Edited by Eamonn Ryan
Construction cost overruns are often blamed on delays, material shortages or unforeseen events on site. Yet the greatest financial risks are frequently introduced much earlier, during planning. Unrealistic schedules, incomplete project scopes and poor cost estimates can lock projects onto an unsustainable path long before the first excavator arrives. In the first of this two-part series, Chris Smith of RIB Software explains why better planning is the industry’s most powerful tool for controlling costs.
Chris Smith of RIB Software.
Supplied by RIB Software
“The reality is that many project risks are already created during the planning phase. When timelines are unrealistic, scopes are poorly defined, or teams are working from disconnected information, cost overruns become far more likely.” – Chris Smith, Senior vice-president for MEA and APAC, RIB Software.
Construction projects rarely exceed their budgets because of a single catastrophic event. More commonly, overruns are the cumulative result of decisions made long before construction begins. Unrealistic timelines, incomplete scope definitions and fragmented information create financial risk before the first contractor sets foot on site.
In an industry operating with increasingly tight margins and economic uncertainty, treating cost overruns as unavoidable is no longer an option.
According to a 2022 McKinsey & Company analysis of more than 500 large-scale projects worldwide, average cost overruns reached 79%, while project schedules exceeded original timelines by an average of 52%. The study concluded that many of these problems originated not only during construction but also in poor cost estimating and inadequate planning during project approval.
Competitive tendering often compounds the problem. Contractors are frequently forced to submit aggressive pricing simply to secure work, resulting in budgets based on optimistic assumptions and schedules with little contingency for unexpected events. As a result, the planning phase – which should reduce uncertainty – often becomes the stage where the greatest financial risks are introduced.
One of the earliest indicators of future budget problems is the project triangle of time, cost and quality. When one element begins to drift, the others inevitably follow. A missed milestone is seldom just a scheduling issue; it is often the first visible symptom of deeper planning weaknesses that can lead to rework, increased expenditure and strained client relationships.
Experienced project teams understand the value of recognising these warning signs early, allowing corrective action before relatively small issues develop into significant financial problems.
Coming next: Part 2 explores how real-time project visibility, digital technologies and structured risk management are helping construction companies improve project outcomes and deliver more predictable budgets.
What this means for the HVAC sector
HVAC contractors are particularly vulnerable to planning failures because mechanical systems are typically installed after structural and architectural work has progressed. Poor co-ordination during the design phase can result in clashes, redesigns, procurement delays and costly rework. Greater collaboration between consulting engineers, contractors and suppliers, supported by digital project management tools, enables HVAC teams to identify problems earlier, improve installation sequencing and protect both budgets and programme deadlines.
Source: Supplied by RIB Software
