Tough Times Ahead for Constructers?

Gaye FrancisRisk Management

Richard attended and presented at the recent Construction Risk Management Summit in Melbourne on 1stand 2nd April. It had a diverse range of speakers and messages.

Possibly the most common message from academic speakers was that the majority of projects do not come in on time or budget. In fact very many had major cost blowouts approaching 100%. There were a number of perceived reasons why this occurs.

The first, identified by the majority of speakers, focused on upfront design failures. Typically 80% of the project cost is established at this phase.  So if this is wrong, such expense becomes a necessary, often quality ensued outcome. The solution to this issue was to get designers to focus on the long term operational performance, say at least 10 years operation, rather than just on practical completion.

The second related to competitive pressures which were increasing. Lowest tender bidding meant that corporate survival required taking a chance on contingencies for risks that might never eventuate. If the construction market continues to shrink, more and more tenderers will be bidding for fewer and fewer jobs and greater collective risk taking will result. One speaker even warned of an increasing likelihood of unethical behaviour in such circumstances.

Richard’s presentation can be viewed on our conference page