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Late, overbudget construction projects can be reduced by tech: survey

Three-quarters of construction projects are delivered late and over budget – but overruns may be corrected by more technology adoption, according to a recent survey conducted by IDC and commissioned by Procore Technologies.

Procore is a provider of construction management software.

The survey, which ran throughout May and June 2021, asked about the challenges that a total of 505 real estate owners face, and how they have responded to them.

Respondents were construction project owners and developers in the public and private sectors in Canada (202 respondents) and the U.S. (303). They are involved in various roles and responsibilities across the project delivery lifecycle, from conceptualization, pre-construction planning to project management, execution and operations.

Challenges on completion

The survey revealed that 75 per cent of owners were over planned budgets on their projects, and 77 per cent were late. On average, projects were 70 days late compared to their original estimates.

Per project, owners experienced an average of six changes to the budget and five changes to the schedule, with a 15 per cent average increase in project costs as a result of these changes.

“The survey shows that project owners can see what needs to be done,” says Warren Shiau, research vice-president at IDC, in a statement. “But if the adoption of these technologies is going to be effective, they need to look at modernizing their data, applications and IT infrastructure – or else they won’t be fully able to take advantage of these game changers.”

Better on-budget and on-schedule performance often corresponded with embracing integrated technology. Two groups emerged: the high performers, who were the 17 per cent of respondents least over their budget and estimate for days/project completion time, and the low performers, who comprised 19 per cent of responding organizations most over their budget and estimate for days/completion time.

Incorporating software

The survey also explored the benefits gained by moving from manual processes to technology solutions.

Low performers trended toward struggling with manual processes across project conceptualization, pre-construction planning, change order management and incident tracking on the jobsite.

Only 15 per cent of respondents manage construction projects with software tools that are integrated together — the rest are relying on the fragmented general productivity software used across many industries and offices.

Prioritizing tech implementation

Owners recognize the importance of data centralization as a key building block for supporting new technologies that can help increase on-time and on-budget performance.

The technologies they identified as priorities for long-term future adoption will require supporting application and data integration efforts to maximize benefits and results. The top technologies identified as priority for future adoption were:

• Data centralization technologies (42 per cent)
• Predictive analytics for cost modelling (36 per cent)
• Building Information Modelling (BIM) (32 per cent)
• Digital twin (31 per cent)
• Green building/construction (30 per cent)

When it comes to budgeting and scheduling, owners predict the greatest impact on project performance in the next three years will be BIM (53 per cent), connected supply chain (44 per cent), pre-fabrication of components (41 per cent), and predictive analytics for cost modelling (34 per cent), according to the survey results.

Labour challenges

Owners said the greatest challenge to getting projects done is on-site labour shortages (69 per cent). Only 24 per cent of respondents said they are well-staffed, with the right skill sets around financial governance, reporting and controls, and only 33 per cent are well-staffed for planning, design and scoping.

“Trade and labour is part and parcel of estimating project timelines and viability, so when there’s a labour shortage, it impacts costs. And the longer it takes to finish a project, the more your costs escalate. For companies without proper processes in place, these problems are only going to be exacerbated,” Shiau says.

Owners also saw environmental regulations (66 per cent) and project cost escalations (61 per cent) as challenges to their businesses.