The construction industry is one of the major drivers of the global economy. In the United States alone, the construction industry employs over 7.6 million people and generates about $1.4 trillion in revenue every year.
That said, the construction industry is not without its challenges. Construction projects are huge undertakings: Massive amounts of time, money, and manpower are pressed into bringing each project to fruition. In addition to that, construction projects typically span multiple years. Projects have critical dependencies on man and material supply chains. Even seemingly minor disruptions and delays can quickly snowball into missed deadlines and cost escalations. Which in turn negatively impacts sales and revenue targets for construction companies. And that’s just the tip of the proverbial iceberg - on any construction project, project managers need to overcome a plethora of challenges every single day.
That’s why it is important to understand the potential challenges you could run into while managing a construction project. When you have visibility into the kind of challenges you might be up against, you can be better prepared to face them. Better yet, you can circumvent or pre-empt challenges before they hamper your project’s progress!
Here are the major challenges that construction project managers typically face:
Let’s understand how these challenges impact timely project completion and how they impact business growth for construction companies.
This can single-handedly make or break any construction project. When the actual cost of completing a project is seen to be exceeding its estimated costs, your project has overrun its budget. Budget overruns are a prevalent issue in the construction industry. As per a KPMG report, 69% of all construction projects launched between 2020-2023 failed to complete within 10% of their budget. Nearly a third of all construction projects fail because they overrun their initial cost estimates. And yet,
A combination of factors can cause your project costs to escalate: Changes in the project design, unfavorable working conditions at the construction site (eg. bad weather), poor material quality, rise in material costs, shortage of skilled labor, et al. resulting in unforeseen expenses.
When projects overshoot their timelines, construction companies have to foot the bill for the added running costs: labor wages, payments to subcontractors, and additional rental costs for construction machinery, invariably result in budget overruns.
Budget overruns could also be the result of inaccurate cost estimates. It is important to be meticulous when drawing up the budget estimates and make reasonable provisions for additional expenses.
Construction projects have a lot of moving parts. Several teams and stakeholders need to be aligned from start to finish. Poor communication between teams on such massive projects can lead to errors and require rework. This leads to an escalation of project costs and delays the project delivery.
On a construction project, work is distributed and delegated amongst multiple teams. Therefore it is essential to establish a clear chain of communication and coordination between the key stakeholders - the architect, the engineers, the main contractor, and subcontractors.
For example, let’s say the architect has made changes to the design. This is a critical update that needs to be communicated to the structural engineers and the contractor on time. If the construction continues to follow the old design, the project is at risk of a major rework. This will not only be an added expense but can cause significant delays to the entire project.
To avoid such lapses in communication, project managers should replace manual or paper-based documentation workflows with a digital collaboration platform. This ensures that project updates are delivered to all teams in real-time, and no mission-critical information slips through the cracks!
For project managers to make informed decisions and drive the project to successful completion, they need accurate visibility into project progress and performance.
But practices that are commonplace in the construction industry can severely restrict a project manager’s access to such data. This can have adverse effects on the project:
Construction companies should implement a project management tool and onboard all teams, contractors, and sub-contractors. This will enhance visibility into the project status for all stakeholders involved. By setting up automated reports on project performance metrics and creating dashboards, project managers can access real-time project data and make informed decisions with ease.
Construction sites present significant safety challenges. Workers can be at serious risk of accidents and injuries. Construction companies need to follow stringent safety protocols to ensure the safety of their workers. Although safety is a top priority on construction projects, construction companies regularly run into safety challenges such as:
Accidents and injuries to workers can be avoided by strictly enforcing safety protocols. Construction firms should regularly conduct safety protocol training for their on-site workers. Higher awareness about safety hazards significantly lowers the risk of mishaps at the construction site.
For a construction project to be successful, the architect, engineers, contractors, sub-contractors, and suppliers must collaborate seamlessly throughout the project. Otherwise, teams could be in the dark about the status of the project, progress achieved, and blockers (if any). This can result in redundant work and costly rework, which escalates the costs of an ongoing project and causes significant delays in project delivery. This hurts the bottom line of the construction company.
What are the root causes of poor collaboration?
The project manager should define clear guidelines to ensure smooth coordination between teams. For example, a daily status update on progress and obstacles is shared with everyone on the project at the end of each day. This can significantly boost visibility and smoothen out most coordination roadblocks. Cloud-based project and document management solutions can effectively address coordination challenges between teams, even on large projects.
Traditional industries like construction are slow to adopt technology and rely on manual methods of collecting and analyzing data to create reports. That’s how human error creeps in, and results in inaccurate data reports. Inaccurate reports lead to misinformed decisions, which result in projects missing deadlines and overshooting their cost estimates.
What are the causes of inaccurate reports?
Reports provide visibility into project and business status and provide insights on improving processes in the future. Data and reports drive decision-making, which determines the success or failure of a construction project. To inform project decisions with accurate data, construction firms should prioritize investing in a digital solution that automates data collection, analysis, and reporting.
While good project management software can boost your efficiency, relying on legacy software and processes can become a burden that slows down your project. And yet, construction companies resist adopting new technology. Most companies continue to rely on spreadsheets or other legacy software.
In reality, construction projects need solutions that provide advanced analytics and automation. Modern project management software that is purpose-built for the construction industry has several functionalities that simplify project management: Automated worker assignments, workload balancing and management, Gantt charts, and more.
To overcome the resistance to adopting new technologies, construction companies should provide sufficient training and support. This will help teams transition from legacy systems to modern project management platforms.
Project managers face a wide range of challenges on construction projects. These challenges can be addressed through a combination of strategies and the right project management tools.
By leveraging modern project management software that is purpose-built for the construction industry, project managers can improve visibility, enhance collaboration, ensure safety, and maintain control over budgets and schedules.
