- Article by Online Contributor
According to software and information business solution company Deltek’s research, firms in the AEC (architecture, engineering and construction) sector have pinpointed their greatest management challenges as:
- client change requests
- accurate project timeline forecasting, and
- poorly defined scope.
Added together, these challenges have resulted in a climate where two in three AEC firms are reporting up to 25 percent of all projects being delayed and coming in over budget. Furthermore, 72.6 percent have had projects exceed their original budgets by a staggering 50 percent.
According to risk expert Pedram Danesh-Mand from KPMG, however, the main reasons for such project failures haven’t substantially changed in the last couple of decades, even with the improvements in project management software and new technologies such as cloud-based computing.
“A strong team culture – underpinned by excellence and accountability, transparent communication and effective collaboration – is fundamentally required to meet the demands of the digital age,” says Danesh-Mand. “However, I still see cases where silo-driven project teams forget to focus on effective and efficient communication and collaboration, for the greater benefit of the project. Rather people focus on their own individual needs and demands.”
His words are echoed and augmented by architect and consultant Jennekin Dicks from Management In Action. “In the AEC industry, where profit margins keep shrinking and the complexity of projects and the environment is rising, we need greater efficiencies in our work. We need better flow and, to achieve that, we need to build and nurture better connections within our systemic environments,” says Dicks.
AEC firms must also ensure efficient and accurate financial management of their projects, explains principal solution engineer at Deltek, Jeff Klein. “This means achieving set delivery milestones before payment will be processed,” he says. “Clients are putting more penalties into contracts for when projects are not meeting scope or budget or timescales.”
Having good governance in this area will ensure that profit margins are protected, with procurement well-managed, invoices issued and payment received on time, costs correctly logged and billed. All of this will allow AEC firms to make decisions using accurate financial information and then prove they have systems in place to help manage the increased levels of risk and higher expectations in a more complex environment.
For more information on the risks of poor project control and the benefits of getting it right, download the white paper here.
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