The construction productivity imperative: How to build mega-projects better
by Sriram Changali, Azam Mohammad, and Mark van Nieuwland, McKinsey & Company.
In 2013, $6 trillion was invested in infrastructure, real estate, energy and mining mega-projects, and that amount could increase to $13 trillion by 2020, according to this article. However, 98% of these projects face cost overruns or delays. This McKinsey article offers more than a dozen ways — including better use of technology — to improve productivity, better manage a project and lessen the chances of cost creep.
A variety of factors account for poor productivity and cost outcomes. Among them are the following:
- Poor organization. Decision-making and procurement processes do not have the speed and scale required.
- Inadequate communication. Inconsistencies in reporting mean that subcontractors, contractors, and owners do not have a common understanding of how the project is faring at any given time.
- Flawed performance management. Unresolved issues stack up because of lack of communication and accountability.
- Contractual misunderstandings. The procurement team typically negotiates the contract, and this is almost always dense and complicated. When a problem comes up, project managers may not understand how to proceed.
- Missed connections. There are different levels of planning, from high-end preparation to day-by-day programs. If the daily work is not finished, schedulers need to know—but often don’t—so that they can update priorities in real time.
- Poor short-term planning. Companies are generally good at understanding what needs to happen in the next two to three months, but not nearly so much at grasping the next week or two. The result is that necessary equipment may not be in place.
- Insufficient risk management. Long-term risks get considerable consideration; the kinds that crop up on the job not nearly as much.
- Limited talent management. Companies defer to familiar people and teams rather than asking where they can find the best people for each job.
To read the full McKinsey article, click here.