Looking At The Outlay Of The Construction Industry Construction Essay

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The construction industry is large and volatile and demand enormous capital outlay; as a result the industry sometimes produces huge problems which can end up into dispute and distraction of relationships between different parties of interest. The parties involve could either be client, contractor, engineer or project manager. In most cases the negative effect that arises are as such lawsuit, time loss and budget overrun. From the client point of interest they would be a loss of profit as a plan might have been drawn for business to embark on. On the contractor's side delays in construction entails a contractor into additional cost from labour, equipments etc.

This project will review different constructional project associated with constructional problem and the causes of these problem, which may have lead to upsets. The considered major projects are;

Wembley stadium

British library

Jubilee line

Wembley stadium

The new Wembley stadium is a construction project which was designed by Sir Norman foster to be the home English football and host a series of national events including athletics, cup final and music events. The project was aimed to design and build a state of the art national stadium with features unlike any other in the world and with the same iconic feel as the old stadium. However there were several problems associated with the project introducing various disagreements and disputes. The main contractor was multiplex UK ltd, with an estimated total cost of £757 million. The project was funded by national lottery fund investments, west deutsche of Germany, Ken Livingston & Brent council and WNSL.

Problems during construction

The project had a delayed start of two years; however the construction began in October 2002 and was schedules for completion on may 2006. Due to last completion a schedule cup final relocated and as a result the main contractors multiplex had to pay for penalties.

There was also problems between the multiples and Cleveland bridge (steel subcontractor). The steel company walked out of the job in 2004 because they believed that material would not be paid for and resulted in contract breach and court cases. There were also problems to do with constructional errors as the temporary roof support had fallen over up to a certain degree, this ended into an excavation of workers which introduced delay of the expected completion time.

Due to ground movement there was also buckling of the installed sewers introducing extra remedial work and cost over-run.

British library

The British library for many years existed as several component in different places. Due to the parliament act 1972 it was considered to bring all the various together as one. The design and build of the British library was scheduled to begin in 1973 and completed in the late 1980's however the door to the library opened to the public in 1998. The programme was estimated to cost around £160 million however upon completion it had drawn in around £450 million which is a significant increase in budget.

Jubilee line extension

In 1989 London underground jubilee line was to be linked between Westminster and dockland and extended beyond Stratford. The project had an estimated cost of £12 billion. This was mega project as the line was to be extended around about 22km of new tunnelling crossing 11 new stations. Construction work was to begin on December 1993 and due to complete on June 1997 with content that the line will open for public use in December 1999. The project was delayed throughout its life cycle by four major events.

An 18 months moratorium while private sector funding was secured

The collapse of the Heathrow express tunnel

Failure of the moving block signalling system

The decision to site millennium dome

There was also delays and disruption caused by project been plagued with changes that affected the programme.

Moreover the project had a cost overrun of 70% more than estimated cost, from £1.2 billion to £3.5 billion with time overrun of 20 months Mitchell (2003).

Major constructional issues

Construction project is a mission, undertaken to create a unique facility, product or service within the specified scope, quality, time, and cost (Chitkara, 2004). In some constructional project there is some associated problem which develops prior to the completion date. From the discussed major projects it is noticed that the main problems associated in construction are time delays and budget over-run. As a result It is required in-depth review on the effects and properties of these problems. It is very likely to see constructional project failing to attain their goal and therefore producing an increase in cost and time effectively.

Time overrun or late completion

Time is an essential property in the construction industry, as it can lead up to rescind and dispute. Late completion is where a time stated for a project to complete is exceeded. When a project is able to run and complete in a given time frame it presents the idea of good organisation and effectiveness of the project consequently for the parties involve important to achieve a timely completion of a construction project on time. In correspondence to the client and contractor, late completion they will tend to invite additional expenses resulting from settlement between the two parties.

A project is by and large regarded as successful if it is completed within an estimated budget, within the client specifications, within the time constraints and up to standard requirement of the building regulations including healthy and safety, Chan & Kumaraswamy (1996).

Causes of late completion

Late completion can arise from any party involved in the construction programme. Within the construction project the different sectors involved that can cause a time overrun are the client, contractor.

Problem caused by Client

Financial inabilities

this is a situation were by a client is unable to fund an ongoing project resulting into project time delays

A possible change in design

A situation whereby an initial design planned is changed at a point in time

Land provision

Make sure that the land is provided and ready for use

Although client requirements are unique in every given situation, they can be classified as basic or expected needs, articulated or demanded need and exciting needs (Griffin and Houser, 1991; Mallon and Mulligan 1993). Basic needs are those which are not voiced but are expected to be present in a facility. Basic need can either be omitted or included however it will only reduced client's satisfaction if omitted.

Articulated are needs that are voiced or demanded moreover exciting needs are needs brings pleasure and delight to client when added as it is not voiced out by client.

Time delays from contractor are could result from some non-excusable circumstance however it is the responsibility of the contractor he should see to its occurrence. Some of the non-excusable are defined by Majid and McCaffer as;

Poor planning of work

Contractor should be able to outline the work plan on which the construction follow

Poor site management

Labour

Contractor should make sure there is sufficient people to carry out the construction

Availability of materials and equipments

Contractor should make sure material arrives as schedules

Conflicts and changes in design requirement

Notice of work commence

Clients should allow enough time to process and begin project

Labour, machinery and equipments

Contractor should make sure there is sufficient people to carry out the construction

Site management and site safety

Environment and restrictions

These describe immediate environment surrounding the propose site for the construction ( neighbourhood, environmental conservation)

Unforeseen ground conditions

climate factors

Bad weather can result into delays as worker not able to set to work, delay delivery of good and equipments

Materials-related delays

Inefficient communication

damage materials

poor quality of materials

late delivery

Labour-related delays

Poor communication , absentees or low motivation

Equipment-related delays

can be due to poor equipment planning

Financial delays

Delay of payment to supplies

Improper planning

due to a lack of experience

Lack of control

Inaccurate management of personnel and the whole agency

Attitude

Low moral motivation

Subcontractor delays

Faults made by them

Poor coordination

Lack of facilities

Lack of experience

Inappropriate practice or procedures

Inadequate supervision

Too many responsibilities

Shortage of personnel

Lack of experience

Poor quality

Poor planning

Improper construction methods

Wrong method statement

Lack of experience

Inadequate fund allocated

Inappropriate procedure

Unavailability of proper resources

Technical personnel shortages

Strikes

Lack of experience

Poor planning

Slow mobilisation

absenteeism

Poor communication

Cost/ Budget overrun

"For which off you, intending to build a tower, sitteth not down first, and counteth the cost, whether he has sufficient to finish it?" Luke, 14:28; quoted by L. Powers, (2006). This goes to show that cost overrun have being in existence for a very long time. They are much common in infrastructure, building construction and technological project.

Budget overrun is when the estimated cost calculated is overrun producing a budget excess or the amount by which the actual cost exceeds the budgeted, estimates, original or target cost.

There are several factors that cause an increase in cost within projects; some could be controllable whiles other may vary depending on the extent of damages. Some examples are as follows inaccuracy of original estimate, labour related problems, completion delays and design changes. According to Jahren, et al, (1990), a survey done they predicted that the follow factors influence cost overrun rates: the size of project, the delivery method, the level of competition, quality of contract documents and the interpersonal relations on the project.

Some common factors according to user guide (2005) are;

Poor project management

Lack of planning and coordinate

Poor communication between members of the project team and project sponsor

Failure to identify problems and institute necessary and timely design and programming changes

Lack of end user involvement

Unexpected ground conditions

Due to some ground uncertainty a project might need remodel of foundations. This however makes it important to review the conditions of sub soil to sufficient extent to prevent grate expense in future

Shortage of materials

Ordering of materials should be carried out in quick succession as sometime local markets are unable to deliver in full quantity of required goods. Therefore it might be a need to import this construction material from aboard resulting into delays and cost increase since there are effects of exchange rate.

Natural occurrences

There are ranges of event that can increase in cost overrun and delay's, they include war, riot, disasters, landslides, contamination and others.

Causes of cost overrun

According to Flyvbjerg (2003) there are four types of causes to cost overrun and they are technical, economical, psychological and political

Technical

Economical

Political

Psychological

The table shows comparison among countries of delays and budget overruns. Le-Hoai et al (2008)

Malaysia

(Sambasivan, 2007) (2)

Improper planning

Site management

Inadequate contractor experience

Finance and payments of completed work Subcontractors

South Korea

(Acharya et al., 2006) (2)

Public interruptions

Changed site conditions

Failure to provide site

Unrealistic time estimation

Design errors

Hong Kong (Lo, 2006) (2)

Inadequate resources due to contractor/lack of capital

Unforeseen ground conditions

Exceptionally low bids

Inexperienced contractor

Works in conflict with existing utilities

UAE (Faridi, 2006)(2)

Preparation and approval of drawings

Inadequate early planning of the project

Slowness of the owner's decision-making process

Shortage of manpower

Poor supervision and poor site management

Jordan (Sweis, 2007)(2)

Financial difficulties faced by the contractor

Too many change orders from owner

Poor planning and scheduling of the project by the contractor

Presence of unskilled labour

Shortage of technical professionals in the contractor's organization

Kuwait (Koushki, 2005)(2)

Change orders

Financial constraints

Owner's lack of experience

Materials

Weather

Nigeria (Aibinu, 2006) (2)

Contractors' financial difficulties

Clients' cash flow problem

Architects' incomplete drawing

Subcontractor's slow mobilization

Equipment breakdown and maintenance problem

Vietnam (Le-Hoai, 2007) (1)

Poor site management and supervision

Poor project management assistance

Financial difficulties of owner

Financial difficulties of contractor

Design changes

Ghana (Frimpong, 2003) (1)

Monthly payment difficulties

Poor contract management

Material procurement

Inflation Contractor's financial difficulties

(1): Delay and cost overruns; (2): Delay only; (3): Cost overrun only

A successful project

Heathrow terminal 5

The BAA Heathrow terminal 5 is currently one of Europe's largest and most complex construction projects. It was approved for built on 20 November 2001 and was scheduled for completion on March 2008. This project will increase Heathrow's capacity by 50% and will provide a perfect gateway into London.

It had an estimated cost of £4.3 billion will not only include the airport but will also involve satellite building, nine new tunnels, two river diversions, connection to M25, car parks, facilities for next generation jumbo jet aircraft, buses and coach stations. The project management was based on the principles specified in the Rethinking Construction (Egan, 1998) and constructing the Team (Latham 1994)

There project was classified to be a success as it was completed on time and within the estimated budget.

Why it all went right

Controlled planning throughout project

Controlled high expenditures with realistic fixed completion date

Effective use of team target

Professional expects clients BAA chose industrial experts for key roles

Use integrated teams; contractors work in partnership

Clear identification of roles within an integrated team

High performance levels and benchmarking standards

Overview of four compared project

Project

Cost overrun

Time over

Quality

Success

Terminal 5

No

No

Good

Yes

Wembley stadium

Yes

Yes

Good

No

British library

Yes

Yes

Good

No

Jubilee line extension

Yes

Yes

Good

No

Success- early completion and within estimated budget.

From the table above it can be deduced that Wembley stadium, British library and jubilee line extension all had significant cost overrun and time delays with only terminal 5 projects being a success in terms of keeping cost and time overruns to almost a bare minimum. However the final outcome of all projects was deemed to be of good quality.

It can then be an augured that to determine the success of a project a balance had to be achieved between the quality of project and time and cost overruns. However a client's judgment on the quality of a project is specific to a particular project. Client may even judge a quality of a project on whether it is either completed on time or on budget.

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