’t paid – well then the project definitely wasn’t a success for them.
· What about if a worker was killed while working on the project? The project certainly was a disaster for the worker and their relatives and probably has ramifications for the company that employed the worker. Can we regard a project with a poor safety record and injuries as a success?
· Of course we often have projects delivered on time and within budget which don’t deliver value for money. Politicians often force through projects that are clearly unsuitable for the environment, the neighbourhood or simply are projects that can’t deliver what they are supposed to deliver or are unaffordable. The world is cluttered with white elephants. Again I would label these projects as unsuccessful, no matter how successful the construction phase was.
· What if the construction of a new apartment complex is completed successfully, but the developer cannot sell the apartments because the apartment market is oversupplied, or the quality, style, or size of the apartments doesn’t suit what buyers are looking for?
Indeed there is the opposite, where some of the most disastrous construction projects have turned out to be hugely successful. Consider the Sydney Opera House – named in the Hall of Shame of landmark building projects with major cost blowouts (the project was completed 14 times over budget and 10 years late), yet today the Sydney Opera House now stands as a city icon (even a national icon) recognised worldwide, a mega tourist attraction and successful venue.
Every project has many stakeholders which include:
· The customer.
· The contractor.
· The design team.
· Those who will directly benefit from the project.
· The community.
· The environment.
· The customer’s operations staff.
Each of these stakeholders often has competing demands that can jeopardise the success of a project. We want a win-win for all stakeholders. Is this possible?
Does the client have to get the project delivered under-budget at the expense of the contractor? Does the contractor only make a profit at the expense of their subcontractors and their workers?
Does the community want a cheap project that is a blight on the neighbourhood?
Is the design team interested in the long-term maintenance of the facility?
Dealing with stakeholders
Unfortunately often all stakeholders aren’t considered, while in other cases some stakeholders are allowed to dominate the process at the expense of others. In some instances personal interests and egos are allowed to dictate the project. Running through all of this is money – everyone wants the cheapest price and the most profit.
There needs to be honest dialogue with the various stakeholders to ensure the best outcomes for all parties and the project. They might not be the desired outcomes at the start of the process, but the outcome should be best result for all parties after due compromises have been made.
What defines project success?
A successful project is one which:
· Is finished on time.
· Is completed within budget.
· Is of good quality.
· The facility achieves what it is supposed to.
· Adds value to the community.
· Resulted in profits for the contractors.
· Is completed safely
· Makes efficient use of resources
· Benefited the workers – wages, learnings and promotions
· Doesn’t damage the environment
· Doesn’t have major disputes – labour, legal or contractual
· Results in long term success for the project achieving:
o Commercial success.
o Process efficiency.
o Minimal ongoing maintenance over the life of the project.
o Operational safety.
o Sustainable operations.
Indeed a Win-Win for all parties.
Is it possible for a project to tick all the boxes and be successful in every respect? Good project management with open and honest dialogue and a team that is focused on the project and not on individuals and companies is surely a good start. One stakeholder’s success shouldn’t depend on another’s failure.
What do you think?
Have you delivered a truly successful project?
What disastrous projects have you been involved with?
Paul Netscher is the author of the popular books 'Successful Construction Project Management: The Practical Guide'and 'Building a Successful Construction Company: The Practical Guide'. 'Construction Claims: A Short Guide for Contractors' has just been published. These books are available on Amazon and other online book stores. Paul publishes articles regularly on LinkedIn and his website. Visit www.pn-projectmanagement.com to read other similar helpful articles.
Paul writes regular articles for other websites, gives lectures, mentors, and is available for podcasts and interviews.
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2016 This article is not to be reproduced for commercial purposes without written permission from the author.