A survey of major client organisations around the world by KPMG’s US team has found that more than half (53%) had experienced “underperforming” construction contracts in the preceding 12 months.
For larger organisations, this rose to 61%, while executives representing public sector organisations experienced even higher levels of project failure, at 90%.
And in the past three years, only 31% of the projects that the survey sample were involved in came within 10% of the original budget, while only one in four came within 10% of the original programme.
Seven out of 10 respondents admitted that the project timetable or budget was not met due to not accurately planning for delays or cost overruns.
Richard Threlfall, UK head of infrastructure, building and construction at KPMG, said: “This survey highlights the prevailing issues affecting the sector both in the UK and globally.
“We will only see a turnaround of poor-performing contracts once we start seeing contractors and project owners adopt technology such as building information modelling (BIM) to enable more efficient planning, mandated apprenticeships to ensure skilled labour are bought up through the ranks, and more accurate planning of projects.”
KPMG’s 2015 Global Construction Project Owner’s Survey: Climbing the Curve revealed that the global construction community is facing a similar skills crisis as the UK construction industry.
Nearly half of the respondents are experiencing shortages in skilled labour, a phenomenon known as the “talent gap” in the US. The survey found that 44% of the sample struggled to attract qualified craft labour and 45% lack planners and project managers.
But there was also backing for direct employment as a staffing model, with a finding that organisations with more full-time project staff had lower capital expenditure per employee.
The survey also found that 69% of the survey group identified poor contractor performance as the biggest reason for project underperformance, with a large majority of 82% hoping to see greater collaboration with their chosen contractors in the next five years.
The international survey was conducted in late 2014 through face-to-face interviews with 109 senior managers, many of them CEOs, from organisations carrying out significant capital construction projects worldwide. Respondents came from the Americas (38%); Europe, Middle East and Africa (26%); and Asia Pacific (36 %).
The turnover of the organisations they represented ranged from US$250m (£168m) to more than US$5bn, with capital expenditure budgets ranging from around US$10m to more than US$5bn.
Public sector bodies and government agencies made up 26% of the sample, and other industries represented were energy and natural resources, technology and healthcare.
