Haunted by Grim Statistics on Megaprojects
A call by Brendan Bechtel to improve schedule and cost performance
Brendan Bechtel, soon to be chief executive of the engineering and construction company that bears his family’s name, sounded an alarm about the industry’s performance on megaprojects with words as plainly spoken as any you will hear at a conference.
Speaking at the Construction Industry Institute conference in National Harbor, Md., earlier this month, Bechtel claimed that, for megaprojects, 98% experience cost overruns or delays, the average cost increase is 80%, and the average schedule slippage is 20 months.
“Our house is on fire,” Bechtel told the audience. “If we don’t address [the various problems], we may cease to exist as an industry and … customers will cease to have confidence that we can deliver.”
Individuals and companies that stake their futures on what is built will turn elsewhere, Bechtel warned, perhaps to the manufacturing sector, where productivity has doubled in recent years while construction productivity has remained flat or slipped. Manufacturing “has lapped us,” he said, calling on the audience’s competitive spirit to figure out ways to do better.
Of course, not all construction owners, engineers and contractors build megaprojects. Bechtel delivered his cri de coeur to the members of CII, among the most competent and studious people in the industry. CII members complete their projects under some of the most adverse circumstances in the face of some of the most formidable risks. The problems on the $1-billion-plus megaprojects Bechtel had in mind reflect not just the shortcomings of engineering and construction but also those of the projects’ private and public sponsors and owners. And the problems that plague megaprojects also bedevil, on a smaller scale, the rest of the construction industry.
Bechtel said his statistics should serve as a prod for anyone who believes the industry can rest on its laurels. “Remember those three numbers and what they mean because I want them to haunt you the same way they haunt me,” he told the 500-person crowd. “I hope it motivates us to work together urgently to develop better solutions to get better project outcomes.” To do that, construction must leverage its collaborative relationships with academia and other companies.
The real threat isn’t that the U.S., private and public, will summarily turn to the construction industry and declare, “You’re fired!” The threat is that individual mainstream construction companies will fall behind the better-managed, better-resourced competitors, which are lasered in on quality, safety and customer service and better able to adapt to the new business environment’s demands. For the companies that evolve over time, Bechtel’s grim numbers will be remembered not as a measure of the industry’s shortcomings but as the beginnings of a vital, long-overdue change.