Photo by: Duane Daws
Only 25% of large construction projects surveyed in KPMG’s Global Construction Project Owner’s Survey, released on Wednesday, were concluded on time and within budget over the last three years.
“Every project owner wants predictability when it comes to large projects, and this is clearly not happening,” said KPMG South Africa Infrastructure and Major Projects director Jeff Shaw in Johannesburg.
A wide variety of project owners in different sectors were surveyed, including public utilities, mining houses and oil and gas companies.
KPMG in 2014 interviewed executives from more than 100 private and public organisations around the world for the survey. The yearly revenue of respondent companies varied from $250-million to $5-billion, covering a wide range of sectors. More than a quarter of the respondents worked for government agencies.
Just under 10% of respondents were from Africa.
A clear message from this year’s survey was that while project owners were satisfied that many of the basic tools to manage large projects were in place, talent shortages remained a global challenge, noted Shaw.
This shortage of talent covered the full range of skills required on projects with 44% of respondents struggling to attract qualified craft labour and 45% lacking planners and project managers.
With the US experiencing a significant upswing in construction activity and the European market still flat, South African project owners would struggle to attract the right talent for large project execution should there be an increase in activity domestically.
The lack of the right people will be a limiting factor should construction in Africa accelerate, said Shaw.
This year’s survey also highlighted another critical factor, namely the notable lack of leadership skills within the project environment, he added.
“A large project could mobilise around 20 000 people and 100 companies. Project owners feel that the leadership around these projects is severely lacking.
“Also, the relationships between the contractors and the owners and contractors are mostly adversarial, instead of collaborative, with little trust between the parties,” said Shaw.
“It is my feeling, and it is supported by the survey, that the biggest weakness in executing large projects can be found in the broad category of leadership and teamwork.
“The level of maturity within project owners in leading massive teams to manage a large, complex project is far too low, and there is nothing to say that this is not also the case in South Africa.
“It is far too easy to look at the nitty gritty stuff, such as implementing a new costing or scheduling system, instead of the softer issues, such as labour and leadership. These softer skills are completely undervalued and the impact on project success is underestimated.”
Shaw said there was a particular lack of trust between public sector project owners and contractors in South Africa, with the recent findings by the Competition Commission on collusion in the construction industry not helping matters.
“This is perhaps the biggest single message the survey has for South Africa. If we do not break the cycle of mistrust and a lack of leadership, we will not execute large projects successfully.”
Shaw made the intriguing statement that most people, both inside and outside the successful Gautrain project, knew who the leader of the project was, but that very few people could name the management leading the construction of many of the troubled projects currently under way in South Africa.
He also believed that the responsibility for strong, appropriate leadership rested with the project owner, but that the owner also required cooperation and equal maturity from the contractor.
“Owners must actively manage the talent on major projects, and not just mobilise contractors. This will also help to address the lack of productivity on construction sites, which is a particular issue in South Africa.
“It is also important to provide continuity in leadership, as research shows that a change in project manager can cost a client up to six months in time lost.”
The survey noted that 69% of respondents identified poor contractor performance as the biggest reason for project underperformance.
It is clear, however, that project owners recognise that change is essential, with the KPMG survey showing that 82% of project owners expected greater owner/contractor collaboration over the next five years.
This could well lead to a fundamental reconsideration of procurement methods, contracting strategies and pricing mechanisms.
“We cannot have a situation where the contractor tries to earn as much as possible, with the owner working to limit costs. The contractor must be integrated into the project, perhaps with the gains and losses shared by both parties,” suggested Shaw.