A staggering sixty per cent of projects were delivered late to clients over the past year, according to new data
Extensive research on key performance indicators, collected by Glenigan, Constructing Excellence, CITB and the Department for Business, Innovation and Skills, found that only 40 per cent of projects were completed on time over the last 12 months.
The data, shared exclusively with the AJ’s sister title Construction News, represents a worse performance than in 2014, when 45 per cent of projects were delivered on time.
Meanwhile the proportion of schemes going over budget remained at 31 per cent - the same as last year.
The figures suggests the construction industry is in danger of missing the government’s Construction 2025 performance targets, published in 2013. These aimed to halve the time taken to complete projects and reduce costs by a third.
One of the strategy’s architects, former business secretary Vince Cable, told Construction News it was vital the government did not abandon the strategy.
‘We’ve seen no sign of [the new government] taking a long-term approach to the sector. ‘The worry is that the process is now completely Treasury-dominated and the Treasury is no friend to long-term thinking.’
Addressing the latest data, he added: ‘These figures are alarming but not surprising – they reflect the decline of capacity in the sector since the [financial] crisis such as a lack of trained people, the disappearance of a lot of small companies unable to raise credit, and the lack of progress in developing new technology.
‘Those are the issues that we were trying to address through the industrial strategy for the construction industry.’
He said the government ‘clearly wants to rebrand the strategy’ but it was important they did not abandon it.
‘Ministers have got to get stuck in and give support to people in the industry, who are trying to work on these long-term problems.’
Government’s chief construction adviser Peter Hansford said the Construction 2025 targets were still achievable.
‘I don’t think these results, while disappointing, do cast doubts on the Construction 2025 ambition to reduce the time from inception to commissioning by 50 per cent by 2025. I believe this is still quite achievable.
‘It requires all parties, including clients to think differently about how the outcome can be achieved more rapidly. The Managed Motorway programme is a good example of how this can be done successfully,’ he said.
The KPI data revealed that the construction phase is dragging down projects’ punctuality, with only 48 per cent of construction phases delivered on time, compared with 53 per cent of design phases.
Construction’s poor performance was all the more stark when compared with last year, when the research showed 67 per cent of construction phases were delivered on time.
Ken Gillespie, chief operating officer at Galliford Try agreed that delivery times have got worse, but said that the problem could come from ever more complicated building design.
“There’s definitely a capacity issue, but I’d also pose the question of whether our designs are so technically sophisticated that operationally we’re struggling to commission and deliver them? Is that a reason why we’re taking longer to commission our buildings than we have historically?”
One tier one contractor, who wished to remain anonymous, echoed this and added: “There are lots of things that are delaying the starts of projects so I wonder whether this could impact the overall delivery time but whether I would agree that it is having an impact on the actual construction phase is very surprising.
“What we are seeing is a lot of delay to projects due to budgetary issues, so going back and forth in the design phase in order to get to affordability.”
Design delays have been a factor in Network Rail projects being delayed. Construction News reported in June that construction companies had raised complaints that design delays were affecting projects, with designer, client and contractor all keen to avoid professional indemnity issues on schemes where cost has risen to the extent that, in some cases, projects conceived two years ago no longer stack up.
Cost performance was better this time round, with 69 per cent of projects completed on budget or better, matching last year’s figure.
The design phase was completed on budget or better for 75 per cent of projects in 2015, slightly down from last year’s record high of 79 per cent.
Construction was completed on budget or better 56 per cent of the time, a small decline compared with last year but significantly ahead of the pre-recession average.
For housing projects, time predictability improved but overall cost predictability deteriorated further after a sharp fall last year.
The figures showed that fewer than half (43 per cent) of housing projects were completed on or under budget. This compared with 62 per cent in 2012 and 46 per cent in the 2014 survey.
Fewer than half of housing projects were completed on or under budget
Crest Nicholson chief executive and Construction Leadership Council member Stephen Stone identified two main reasons for the decline.
He said larger housebuilders had been hit with materials and skills shortage after seeing an increase in output over the last 18 months.
‘Material shortages have washed their way through, while skills issues still remain so we need to start training people and bring new people into the sector,’ he said.
He said the housebuilding sector also faced escalating costs associated with planning and land.
‘We’ve suddenly got an expanding sector – it’s going to take us a while to get back on track.’
Construction Products Association economist Rebecca Larkin said that inflationary pressures from wages in particular have made it difficult for firms to deliver on cost.’
‘Despite continued growth in workloads and output, it appears that shortages in skilled labour are starting to filter through to the industry’s ability to deliver projects on cost, with wage bills now the largest inflationary element for many firms,’ she said.
She added that a “clear recruitment strategy” was needed if construction was to hit Construction 2025 targets for cost.
EC Harris head of strategic research and Construction Leadership Council member Simon Rawlinson: ‘The challenge the industry clearly is having with schedule underpins the importance of a sustained body of work that the industry needs to have to support investment in capacity and skills.
‘But this challenge is shared and not one that sits with one part of the supply chain.’