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A perfect storm of booming demand for construction as countries rebuild from the pandemic combined with materials and skills shortages is driving a radical reconfiguration of construction delivery methods to achieve greater collaboration and integration. This dichotomy has placed an imperative on replacing traditional siloed, sequential project delivery methods with more agile, collaborative approaches to drive leaner and faster development.

This has spurred a rise in public-private partnerships, design-build projects where construction and design are iterative, and integrated project delivery methods where risks and responsibilities are shared among all project participants. Yet more alternative delivery methods will require a parallel integration of project management methods to enable comprehensive, current, and consistent tracking of project progress across design and construction and among multiple stakeholders.

This presents a challenge for a fragmented construction ecosystem with widely varying, siloed, and outdated methods of measuring project performance. There is an urgent need for greater automation and consolidation of project control to facilitate the rise of new project delivery methods and more innovative, collaborative and efficient construction.

Booming construction and changing project delivery methods

Global construction industry output will grow by 42% to reach $15.2 trillion by 2030 as the sector continues its relentless upward trend following a brief slowdown during the pandemic. This unusually long period of sustained industry growth has been driven by rising populations, urbanization, infrastructure renewal and surging demand for technology and alternative energy (think silicon chips, electric vehicles and solar farms). The Middle East is also undergoing a major construction boom as it seeks to transition from oil and gas to renewable energy and sustainable tourism. Yet continued growth in construction is being constrained by major international shortages of skills, raw materials and components that have been exacerbated due to the ongoing fallout from the pandemic. This means the construction industry is facing increased demand with limited ability to increase capacity, putting even more pressure on budgets and schedules. 

There is now a major imperative for more efficient project delivery methods and methods of accurately tracking project progress and performance across multiple stakeholders to predict and prevent cost increases and delays. There has already been a rise in design-build delivery methods which now account for 47% of spending across some construction segments. Integrated project delivery methods combined with lean construction are also becoming popular as a way of harnessing the skills of all participants at every stage of the project and distributing design and construction risks equally. 

‘Black box’ project measurement methods

These project delivery methods will require transparency underpinned by common standards of measuring progress and performance across multi-partner projects so that all parties have equal visibility to potential pitfalls. Yet there is currently a disjointed array of progress measurement methods in use with widely varying degrees of accuracy.

Earned Value Management (EVM) is increasingly being adopted as a way to objectively measure the value of the work performed on a project to date and use that value to gauge performance from both a cost and schedule perspective. For example, if a building is judged to be 25% complete, but the construction team has expended 50% of the building’s budgeted cost, or consumed 40% of the project’s scheduled duration, those are both red flags and early warning signs of trouble. EVM enables an ongoing “earned vs burned” analysis that can be applied to virtually any metric–such as dollars, days or work hours–to ensure that the project is on track to hit its completion targets.

Yet even EVM can be a black box process as there are conflicting definitions of percent complete, exacerbated by the human factor that comes into play since progress is often self-reported by the very teams doing the work. This creates inconsistencies, errors and even deliberate misreporting. For example, completing 20% of a mile lone pipeline could mean different things to different people. What if no pipe has been installed but the entire mile of trench has been excavated? What if all the pipe has been placed in the trench but no backfill has been placed on top of the pipe yet? What is the acceptable measure of percent complete in those scenarios? Without specifying how percent complete will be calculated–the “rules of credit”–teams can hide poor productivity or overspending beneath crude metrics which conceal the time and cost of each task and its contribution to overall project budgets and schedules.

Progress is also frequently measured manually with Excel spreadsheets which are vulnerable to human error and do not enable managers to get a real-time overview of project progress. Spreadsheets are not well suited to track real-time, incremental progress and transactions across large projects. An integrated EVM system with rules of credit can take the subjectivity out of the process, and ensure that a holistic view is taken across cost and schedule metrics. Without such a system, teams can fail to spot the interplay between budgets and schedules, such as when a task has been completed ahead of schedule (good news!), but only achieved that feat by going over budget (bad news!).  

Creating transparent, consistent progress measurement

There is an urgent need for digitalization and automation of construction project measurement methods to provide a comprehensive, timely overview of project-wide progress accessible to all project stakeholders. Automatically calculating and illuminating current project progress enables collaborative and efficient projects where everything from field productivity to procurement is continually optimized to predict and prevent risks.

Experienced organizations are now using automated EVM metrics that automatically calculate earned values and identify risks based on current progress in near real-time, eliminating reporting delays, inconsistencies and surprises. These systems provide an objective view of success by automatically comparing progress on each task against predefined steps (rules of credit), preventing any teams from overestimating their productivity and ensuring a consistent project-wide picture of progress. Project team members can use mobile devices to capture and send current updates on project completion rates at the end of each shift, providing a rich, immediate picture of project progress across all construction crews.

The improvements that EVM can bring to project predictability could not come at a better time. As the construction industry continues its ever upward climb–brushing off its historical reputation as a highly cyclical industry–demand for construction is outpacing the capacity to deliver. Skills shortages and supply chain challenges are creating a difficult environment in which to succeed, as evidenced by the most recent Global Capital Projects Outlook conducted by InEight. In that survey, only around 40% of owners and contractors indicated projects are completed on schedule and on budget. 

A transformation in construction project management models

Cloud-based, collaborative project controls solutions that embrace EVM could be the answer. Such technology drives more transparency in construction, perfectly aligned with the trend toward alternative delivery contracting models where design and construction are iterative, and everyone shares the risk. Real-time visibility of project-wide progress enables all participants to stay informed and involved at every stage of design and construction, facilitating truly integrated delivery of capital projects. The ease of data sharing with cloud-based systems fosters tighter collaboration between construction and design teams, which is essential for alternative delivery projects. Budgets and schedules can be updated continually based on the latest design assumptions, such as when the design work will be completed, and the scope and quantities of work called for in those designs. Not only does that enable swift reactions to changes, but also encourages “what if?” analysis to test various scenarios of scope-cost-schedule to optimize the value of the asset being built. With EVM at the center of the process, project teams have a proven methodology to ensure predictable delivery of complex capital construction projects. 

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