Why starting construction without a complete design is a bad idea: industry experts - Zawya Projects

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Why starting construction without a complete design is a bad idea: industry experts

Why starting construction without a complete design is a bad idea: industry experts
Partnership approach and early contractor involvement are key to preventing delays and disputes
02 July 2017

“Let’s start building and we can figure out the design as we go along.” You don’t have to be a construction expert to know this doesn’t sound like a good approach, but this scenario is a lot more common that you’d think, industry professionals in the United Arab Emirates have warned.

The rush to deliver projects often means that contractors begin laying bricks before the ink is dry on the drawing board, meaning it is no surprise that design discrepancies remain a key cause of disputes and delays on some projects.

“Our target is always to finish the project on time or ahead of time to save hassles,” Walid Salman, Consolidated Contractors International Company S.A.L’s (CCC) regional managing director of operations for the UAE and Palestine, told Thomson Reuters Projects in an interview in May.

“But because with most of the clients, their design is not completed and they develop the design during the construction time, it causes some delays and additional costs for the contractor, and variations and extension of time.”

Nathan Cartwright, partner at architects Godwin Austen Johnson (GAJ), said that while not as common with their clients, project delays do occur when a client goes to site without allowing sufficient time for the design to be completed and coordinated correctly.

“We are, however, from time to time required to prepare a design and go to site in less time than we would ideally like to carry out the full coordination,” he told Thomson Reuters Projects in an email interview last month.

“When this happens, it can inevitably lead to a greater number of design discrepancies than the norm,” he said.

Global design, engineering and management consulting company Arcadis said in its 2017 Middle East Construction Disputes Report that dispute values in the Middle East are about $10 million higher than the $46 million global average. Failure to properly administer the contract remained the most common cause of disputes last year, which demonstrates the need to get the basics right from the very outset of a project.

But neither developers nor other project stakeholders can afford the luxury of long drawn-out disputes any more.

Several construction projects in the UAE and across oil-producing Gulf Arab states have suffered delays following the plunge in crude prices in 2014.

The tougher environment, due to weakening macroeconomic factors, including low oil prices, slower economic growth among the six members of the Gulf Cooperation Council (GCC) and tighter bank liquidity, is pushing firms to tighten their belts and combat both delays and disputes.

When variations occur, Salman said the contractor has to continually evaluate the situation and then reserve the right to cover the time extension in case of a claim.

“This has become a practice, not because of the (economic) situation but generally,” he said. “(But) now because cash flow is critical, all of these things will take time to be solved.”

Realistic building
According to Arcadis’ report, although a low oil price and limited liquidity may be creating conditions for more disputes, the root causes are all avoidable if the parties to a contract are willing to work differently.

On the employer side, there needs to be a sharper focus on removing any ambiguity within the contract and ensuring there is a clearly defined scope of work, the report said. It also said experience showed when decisions were rushed at the tender phase or the focus was on trying to save cash, it only stored up problems for a later date.

However, GAJ’s Cartwright underlined that no design is perfect.

“All projects evolve to some extent along the way, however where a design has not been properly completed and coordinated there is a greater risk of variations and delays to the programme,” he explained.

“Where, however, sufficient time is given to the consultant we don’t generally see the same issues. The value in mutually agreeing a realistic programme with achievable deadlines at the design stage can save significant time and additional cost during the construction stage.”

Last year, Craig Ross, head of project and building consultancy at Cavendish Maxwell, called some construction programmes in the UAE “ridiculous” and “unnecessarily fast.”

“Anyone looking at it (the programme) from day one can say that’s not achievable but they are pushed to do that anyway and meet certain deadlines for profit,” Ross told Thomson Reuters Projects. https://projects.zawya.com/UAE_buildings_beset_by_defects/story/ZAWYA20161130113501

Early contractor involvement
However, things are changing, Cartwright said, adding that he has seen an increase in early contractor involvement on GAJ’s projects, as well as an increase in design and build projects.

“In the instance where a client wishes to go to site early we try and steer them down the design and build route rather than try to procure the project on a traditional basis where the design is not completed,” he said.

A study from management consulting firm AT Kearney last year quoted Ralf Steinhauer of RSP Architects as saying that more upfront collaboration could reduce project timelines by as much as 40 percent, due to less re-working needed.

Another consultant, Jamil Jadallah of National Engineering Bureau, recalled instances when his firm had to do design changes to 30-40 percent of the project, which led to over six months of delays.

Mohamad Al Sabek, vice president of UAE-based Commodore Contracting, said involving contractors early on is far more valuable from both a design and a cost perspective.

“It is very effective to help in doing the project in a fast way if you can let the contractor start at the very early stage of the design,” Sabek said at a contractor’s roundtable with Damac Properties in April.

“Trust leads us to a very important thing, which will help with the cost of the project - because if I’ll price any tender on a project now, I will have to take into consideration any increase in price in future,” he explained.

Cutting project delays could halve the potential internal rate of return on investment (IRR), the AT Kearney study said. A four month delay lowers IRR by one fifth, but under stable market conditions, if a project is completed four months ahead of time, IRR can increase by one quarter.

© Zawya Projects News 2017