Why do Middle East construction projects fail?

Some common mistakes made by clients and contractors

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Ahmed Mohamed Hassan breaks down some of the common mistakes made by clients and contractors that lead to the failure of construction projects in the Middle East

The reason that construction projects fail is an oft-repeated discussion among construction professionals in the Middle East. Following extensive discussions and an informal survey with colleagues and friends working on a number of projects in the GCC, it was relatively easy to whittle down the many reasons why projects fail to a list of some common mistakes made by both client and contractor.

First of all, it’s important to remember that construction projects fail due to a lack of good planning. The other reasons, we’ve divided into two categories:

Causes related to owners:

• Scope issues:
Neither project nor product scope fully address organisational business requirements. Also, owners are often not aware of the project requirements or what exactly they need.

• Communication issues:
Poor and inefficient communication between project owner and other stakeholders on a project can often cause significant delays and deadlocks.

• Determining long lead items:
A lack of interest in determining long lead items can cause a number of conflicts in a construction project’s schedule and budget.

• An inexperienced or under-qualified project team:
If a project team lacks the appropriate skills and expertise to manage a project, then the project is going to fail. A client cannot afford to appoint a project team based on personal relationships, rather than making a decision based on competence and experience.

• Poor estimates:
Problems occur on a project when clients have project estimates that are incomplete or have insufficient detail for proper budgeting.

• Relationship between project budgets and plan:
One of the major causes of failure is the project’s business requirements not being aligned with the budgets and execution plan.

• Incomplete designs:
A common factor in the failure of a project is construction work starting before the design is complete and finalised.

• Lack of risk management:
Another major issue halting the success of a project is when owners do not fully understand the risks associated with the construction schedule, leading to a failure to prepare for any complications that may arise.

• Unrealistic schedules:
Project delays during the planning, design and approval stages often result in compressed construction schedule milestones and unrealistic completion targets set by an unaware management.

Causes related to contractors:

• Scope creep and gold plating:
This is when some extra functions are added, with the changes not explicitly stated in the scope statement for the construction project.

• Poor estimates:
Problems occur when contractors put in overly optimistic bids with poor or outdated data, missed scope items and flawed assumptions regarding regulatory issues, constructability, or labour and the price escalation of materials.

• Turnover:
Turnover during a construction project can have a negative impact on the team and the project.

• Resource shortages and an inexperienced or unqualified project team:
When there is a lack of available craft or staff labour, leading to the use of inexperienced field supervisory personnel, or a lack of qualified and experienced project management team members, a construction project will most likely fail.

• Unfavourable contracts:
Construction contracts favour owners in areas such as payment terms, change order pricing, reimbursement of general conditions, overhead and profits/fees, and negotiations with project owners. This adds up to a challenging environment for a contractor, with penalties for non-performance.

• Lack of support from senior management:
A project will fail when there is a lack of support from senior management in addressing key project issues and challenges in a timely manner. Having the support of senior management is also crucial when it comes to managing key communications and negotiations with the owner.

• Design issues:
Project design issues tend to lead to inefficiencies, unrecoverable cost overruns and schedule delays, which can all have a catastrophic impact on a construction project.

• Coordination issues:
As most contractors will tell you, a lack of coordination with subcontractors and suppliers can have disastrous effects on any construction project.

• An overly aggressive schedule:
An overly aggressive schedule can lead to inefficiencies in the field, which in turn will lead to unrecoverable overtime and premium time.

• Lack of risk management to address unforeseen conditions:
There is often a lack of proactive risk management techniques to identify and address project issues and risks, which in turn leads to huge problems for the contractor should something go wrong.

All of the above points have been compiled from an informal survey conducted by the author, of construction professionals working on projects in Saudi Arabia, Egypt, Qatar and the UAE. The views expressed are entirely the author’s own.

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