The Pitfalls Of Capital Works Delivery & Project Management

The new financial year is upon us and delivery of projects has commenced in earnest. The community and Councillors love capital projects and have high expectations of their delivery. Late delivery of the capital works program is not uncommon with predictable causes.

7 key points you need to address for successful project delivery are:

1. Tender before Christmas

Projects that have not been tendered prior to Christmas will probably struggle to be delivered in the financial year. This is because where procurement is commenced after Christmas, for the practical reason of Christmas holidays, advertising can’t really commence until late January. Allowing for six to eight weeks of procurement time, then to get the contractor on site and to complete the construction of the infrastructure, there is really only 3 months available. From that time deduct wet weather, delivery and construction delays.

2. Proper project planning

The most common cause of project non-delivery in the financial year is insufficient project planning. For example:

• Committing to projects in the financial year that have not been scoped or designed;
• Having poor project scopes and estimates;
• Having set unrealistic estimates of time lines; and
• Insufficient pre-delivery preparation such as obtaining planning permits, heritage evaluation, native vegetation issues. This could also be the lack of consultation with the community, adjacent properties owners or service authorities.

3. Grant funded projects often cause timing issues

Larger projects may need to straddle financial years and timing may be determined by receipt of external grants. Grant funded projects are often a surprise and dropped into an already busy program, often delaying other projects.

4. Delaying projects may be appropriate

While not ideal, it may be entirely appropriate to delay a project when:

• The budget is insufficient;
• New factors are identified;
• Tenders received are well above what is considered reasonable. The warning sign is one tender received well above the estimate. Retendering the project either immediately or delaying it some time, could result in a far more cost-effective outcome, important when spending community money.

5. Properly resource project management

Resourcing projects with inexperienced management should never be allowed to occur. The costs of variations, delays, and mistakes will often outweigh the cost of the project management for the project. Experienced project management may have avoided these costs.

The design and project management costs for each project should as a matter of practice be contained within the project budget. It is quite common practice for project budgets to only cover the construction cost of the works. Often the explanation is the project will be delivered using in-house resources as if there no cost to those resources. Budgeting for design and project management cost allows flexibility in project programming by the project management staff and avoids loading up internal staff where there is insufficient capacity and it is likely will cost the project delivery time.  The completed written-up capital value of the infrastructure will include the design and delivery costs so they should be in the estimate from the beginning.

6. Building projects add a new level of complexity

Buildings are the most complex projects undertaken and need more extensive planning and co-ordinated management often across the Council organisation than road related infrastructure projects. Budgets need to include the fit-out costs such as phones, printers, photocopiers and IT.  Relocation costs are often unexpected but necessary. There may even be temporary accommodation costs. Additionally, staffing costs, annual maintenance costs such as building and surrounds maintenance, cleaning and utilities need to be budgeted for in the annual budget particularly if the building is completed well before the end of the financial year. It is important that someone manages this but more often it falls on the shoulders of the unsuspecting project manager.

The project manager needs to be involved in the project very early to understand key items like funding arrangements, time limitations, temporary relocation arrangements and co-ordinates with the project sponsor and tenant.

Building projects require a clear structure of a project sponsor and a delivery agent (the project manager). Issues of product acceptance, facilitation of external grants (where applicable) and ensuring ongoing communication with the eventual occupants and arrangements for occupying and or relocation to the completed facilities are tasks beyond the physical construction of the facility but need to be managed as part of the construction. Problems surface when the project manager is inexperienced with building projects and so is the project sponsor. The starting point must always be to establish an appropriate responsibility structure and plan as a united team.

7. Oversight of the whole program essential

With a complex capital works program, it is too easy to fall into the trap of managing the detail of each project and not see the program as a whole. Decisions will need to be made regarding outsourcing requirements or the timing of projects which may be competing for resources. This requires a strategic approach and requires very regular project co-ordination meetings.

If HDS Australia Pty Ltd can be of any assistance with project scoping, design and project management or evaluating your current systems or mentoring staff, please David Sutcliffe mob 0448 913 004 or email [email protected].