A Guide to Controlling Cost and Time Overruns on Industrial Construction Projects

General Introduction

Industrial construction projects have been increasing at the speed of light since the last decade. However, time and cost overruns have been one of the major concerns in industrial construction projects. Delay in the project timeline and fluctuation in cost estimates are the key components and play a vital role in the closure or failure of successful projects.

Specifically talking about industrial construction, these projects are complex like any other construction projects and require accurate planning and execution in order to achieve desired outcomes and successful completion. We’ve heard project managers say that the project is perfectly planned. Still, issues such as time delays and cost overruns come out of nowhere. This blog can be your go-to guide to controlling cost and time overruns on your industrial construction project.

 

What is Cost Overrun?

Cost overrun can simply be defined as a situation in which the actual cost of a construction project exceeds the planned or estimated cost. This is not an unusual phenomenon, as it occurs on many of the construction and engineering projects due to poor cost planning. Of course, there are many other reasons due to which the actual cost may exceed the planned cost on an Architecture, Engineering, and Construction (AEC) project or especially on an industrial construction project.

 

What is Time Overrun?

Time overrun in an industrial construction project refers to a situation where the actual time taken to complete a project exceeds the planned or scheduled time for the project. This can happen for various reasons, such as unforeseen delays, changes in project scope, budget constraints, weather conditions, or any other unexpected events. Time overruns often result in delays in project handovers.

 

Reasons Why Cost and Time Overruns Occur on Industrial Construction Projects

Let’s have a look at some of the major and possible reasons why cost and time overruns occur on industrial construction and engineering projects.

1. Poor project planning and scheduling
2. Ineffective budgeting and estimating strategies.
3. Lack of effective communication among the project team
4. There are frequent changes in the scope of the project, its designs, and specifications, as well.
5. Ineffective collaboration among the project teams and team members.
6. Delay in project activities due to unanticipated site conditions, also resulting in an increase in the cost of linked activities.
7. Unreliable vendors, suppliers, and dealers.
8. Poor procurement, management and utilisation of valuable resources on construction projects. These are some of the factors that are responsible for cost and time overruns on an industrial construction project.

 

Measures to Control Cost and Time Overruns on Industrial Construction Projects

Industrial projects are highly prone to the risk of cost and time overruns as they involve large budgets and complex timelines. These can occur due to a number of reasons, such as frequent changes in the project scope, changes in designs, unexpected conditions, and ineffective budgeting and estimating. So, to control these problems, there are several measures that can be taken, which are given below.

1. Develop an effective project timeline, cost estimate, and project plan.
2. It is advised to carry out a risk assessment to identify potential risks and eliminate them in the planning stage to avoid delays in project activities and cost overruns.
3. Changes in project scope, specifications, and designs should be carefully managed so that they least affect the project.
4. Regular and effective monitoring of the progress of the construction project helps project managers keep a watch on the timeline and costs incurred during the execution stage.
5. Utilization of the latest technologies, such as project management software programs, can help eliminate issues like cost and time overruns as they ensure accurate and effective project planning.
6. Delays in the delivery of materials and other resources cause delays in projects and cost overruns. Therefore, the supply chain should be managed carefully to ensure that materials are delivered on time and are of the required quality.
7. By implementing these measures, construction project managers can effectively control cost and time overruns on industrial construction projects.

 

Wrapping Up

Time and cost are two of the most important elements in a construction project and are crucial for the project’s success. However, industrial construction and engineering projects are prone to such issues, and these can occur frequently with other contributing factors too. In this blog, we’ve focused on measures that are really useful to prevent such issues while practically executing industrial projects. These measures ensure that the projects run in accordance with the planned schedules and around the estimated cost.