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Everything to Know about Project Delay Risks

The meaning of Project Delay, causes and how to mitigate Project Delay risks in construction.

What is Project Delay?

Project Delay in construction refer to any situation where a project's progress is slower than planned, causing it to extend beyond the original schedule. Delays can be caused by a variety of factors, ranging from unforeseen site conditions and supply chain disruptions to labor shortages or administrative hurdles. These delays can significantly impact project costs and stakeholder relationships.

What does Project Delays mean?

'Project Delays' mean any deviation from the agreed-upon timeline for completing a construction project or activity towards it. These delays can affect not only the construction company's bottom line but also its reputation and relationships with the Project Owner who wants their capital project done yesterday!

Project Delays Example

A common example of project delays in construction is when essential materials fail to arrive on schedule due, to supply chain issues. This delay in materials is preventing progress in critical areas of construction. Other examples include unexpected bad weather, permitting delays, or discovery of archaeological sites.

The History of Project Delays

Project delays have been a persistent issue in the construction industry forever, leading to cost overruns and contractual disputes. Over time, project management methodologies have evolved to better anticipate and mitigate potential delays, including more sophisticated scheduling tools and risk management practices.

Causes of Project Delays

Project delays can be caused by a variety of factors:

  • Supply Chain Disruptions: Delays in the delivery of key materials or equipment.
  • Labor Shortages: Insufficient labor force to carry out the construction tasks on schedule.
  • Design and Documentation Errors: Inaccuracies in project documentation that require revisions.
  • Regulatory Approvals: Delays in obtaining necessary permits or facing regulatory compliance issues.
  • Weather Conditions: Adverse weather that halts construction activities.

Likelihood of Project Delays

If one thing is absolutely for certain, it is that a contruction project will face some delay. So, the likelihood of project delays almost certain, especially given the number of variables involved in a typical construction project. Effective project management can help reduce this likelihood, but not entirely eliminate the risk of delays.

Consequence / Impact of Project Delays

The impact of project delays primarily puts the Substantial Completion date of a project in jeopardy. Delays can also lead to cost overruns due to extended labor and equipment rentals, penalties for late completion, strained relationships with clients, and potential legal disputes. For Project Owners, delays can mean postponed use of the asset, loss of revenue from property use or increased interim financing costs.

Project Delays Clauses in Construction Contracts

Delay clauses appear in Standard Form Contracts in Australian and North America, with contract authorities such as Standards Australia and AIA Contract Docs respectively. Most commonly, look out for clauses or terminology Extension of Time (EOT). This clauses that allow for the extension of project deadlines under certain conditions, such as weather delays or supply chain issues.

Mitigations and Treatments for Project Delays Risk

Effective mitigation and treatment strategies for project delays include:

  • Robust Planning and Scheduling: Developing detailed, flexible project schedules that accommodate potential setbacks.
  • Regular Progress Monitoring: Keeping track of project progress through regular updates and meetings to quickly address any deviations from the schedule.
  • Strong Supply Chain Relationships: Building good relationships with suppliers and having backup suppliers to prevent material shortages.
  • Contingency Planning: Preparing for potential delays by planning alternative actions, including financial reserves to cover unexpected costs.
  • Risk Management: Ensure a Risk Register is in place, and that proper Risk Identification has been undertaken to identify all possible causes of delay and their mitigations.

Risk Management and Reporting of Safety Incident Risk

As we've seen above, there are alot of considerations when it comes to Risk Management. Implementing Risk Management and Reporting controls will make managing this risk easy, and ensure success of your Capital Project.

  1. Risk Management Plan: Download a free Risk Management Plan Template and put a Risk Management process in place.
  2. Risk Register: Download a manual Risk Register Template or use an automated Risk Register solution to track all risks, causes, consquences and mitigations.
  3. Reporting: Create automated Risk Reports, Project Status Reports or Dashboards for communicating with stakeholders. If you need a free Report Template, you can find some examples here.
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