Construction project delays end up hurting the project health in multiple ways. Ultimately they end up costing much more than the general perception.

Job of a project manager or a construction contractor demands two important things –

• Make sure the project is delivered on schedule
• Make sure that project costs remain within budget

Yet majority of infrastructure projects fail on that front. For heavy infrastructure projects in India, we see around 80% projects delayed and budgets overrun by 100% on average. It is hence important to ask what is causing this failure of budgets, schedule and are those reasons interrelated?

Answer is yes, those reasons are deeply related. Following chart very clearly demonstrates how project delays are largely responsible for budgets being overrun.

Inefficient usage of resources

Whenever any activity is delayed, the resources assigned to that activity will sit idle. Imagine a construction crew being idle on the site because material delivery got delayed. This waste of valuable resources is partly causing the costs to exceed budgets.

But the nuance of delays doesn’t just end there.

Delayed payments

Project delays also delay important milestones. Then payments attached to those milestones get delayed. If substantial payments are delayed, that will hurt upcoming activities and delay the project further causing more delay in payments! This is a vicious circle indeed.

For small and medium contractors who may already be constrained by liquidity, this is a bad place to be. Hence timely completion of milestones becomes critically important.

Disputes over delays

Severe construction project delays may even get escalated to an arbitrator and then to a court. In case of heavy infrastructure projects, 80% projects get delayed and around 75% claims are disputed and sent for arbitration. Majority of these disputes result in the favor of contractor, but it takes more than 6 years to settle those claims. This kills the near term liquidity for a contractor.

Project delays can hence be huge setbacks for small contractors who then struggle to keep the project moving.

If schedules are indeed so critical, it makes sense to emphasize on timely delivery of projects and milestones. WorkPack helps contractors to manage timely delivery of engineering services, construction work and turnkey infra projects. Get in touch to find out more details.

Although the case of infrastructure projects in India is just one example, it clearly demonstrates the impact of project delays on cost overrun.

What is your experience in case of project delays and their impact on project costs? Comment below to let us know how you manage to deliver on time.