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69% of clients claim poor contractor performance undermine projects

Construction clients have identified contractors as the biggest cause of project underperformance.

According to a global survey of projects by KPMG, more than two-thirds of project owners (69 per cent) said poor performance from their contractors was the single biggest factor in underperforming projects.

Less than a third (32 per cent) of owners worldwide said they had a high level of trust in their contractors.

While only 9 per cent of respondents said they had a low level of trust in their contractors, 60 per cent stated that they only had moderate trust.

The figures, released as part of KPMG’s 2015 Global Construction Project Owner’s Survey, show more than half (53 per cent) of project owners globally have had one or more underperforming projects over the past year.

Energy and the public sector were two of the hardest-hit areas, with 73 per cent and 90 per cent of clients respectively experiencing underperformance in these sectors.

The survey, conducted in late 2014, questioned 109 senior leaders from organisations carrying out significant capital construction projects worldwide.

Respondents were spread across the Americas (38 per cent); Europe, Middle East and Africa (26 per cent); and Asia Pacific (36 per cent).

Only 31 per cent of respondents’ projects came within 10 per cent of their original budget over the past three years, while just 25 per cent of projects came within 10 per cent of their original deadlines over the same period.

More than half of the respondents to the survey were concerned about the lack of available in-house skills, with many choosing to hire external specialists to help deliver projects.

In total, 69 per cent of respondents said they required external assistance to support their existing workforce to enable delivery of projects, equating to 5 per cent of their total workforce per project.

Additionally, 44 per cent of respondents struggled to attract qualified labourers, while a further 45 per cent lacked planners and project managers.

More positively, 82 per cent of clients felt that owner/contractor collaboration would increase over the next five years, with only 3 per cent believing that collaboration would fall.

A further 13 per cent of respondents felt there would be no change in collaboration over the period.

Commenting on the survey, KPMG UK head of infrastructure, building and construction Richard Threlfall said: “This survey highlights the prevailing issues affecting the sector both in the UK and globally.

“We will only see a turnaround of poor-performing contracts once we start seeing contractors and project owners adopt technology such as building information modelling to enable more efficient planning, mandated apprenticeships to ensure skilled labour are bought up through the ranks, and more accurate planning of projects.”

Readers' comments (5)

  • I wonder of the 69% how many went for cheapest price regardless of other considerations

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  • Probably 99%

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  • Poor procurement practice by badly-advised Clients mean that the winning contractor will probably have the lowest overheads i.e. little in house expertise. An example of the endemic bad practice is the "pooling" of the good ideas from competitive tender submissions, which are then given to the cheapest tenderer to take advantage of.

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  • What does it matter if the client went for the cheapest price. If that is the price the contractor has said it can do the work for and to the standards required in the contract then why shouldn't the client expect a good job?
    I've worked in the industry for over 25 years and the standard of contractors is very poor. Poor quality, planning of work and not understanding the specifications and contract documents is rife and whilst you get the major projects like the Olympics and Crossrail that the industry shout out as best practice the majority of contracts are very different from this, I would suggest.
    In defense of contractors I would say that there are many jobs that are designed poorly that makes the contractors job difficult from day one.

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  • When these big MC's go in cheap just to get a contract, who will pay for the losses, the specialist subcontractors they employ of course!

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