We’ve all done it at one time or another—overpromising on the completion date of finishing a project, a report, a chore, virtually any type of commitment you can name. The reasons are almost limitless: starting too late, wanting to impress someone or appease their anger, or simply not caring.
Overpromising is a pervasive challenge in the construction industry, leading to project delays, cost overruns and strained relationships between contractors and clients. Further, it can lead to quality issues as contractors look for ways to make up time in an effort to get the schedule back on track.
The obvious question is why does this predicament persist? The truth is, some causes can be fixed (i.e., poor early planning); while others are deeply ingrained in the industry (i.e., competitive pressure). This article will examine the underlying reasons that construction companies and contractors repeatedly fall into this insidious cycle. By gaining a deeper understanding of the root causes of overpromising, the industry as a whole can begin formulating effective remedies.
Optimism Bias
A term that can be avoided yet is so common, optimism bias is the tendency to overestimate the likelihood of positive events and underestimate the likelihood of negative events. It causes most people to expect that things will work out well, even if rational thinking suggests that problems are inevitable. This phenomenon is particularly common in industries like construction, where there are multiple variables that can affect the outcome of a project, from unpredictable weather conditions to regulatory delays.
Optimism bias can cause contractors, project managers and even clients to underestimate the time, cost and resources required to complete a project successfully. They may overestimate their abilities to overcome challenges and resolve issues quickly—or they may overestimate the odds that an issue simply won’t occur. The predicted storm will not materialize. The subcontractors will all show up on time. All materials will be delivered to the site on time—all of these things could happen, but they probably won’t—or not all at once. Optimism bias can also creep into financial estimates. In their desire to secure contracts, construction companies may provide overly favorable cost estimates. They assume that they can find cost-saving measures during the project or that they will not face significant cost increases in labor, materials or other resources. However, when these cost savings fail to materialize or when costs escalate due to unforeseen circumstances like inflation or supply-chain issues, the project quickly rises in cost—as does the friction between stakeholders.
Competitive Pressures
The construction industry is highly competitive, and contractors often bid against multiple firms for the same project. In this environment, overpromising can be a deliberate strategy used to outbid competitors. Contractors may provide lower cost estimates and shorter timelines, knowing that project owners are likely to choose the proposal that not only promises the best value for money but also delivers the project faster than anyone else.
However, this strategy comes with significant risks. When overpromising to win a project, one may do so with the intention of negotiating change orders and requesting extensions later in the process. Relying on these methods as a strategy to compensate for an unrealistic initial promise can strain relationships with clients, who may feel misled if the project costs significantly more or takes longer than they were led to believe at the outset. The truth is, change orders are often necessary; they are a common occurrence on construction projects, where the scope of work is adjusted—oftentimes more than once—and additional time or money is required to complete changes. But counting on change orders as an eleventh-hour tactic simply creates too many opportunities for things to go south very quickly.
This competitive pressure also creates a cyclical problem. When one company overpromises, it can set an industry-wide expectation that other firms must match or exceed. As a result, companies may feel forced to make unrealistic promises just to stay competitive, knowing that these promises are unlikely to be met without major complications. In other words, it sets an ineffective precedent.
Poor Early Planning
Construction projects are inherently complex, involving multiple teams, stakeholders and moving parts. In a project’s initial stages, it can be difficult to fully understand the scope of work and anticipate all the potential challenges that may arise. As a result, some overpromising occurs simply because contractors lack the detailed information they need to provide accurate estimates. Some contractors may have the information but forget to use it or use it incorrectly. Both instances can signify a larger deficiency in communication that can spur—or stem from—broader organizational problems.
For example, the early design phase of a project may leave out critical details about site conditions, permitting requirements or the availability of materials. In their eagerness to move forward, contractors may provide estimates based on incomplete or overly broad information. When the true scope of work becomes clear later in the process, significant cost overruns and schedule delays are virtually guaranteed.
Moreover, the construction industry often struggles with risk assessment and contingency planning. In many cases, contractors do not allocate enough time or budget for unexpected challenges such as poor weather, labor shortages or supply-chain disruptions. Lacking thoughtful contingency plans, contractors must rely on overly optimistic assumptions that the project will proceed smoothly. When these assumptions don’t pan out, the project’s timeline and budget are thrown into turmoil.
Reputation Enhancement
Another reason construction companies overpromise is the desire to maintain or enhance their reputation in the industry. Builders want to be seen as reliable, efficient and capable of delivering challenging projects on time and on budget. They may overpromise as a way of signaling their competence to potential clients, hoping that their reputation for quick delivery and cost-effectiveness will help them win more contracts in the future.
This may be a great approach on paper, but not so much on a project site. When a contractor consistently fails to meet the timelines and budgets they promised, their reputation for reliability and transparency can suffer. Clients whose trust is broken grow frustrated with delays and cost overruns, which harbors potential to harm the contractor’s ability to win future work.
Miscommunication and Ambiguity
Most of us remember the game telephone, in which a person whispers something to the person next to them, who then has to whisper what they heard to the next person and so on. When the last person recites what they heard to the group, it’s generally far different than the original communication.
The same thing can sometimes happen in construction. Any kind of disconnect about the scope of work at the outset of a project can be a major factor in overpromising. In many cases, the initial project scope is not clearly defined, leaving room for interpretation about what is included in the agreed-upon timeline and budget. Consequently, contractors may provide estimates based on their own interpretation of the scope, only to discover later that the client expected something different. It’s all too common for situations like this to end up in litigation. This misalignment between expectations can lead to conflict and the need for extensive negotiations as the project progresses.
There’s no single answer to solving the issue of overpromising because there’s a multitude of causes. But by examining your own operation and deciding which of these factors (it may be more than one) is creating the issue, you can begin the search for remedies. It is usually best to err on the side of caution, communication and transparency.
SEE ALSO: TRANSPARENCY IS KEY TO DRIVING THE FUTURE OF CONSTRUCTION
