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Client satisfaction dips as 60% of construction projects are delivered late

17 September 2015

Three out of five construction projects are completed late, according to the latest KPIs published by the Department for Business, Innovation and Skills (BIS).

The figures, compiled by BIS, CITB, Constructing Excellence and Glenigan, show that the industry’s ability to deliver on time fell from 45% in 2014 to 40% this year. The peak recorded in the 15-year history of the survey was 58% in 2007.

For non-housing projects, the design phase was completed on schedule on just over half (52%) of projects while the construction phase was on time in just 45% of schemes.

Satisfaction scores are another area of concern. Clients rated their “overall satisfaction with the finished product” as eight out of 10 or higher on 81% of surveyed projects. This was only a percentage point lower than in 2014, but client satisfaction has now fallen for three surveys in a row.

Contractor satisfaction with the performance of the client and consultancy team also fell during 2015, with 69% of contractors rating performance as eight out of 10 or better, significantly below 74% in 2013 and 2014 and 75% in 2012.

The industry’s performance was better for cost predictability, with projects coming in on budget or better in 69% of cases, the same figure as for last year, which was a new high.

However, overall the results suggest that construction is making limited progress towards the government’s Construction 2025 performance targets, which aim to cut delivery time for projects by 50% and reduce costs by a third.

Predictability time - project

Source: UK Industry Performance Report 2015

Glenigan economist Tom Crane believes the poor performance on time predictability may be due to pressures caused by the economic recovery.

“The rapid upturn in activity during 2014 put pressure on capacity, manifesting itself in rising material and labour costs and extended delivery times,” he said. “Evidence from this year’s KPIs suggests that construction firms have managed to keep control of costs, but delays to schedule have worsened.

“The latest indicators suggest that the challenging economic environment continues to undermine the industry’s efforts to deliver an improved product and service to clients,” Crane added.

Profitability remains a concern for construction, despite a rise in the average margin from 2.1% last year to 2.8% in 2015. Crane suggested that construction firms’ margins “have moved past their nadir” but warned that “profitability remains far below a peak of 9.9% recorded in 2009 and a quarter of respondents reported losses during the year surveyed”.

"The latest indicators suggest that the challenging economic environment continues to undermine the industry’s efforts to deliver an improved product and service to clients."

Tom Crane, Glenigan

Productivity continued to creep upwards, though by just 0.6%, after hitting a spike of over 20% in 2011 when contractors made more efficient use of a slimmed down workforce.

Lee Bryer, research and development operations manager for the CITB, said the industry needed to increase training provision to address productivity levels.

“A rise in productivity indicates that construction is coping well with the increased demand,” he said. “Training levels are up, which is good news for qualifying the existing workforce. But at a median of 1.2 days per full-time employee, this figure must increase even further to maximise the industry’s potential, especially considering the need to improve productivity.”

Bryer said he was concerned by falls in the number of women and proportion of people under the age of 24 working in construction – both dropping 2% - compared to last year.

“With an ageing workforce, the industry needs to do more to attract people from all backgrounds,” he warned.

Nick Boles, construction minister, said: “Growth in construction over the past few years has led to strong business confidence and new opportunities, with private house building output now at a record high. Nonetheless, the industry must continue to adapt to changing demands.”

Comments

In my experience there is another factor involved in commercial construction contracts not being completed on time. This one is design changes imposed by the Clients during the build process. It isn’t helped along by delays in getting responses to RFI’s, either.
To overcome these potential delays requires acceleration. Acceleration costs money! Not only that, but there also has to be an awful lot of discussion and negotiation to ascertain how long and how much. Then the clerical paperwork trail has to be laid to justify any additional charges if completion is to be on time. Very few contractors have tendered with a sufficient margin to be able to afford the specialised professional people on site to be able to do all that!

Stuart Howie, 18 September 2015

Maybe if programmers were more realistic, these comments wouldn't be necessary.

Sean Morgan, 18 September 2015

The increase in late project deliveries does not surprise most Construction Managers today. The difficulties in obtaining skilled workers has been getting greater for at least the last 15 years and so we are now scratching around for just about anyone who can hold a shovel the right way up. This means that ever more management hours and project hours are used up in reworking shoddy workmanship and ad hoc on site training.
An old colleague used to tell me that people in this industry either didn’t know or didn’t care, one or the other. It is fast becoming the case where I meet people who not only don't know but also don't care either. Until we can get away from this industry’s image as a job you take when all else has failed and when people start to recognise the skills required, the situation will only get worse and Britain will be ever more reliant on immigrant labour…. lets just hope they were all trained better than our own workforce.

Stephen Smith, 18 September 2015

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