Top 5 Causes of Construction Projects Failure (Pre-Construction)

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Since 1971, The GeoFocus Group has established itself as one of the few firms in the North American construction market that has consistently specialized in the analysis, recovery and completion of delayed, distressed, disturbed or dysfunctional construction projects; with multiple projects recovered in the following sectors:

  • Institutional;
  • Single Family Residential;
  • Multi-Family Condominium;
  • Mixed-Use Condominium;
  • Purpose Built Apartments;
  • Industrial; and,
  • Hospitality

For over 50 years The GeoFocus Group has expanded and utilized this niche experience and knowledge base to assist Owners, Developers, General Contractors and Construction Managers navigate projects that have trended sideways for a variety of reasons.

Earlier in the year we posted of our telltale signs that a project is structured for failure. In this post, after performing an internal review of the last 100M worth of projects analyzed and/or recovered by The GeoFocus Group, we have identified the following as the consistently top 5 warning signs of construction projects destined for delay, distress, deficiency or dysfunction from the land acquisition, site plan approval and design development phases.

  1. Schedule Management – Consistently Missed Milestone Dates with no Plan for Recovery

Consistently missing milestone dates during the land acquisition, site plan approval and design development phases of the development lifecycle are often signs of an inexperienced project team. Projects should trend on or ahead of schedule; however, if trending behind schedule immediate action should be taken. If a project is trending behind schedule an experienced project manager/owners’ representative will identify the factors associated with the delay, identify possible solutions and take immediate action to implement. Often, inexperienced Owners, Developers, Consultants, Project Managers and Owners’ Representatives that miss milestone dates will simply “shift” the project schedule to suit the “revised date”. Consistently shifting milestone dates often cause irreparable damage to a development by causing the Owner/Developer to incur significant carrying costs. This will ultimately have a trickle-down effect on the project team in its entirety.

  1. Payment Management – Delayed Payments to Consultants, Vendors, Suppliers and Contractors.

Owners and Developers that are consistently late in clearing their accounts payable at the pre-construction phase of a project should be a warning sign to the development as a whole. The infrastructure required to fund payments at the land acquisition, site plan approval and design development phases of a project is minimal and inconsistent payment to multiple entities may be a sign that a project may be having financial difficulties. Owners and Developers should institute the infrastructure required to ensure that the submission, receipt and payment of invoices are processed in a reliable, consistent and prompt manner. Owner/Development teams that do not have the infrastructure in place to appropriately process Consultants, Vendors, Suppliers and Contractors invoices should consider outsourcing same. Prompt payment, while not only mandatory, is a key ingredient to the success of any development.

  1. Communication Management – Implementing a Communication Management System, Protocol or Hierarchy.

Inconsistent communication, multiple entities contacting, coordinating and/or instructing the same entity with no clear delineation between role and responsibility, and consistently unproductive meetings are a few of the signs that are often indicative of a construction development that has failed to prescribe a communication plan or policy. Experienced participants will notice the sporadic communication trends on the project both for requests for information and action, subsequently leading to frustration, which will ultimately have an impact on the quality of work. Poor communication is often rooted in poor planning/leadership and while it is an issue that is easily resolved, it is often mismanaged. Every project requires a clear communication system, protocol and hierarchy. Projects without concise systems in place can often expect delays, disruption, extended schedules and “finger pointing”.

  1. Planning Management – Managing the Development at the Land Acquisition and Site Plan Approval Phases of the Development.

The land acquisition, site plan approval and design development phases of a development are where most projects are either set up for failure or success. Owners and Developers will often utilize these phases to perform risk assessments, create budget estimates, identify logistics issues, prepare procurement strategies, assemble the development team and retain a project manager and/or owners’ representative to create the ‘road map’ for the development. Nonetheless, this is where most projects are set up for failure. Inexperienced Owner’s often fail to retain or appoint experienced project managers/owners’ representatives thus failing to instill the leadership required to ensure that the project is set up for success. Consequently, proceeding without an appropriate ‘road map’ creates opportunities for substantial mistakes and errors. The only thing worse than poor planning is a project that does not have a plan at all.

  1. Consultant Management – Who Is Coordinating the Coordinator?

“Coordination begins at the inception of the project, the first meetings with the client and/or consultants and continues as long as the architect is involved with the project.

Architects start with the pre-design services and an initial conceptual design. As the design develops the architect incorporates various disparate functional needs such as codes, life safety, structural, mechanical, electrical and other consultants, sustainable goals, client’s needs and aspirations, program, schedule and budget parameters into a final design – coordinating of all these factors while maintaining the design.” (OAA – Practice Tip – PT.27 Version 1.1 May 21, 2012 Coordination of Consultants)

Consultant management and coordination is critical to the success of every construction development and while you may have retained the Architect as the “Coordination of Consultants” who is coordinating the coordinator? Inexperienced Owner’s often fail to retain or appoint experienced project managers/owners’ representatives to manage the coordinator. More often than not inexperienced owners/developers’ pair with inexperienced consultants almost always leading to delay, deficiency, dysfunction and ultimately project failure.

The GeoFocus Group’s niche experience in the analysis, recovery and completion of projects that are delayed, deficient, disturbed or dysfunctional, provides its team with the unique ability to recognize the warning signs outlined above before they become detrimental to a project and assist to ensure that the development is structured for success.

Founded with the advanced knowledge and experience that is typically associated with larger advisory firms, The GeoFocus Group utilizes its size to its advantage. Client-centric services based on industry know-how from boots on the ground experience.

Your options are not limited. Contact Us today and we will perform a comprehensive analysis of your current construction program. Utilize our expertise as land development, expert witnesses, construction advisors, project recovery specialists, developers, construction managers, owner’s representatives, payment certifiers, claims consultants and litigation support specialists.

Whether you are an Owner, Developer, Stakeholder or Contractor – The GeoFocus Group has the personnel and expertise to assist you with your project. From land acquisition through to post-construction closeout, our advisors have participated in all facets of the development and construction lifecycle. Allow our experts to assist you before your project becomes distressed, delayed, disturbed and/or dysfunctional; however, should you be in the midst of a distressed, delayed, disturbed and/or dysfunctional allow our experts to assist you in analyzing, recovering and completing your distressed asset.

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