“I never make the same mistake twice,
I make it five or six times just to be sure.”
The Global Construction Industry?
Forgive me COAFB for I have sin...gularly failed to understand how the construction sector operates.
This Bob the Builder guy for instance, why is it he is always fixing stuff? Why can’t things just be built right the first time?
From Nowhere in Particular.
For your penance you might want to reflect for a moment on what a great business model Bob and his gang have.
Photo courtesy of Bob and the gang (looking very happy and relaxed due to their great business model).
There is a huge amount of work in this space. To cite an example, a study out of Sweden in 1998 found that the cost of defects in a sample group of seven commercial construction projects corresponded to 4.4% of the total “production cost” while the time to correct them corresponded to 7% of the total working time. In simple terms this means that if the building cost $100m to build, at least $4.4m of that was probably spent on ‘fixing stuff’, and that’s before we calculate the cost of any delays and/or the opportunity cost of not completing earlier.
That study was 20 years ago but considering that productivity in the industry has not appreciably improved over this period (remaining flat in most advanced economies) it is fair to suggest that in the general sense, not much has changed.
I highly recommend you read this report, or at the very least go to page 4 and have a look at Figure 1 – it makes for really fascinating reading. Over the sample pool of projects a whopping 51% of the total defect cost "originated in lack of design and insufficient production management [where p]roduction management includes the contractors’ project management and site management.” So basically human error (in whatever form that may take) could be responsible for over 2% of (fairly easily) measurable wastage on projects - $2m on a $100m build, $10m on a $500m build and so on and so forth, and again, excluding time. The maxim ‘if you think it’s expensive to hire a professional to do the job, wait until you hire an amateur” encapsulates the situation well... Incidentally the participants of this study i.e. the project teams, thought the results felt about right.
Now at this point it’s key to remember that this study was concerned with defects that were identified during the course of the original build, so were in theory the most cost effective to remedy - if that is not a contradiction in terms. Yet for examples of ‘misadventures’ that come to light so inconveniently after the event we (I) don’t have to look too far - Australia and New Zealand offer some great tangible case studies.
In the 2018/19 financial year alone Auckland Council (New Zealand) paid out $134m NZD on “fixing stuff” since they had issued approvals associated with these projects. That’s a lot of cash in one year for a city with less than 2m people.
Yet while the kiwi problems were mostly associated with ‘leaky buildings’, hop across the Ditch to Australia and you’ll find that the Aussies have their own industry crisis to deal with, via way of “the prevalence of serious compliance failures in recently constructed buildings. These include non-compliant cladding, water ingress leading to mould and structural compromise, structurally unsound roof construction and poorly constructed fire resisting elements.”
This is an extract out of the Shergold Weir Report, research commissioned by the Federal Government that examined the construction industry’s QA/QC processes on a systemic scale. Optimistically titled ‘Building Confidence’, it’s a subtle nod to the fact that there isn’t any now... Here’s another confidence inspiring extract from their executive summary:
“The work required to bring positive change cannot be done by governments alone. Industry has a keen self-awareness of the problems that exist. Whilst there are many participants who display competency and integrity, this is not universal.”
So I will leave you with two thoughts:
1. Clients - chose your supply chain carefully, because it is the people in it that will define the success or failure of your project, and...
2. Whoever is able to invent the world’s first ‘integrity detector’ could stand to make a lot of money.
Maybe even as much as Bob.
Things to note...
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