Critical Success Factors in the Construction Industry

Introduction

Time, cost and specification are the three basic barometers through which all projects are typically measured. As projects become larger and the number of stakeholders increase however, those from different backgrounds often view project success in a number of different ways. Profit and schedule may be important to the client, health and safety may be more critical to the contractor while aesthetics may be the primary concern of an architect. To help achieve the stated goals of a project, critical success factors (CSFs) are utilised. CSFs are measures which are put in place to ensure the successful delivery of a project. Put simply, they create a means through which the project can be carried out while meeting its aims (Alias et al., 2014). John F. Rockart (1979: P81) has defined CSFs as ‘key areas in which satisfactory results would ensure the successful competitive performance for the organization.’ CSFs encompass many different elements which will be investigated further below – these elements must be coordinated throughout the project to ensure its completion.

• Project Scope
• Top Management Support
• Project Schedule/Planning
• Commitment of All Parties to Project Success
• Resources
• Technology
• Client Acceptance
• Communication
• Training
• Contract Management
• Risk Management
• Resource Management
• Experienced Management Team
• Quality Control
• Health and Safety

Project Scope

Without a pre-agreed and documented vision, chances of success are greatly reduced. Therefore, it is vital for each project to clearly outline its scope so that the project can advance in a coordinated fashion. As mentioned above, different stakeholders may often have different aims for a project, depending on their specific interests. A well-defined and managed scope can help lead to the delivering a quality product, on time, under budget and within specified schedules to the stake-holders (Mirzaa et al., 2013). Specifying project objectives early on and sticking to these aims is paramount to a project meeting these goals. Typically, project scope would include plans such as description of scope, budget, schedule and performance requirements. A well-defined project scope should include project aims that are specific, measurable, attainable, relevant and time-bound (SMART).

In identifying the project scope, the following areas must be addressed:

• Identify Requirement: Once the scope has been agreed, this should not change over the course of the project. If the scope is beginning to change direction, it becomes increasingly difficult to ‘build a product to meet a moving target’ (Mirza et al., 2013: P724).
• Identify Stakeholder: The needs of stakeholders must also be considered prior to setting out scope. Clients, designers, contractors and end users all need to be considered while defining a projects main objectives. Considering the interests of these parties (plus many other stakeholders) will heavily influence scope.
• Identify Project Drivers: By their nature, all projects are different. Internationally, projects are affected by different building regulations, different attitudes, different climates and many other factors. These different influences can play a large role in determining the project scope, as many factors require different considerations. Projects are also shaped by outside influences, e.g. regulations, standards, laws, and other considerations.
• Assess the Scope Statement: the project scope ‘provides justification for the project existence, lists the high-level deliverables, and quantifies the project objectives’ (Mirza et al., 2013).

Communication

When starting a project, setting up a communication system that caters to the needs of the project is vital. As mentioned above, each project is unique – whether it be different clients, contractors, budgets, timeframe or contract type, this all has a knock on effect on the communication procedure. The communications methods need to be outlined early in a project in a way that satisfies the requirements of those implementing the project – information needs to be shared quickly when needed and effective communication channels need to be in place for this to happen. There are a number of areas of communication which are of particular importance in construction, these will be looked at in more detail below:

• Requests for Information (RFIs): these are an aspect of communication that can greatly influence a projects success. From an engineering viewpoint, management of RFIs and ensuring their resolution within a specified timeframe is very important. An effective system for monitoring and controlling RFIs can inhibit delays and ensure progress flows more steadily, thus helping with site works and schedules.
• Dispute Resolution: as any construction project develops, disputes inevitably arise. Setting out clear guidelines on how to deal with these disputes would aim to solve problems in a timely manner and in a fair way. Dispute resolution forms a vital part of a communications procedure and can help to resolve disputes in a way that both parties are satisfied and works can continue.
• Feedback: developing and enhancing work methods can be achieved by implementing a suitable feedback process within the communications procedure. ‘Near Miss’ or ‘Good Catch’ cards can be a simple way for many to voice their opinions or concerns on a project, and their concerns can be acted upon if required. A successful feedback system can help with employee morale, can help with aspects of health and safety and can improve the quality of the delivered product.

Effective communication is vital for successful project implementation. It is not only important within the project team, it is also important for the project team and their communications with others in their organisation and others involved in the project (Pinto and Slevin, 2015).

Risk Management

Due to the complexity and budget limitations of construction projects, risk management is vital to a projects success. Management of risk must be considered from the very start of a project and every effort must be taken to make to negate these risks as much as possible (Yaraghi and Lange, 2011). Some of the areas of risk that must be taken into account include:

• Environmental: particularly with larger scale projects, the impact of the works on the surrounding environment can lead to many issues such as noise, sound or air pollution, it could impact local wildlife or it could impact local society. Early scrutiny of these impacts can help with negating these risks before they are detrimental to a project.
• Earthworks: with all ground works, a certain number of assumptions are made when pricing and planning a job. Typically, boreholes are carried out and this information is used to learn about the makeup of the ground. From this, extrapolated data is used to estimate the quantities and levels of rock, soil and water. There is inevitably a risk factor with these assumptions which needs to heavily scrutinised and factored into pricing the job.
• External Market Forces: construction is Ireland is a volatile market and as such, assessing the market forces that can impact a project must be considered. These factors include product demand, labour, interest rates and materials supply.

To implement a risk management strategy, a procedure should be drafted – management need to identify potential risk and prioritise them accordingly. From this, a list of risks or a risk map can be developed and appropriate risk response measures can be drafted in line with this. (Zhao et al., 2013)

Experienced Management Team

The experience of project managers can have, particularly in construction due to the diverse nature of each project, a large bearing on the success of that project. The critical success factors mentioned above tie in largely with this – an experienced management team should be capable of setting clearly defined project goals, managing an effective communication system and assessing the project risk. Szentes (2010) carried out interviews of construction project managers across four Nordic countries. He concluded that ‘experienced project management team, availability of resources, and effective communication were main CSFs of large construction projects’ (Samiullah et al., 2018: P2685). In a separate study by Samiullah et al. (2018), they carried out questionnaire surveys of construction professionals which concluded that the overall experience levels of the management team was the top ranked critical success factor on their projects.

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It is obvious that experience levels of managers would have a knock on effect on the success of any project. Factors such as man management, contracts, scheduling, design, technology, plant and health and safety all require a certain level of ‘book learning’ although having on the job experience can develop this much further.

Contract Management

One of the overall aims of any project is to turn a profit, and in order to achieve this aim, the contracts manager has a vital role to play. Contract plays an important part in the management of a project, relationships within the project and business strategies. It is the basis upon which many decisions are made. All parties within a project, whether it is the client, the contractor or the subcontractor, are all looking to decrease their liability and maximise their return. Intricate understanding of the contract is therefore pivotal in managing these risks and the project being a success. Organisations both in public and private are looking for efficient performance at a reduced cost. Careful management of the contract can determine the overall success of a project (DTU, 2017).

Construction contracts can typically be broken up into three chief categories; labour, regulations and commercial. Labour contracts are concerned with the employer/employee relationship, regulatory contracts cover the ‘expectations between the company and the regulators, mostly from the external environment’ (Nyang’or, 2011: P1), and the commercial contract. The commercial contracts are concerned with the supply of goods and services on a project. The client/main contractor agreement would fall into this grouping and it can have a massive bearing on the route a project can take, the sequencing of works and the profitability of the job. The key clauses in a contract are usually of a commercial aspect such as scope of works, penalties for missing deadlines or non-conformance or payment terms (Nyang’or, 2011).

Construction Specific CSFs

• Health and Safety is an area of construction that plays a massive role on a project. Setting out clear health and safety aims, guidelines and procedures prior to a project beginning carries a lot more emphasis in construction due to the dangerous nature of the work.
• Quality Control is another area that can have a significant bearing on the success of a construction project. Non-conformance with standards and specifications can lead to hold ups, non-payments and it can lessen a companies reputation if the job is not completed to a certain standard.
• Planning in any project is important for its success. In construction, there is always a large emphasis on planning and programme as it determines what directions the works will take, what subcontractors are required and when, and how deadlines will be met. The complexity of planning in construction can not be overestimated when it comes to CSFs.

References

• Alias, Z., Zawawi, E., Yusof, K. and Aris, N. (2014). Determining Critical Success Factors of Project Management Practice: A Conceptual Framework. Procedia - Social and Behavioral Sciences 153 ( 2014 ) 61 – 69
• DTU, 2017. Construction Contract Management Guidelines and Administration. Available at: http://apppm.man.dtu.dk/index.php/Construction_Contract_Management_Guidelines_and_Administration Accessed on: 08/11/2018
• Forcada, N. et al. (2008). Experiences of Success in Industrial Plant Projects. Revista Ingeniera de Construction, 23(1), 82- 89.
• Mirzaa, M., Pourzolfagharb, Z. and Shahnazaric, M. (2013).Significance of Scope in Project Success. Procedia Technology 9 ( 2013 ) 722 – 729
• Nyang’or, H. (2011). Contract Management as a Critical Success Factor in Strategic Decision Making at Kenya Airways Limited. Available at: http://erepository.uonbi.ac.ke/bitstream/handle/11295/96722/Nyango'ri_Contract%20management%20as%20a%20critical%20success%20factor%20in%20strategic%20decision%20making%20at%20Kenya%20Airways%20limited.pdf?sequence=1 Accessed on 08/11/2018.
• Otubanjo, O. 2018. Building a Powerful Entrepreneurial Brand: The Role of Critical Success Factors and Their Impact on Competitive Advantage.  Available at: http://eds.a.ebscohost.com.ezproxy.wit.ie:2048/eds/pdfviewer/pdfviewer?vid=1&sid=eee59aba-c48c-4306-8d4a-ad980bf82c88%40sessionmgr4006 Accessed on 18/10/2018
• Pinto, J. and Slevin, D. (2015). Critical Success Factors in Successful Project Implementation. Available at: https://www.researchgate.net/publication/267559698 Accessed on: 08/11/2018
• Rockart, J.F. (1979). Chief executives define their own data needs. Harvard Business Review, March–April, pp.81–93
• Samiullah, S., Jhatial, A., Ullah, K., Lakhiar, M. and Shahzaib, J. (2018). Determining the Critical Success Factors for Highway Construction Projects in Pakistan. Engineering, Technology & Applied Science Research Vol. 8, No. 2, 2018, 2685-2688
• Szentes, H. (2010). Success Factors in Large Construction Projects. Proceedings of TG65 and W065-Special Track. 18th CIB World Building Congress, pp. 423–433, 2010
• Yaraghi, N. and Langhe, R. (2011) Critical Success Factors for Risk Management Systems. Journal of Risk Research Vol. 14, No. 5, May 2011, 551–581
• ZHAO, X., HWANG B. and LOW, S. (2013). Critical success factors for enterprise risk management in Chinese construction companies. Construction Management and Economics, 2013 Vol. 31, No. 12, 1199–1214