Causes of Construction Cost Overruns
Peter Cholakis
Improve facilities repair, renovation, maintenance, and new build outcomes and reduce costs
There are many causes of construction cost overruns, whether it be new construction, repair, renovation, or maintenance. The graphics represent just a few factors.
In reality, however, the primary cause of construction cost overruns is a lack of leadership and competency combined with associated lack of applied LEAN construction planning, procurement, and project delivery processes (LCPPP)
LCPPP processes have proven capable of a 90% success rate in the consistent delivery of quality repair, renovation, and new construction projects. This is a significant improvement over the AEC industry-wide average of only 10%-20% of all projects being on-time, on-budget, or delivered in a manner satisfactory to project participants/stakeholders.
Examples of LCPPP include integrated project delivery (IPD) for major new construction projects and job order contracting (JOC) for repair, renovation, maintenance, and "minor" new construction. When implemented and managed properly, both methods are capable of consistently delivering BEST VALUE outcomes for all participants.
Tools and services are readily available to enable the successful and ongoing deployment of LCPPP. The only barriers are real property owner competency and leadership.
