The High Cost of Low Quality Schedules
Updated: Nov 14, 2019
Unrealistic project schedules are a root cause of project cost overages. Does your team invest enough in determining schedule viability?
Regardless of the industry sector or project type, teams work diligently to drive their construction project to a successful outcome. Whether a change initiative, a new refinery build, or a road resurfacing project, each of these teams is united in a common goal. This unity is usually evident the minute you walk through the door; team pictures and banners blanket offices while posters highlighting milestone achievements and safety performance are proudly hung. Camaraderie is high, usually. One tool that should display the team's unified direction is the project schedule; yet, it is often one of the least used tools by teams at the workface.
Take a look at a sample of project schedules within any industry; you'll usually find no shortage of those classified as over-aggressive. These schedules have high resource draws, short completion windows, little float, and an end date that the team knows is unachievable. Ask anyone on the team what the project driver is on most projects; they will all emphatically tell you that schedule performance is key to their success. Unfortunately, some teams know full well that success on their project is likely out of reach.
Aggressive schedules look great on paper; however, in reality things don’t always go as planned, especially in an industry as dynamic as construction. People are human and errors are made. Shipping windows are lost and material damage occurs. Engineering slip and scope creep are both common. Errors may derive from planning, design, execution, or close-out activities, but they will, without fail, occur. Even in focusing on critical path management, with tens of thousands of project activities, it's relatively simple for logic to become flawed as project conditions change. Those flaws, if not caught or corrected, can cause schedule performance to crumble quickly.
House of Cards
On most projects, we schedule for the best case scenario and all too often encounter sub-optimal conditions. Clients or contractor management teams that drive teams to produce idealistic, hyper-aggressive schedules are bound to be disappointed. Rather than collaborate, these leaders are commanding. This is a base ingredient in a recipe for project failure.
But, the biggest problem here is not only that we don't build realistic schedules; it's that we don't create schedules that reflect the actual execution plan; the minute construction kicks off, the schedule shows us going left but the team goes right. From this point, control is lost. This loss of control is entirely preventable, but it requires a fundamental shift in how we craft project schedules.
Playing the Long Game
As schedules slip, costs usually slip shortly after. As resource requirements are prolonged, those costs continue to aggregate for much longer than originally planned. If the project truly is schedule driven, it's likely that additional resources will be added to make up time, or that existing personnel will be asked to work longer hours. Between on-boarding costs, training, overtime, and incentives, the cost of schedule slippage can be staggering.
Couple the resource costs with those of logistics and incidentals, and you have a perfect recipe for a major financial loss. Additional contributions to these spiraling costs include:
Indirect resource costs (supervision)
Equipment (construction or utilities)
With these rapidly mounting costs, you're not only delivering the project late but with a hefty price tag. Your Client won’t be happy; your boss won’t be too pleased either. You have turned a short game into a long game and, while unintentional, you must now find a way out of the rough.
The Frustrated Client
Teams often assume that by generating and working to aggressive schedules they will make their clients happier. Everyone wants an early finish; therefore, teams try to document and work to that prospect within their execution schedule. But, when the schedule is blatantly not achievable, the once happy client turns into a frustrated foe. When schedule performance is immediately sidelined, whether during design or construction, it's not only your reputation that suffers; it's your client relationships.
So How do We Avoid This Problem?
The answer to this question is easy; stop creating unrealistic schedules. Build schedules that reflect reality. Engage all key stakeholders in schedule development and iterative updates. If the schedule actually reflects the execution strategy, team members will remain aligned throughout the project. Clients will be provided with realistic plans that can be used to accurately project financial draws; and, projects will be completed within the allocated window.
Sounds simple, right? If only it were. According to a recent Mckinsey & Company article, the average capital project is completed 20 months behind schedule. If collaborating to derive optimized and realistic execution plans were that simple, schedule overruns wouldn't be so common.
Start with a Solid Foundation
When schedules are too aggressive and begin to slip early, it's often because they lacked input from those front-line leaders who are responsible for executing the work. One of my biggest pet-peeves when consulting is meeting with delivery teams that aren’t working to the schedule. It’s usually not the case that they don’t like project controls tools, but rather that they weren’t consulted in the development of them. It’s not their plan, so they don’t work to it. If the schedule doesn't reflect the team's execution strategy, what’s the point in using it in the first place?
To avoid the development of an over-aggressive schedule, engage experienced front-line leaders early and often. Generate team insights into the level of effort really needed to complete a task. It may be easy to paint a wall in your living room, but if you had to paint that same wall in a hazardous environment, donning breathing air and protective clothing, it will likely take longer. Context matters and your experienced team members will catch duration errors that won’t be evident to others.
Remove Execution Constraints
What is most frustrating to project teams experiencing schedule delays are those problems encountered that should have been caught. Execution constraints are roadblocks or conditions that would prevent a task from being completed. Examples include material or equipment availability. Constraint management is an essential element of mitigating schedule slip. By identifying and clearing roadblocks, you can ensure that teams will be able to push forward with the work they have planned to complete.
For example, if you want to change a light bulb in your hallway, you would have the following constraints:
Light to be changed has been identified
Replacement light bulb is available (correct type and wattage)
Power isolation is complete
Ladder is available and in good working condition
Other light source is available to illuminate the area
Disposal plan is in place for the burnt-out light bulb
As you can see from this list, someone who is changing a light bulb needs to ensure that all of these potential roadblocks have been cleared prior to beginning the task. If one of these constraints hasn’t been mitigated, the task will no doubt take longer than was planned. If you don’t have a working light bulb to replace the non-working bulb with, it may take days until you can pick one up at the store. When slip happens, it is often due to constraints not being properly identified and mitigated.
Constraints can be easily managed for any task within your project schedule if you have a system in place to facilitate the process. Excel spreadsheets, databases, or more complex platforms and dashboards can help teams better identify and mitigate constraints to ensure that delivery teams can actually complete their work. Managing constraints effectively will enable you to navigate aggressive schedules with more certainty.
You Can’t Manage What You Can’t See
The ability to visualize the details of any project puts management teams back in the driver's seat. 4D planning and visualization solutions are being implemented by progressive teams looking to improve execution plans and enhance visualization potential; 4D tools empower teams to view their plans in 3D rather than attempting to manage their activities in complex Gantt charts. Rather than helplessly watch schedules slip away, you're able to predict slip early and take action to mitigate it. You can make decisions with greater certainty, rather than making educated guesses which may result in negative outcomes.
Visualization requires access to data; to generate useful insights, data must be of high quality. As data is such a valuable resource, organizations that execute projects must invest in technology that'll facilitate more immersive insight. By moving from descriptive to predictive analytics, organizations can stop looking out the rear view mirror to see where they've been. Instead, they can look out the front window to visualize where they're going. If you're managing a schedule driven project, this insight will be key to ensuring success.
The Whole is Greater than the Sum of Its Parts
When facing a challenging situation, focus only on the next goal line, not the entire journey. Small wins quickly add up to large successes. While we have a large and complex project to deliver, we can break that project down into smaller chunks, or work packages. If we create smaller tasks for project teams, which in turn can be rolled up into larger units, we can set small goal posts that teams can reach in short duration.
Industry practices such as pull planning and WorkFace Planning facilitate this micro-task approach to project delivery. Large work scopes are broken down into smaller, more granular units. This approach yields more detailed execution data which, if accurate, can produce more insightful project reports. Other benefits to micro-task execution include improvements in team momentum as wins are celebrated more frequently. As well, constraints are more manageable at a task level, as they can be easily identified and cleared to facilitate short-duration work scopes.
Unrealistic schedules are detrimental to project success. Clients and management teams that aren't willing to collaborate and engage with key stakeholders will continue to experience cost and schedule overruns as a result of ineffective planning. Contractors will often try to meet client expectations, even when they know it's not possible to do so. What looks good on paper, and in reports, may not be achievable in the real world. If your contractor or execution team is telling you that your expectations are unrealistic, find out why. Perhaps the timelines established are not achievable.
Aggressive schedules, if not managed effectively, can yield catastrophic cost overruns that can impact an organization for years or even decades. While aggressive schedules are sometimes necessary, risks must be managed to avoid negative outcomes. Management teams must invest in driving these risks out of the project to increase the chances of success.
Project schedules can unite teams in a long journey of short duration milestones, or divide stakeholders in a battle to justify delays and point fingers. Collaborate or combat; which approach will you chose?