Fletcher Building, NZ’s leading construction company, admitted that a few of their major projects are facing the problem of poor project management and it may be the sign of a much wider issue.
The industry as a whole is losing money in a short period of time, a project management specialist with knowledge of the issue has stated. According to Fletcher Building’s chairman Sir Ralph Norris, in the construction division in 2017, the company has lost $292million due to design changes, undesirable project management and governance with a shortage of resources, especially workers.
“A boom in any business is almost as bad as a bust, because you end up with a situation where resources get short, the ability to price becomes compromised by the fact that the demand becomes such that sub-contractors and trades, etc, start to become more expensive because of the scarcity situation.”
“And you also find you run into blocks and hurdles, which means time goes against you and in any business, time costs money.”
James West at Christchurch-based project management consultancy Quantum Aspects says most of the problems can be eliminated. A PWC report last year showed that the average cost to build a commercial building in NZ was $15m, while two third of that was spent on overheads, wastage, litigation and additional costs.
“The impact of a professional project manager with proper planning experience can have on a project will largely eliminate most of that $10m worth of loss per project.”
An industry-wide report by KPMG suggested that only half of all projects have met the criteria on time, budget and scope.
Upskilling was one of the main concerns raised. A majority of project managers moved sideways to take up the job role, while very few of them have gained project management qualifications, West explained. Another contributing factor is the slow process of modifying the designs between architect, builder and developer.