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How optimists impact construction projects

By Abby Jordan

Special to North Carolina Construction News

Optimists. They tend to see the positive side of things; they expect things to turn out well. Glass half full kind of people. They aren’t generally thought of as detrimental. That is until they work their way onto a construction project.

Only about a quarter of construction projects finished within 10 per cent of their original deadline, according to a three-year study from KPMG in 2015.

So why are so many projects delayed?

Of course, there are the obvious reasons: delayed delivery of materials, construction mistakes, weather, and so on. But, according to experts, there’s a simpler answer to this question: optimism bias.

“We people tend to be optimistic,” said Jim Rispoli, a professor of the practice at NC State.

“When we do an estimate of cost and schedule, we tend to inadvertently, in many cases, overlook the risk and overlook the problems that could come up,” Rispoli said. “And if there are unknowns, we overlook those.”

In order to understand just how optimism affects these projects, you first have to know the basics of building.

When an owner first decides to start a project, they contact an architectural firm. The architect will then create the drawings and specifications – or “specs” – and send them back to the owner. Once approved, the owner sends the specs to general contractors for bids on the project.

Cue the optimism.

In order to provide the most attractive bid, general contractors tend to draft aggressive schedules. They have a habit of overestimating the amount of work that can be done in the timeframe the project owner wants the job completed.

“The owners and the people who pay the engineers and the engineers themselves become optimistic with their product, and they think it’ll go smoothly,” said Rispoli. “So they tend to sometimes even knowingly overlook the risk to get their project funded and get it underway. And then they suffer the consequences later on.”

Overlooking risk, in this case, might mean not accounting for a few “hiccup” days, picking small, less expensive subcontractors that can’t deliver on the work, or miscalculating how much time it might take for a piece of the project to be completed.

“There are so many GC’s that are out there that it’s already very highly competitive,” said Daniel McDonnell, senior superintendent at Frank L Blum Construction Company. “And I think that that drives it a little bit. People make very optimistic schedules.”

After a general contractor wins the bid, they begin work, which is when their earlier optimism meets reality and results in delays.

“A lot of it is not due to incompetent engineering,” Rispoli said. “It’s due to being myopic, and not seeing things that we should be seeing. Because we get too close to things.”

And, as we all know, timeline delays mean costs increase.

In the same KPMG study, researchers found less than a third of construction projects came within 10% of their original budget.

That means these delays, most often caused by the general contractor during the bidding process, end up costing that overly optimistic person in the end.

Is there any way to override this optimism bias?

Yes, according to Rispoli.

“The only way you can improve performance is by having an independent reviewer come in and evaluate your project before it starts and identify the risks and drive out the optimism bias,” said Rispoli.

Though this typically isn’t practical.

With so many moving pieces and three main players – owner, architect and general contractor – with varying viewpoints and priorities, adding yet another expert with another point of view to the mix could complicate the process and potentially derail progress.

So, until all general contractors figure out how to override their optimism, construction projects will likely continue to face delay after delay.

Abby Jordan
Abby Jordan

Abby Jordan is a senior at The University of North Carolina at Chapel Hill studying Journalism and Political Science. Originally from the D.C. area, she loves to report on politics, construction and other local news.

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