In Cracow Poland, where our is based, we have this infamous building called “The Skeleton” (in Polish - Szkieletor). It is 92 meters tall, which makes it the highest building in the whole city, higher than the St. Mary's Basilica even!
The history of this building started in 1968, and the first construction works launched in 1975. The plan was ambitious: a congress hall with over 500 places, a huge underground parking lot, and a beautiful cafe at the rooftop, with the view of the whole city. But something went wrong.
In 1979, just a few years after construction was launched, the works were stopped due to (mostly) lack of finances. For over 40 years (!!!) every person visiting or living in Cracow saw this huge concrete scaffolding that showed clearly what happens when you start your construction works without prior preparation.
The Skeleton (proudly called the Unity Tower now) history has got its happy ending - the building has been finished and is planned to be open in 2020. But it took exactly 52 years to do it - that’s half of a century! So if you ask me why construction projects fail - the answer is never simple. If it was, it wouldn’t take so many years to transform the sad Skeleton into the majestic Unity Tower.
Yet, this building example shows clearly, the reasons why construction fails happen at the very early stage of the works. In this article, I will dive deep into different factors that cause construction project failure, show some statistics and present some ways on how to avoid all (and more!) of the mistakes that Skeleton made. Hold tight!
Why do projects fail - statistics
As the research from 2016 shows, the most important factor that impacts the construction projects' failure is funding shortage - both private and public (34%). For me, it sounds very vague as you can put everything here - so it’s the easy way out.
Of course, we’re not talking about the situation where the investor just pulls out unexpectedly or the government decides that they don’t want to build the building anymore. I think it is much more connected with the fact, how hard it is to estimate the construction cost properly.
What I mean is - preparation is everything. If you estimate your costs better, take in to notice some unexpected changes that can happen on the way, the thing that you end up broke becomes much less possible. But don’t worry - it’s a global problem, so if you struggle with it as well, you are not alone.
An example: if you think that keeping to construction schedules and budgets is tough on Earth, try doing it in orbit. That's the fiscal lesson of the International Space Station (ISS), an orbital laboratory that's a joint effort between Russia, Europe, Japan, Canada, and the U.S. The project was so complex and unwieldy that it was already four years behind schedule when it began in 1998, and its original estimated cost of $17.4 billion ultimately grew to $160 billion. The U.S. kicked in $100 billion of that total.
What causes construction projects to fail & how to avoid it?
Let’s dive deeper into the factors that cause so many construction projects to fail. We’ve prepared the list of the most common reasons we see, as software development experts cooperating closely with the construction industry both in the USA and the GCC region.
#1 Unexpected Events
Let’s discuss the elephant in the room: the COVID-19 pandemic. As the European studies show, on this continent, the construction development went down by around 30% from February to April but it pretty quickly started to recover in May. As you can see from the graph below the drop-down wasn’t as dramatic as in the
The information we got from our USA construction client tends to confirm that - despite very alarming forecasts, they say, that construction business wasn’t hit so hard by the pandemic as it was expected. So I guess we can say that unexpected events happen and affect construction but - definitely not as hard as other industries. Mentioned previously restaurants or cinemas, schools, and stationery shops are far more vulnerable. So if you are looking for a safer industry to invest & develop at - construction can be your choice!
Solution: while planning your building consider different things that may influence its success or failure. You see a river near your building, that is just 3 heavy spots of rain away from flooding the entire town? Don’t ignore that. Heard about the first cases of COVID-19 in China? Think, what is your scenario if (when) it comes to your country. You can’t see everything and forecast everything, that’s for sure - but don’t ignore things that are much more obvious.
Government approvals, site regulations, and permit delays - those are the real killers when it comes to getting the construction done in time. Depending on your location, you may need to consider union requirements and area-specific rules such as building codes.
Solution: Making sure you have the right licenses before beginning a project is essential to prevent delays! So once again - this something strongly connected with the preparation process, that starts far earlier than the “real” construction itself.
#3 Unreliable Workers
Labor shortages and fewer skilled workers have only made the problem of employee productivity worse over the past several years. Newer workers don’t have the skills and confidence to complete tasks at the same speed as experienced veterans on your crew. Understanding the capabilities of your workers is vital when determining your project schedule.
Now we want to share it with you!
Solution: Do a background check of your employees and make sure that they have the skills to perform their job. Don’t overwhelm one person with too many responsibilities, but hire the whole team, where each task is clear and assigned to someone. Equip your workers with the proper tools and equipment needed to complete tasks efficiently. Work with your subcontractors to determine whether they have the workforce available to perform their contracted work as scheduled.
#4 Scope Creep & Funding shortages (public and privates)
Scope creep is the continuous expansion or changes to the project’s initial scope beyond what was initially intended. Factors that lead to scope creep include poorly defined scope, incomplete plans and specifications, poor communication, mismanagement of change orders, and clients changing their minds about what they want. Sometimes, you need to state clearly that what is asked from you, is far above what you agreed upon. If you prepare for your construction work right and make sure that the client is not hiding anything from you - you should probably be fine!
Solution: Encouraging a client to do their due diligence at the beginning of the project allows the process to go much more smoothly and provides clear objectives to both parties about what needs to be done. Identify what the scope of work is to your client in the terminology they understand. What happens often is that the client thinks what they’re asking is a part of the work you agreed upon. Education is the key here!
#5 Communication Issues
This is extremely important because people can’t believe that something so trivial can kill their project. But yeah, it can. Imagine a situation when as an employee you have no idea what are your responsibilities, who you should contact when you have an issue, what are the clients' specific requirements or what does your boss expects from you. This causes extreme stress that reflects on your work and the project as a whole.
Solution: Establish a very clear chain of command. This way you will make sure that all parties are getting the necessary updates in regards to changes in the project, design, plans, specs, or timeline. By establishing a chain of command, you know exactly who your point of contact is to communicate any changes, requests, or problems that may come up during the duration of a project.
#6 Underestimating The Project
The biggest construction killer at the end - lowering the construction costs, setting it range very vaguely or just recklessly assuming, that everything will go smoothly and no additional costs will be required. For years, it was almost impossible to estimate construction costs to details, but fortunately, it changed. Some of the companies use hundreds of spreadsheets to do it (to the point, they get lost in them entirely) and some use dedicated software to do it much more efficiently.
Solution: We’ve made an entirely separate article on the topic, so if you’re interested in how to save your project through detailed estimation cost - click below!
What else can you do to prevent the failure of a project?
We are a software house, so we will give you the solution that we know the best (and have seen serving people well!): build dedicated custom software. You might think: how can software help me to manage my people better? To make communication easier? Avoid delays? There is a common misconception when people think “software”, that it doesn’t fit their business. With the eyes of the imagination, they see computer games, Facebook, or other things, that seem just useless for a serious construction business. If you think the same then with all of the respect - you’re wrong.
Technology will never replace people, that’s for sure, but it can make their work much easier. Let’s take an example of one of our clients Protenders. They are the #1 platform for the construction industry to connect, track & procure. And it easily solves a few of the issues from the list: it helps you to find reliable workers for your construction work, solves the communication problems as everything is done through one app, and help you to avoid delays because you don’t have to dedicate hours of your time to find someone who will paint your house or make the electricity work.
and it’s CEO Karim Helal have been so successful in their business, that they acquired $3 Million Pre-Series A Funding! Read more about their success story & our cooperation with them in the case study below.
What Karim did was to identify the issues the construction industry struggled with and found a solution. He fixed them with just one application! So what I recommend you is to think: what annoys you the most in your work? Are those delays that’s connected with getting all the permissions? The right application can make this process much smoother. Struggle to verify whether your employees have the right competences? Build a learning platform, where they can raise their skills. Have issues with communication among different construction areas that are a hundred kilometres apart? Create a dedicated platform, to connect them.
We don’t encourage you to build a copy of ProEst or ProTenders (they are excellent at what they do already!) - but to figure out something new on your own and fill up the gap on the market.
When you look at the biggest construction failures they have many things in common. So you might think that people should learn from other people's mistakes and for example, estimate their construction cost better or take care of all the legal requirements prior. But this is our human nature - we always think that we will be those who make it ;)
And I’m not saying you won’t - but wouldn’t it be good, to have some back up in the form of technology? Something that takes some of the work of your mind never gets distracted by the stress and emotions and is constantly evolving. Think that really through as not so long ago, people couldn’t imagine how computers can help them make their work better. As we both see now - yes, they can.
Are you a beginner in the software development world? That’s okay, we specialize in partnerships like that! We picked construction as one of our specialties because we believe that the potential here is huge - we just want to help you to discover it.
Speaking about discovery - we’ve just launched an entirely new service of ours called Software Strategy Workshops. It’s 100 % free and will give you a sense, whether the software is something that you need or not.