Going over your annual, monthly and even daily budget can personally give you that sinking feeling. Whether it was an unexpected expense or simple miscalculation, thankfully for most of us it’s easy to make ends meet and catch up. In construction, making up for budget overruns isn’t as simple, especially if you’re working on megaprojects. One weather delay here, one change order there. Before you know it, you’re running months behind schedule and millions over budget.
If you haven’t been on a project that’s gone over time or budget, you’re in the minority. For megaprojects, projects classified as more than $1 billion, these overruns can have a far greater magnitude. The London Crossrail is a prime example of a megaproject gone right. Scheduled to be completed in late 2018, there will be no excess cost from the original budget. Nonetheless, most projects don’t experience the same degree of flawless execution. Not even close. In fact, approximately 98% of megaprojects experience time or budget overruns to some extent.
To showcase just how large overruns can get, check out our latest SlideShare “Top 10 Biggest Billion Dollar Cost Overruns on Megaprojects”.
Why Megaprojects Go Over Budget
Megaprojects are significantly more complicated than your average construction project just due to their sheer size. Larger projects are prone to more risk, regulation and, unfortunately, mistakes. Here are some of the top reasons why megaprojects continue to exceed budget:
For better or for worse, project planners tend to be overly optimistic when they originally establish the scope of the project. But when it comes time to build, it’s a different story. Unexpected changes almost always happen, and if project managers aren’t adequately planning and anticipating for them, shortfalls are highly likely.
By their very nature megaprojects more complex. With so many stakeholders involved, often projects are burdened with incomplete and error-ridden designs. When plans are ready to be built, they are executed incorrectly and need to be redone. Rework adds up quickly in both time and money. Therefore, seamless design planning and collaboration are essential for a successful megaproject.
Project changes are inevitable. But it’s how change is managed that has the biggest impact on a megaprojects outcome. If changes are instantly and clearly communicated to all team members, that’s likely to have minimum impact on your project’s budget or schedule. On the other hand, if communication is disjointed, small changes can have a domino effect–adding up to colossal profit eaters. Many megaprojects are still using outdated systems like paper, email and Excel to coordinate changes and team communications. Without new systems to relay changes in real-time, construction teams will continue to suffer from poor communication.
How Megaprojects Can Avoid the Money Pit
To be successful, megaprojects need to adopt the latest technology and practices. With the right digital tools, project teams can stay connected and updated on the latest designs and changes. Learn how to keep your project under budget and on time through the use of mobile construction apps in our ebook, “The Dollars and Sense of Mobile Construction Apps.”