Project Failure: Is This Why Your AEC Firm Has A Poor Delivery Record?

Posted by Andy Mckay on February 15, 2019

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Did you know that Australia has a poor delivery record on architecture, engineering and construction design (AEC) projects?

According to recent research conducted by Deltek, 66% of firms admitted that the delivery on one-quarter of their projects was delayed, an outcome that costs firms and their clients millions of dollars each year.

Interestingly, the cause of those failures had less to do with technical difficulties (which accounted for just 28% of project failures) and more to do with budget overruns (51% of project failures), unclear objectives (41%), and issues relating to sub-contractors and/or other stakeholders in the supply chain (34.8%).


 

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Failure to deliver projects on time, to specification, and within agreed budget parameters causes myriads of problems for AEC firms, which range from lost revenue and/or exposure to financial penalties, to negatively impacting a firm’s reputation and chances of securing future projects.

No matter where your business sits in the construction supply chain, project failure is damaging to your brand and your bottom line. It’s no surprise, then, that AEC firms are keen to improve their handling of project management by:

  • Getting a better handle on client change requests (63%);
  • Achieving more accurate project timeline forecasting (41%); and
  • Refining poorly defined scope (38%).

How Can You Rein In Project Failures?

Project Control

One of the best and simplest ways to obtain a holistic overview of work in progress and your future pipeline is to implement an integrated Project Control framework as the principle foundation for decision making.

Project Control systems combine technological platforms and structural processes, and encompass all aspects of the business including operations, outsourcing and procurement, human resources, financial management and Information Technology.

Australian AEC firms told us about the pressures they face which arise from the growing complexity of projects, and an increasingly challenging operating environment. Some of the most burdensome issues they singled out include:

  • Increased financial pressures (cited by 74% of survey respondents)
  • Procurement process (60%); and
  • Issues arising from legislative compliance (ISO) (53%)
 

"One of the best and simplest ways to obtain a holistic overview of work in progress and your future pipeline is to implement an integrated Project Control framework as the principle foundation for decision making."

 

 

What Are The Costs?

According to our research, 72% of AEC firms surveyed admitted that some of their projects had exceeded budget estimates by as much as 50%. These types of results have significant flow-on impacts for the firm, the client and other key stakeholders.

It’s not surprising, in light of these figures, that the main financial goals of Australian AEC firms are to:

  • Increase profitability (54%);
  • Maintain cash flow (54%); and
  • Ensure that clients pay invoices on time (49%).

Yet Deltek’s research found that only about 43% of AEC firms have invested in financial management platforms to improve their business operations. Consequently, there is plenty of scope for the remaining firms to streamline their practices and their financial results by adopting appropriate technology platforms and business structures.

Project Control systems offer many benefits, and these can broadly be broken down into two main categories:

  1. They help to clearly define project objectives and ensure that everybody within the team understands who is responsible for well-defined tasks, from the outset and throughout the duration of the project; and
  2. They foster a workplace culture that focuses upon innovation and ongoing improvement.

In an era where profits are at risk from poor project oversight, it makes sense to put in place the right fundamentals to ensure that Project Control becomes a top priority.

 

Project Control White Paper 

Find out why project control matters for AEC firms and how you can implement it for your business.

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