How not to miss project deadlines and why developers have succeeded in this more than industrialists

According to PM Excellence, more than 50% of industrial projects are delayed by over a year, with some delayed by six years or more, while leading real estate developers almost always stay on schedule. The developers’ key success factors are transparency toward buyers, accountability for their reputation, and a project-based or strong matrix structure that makes the project manager financially accountable for results. In industry, the problem is compounded by remote sites, complex logistics, long process-equipment supply chains—engineering design firm → owner → foreign supplier → equipment engineering documentation → engineering design firm → construction documentation—and diffuse accountability within corporations. The principal solution proposed is an integrated schedule network model: a “truthful schedule” covering all activities and interdependencies between contractors. However, industrial project deadlines are often imposed before the model is developed. The author therefore proposes tracing critical chains of activities: entering mandatory deadlines into the model, identifying negative float, and progressively optimizing the most critical chains. This is supported by short TsORP meetings of up to 30 minutes, attended only by those responsible and the head of the organization. The key takeaway is that one day of delay in a large-scale project costs RUB 20–100 million, making effective schedule management through schedule network models and TsORP not simply a methodology, but a condition for survival and competitiveness.

Missing deadlines in construction is a headache for many companies. In industrial construction, according to PM Excellence, more than 50% of projects are delayed by more than a year, and some are completed within 10 years instead of the planned 3-4 years. At the same time, developers show much better results: the average deadline is about 6 months, and companies from the top 10 almost always meet their schedule. What is the reason for this difference and what tools should be used to avoid multi-million dollar losses as a result of delays?

Development versus industry

The secret to developers' success lies in several key factors. Let's start with the fact that project teams in development companies are in a more transparent environment, which is due to the requirements of existing legislation and the demands of apartment buyers. It is very easy for a developer to ruin their reputation, and if people are already accustomed to suing for money for poorly done repairs, it is difficult to imagine that the company will remain afloat if residents receive the keys several years later. This forces you to work towards results and eliminates the "formal delivery" of the object to management and the media, in which the work is not performed with normal quality and in full. For example, St. Petersburg Seven Suns Development left without housing about 7,000 people who signed a shared construction agreement for apartments in three residential complexes in Moscow. Obviously, it will be extremely difficult for them to attract new customers.

Development companies also, as a rule, use a project or strong matrix organizational structure, in which the project manager is financially responsible for the final result. In large corporations implementing industrial construction projects, responsibility within the company is usually more diffuse.

In addition, industrial construction sites are often located in remote areas, which creates site complexities and logistical risks.

Also, in industrial construction, additional work arises related to the supply of technological equipment, which is not present in development. Here, first, the design contractor forms the requirements for the equipment, the customer agrees on these requirements and, based on them, enters into an agreement with the equipment supplier (often foreign), then the equipment supplier develops design documentation, which, in particular, determines the weight and dimensions of the equipment, then this documentation must be agreed upon by the designer and the customer, only after this can the working documentation for construction be developed and manufacturing begin equipment.

Why deadlines are missed

All large-scale projects involve dozens of contractors who must coordinate with each other and whose work at each stage determines the customer's success. Let's consider an example of a chain of work from a project for the construction of a mining and processing plant.

The first contractor must fill the dam to block the stream bed and form a storage pond from which water will be drawn for process water supply needs. Until the storage pond is formed, the second contractor will not be able to carry out commissioning and launch of water treatment facilities. Until the water treatment facilities are put into operation, the third contractor will not be able to carry out commissioning work and put the thermal power plant into operation. Until the thermal power plant is put into operation, the fourth contractor will not be able to carry out commissioning of the enrichment plant.

In the example above there is one chain and three relationships, but in a large-scale project there could be thousands of them. And they all need to be taken into account in the planning process. At the same time, at the initial stage of the project, there are no initial data for detailed planning, and the composition of the work and the sequence of their implementation during the project can change many times, which will require regular and prompt replanning.

In such projects, problems arise with transparency and identification of critical issues. The management structure is large, responsibility is blurred and shifted, it is impossible to "find ends". As a result, it is very difficult to get to the bottom of the truth - to understand the real origins of the project's problems, to estimate the time required to correct errors, and to create a new realistic implementation schedule.

Tools for dealing with missed deadlines

Managing the timing of a large-scale project based on dozens of individual contractor schedules is extremely difficult. A single integrated schedule network model (hereinafter referred to as the CNM) is required, covering all work, including non-contracted work, and displaying the relationships between contractors. KSM will provide all project team members with access to up-to-date information about the progress of the project. If a contractor has not yet been selected, information about the timing based on similar projects can be included in the tender documents. They will further become directives on these works. With the help of KSM, you can also set the priority of work performed by contractors for whom the sequence is not important.

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However, in practice, a contradiction arises: theoretically, project deadlines are determined by the KSM using the critical path method, but in reality, deadlines are often set prescriptively even before the creation of the KSM. Our experience shows that the deadlines for large-scale projects are always set in advance, and in 70% of cases, calculations based on KSM reveal discrepancies with these target deadlines. Since the standard critical path method is ineffective in the presence of such constraints, we have developed a technology for "critical chain unwinding".

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This process requires joint discussion and decision-making, since delays in one chain can affect the entire project. To effectively solve this problem, we use a special meeting format - the "Center for Rapid Response and Forecasting" (CRRP). Thus, according to his principles, all meetings last no more than half an hour, only employees responsible for work on critical chains and the head of the organization participate in them, only issues of reviewing critical chains and developing compensatory measures are discussed. All decisions made are recorded together with those responsible, and their implementation is monitored.

Many other factors influence meeting deadlines. In order not to disrupt them, you need to select the optimal contract scheme for the project, and sometimes even make changes to the organizational structure of the management company. However, it is difficult to formulate general recommendations on these issues, since decisions largely depend on the specifics of the project and the company.

In conclusion: those who don't miss deadlines earn more

The damage from missed deadlines is colossal in both industrial and development projects. In development projects, it is formed from additional costs for credit financing, penalties from buyers and damage to the company's reputation. In industrial projects - from lost profits (later start of product sales), additional costs for credit financing, fines for failure to fulfill licensing obligations to the state or obligations to supply products to partners.

In today's business world, where competition is growing every day, effective project management becomes the key to survival and prosperity. 1 day of missed deadlines for a large-scale project leads to losses in the amount of 20-100 million rubles. Therefore, it is so important to pay sufficient attention to the issues of project planning and control, use modern tools and techniques, such as "promotion of critical chains," and create a culture of responsibility and transparency. This is the only way to achieve success in the long term and gain a strong position in the market.

Source: https://secrets.tbank.ru/blogi-kompanij/developery-i-promyshlenniki/?internal_source=copypaste