Project complexity is pushing cost and time uncertainty to the limit, says Bill Zuurbier, Co-Founder and Managing Director of risk management consultancy Equib.
Many local-authority construction projects are complex by nature, typically involving a long list of partners — ranging from contractors involved in Engineering Procurement and Construction (EPC) to sub-contractors, logistics firms and other service providers. For Project Managers, this can increase the risk of cost and time overruns.
With a variety of stakeholders involved in the sign off and procurement of many local authority-backed projects — ranging from small-scale housing schemes to new hospital developments — the need for good governance is essential. Individuals with responsibility for finance, health and safety, Building Regulations and design all need to have their say and give their approval. Whilst this process is obviously important and helps to ensure taxpayer’s money is well spent, it can increase the risk of costly delays.
Problems can arise if stakeholders fail to acknowledge that whilst governance procedures are designed to mitigate risks and typically involve setting budgets and timescales, they can also cause delays. To avoid such issues, Project Managers should prepare detailed plans, which should involve conducting a thorough stakeholder analysis and risk assessment. As part of this planning process, the Project Manager should consider any risks that could de-rail the plan — such as unforeseen breaks in supply or demand for design re-works, triggering the need for further rounds of approval. To minimise the risk of such delays, the project team must have clear sight of how decisions will be taken and who they can go to for decisions to be made when required. Under investment in internal and external expertise can also add significant risk to projects.
For Project Managers used to working on local authority-backed programmes, some degree of procedural disruption is expected. However, some stakeholders may be reluctant to admit that a project is going to cost more or take significantly longer to complete than they had hoped. Even thorough use of dynamic risk modelling tools, such as Monte Carlo simulation, may not be sufficient to persuade those involved that a project could take anything from two to 10 years to complete, depending on what might happen along the way. Choosing to ignore such risk analysis could have serious implications however, leaving a significant dent in the council’s finances and impacting public perceptions of its activities.
Another area of project complexity that can lead to an increased risk of cost and time overruns is a lack of data visibility. The systems used on most projects are stand-alone, function or task-specific, with little or no cross-platform integration. This creates a fragmented picture and makes it harder to access and share reliable management data about cost variations or other changes that could have a bearing on the outcome of the project. This could result in one function believing the project is running on time and on budget and another foreseeing major hold-ups or cost discrepancies. To optimise efficiency, Project Managers require access to a ‘single source of truth’, seeking to establish a platform to facilitate this at the outset can significantly reduce many of the common risks that de-rail projects.
Wider application of BIM or Building Information Modelling (BIM), which involves the creation of a detailed digital description of every aspect of a building or project, should be utilised, where appropriate to improve data management and visibility. The ability to integrate 3D models with time and cost data allows risks to be identified across the lifetime of the project. As well as helping to improve efficiency, access to reliable data informs and de-risks the planning process, project delivery and operations.
Time and cost considerations are intrinsically linked in construction. If a project is running to time, it is more likely to come in on budget and vice versa. Whilst complexity is clearly a challenge for Project Managers, doing what they can to raise awareness of stakeholder and project governance-related risks and increase data visibility, can improve outcomes significantly.