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Should budgets still be spiralling out of control?

Alex Fraser

It’s a common issue within the industry to see high-profile projects making the headlines for being over budget.

Crossrail has been in the news frequently in recent months as it first went £590m over its original envelope and then asked for a further £350m loan to complete its work.

And in July, a leaked report for the government’s Infrastructure and Projects Authority suggested that HS2 was in a “precarious position”, with some estimates predicting it could over-shoot its £55.7bn envelope by as much as 60 per cent.

Proper valuation of land purchase is fundamental to the costing of major transport infrastructure projects. But, in the case of HS2, its valuation methodology was seriously flawed: having spent £1.6bn of the £2.8bn budget, only 20 per cent of the properties affected by the route were acquired.

Among the primary factors blamed for budget overruns are inadequate cost control and project management issues (including subcontractor interface and management). 

However, a lack of real-time data, poor communication and unapproved staffing supply (at inflated rates) all contribute towards a budget overspend and inevitably make it difficult to keep costs at bay. In a digital era where information is readily available at the touch of a button, should this really be the case?

Improving outcomes

Over the last few years, the emergence of new machinery, software and technological approaches have reshaped the way the industry operates.

With this pace of change showing no sign of abating, it’s crucial construction firms ensure they are up to date on the latest methods of improving project outcomes.

“Businesses that fail to keep themselves on the cutting edge of tech could risk being outshone”

For example, laser scanning is increasingly becoming a reality on sites to address field-safety risks and improve precision. Used to report on building conditions to create initial project plans, this technique allows designers to see conditions of the site in full 3D, giving higher accuracy.

Similarly, wearable technology is another tool that can reduce risk on construction sites, giving workers PPE with sensors attached to improve protection and raise the alarm when dangers arise.

Competitive cutting edge

Technologies such as virtual reality, AI and prefabrication also offer huge digitally derived benefits to construction in the long term. Yet there’s often too much focus on using these approaches for the actual construction process itself, with relatively little collaboration across this entire process.

For example, vendor management systems can enhance visibility through the supply chain, providing real-time cost reporting on a shared platform. This can help lower the risk for human error, duplication, fraud and compliance issues.

Businesses that fail to keep themselves on the cutting edge of tech could risk being outshone by more responsive competition.

As the saying goes, ‘information is power’. But for construction, information is control – over costs, programmes and supply chains. 

Alex Fraser is a director at management software provider Engage 

Readers' comments (2)

  • I think HS2 is slightly more complex than that!!


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  • You missed a key one: deliberately underestimating the costs at the outset in order to get approval for a project to go ahead that might not get signed off if the true costs were made available.

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