No matter how much knowledge and experience one has in project management, delays and cost overruns are bound to happen in most projects. But constant delays in a project will cost your company a lot of money, perhaps more than you even realise.
Although business owners can seek cash advance for businesses, it isn’t always a viable option. Therefore, it is better to recognise the reasons behind these delays to try to avoid them in future projects.
Following are three major reasons behind project delay that are bound to cost you a fortune:
1: Design Errors
Design errors are one of the major and most common factors behind project delay. No matter how big or small your project is, it is crucial to have an accurate understanding of your client’s requirements. So, for proper representation of your client’s needs and the blueprint to achieve good technical input to project execution, you are needed to have a basic project design.
Having a project design that includes a lot of errors will mean that your company is incapable of understanding its client’s requirements. Further if these errors aren’t corrected, they will lead to wrong application of techniques in achieving the final outcome. Eventually, the actual execution phase of the project will unveil all these design errors. At this stage, attempting to correct these errors will only lead to delays and cost overrun.
Hence, it is necessary to conduct a rigorous review of the project design in the initial phases of development. Errors that are found at an early stage of the project development are easier and less costly to eliminate. To avoid project delays and cost overrun due to design errors, involve people with professional skills and application of competent tools throughout the project.
2: Change in Scope of the Project
Another common reason behind project delays and cost overrun is due to a change in the scope of the project. The term scope defines the outcome that is expected at the end of the project. Hence it is safe to state that all project plans, estimations, schedule, quality and base lines are designed in the initial project scope.
Any changes made in the project scope during the development phase will mean that the entire initial project plan will need reviewing to such an extent that a reviewed budget and schedule will need to be developed. This requires additional time and resources against the initial baseline.
In other words, with every scope change, the main project resources are diverted to operations that were not identified in the original project scope, thus putting pressure on the schedule and budget.
Few reasons that lead to a change of scope are:
- Wrong initial scope definition
- Inherent risk and uncertainties
- Sudden change of interests
- Project funding change
These reasons further lead to changes in:
- The ultimate outcome of the project
- The project budget
- The project team (if necessary)
This undoubtedly results in project delays and cost overruns. So if you need to achieve a proper control over scope change, it is essential to identify the fact that change is not only inevitable but could also be beneficial to the entire project. Hence, project managers need to integrate a proper change management plan that takes into consideration all of their client requirements.
3: Inappropriate and Inadequate Procurement
It is important that the project contract highlights every aspect of the project correlation that includes payment terms, pricing and service levels. Failing do to so may lead to disputes in the contract system.
For instance, if the contract does not address every relevant project aspect, it will only lead to long chains of negotiations and requests for reviewing the contract agreement (which will have new budgets and schedules). All this will result in project delays and cost overruns.
Likewise, it is even ambiguous to involve unrealistic clauses in your project contract. Resolving them would take time, thus generating delay and cost overrun in a project.
On the other hand, delays and cost overruns can also be caused due to poor selection of contractors who have no technical capabilities to handle the project. Also, having contracts with clients that have a slow payment schedule will eventually lead to delay and cost overrun.
To avoid these issues, the ethical thing to do is to hire a professional contractor who is capable and knowledgeable in handling the project. Moreover, the project contract should involve clear and realistic clauses, and these clauses should explain the penalties associated with delays and cost overruns that both the parties have to bear.