As the construction industry deals with unprecedented challenges related to supply disruptions, rising material costs, and labor shortages, construction companies must efficiently manage construction projects to avoid possible delays and sustain profits.
Delays result in lost time and, in many instances, money. A global construction survey shows only 25% of projects came within 10% of the original deadlines within three years, highlighting the importance of efficient project planning and project management.
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Common causes of construction delays include unforeseen circumstances, such as pandemics, natural disasters, or unfavorable weather conditions; preventable factors may involve inaccurate budgeting, inadequate planning, and poor communication.
Identifying causes of delays in construction projects and the possible consequences allows for better construction management, improved customer satisfaction, and increased profits for your construction or subcontracting company. Causes of delays in construction projects include:
1. Inadequate planning
2. Unorganized scheduling
3. Altered projects
4. Poor communication
5. Diminished cash flow
6. Lack of labor
7. Inaccurate job costing
How are construction project delays categorized?
Delays in the construction process for construction work claims typically fall in one of the following categories:
Critical or noncritical: A critical construction delay affects project completion, while a noncritical delay does not affect completion date.
Excusable or inexcusable: An excusable delay typically results from an unforeseen circumstance, versus a preventable, inexcusable delay.
Compensable or non-compensable: A compensable delay could allow the contractor to obtain a time extension and receive additional compensation, versus a non-compensable delay, which does not allow for compensation.
Concurrent or nonconcurrent: A concurrent delay overlaps another delay.
Construction contracts should clearly spell out time extension and cost procedures in the event of a delay. This includes requirements for notification, such as the timeframe to submit a construction delay letter. In the event of a delayed project, a delay analysis determines who was at fault. A Force majeure clause in the contract lifts contractual obligation in certain circumstances. Follow industry best practices if you seek samples of construction delay claim letters or other construction document examples.
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Long-term, complex projects require oversight of a skilled project manager who excels at planning and budgeting. The procurement process—the project estimate, bid acceptance, and contract negotiations—sets a critical path for project cost and project schedule.
Determining the right project schedule allows project stakeholders to coordinate their work. Inadequate planning could result in missed deadlines, additional labor, and an increase in project cost, which undermines profit and damages your company's reputation for future jobs.
Creating accurate estimates and project timelines minimizes potential cost overrun and time overrun. Understanding the time it takes to complete certain construction activities and milestones remains imperative to providing accurate labor costs and on-time completion.
Scheduling can get tricky, especially when jobs stretch over several months to a year. When it's time to install wiring or plumbing, but the crew isn't on site due to overbooking, the job comes to a standstill.
One Texas company that works in new construction found ServiceTitan's appointments feature provided much-needed tracking when workers arrived at a job site.
"Appointments have been great with being able to see every time they've been to a job site," says Brittany Grose, Director of Business Operations at Intown Plumbing. "It's been really nice to see that and track it that way. That's been a huge help for us."
Poor weather and unfavorable site conditions or delayed arrival of material and supplies also contribute to scheduling delays. The construction industry continues to grapple with supply chain issues, causing contractors delays and uncertainty about backlogs for key materials, according to the Associated General Contractors of America.
When it comes to details you can control, keep your project underway with ServiceTitan's cloud-based Construction and Service Software. The software allows you to schedule the right work crews at the right time, reschedule delays, and track job progress in real time.
In construction, change orders can throw a project off budget, as will increased material costs or additional labor, such as specialty subcontractors.
Project managers should always follow a set protocol for change orders and modifications to project execution, because delayed approvals on any changes cost time and money. Ensure clear communication and accurately track change orders by documenting extension of time requests, extra work, estimated cost, and any related scheduling changes.
Efficiently manage documents by keeping them in one place, so your project team can easily reference them. Record key rework information to aid in your decision-making throughout every step of the project.
Diminished cash flow
Maintain a healthy cash flow to advance project completion—and your bottom line.
The Credit Research Foundation’s quarterly Accounts Receivable and Days Sales Outstanding Industry Report shows nearly 30% of general contractors receive payments 60 to 90 days late, compounding cash flow issues.
Progress billing, or billing upon completion of phases or milestones, remains one of the most effective billing methods for construction companies.
Hometelligent President Silvio Dobrovat suggests structuring billing payments into smaller milestones to maintain a constant influx of money.
“If you’re running multiple projects and they all have micro-milestones, then you’re constantly getting paid,” Dobrovat says.
Lack of labor
While labor remains one of the highest costs in a construction job, lack of adequate labor results in delayed projects.
Increase productivity by placing priority on hiring the right employees and subcontractors.
"Don't try and do everything yourself," Grose advises, speaking from experience. "Books, invoicing, bidding, scheduling, everything—hire somebody and then get them trained up on whatever system you use."
When your company hires intentionally, it sets up your team for success.
“Everyone is talking about the labor shortage, and it's not going to get any easier, let's face it,” says ServiceTitan’s Director of Customer Relations, Chris Hunter, and Founder of Hunter Super Techs and Go Time Success Group. “We're going to have to start finding these people, painting our mission or vision, where we're going, how they fit in, what it means for them, and build the bench.”
Streamlined communication between your team and customers remains key to efficiently managing your construction schedule, and enhances customer satisfaction.
ServiceTitan's Construction and Service Software allows construction companies to route employees in the most efficient direction to a job site, and communicate to customers when a work crew will arrive.
Before using ServiceTitan's construction software, Intown Plumbing notified customers about a week prior to showing up at a construction job, Grose says.
Now, the company can send customer notifications to confirm an appointment or inform them when they're on the way. It helps coordinate other work at the job site, too, and enables the builder to notify the homeowner about progress on their new home.
"I would never want to give any of that up," Grose says. "Just being able to keep all the job notes and everything in one place where everybody can get to it. That's been major for us."
Inaccurate job costing
Job costing can make or break profit. Use an accurate job costing methodology to track progress on construction accounting, and show the profit on any job based on materials, purchase orders, equipment, or payroll costs.
Job costing software allows you to control workflow by using color-coded project labels, so you can easily find needed data at a glance and break down the budget by each category. It also becomes indispensable when it comes to instantaneous data collection.
"We can see where we're coming out on the job, rather than a month later," says Tyler Edelman, CFO of Edelman Inc., an electrical, HVAC and plumbing company based in Champaign, Ill. Without it, the company would need to examine QuickBooks later, after all the financials become categorized and departmentalized, he adds.
Keeping track of every detail on a construction job helps your project stay on course, and provides the tools you need to profit on future jobs, generating revenue and growth for your company.
ServiceTitan is a comprehensive software solution built specifically to help service companies streamline their operations, boost revenue, and substantially elevate the trajectory of their business. Our comprehensive, cloud-based platform is used by thousands of electrical, HVAC, plumbing, garage door, and chimney sweep shops across the country—and has increased their revenue by an average of 25% in just their first year with us.