Is 57% waste real in delivery of projects in the Built Environment?

What is the highest portion of waste in construction projects?

It appears that rework tops the list. The data show that rework often has more than one cause. A recent CII study called "A Guide to Construction Rework Reduction" reveals that the biggest contributor to rework, at 25.4%, is scheduling, followed by issues related to materials and equipment (19%), design and engineering (14.6%) and instruction/monitoring (14.5%). Cutting costs too much can also drive rework. To save money, for example, some architects and engineers use old designs or templates for new projects, and those designs may have problems that were fixed on a previous job but remain in the original design and are passed along to a new one.

At the beginning of this year a conversation began between myself and collaboration principles of NoSilos.com. The reports from the Building SMART Alliance and the Construction Institute and others have been purporting A huge percentage of waste in our industry. While I cringe at the huge numbers, the reality is a lot of that number is infrastructure costs which are inflated due to the litigious nature of our business. Examples such as insurance, performance bonding and financing directly increase the cost due to the risky nature of the current methods we use to deliver Built Environment  projects. So eliminating these excessive costs will be difficult until lenders, insurers and risk assessment folks change their policies to favor less risky arrangements.

That said, the Cll study cited in the ENR article gives us a glimpse behind the numbers from yet another perspective. The study points out that rework, aka failure that manifests itself at the tail end of a project, is spawned by many different failure mechanisms. Bad schedules, materials, equipment, design, execution, supervision etc. etc. account for rework BUT most rework arises from more than one failure mechanism. Further, rework is merely the visible tip of the iceberg. The real failure points lie submerged and ignored.

If necessity is the mother of invention then crisis is the father of failure. And we see the father of failure sowing wild oats all over! And let us count the ways:

•  RFI's
• Energy
• Re-work
• Waste removal
• Poor site logistics
• Over priced construction materials
• Over priced construction equipment
• Poor delivery coordination
• and more, more, more.....

At NoSilos.com we have a metric we use called ROF or Return on Failure. Sort of like the Return on Investment metric known in the financial world, but in reverse. The value of failure compounded over time creates its own wave of increased cascade of failure. 

So how much can be reduced. Past experience shows a possible reduction on privately funded projects of at least 10% and more likely around 15% when we used a modestly integrated design and delivery process not even close to true IPD process. The key to these numbers was a combination of great communication, clear goals and some judicious use of technology to help make the process a bit easier. 

The bottom line, from our perspective, is that waste and inefficiency are known realities by key stakeholders in every sector of the economy regardless of their willingness to admit to the presence of the waste. We bring solutions to identify the differences between uncontrollable and controllable waste. What our clients do to reduce those costs is up to them. There is a vast opportunity for every company to reduce their ROF and increase their ROI to levels not seen before.