Why do so many major construction projects fail?
At least one project failed or underperformed last year for more than 60% of organizations that spent $10 million or more on capital construction projects—in large part because of personnel issues, according to KPMG’s 2015 Global Construction Survey.
Executives at 100 public, private and governmental organizations with annual capital expenditures of between $10 million and more than $5 billion said just 31% of their projects came within 10% of budget, and a quarter finished up within 10% of their original deadlines.
"As engineering and construction projects get bigger, the complexity grows exponentially," Geno Armstrong, KPMG’s global chair of engineering and construction, said in a press release. "The improvements by owners in planning and risk management have been significant, yet there is further work to be done to reduce the number of project failures and bring more projects in on time and on budget."
The execs said their firms are doing a better job of controlling risk and noted they are satisfied with the return on investment they have reaped from their spending on project management tools and training.
Yet they complained that a lack of qualified workers has added to their struggle to come in on time and within budget. In the U.S., 56% of project owners said they are having trouble recruiting qualified craft labor, and 45% cited a lack of planners and project managers.
One solution the execs shared with KPMG: an effort to improve the relationship between the project owners and their contractors. 82% of those in the survey predicted greater collaboration within five years. That effort is stymied, however, by the owners’ lack of trust in their contractors. In fact, another 82% cited “poor contractor performance” as the biggest reason for project underperformance.