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Delays on Large Construction Projects

by A. Sullivan and F. C. Harris
University of Technology, Loughborough, UK

Received February 1985 Revised May 1985

The main research effort into the United Kingdom's construction industry's performance is undertaken by the National Economic Development Office (NEDO). In respect of large projects, NEDO have concentrated upon the performance of the process industries and have looked at the problems facing mechanical plant contractors. This article is primarily concerned with performance on large contemporary construction projects and the problems experienced by civil engineering contractors during construction. Most of the information was based on a series of interviews with major construction industry clients, contractors and consultants along with information derived from questionnaires. The conclusions recommend the need for more team building and a greater integration of skills particularly at the early stages of planning a project and developing its design. Introduction Over recent years large construction projects have become more complex as new technologies have demanded concentration of resources into single facilities, for example, power stations, petrochemical plants, container ports, airports, etc. A striking feature of many such projects has been the noticeable occurrence of cost and time over-runs, excessive in a number of cases. This article addresses these problems, and reports on a study undertaken by the authors[l] to try to isolate and identify causes of the inefficiency. The emphasis is directed towards the problems experienced by contractors. Methodology Examples of "large" projects initiated by major construction industry clients are shown in Table I. Information was elicited by means of interviews and questionnaires. The distribution of questionnaires returned is shown in Table II. Respondents were asked to indicate their estimates of the frequency of occurrence (i.e., the proportion of projects experiencing) of each of the problems listed; these having been formulated after extensive interviews involving discussions on a wide range of problem areas (Figure 1).

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Reliability of Information The reliability of information was clearly dependent upon the quality of experience of the persons providing information and the manner of interpretation of questions asked. Table I. Contemporary Large Projects
Sector Nature of work Typical value of (UK) contemporary projects 3-32 million 70 million

Energy and process engineering

Oil industry: Fabrication contracts : Hook-up Electricity generating power stations : 2 x 660 MW utilising Atomic Gas Cooled Reactors (AGRs) Chemical plant Gas liquefaction storage and supply

1,750 million 30-75 million 12-80 million 200 million (two ongoing projects) 70 million 8-60 million 25 million

Civil engineering

Airport terminals Docks expansion

Buildings

New construction Renovation

Overseas: 100 million plus generally.

Table II. Distribution of Questionnaires Returned

Type of organisation Top 20 civil contractors Plant contractors (Turnkey) Clients Consultants Overall Questionnaires sent 20 1 9 10 40 Questionnaires returned 12 1 3 4 20 Response 60% 100%
331/3%

40% 50%

All questionnaires were sent to top management personnel. In a number of cases, information was provided by contractors' chairmen and consultants' senior partners. The source of information from clients was sometimes unclear. The questionnaire itself had some fairly obvious limitations. For example, no account was taken of different types of work, locations or contract strategies. A more elaborate form would probably not have attracted such a wide response from the relatively small number of organisations who are actually involved with contemporary large projects.

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Figure 1. Information Sheet A Typical Single Response

Typical Problems Leading to Unanticipated Delays Frequency of occurrence on large construction projects

%
1. Waiting for information from the client or his representative. 2. Design complexity. 3. Materials procurement or delivery delays. 4. Shortage of appropriate (a) labour or tradesmen. (b) foreman or supervisors. (c) senior staff. 5. Bad weather. 6. Subcontractors default (a) Mechanical and Electrical, (b) Civil. 7. Ground problems. 8. Physical obstructions (e.g., unexpected presence of services) 9. Industrial disputes/strikes. 10. 11. 12. 13. 14. 15. Statutory undertaker's default. Variation orders. Plant shortage or procurement problems. Breakdowns. Joint venture co-ordination problems. Mechanical and Electrical plant procurement or delivery delays. 16. Significant contractual disputes. UK 90 15 20 10 5 5 40 15 5 80 60 15 20 90 5 10 2 10 0 Overseas 30 15 25 5 10 10 5 10 10 10 5

20 75 5 10 5 15 0

Results of the Survey UK Projects The major factors leading to unanticipated delays and extra costs on large UK projects (Table III) were late receipt of information, variations, M and E (Mechanical and Electrical) construction and procurement delays, ground problems and bad weather. Surprisingly, however, differences of opinion among clients, consultants and contractors on the frequency of factors were generally fairly slight. In particular, there was general agreement on the frequency of occurrence of ground problems. This was also the case with M and E plant procurement when all parties were involved in this aspect the consultant in the pre-construction programme, the contractor from tender stage onwards, with the clients tending to get involved with the other parties on such crucial aspects during construction indeed the client may be responsible for procurement. (In this regard, it is not to be assumed that a traditional contractual arrangement necessarily exists in each case). There appeared to be general agreement between contractors and consultants about bad weather delays.

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Table III. Major Factors Leading to Unanticipated Delays on Large UK Projects Contrast between the Views of Civil Contractors, Consultants and Clients
Contractors % of projects Waiting for information from the client Variation orders Ground problems Bad weather Design complexity M and E subcontractors Obstructions M and E plant procurement Materials procurement Statutory undertakers Industrial relations Civil subcontractors Claims Labour/tradesman shortages Construction plant shortages Breakdowns Senior staff shortages Foremen shortages Joint venture co-ordination problems 51 49 21 19 19 17 14 14 13 9 7 7 6 5 5 5 4 2.5 0.3 Consultants % of projects 29 17 22 18 5 22 12 15 8 20 5 9 9 9 4 1 Clients % of projects 9 15 17 9 7 6 8 17 4 1

2 3

4 5

4 1

The variability of views on waiting for information was not surprising since the contractor has to wait for both the consultant and the client, but the consultant only for the client. Moreover, the contractor is at the sharp end and is often the first to experience the effects of those factors responsible for delays followed by the consultants, and then the client. For example, the client's degree of awareness of the priority of providing timely information depends to some extent upon feedback and the sort of relationships enjoyed with advisers. A similar argument could be applied to the differences in opinion in connection with variations and design complexity. Overseas Projects The most frequently occurring delays on overseas projects are given in Table IV. As with UK work, waiting for information, variation, and M and E problems were commonly cited by all parties, together with materials procurement difficulties. On this latter point factors such as lack of processing expertise, difficulties in the supply of raw materials, and customs/import problems at points of entry into the country were typical causes. Long lead times were also needed for competitive shipments of oneoff items.

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Table IV. Most Frequently Occurring Factors which Lead to Unanticipated Delays on Large Overseas Projects
Plant contractor* Materials procurement Waiting for information Variations Construction plant shortages M and E plant procurement Design complexity Labourer/tradesmen shortages Bad weather Physical obstructions Foremen shortages Civil subcontractors Statutory undertakers Joint ventures Senior staff shortages M and E subcontractors Breakdowns Claims Ground problems Industrial relations Civils contractor Variations Materials procurement Waiting for information M and E plant procurement Labourer/tradesmen shortages M and E subcontractors Design complexity Construction plant shortages Claims Foremen shortages Ground problems Physical obstructions Statutory undertakers Senior staff shortages Breakdowns Civil subcontractors Bad ground Industrial relations Joint ventures Clients M and E plant procurement Construction plant shortages Waiting for information M and E subcontractors Ground problems Materials procurement Variations Foremen shortages Consultants Waiting for information Materials procurement Senior staff shortages Design complexity Foremen shortages M and E subcontractors Variations Joint ventures M and E plant procurement Construction plant shortages Breakdowns Civil subcontractors Physical obstructions Labourer/tradesmen shortages Ground problems Claims Bad weather Statutory undertakers

*Note: based on one response.

A high frequency of (local contractors) senior staff foremen and labour shortages are also evident. Contractors and clients emphasised the shortage of contractors' general plant. Also from the authors' personal experiences cash flow problems are common, often aggravated by unrealistic bid prices, unbalanced tenders, lack of accounting for inflation, insufficient attention to the setting up of adequate management organisation and controls by the contractor and, occasionally, unrealistic consultant's specifications. Evidently, more care is needed prior to contract award and selection. The main differences between contracts undertaken overseas and in the UK in terms of factors causing delay as given by contractors are summarised in Table V. These are more readily appreciated when viewed diagramatically as in Figures 2 and 3 where it is clear that a disturbing proportion of large projects are liable to unanticipated delays from a relatively small number of causes.

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Table V. Average Frequency of Occurrence of Major Factors Leading to Unanticipated Delays on Large UK and Overseas Contracts
A. UK Description Waiting for information Variation orders Ground problems Bad weather Design complexity M and E subcontractors Obstructions M and E plant procurement Materials procurement Statutory undertakers Industrial relations Civil subcontractors Claims Labourers/tradesmen shortages Construction plant shortages Breakdowns Senior staff shortages Foremen shortages Joint venture co-ordination problf :ms Frequency of occurrence B. Overseas Description Variation orders Materials procurement Waiting for information M and E plant procurement Labourers/tradesmen shortages M and E subcontractors Design complexity Construction plant shortages Claims Foremen shortages Ground problems Obstructions Statutory undertakers Senior staff shortages Breakdowns Civil subcontractors Bad weather Industrial relations Joint venture co-ordination problems Frequency of occurrence

%
51 49 21 19 19 17 14 14 13 9 7 7 6 5 5 5 4 2.5 0.3

%
40 35 32 26 17 17 14 12 11 10 9 9 9 8 8 6 4 4 4

Recommendations A number of recommendations are implicit. For example, procurement problems may suggest that supply contracts should have been placed earlier or perhaps construction was commenced too soon, or the "best" supplier was not chosen, or the specification was inappropriate, or perhaps a product should not have been specified at all and an alternative found. The construction industry has always suffered from fragmentation owing to the temporary nature of project execution and the various technical, financial and managerial specialisms that are incorporated into a project. Management's task is to mitigate the effects of fragmentation and specialisms by adopting a project strategy which will combine the skills of individuals and groups from contributing organisations so as to have the best balance of resources available at the right time. The trend of major clients towards executive project management is a positive step in the right direction and is to be encouraged. It is essential that major clients should develop a strong management

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team since, with large projects involving many contractual agreements, only the client can view the project in its entirety and from the client's point of view. There is a need for more team building and a greater integration of skills particularly at the early stages of planning a project and developing its design. During this time most of the decisions are made which will directly affect the final cost of the project and its viability so that operational experience, fabrication, construction and transportation logistics need to be integrated together with a thorough knowledge of the manufacture and supply market. A "construction logistics and cost engineering" department could be set up which, under the auspices of a project manager, would advise designers on economic forms of construction and, as a result of building up

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communications with suppliers and manufacturers, could advise on the most economic usage of materials. Duties would also include reviewing programmes and performing design audits. Future Research More work could usefully be undertaken in the following areas: (1) Team Building: The relationship between the project team and functional departments should be examined to find ways of forming more effective project teams. (2) Integration of Parties' Contributions: Channels of communication could be reviewed to see what improvements can be made to the integration of parties' contributions. (3) Unrecoverable Costs: Following on from the identification of factors causing unanticipated delays and additional costs, a survey could be undertaken to attempt to determine the extent to which such factors lead to unrecoverable costs by contractors.
Bibliography 1. Sullivan, A., "Organisation and Control of Large Construction Projects", MSc Project Report, Department of Civil Engineering, Loughborough University of Technology, 1984. 2. "Contract Strategy: A Pilot Study", NEDO, 1983. 3. "Guidelines for the Management of Major Projects in the Process Industries", NEDO, 1982. 4. "Engineering Construction Performance", NEDO, 1970. 5. "Large Construction Sites", NEDO, 1976. 6. "Market Briefs", (Series of 12), NEDO, 1981. 7. "The Public Client and the Construction Industry", NEDO, 1976. 8. Harris, F. and McCaffer, R., Modern Construction Management, second edition, Granada/Collins, 1983.