Productivity – What’s the cost of not getting it right?

Producitivity costs Ellis Fox Blog

2020 has been a year of careful introspection and for many main contractors, an opportunity to streamline their operations and work smarter. In other words, to finally start to make progress towards improving productivity and profits in the industry. With Brexit looming and the pandemic still out of control there’s no doubt that there are still challenging times ahead. It highlights the critical importance of getting things right from the start to avoid having to count the cost later.

4 years later and 4 billion more

A prime example of this is the controversial Crossrail infrastructure project in London, that was originally due to open in December 2018.  Promoted as being the answer to inner city commuter headaches, offering convenient rail connections from the South East throughout inner London, and increasing capacity by 10%, the project itself has become a major headache. At risk of being mothballed, a finance deal of £825 million has recently been announced by the Department of Transport. It still falls short of the estimated £1.1bn needed to complete the project, but for now at least the project can progress. The question remains, if and when the project finally finishes and Crossrail opens for business, will it be worth it?

Crossrail highlights the difficult decisions that need to be made when a project starts to unravel. Scrap it and let all the investment and infrastructure go to waste, or carry on and bear the burden of operational and profit margin losses? Concerns were raised early on in the project, yet it forged ahead. It’s relatively easy in hindsight to identify what might have gone wrong and what could have been done differently, but is the industry learning from this?

Strategic recovery

Pursuing new contracts, especially major frameworks is one way to enlarge the project pipeline. However, investors are increasingly interested in project delivery and mitigating risks such as project delays and budget over-runs. So over promising and not being able to deliver could severely impact future tender opportunities. There is sufficient expertise in the industry and the availability of technology to be able to improve on project management and delivery. In the current uncertain economic condition there is no room for mistakes. Which means that main contractors need to draw on all available resources to ramp up productivity, because being able to deliver on time and on budget is what can enable the construction industry to lead economic recovery.