failed construction project

5 Early Warning Signs of a Failing Construction Project

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Ever heard of a construction project that seemingly proceeded well for a couple of months, but then ended up failing?

I bet you can mention several off the top of your head. This is Kenya and, needless to say, a failed construction project is a thing we’re all used to by now.

But, what exactly triggers all these cases? Could it be poor construction project management? Rampant corruption maybe? Or are Kenyan contractors exceedingly unreliable?

OK, we’ll explore the entire problem. But first, for what it’s worth, let’s discuss “construction failure”.

Now, the common misconception is that “failed” only means “left unfinished” or completely dead, kaput.

Fair enough. But, while that would understandably be a great example of a failed project, the whole concept of construction failure is much broader than simply “dead”.  

Here’s the deal. By and large, a failed construction project is any that’s extensively defective. This entails not only the building’s quality, but also the overall project time and finance.

So, if your construction process ultimately falls short of meeting its intended quality within a reasonable timeframe, and within budget, consider it a failed project.

project management variables

Now, back to what I was saying…

In general, the process of building rarely goes off-track overnight. Multiple issues usually pile up over the long haul before they ultimately ruin the entire project.

By the time a building collapses, for instance, odds are that its developers and other project stakeholders had ignored numerous variables way before its integrity was severely compromised.

That said, it’s possible to save your building before it’s too late. You just need timely mitigation as soon as you notice that the project may be headed for trouble.

Based on our project management experience in Kenya’s construction scene, here are the 5 early warning signs you should look out for:

Ambiguous Construction Project Scope

This is arguably the most common mistake in the construction industry, and I like to refer to it as the “cowboy” approach to building a house in Kenya.

Usually, this is how it goes- you get a plot, source for funds, and then put up a building. Just like that. Developers essentially proceed without first conducting adequate planning or due diligence.

And for the few that attempt, most of them rush to plan haphazardly. That’s how they subsequently end up with an ambiguous project scope.

But hang on a minute. Why would you even need a comprehensive project scope in the first place?

Well, a project scope provides an overview of your construction project. You can think of the resultant document as your project’s roadmap since it outlines not only the specific project goals, but also the accompanying tasks, functions, features, deliverables, and costs.

In short, therefore, the scope defines what you intend to build, and what must be done to achieve the best possible quality at the lowest possible cost within the shortest possible time. Without it, you might as well expect a considerably challenging construction process.

construction project scope

Now, it’s worth noting that your construction project scope should concisely include every last detail in order to avoid what we call a “scope creep”. This is every developer’s nightmare yet, ironically, most of the scope creep cases are triggered by the developers themselves.

Scope creep basically happens when a project morphs uncontrollably during construction until you end up with a very different building. Some developers exceed their project budget, others experience more quality issues than they previously anticipated, while a number fail to complete their projects in time.

So, get your project scope right at the beginning, and you can consider the construction process almost halfway done. Everything else should easily fall into place when you have a concise project scope for guiding your construction.

Lack of a Proper Contract Administration Framework

Managing your project’s contract might, understandably, sound like a pretty simple undertaking at first. After all, if a contractor turns out to be difficult, you’d probably just withhold their payment. Or maybe, proceed to fire them from your project site if the problem persists.

Well, such are the rules some developers typically use to manage their construction projects in Kenya. But, if the numerous cases filed through the Chartered Institute of Arbitrators Kenya (CIArb) are anything to go by, a poor contract administration framework could have you losing big in the end.

How?

You see, a contract defines the overall responsibilities and rights of not only the contractor, but also other parties, including the employer. Failing to manage it accordingly, therefore, could result in parties straying from their terms during the project period. And that, more often than not, triggers disputes that could attract huge claims.

construction contract kenya

Consider something as perceivably small as terminating a contract, for instance. It’s not as simple as just firing your contractor at will and appointing a replacement immediately. There are specific legal guidelines and timelines for terminating various forms of contracts.

And the same applies to all the other matters relating to building contracts. Even your contractor’s sum may not be final. It could change during the construction process, depending on the possible variations that develop, as well as market fluctuations.

In some cases, interest rates are even applied to amounts due after a specific period. Such issues are governed by the principles published by the Joint Building and Construction Council of Kenya (JBCC).

Any unresolved disputes and claims arising from construction contracts can be referred to arbitrators. And just like any other court decree, the resultant decisions and awards are binding.

Then get this. If you appeal to the High Court and the court happens to back the amount awarded by the arbitrators, then that’s it. You cannot appeal further. Not even to the Court of Appeal.

That said, a solid contract administration framework manages the pre-award tendering phase, as well as the subsequent post-award construction phase. That’s how you get to protect yourself, your building, and the corresponding construction resources. (See the 10 Common Forms of Construction Fraud in Kenya)

Proceeding Without Comprehensive Construction Insurance

Naturally, buildings are extremely vulnerable during construction. Even simple changes in weather could potentially jeopardize your entire project.

Heavy rainfall showers, for instance, are known to decompact poorly-graded soils and consequently trigger foundation failure. Other common risk factors include earth tremors, floods, fire, lightning, political violence, vehicle and aviation accidents, etc.  That’s why construction is usually a tense period for all the stakeholders involved in a project.

Since it’s difficult to accurately predict these and many other possible disasters, insuring your construction project is a thoughtful way of preparing for any unfortunate outcome.

construction insurance kenya

Now, the common assumption here is that insurance should be procured directly by the developer. But, the truth of the matter is, it depends on your project’s contractual terms. While some contracts require employers to insure their project works, the standard rule is applying contractor liability insurance.

The latter, I must admit, is the best option, considering the contractor is solely responsible for all their works and the accompanying risks. Plus, the law stipulates that a construction site and its works are possessed by the contractor until a certificate of practical completion is issued by the project manager.

Now, if you decide to go ahead and use contractor liability insurance, the policy itself should be procured before the building works actually begin. And get this- the policy should include both the contractor’s and employer’s names.

That way, it protects both parties against loss and damages caused by civil commotion, fire, earthquake, lightning, explosion, storm, aviation accidents, vehicle crashes, floods, overflowing water, etc. This should apply to not only the construction works, but also all the fixed and unfixed materials on site.

However, when it comes to extension, repair, and alteration works, the developer is one required to solely cover the accompanying risks. So, it would be a good idea to purchase a relevant insurance policy if you’re planning to renovate your building.

Ok, fair enough. But, what happens in the event the contractor drops the project or is declared bankrupt?

Well, you should be prepared for that too. And the legal way to protect yourself is requiring the contractor to provide a performance bond, whose surety should be a trusted insurance company or bank. Failure to which, you have the right to withhold payment until the performance bond is presented

Insufficient Construction Cost Control

In our Construction Costs In Kenya piece, we discussed what you can expect to spend on different types of projects across every region. And since those are just averages, we advised readers to consult professional quantity surveyors for more accurate building cost projections.

Well, the resultant BoQ should be a helpful roadmap. But, let’s face it. It would just be a breakdown of your project’s material quantities and their average market rates.

Now, the trick to avoiding even the slightest project cost overruns is combining the BoQ with a comprehensive cost control system.

And what does project cost control entail?

This is how it starts off- your project manager uses the building plans and the accompanying BoQ as guidelines for establishing detailed cost estimates. That consequently forms your construction project’s Baseline.

In essence, the Baseline dives much deeper than the BoQ by outlining all the small details about materials, labor, equipment, and of course, their precise market rates. So, you can think of it as a comprehensive cost plan.

Take a look at the following sample Baseline template. Notice how detailed it is?

building cost baseline

Then to supplement the Baseline, your project manager should come up with a complete Procurement Plan. Some of the details you can expect here include item particulars, planned purchase dates, purchase sequence, suppliers, plus the accompanying pricing rates.

When it comes to the actual construction process, you should be able to track everything with the help of daily labor, materials, and equipment reports prepared by your project manager. All that can be supplemented with cost progress reports on Productivity Performance, Material Usage/Wastage Performance, Equipment Usage Performance, Items Performance, plus Project Overall Performance.

Now get this. Because of its overall efficacy, such a cost control framework is commonly used by elite contractors to first establish their profit margins, and then subsequently track their expenditure throughout the construction period. So, of course, you could take advantage of it in a similar fashion to control your project costs accordingly.

Poor Quality Assurance and Quality Control

Supervising your site only occasionally is how you end up with numerous defects. And to make matters worse, most of them become apparent long after the project has been declared complete.

According to a brief audit conducted by the National Construction Authority, only 42% of the buildings in Nairobi are safe for human habitation. A fraction of the rest are write-offs while many are in desperate need of repairs.

Well, surprisingly, this only covers patent defects. The numbers would have been much worse if NCA comprehensively tested the sampled buildings for possible latent defects.

Now, all these issues are best avoided by managing your construction project’s quality through a proper Quality Assurance and Quality Control (QA/QC) framework.

construction quality control kenya

But, what exactly are QA and QC?

Quality Assurance simply means ensuring that things are done in the right way, while Quality Control ensures that the subsequent results meet the set standards.

In other words, Quality Control is all about evaluating and testing aspects like concrete strength, soil compaction, durability, weatherability, permeability, etc. Quality Assurance, on the other hand, involves working closely with the contractor to make sure that the proper construction methods are consistently followed in order to avoid quality issues in the future.

Therefore, to get your money’s worth, you should apply QA and QC in tandem throughout the construction process.

The Bottom Line

All in all, construction is an extensively delicate battle between human engineering and the forces of nature. So, remember- you cannot afford to leave any room for error. Otherwise, the consequent results could be potentially catastrophic. The choice is yours.


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