Disputes in construction are nothing new. In Greece, the Parthenon, and in the UK the more recent St Paul’s Cathedral were both blighted by delay. On the latter, Christopher Wren had his salary halved as a result.
In 1993, the Eurotunnel project saw cost overruns of over £1.2bn, leading to a series of disputes between those involved in its construction. The project costs are just a small part of the issue – time and money spent disputing can be equally debilitating for all involved.
In our modern, high-tech age are we any better at getting big things built on time, and to cost? The evidence suggests not.
In 2008, the CIOB’s study, Managing the Risk of Delayed Completion in 21st Century found that 31% of high-rise and 33% of power generation projects finish more than three months late.
Just 14% of projects use a fully linked network/schedule to manage time, and only 2% use an independent reviewer to check viability.
Of those interviewed, 47% felt the standard of training is sub-standard, and 57% feel there should be better education.
We looked at this century’s six most high-profile troubled projects and ranked them according to cost and time overruns. Can we learn from them?
Number 6: Wembley National Stadium, UK
Relatively modest cost overrun, but phenomenal legal bills (Source: Hill International)
- Commenced: 2002
- Planned Completion: Early 2006
- Opened: March 2007
- Delay: 1 year
- Planned Cost: £757m
- Final Cost (approx.): £1bn
- Increased cost: 32%
In 2007, the Wembley stadium project in the UK notoriously saw £1m spent on photocopying alone, during a lengthy and complicated dispute relating to issues including the roof design, the famous arch, and ground works.
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By going to court and winning their claim, the contractor Multiplex lost £2m – a cost that ultimately was blamed for the sale of this previously successful 43-year-old company.
At first glance, this might not seem like too much of a failure – with a cost increase of just 32% (in part down to procurement route). But the cost in legal bills was phenomenal – Multiplex’s costs on a sub-trial alone (dealing with only a few of the issues at dispute) were quoted as being £45m.
UK newspaper The Telegraph commented in 2007: “The Wembley hangover has dogged Multiplex and seen the company struggling to restore its reputation just three years after it was listed in Australia.”
Number 5: Gorgon LNG Plant, Western Australia
Chevron’s Gorgon liquefied natural gas (LNG) plant is under construction on Barrow Island, 60km off the northwest coast of Western Australia (Source: Chevron)
- Commenced: 2009
- Planned Completion: 2014
- Completed: Ongoing – First production estimated late 2015
- Delay: Estimated 18 months
- Planned Cost: US$37bn
- Final Cost: Estimated US$54bn
- Increased Cost: 45%
Project trouble is no respecter of geography. Even 60km off the coast of Western Australia, with nothing but wildlife in the way (around 1,500 animals are reported to have been accidentally killed), megaprojects suffer delay and cost escalation.
The Gorgon project is set to deliver 15 million tonnes of liquefied natural gas (LNG) per year at its peak, and production is estimated to last until 2074. But, the project is currently at least a year behind schedule and is estimated already to be $17bn over budget.
Again, it’s known that there are disputes with hefty legal bills, but details are not made public. Gorgon’s remoteness may be part of the problem: last month workers negotiated more time for home leave and a 5% pay rise.
In 2014, Ernst & Young found that 64% of oil and gas projects face cost overruns, and 73% are behind schedule – an estimated increase in costs of US$500bn across 205 projects.
Number 4: Panama Canal Expansion
Panama chose the cheaper quote, but paid the price (Source: Hill International)
- Commenced: 2007
- Planned Completion: 2014
- Completed: Ongoing – Estimated 2016
- Delay: Possibly 2 years
- Planned cost: US$3.1bn
- Final Cost: US$5.3bn
- Increased Cost: 71%
Delays and bitter public disputes have beset this ambitious scheme to widen the Panama Canal so it can accommodate post-Panamax ships.
Originally, a major US contractor quoted a cost of around $5.3bn to complete the project, but a consortium of Spanish, Belgian and Italian contractors won the contract with their bid of $3.1bn. (Ironically, the final project is now expected to cost around the same as the original bid.)
In December 2014 a dispute arbitration board said ruled that the consortium was entitled to $234m in compensation from the canal authority.
In February that year the consortium halted construction, claiming $1.6bn in cost overruns that were caused by the authority. Work resumed some months later after the two parties signed an accord.
Number 3: Dubai Metro, UAE
A train completes a trial run on the Dubai Metro in February 2009 (Producer/Wikimedia Commons)
- Commenced: May 2005
- Planned Completion: September 2009
- Completed: March 2014 (final stations – line opened Sep 09)
- Delay: 5 years
- Planned Cost: $4.2bn
- Final Cost (approx.) $7.8bn
- Increased cost: 85%
The Dubai Metro was subject to a raft of disputes. Several billion dollars were rumoured to be at stake in the various arguments arising out of the light rail project designed to relieve some of the congestion in the rapidly expanding emirate.
Many disputes, particularly those dealing with international projects, are not settled in a public forum, which makes it difficult to be certain exactly how much is spent on their resolution.
Read the rest of the article at GCR
