Failure costs weigh double on the profits of a construction project. Expensive materials are wasted, and it takes time to identify and correct faults. And that while the margins are already razor-thin. To save time in construction, it is therefore smart to look for ways to prevent failure costs.
Failure costs in figures
Failure costs are faults during the implementation phase that could have been prevented. For example, the quality is not as promised, materials break down or are wasted, or the project is delayed. Recent research by ABN-Amro shows that failure costs amount to an average of 5% of the total project costs. With an average profit margin of 4.1% for the Dutch market for example, this is a significant dent in profits.
Recent research by ABN Amro shows that failure costs average 5% of total costs.
Costs due to delay
Project delays are a major cost for construction companies. There are several reasons for this:
- Employees (nowadays often specialist freelancers or subcontractors) are putting in more hours and therefore need to be paid more;
- Rescheduled shifts mean that mechanics are no longer available once it’s their turn. Then another (more expensive) company must be found;
- If the contractually stipulated overrun period is exceeded, delays can lead to compensation from the buyer(s) of the construction project.
Save time in construction by preventing failure costs
Failure costs and delays are inextricably linked. By preventing failure costs, you gain time in construction and increase your margin. There are several ways to achieve this.
1. Better preparation
Many construction companies say they should spend more time on the start process, but that is easier said than done. Often the pressure at the beginning of a project is already so high that there simply is not enough time. And yet, with a little extra time, a better risk assessment can be made and a more realistic planning can be drawn up. This reduces uncertainty and unexpected costs during the implementation phase. It is therefore smart to work efficiently in other areas, so that there is more room in the start-up process.
2. Standardise the construction process
Working according to a fixed method helps to avoid mistakes. Therefore, draw up step-by-step plans and checklists for recurring processes. And follow them up during the construction process.
Not only does this make you work a lot faster, it solves problems that you, as a builder, pick up a profit on immediately.
3. Communicate through a central system
Adjustments are passed on by means of individual apps, phone calls and e-mails. Perfectly normal in the construction industry, but unfortunately it also leads to many failure costs. Recent Dutch research shows that 66% of construction companies blame failure costs on poor communication and agreements.
By using modern construction software, that problem can be solved in no time. Put all documentation in one convenient system and let all communication run through your chosen platform. Not only does this make you work a lot faster, but it also solves problems that directly benefit you as a builder. Especially with a company that helps you get started within a day, that is really low hanging fruit.
4. Modern tools for repairs
Is the piping laid properly? Are there no cracks in the windows? With the same camera that we use on vacation, we go to the construction site to register faults. And then make a phone call to find out what needs to be changed. This is another fault-sensitive method that occurs all too often in practice.
With modern tools, this can be done much more accurately. By placing Snags on the (digital) blueprint for example. This allows you to indicate the exact location of the problem and who has to solve it. All through the central system, of course.
5. Continuous quality assurance
With all health and safety regulations, it also helps to continuously guarantee that you are delivering the obliged quality. This way you don’t find out at a later stage that you have to take a few steps back.
6. Guarantee the latest version
Working with an outdated blueprint. That’s one of the biggest and most deadly sins a construction professional can commit. But due to fragmented documentation, it unfortunately still occurs. Digital stamping prevents this: the blueprint contains a QR code. Scan the code and you can immediately see whether you have the latest version in front of you.
7. Learn from previous projects
By digitising your project management, you collect a wealth of data and information. What went well and where did the project encounter delays? And who played a leading role in that? By analysing your processes, you can optimise them during the next construction project. This way, you will gain more time with each project.