The pipeline for Engineering Procurement Construction (EPC) projects is white hot. By September of 2022, over 100 million square feet of industrial development space had been delivered to the U.S. market in this year alone — a new record. Another 586.7 million square feet of industrial space was already in the construction stage — also a record.
What’s Up With Insane Overruns?
But it’s no time to sit back on your heels. EPC projects are dogged with preventable delays. Surveys show that 70% of projects have time overruns, while 76% of contractors and 56% of consultants point to average time overruns of 10% to 30%. When you’re dealing with millions (or billions) of dollars, an extra third in overrun is huge. And unacceptable.
It’s even worse for megaprojects. Oxford University says 90% of EPC megaprojects face cost and time overruns.
Here are a few of the top reasons for planning and construction delays that we’re seeing right now:
1. Overall Supply Chain Volatility
It’s a mess out there. The war in Ukraine. Labor shortages. An industry still swinging back from COVID. A bull rush of new projects locked and loaded for action. Andrew Volz, a construction research manager from Chicago, calls out supply chain disruptions and volatility as one of the biggest factors causing delivery delays.
Okay, so you can’t solve world peace. Supply chain issues are gonna happen. But you can keep your project out of the muck with better communication and alignment across all teams. An empirical study of delays in large engineering projects named “lack of communication between parties” one of the leading causes of costly delays. This is a business about getting stuff done, but don’t forget to coordinate. And if you’re lost in the weeds, a special ops team that knows how to handle this can help.
2. Delayed Deliveries & Long Lead Times
Long-lead items demand aggressive pre-planning. Late deliveries and long lead times are one of the top factors in construction delays. You can’t wait on these things and expect it to work out. Some contractors are launching their construction pre-planning phase a year and a half before groundbreaking… about triple the time they used to spend.
They’ve got no choice! Median delays for EPC projects are now over 200 days and you’ve got to be proactive to keep ahead of the fire. Engage your distributors and suppliers early and start the conversation. The earlier you start, the better your partners can help you identify potential delays and get those things moving so the delivery is on time.
3. Sitting On Your Hands or Twiddling Your Thumbs
Take a hard look at your procurement cycle and lead time for field buys. How many days are you wasting every time you identify a need in the field? Count the days between the time you figure out there’s a need and the moment you slap it into your team’s hands to install. A week? Two? Every day pours the man hours and money of EPC projects down the drain.
EPC project management is right to worry about this nonsense. That’s why so many are building up huge ghost inventories of material they don’t know if they’ll need. Just in case. That’s not the worst strategy, but you can be even more efficient. True efficiency is about smart construction material management. You need a system to track inventory and deliveries in real time and flag your future material needs before you need them. The research firm McKinsey calls out the value of a true production-management system with lean construction tools that enable decisions to be made collaboratively across the project.
4. Not Enough Experience
Lack of contractors or vendor experience with projects of this magnitude is a top-five risk factor for delays. Research called this out as a major contributor in the more than 80% of oil and gas projects worldwide that rack up delays. It’s no surprise. A steady hand at the tiller helps you chart a straight course.
This is a risk factor you can nip in the bud with a little attention to who you’re working with. You need partners who speak the language of these projects and have experience you may not find in your current team. Someone who’s seen it before, and knows what’s coming. The most important part of preventing delays is predicting them. Only then can you take action to snuff them out.
Tackling these four main causes of delays will go a long way towards saving EPC projects millions. Troop Industrial has been putting in the elbow grease to resolve these sorts of material management issues for decades. Get in touch with our experienced, expert team to get ahead of pointless delays and keep your project humming.
