Most commercial construction pros know projects are taking more time to build and cost more than expected. A 2022 survey from Associated General Contractors of America found that 84 percent of respondents reported project costs were higher than anticipated and 72 percent said projects were completed well beyond their estimated finish date in the past two years.
The problems that mire the development industry, from labor shortages and supply chain issues to uncoordinated teams and inadequate project sequencing, are only compounded in the hospitality space, where high-end and customized assets unique to a particular hotel or resort increase the potential for mistakes. Delays are not only more likely and costly given the complexity of hospitality projects overall, they can also be detrimental to a hospitality brand’s carefully crafted image.
But like the tickle in your throat that precedes a nasty cold, there are clear warning signs that a project is in need of an intervention. Here are some symptoms of a “sick” project to look out for and the treatments available to remedy them before the project turns terminal.
Symptom 1: Continuous Schedule Delays with No Recovery
In its 2023 Outlook survey, AGC found that 63 percent of respondents cited project delays related to supply chain issues and other availability problems as the biggest concern for the year ahead. Another 28 percent identified project delays due to permitting or inspection as a major concern.
Projects can get off schedule for any number of reasons. In the hospitality realm, the design details are especially important as incomplete plans or information, changes to the design and materials procurement of are all culprits of potential delays, creating bottlenecks that affect the availability of subcontractors and third-party vendors.
To mitigate delays, it’s imperative to get to the root of the problem, which may require an in-depth review of the design plan and project schedule. Identifying the issue, however, is only half the battle.
The entire project team must work together to create a remediation plan that includes revisions to the schedule and allocates additional resources, among other changes. For delays longer than a month, a contingency plan may be necessary for finding alternative suppliers or contractors. In worst case scenarios, a total revision to the project scope may be required.
Schedule extensions may be inevitable, but keeping all stakeholders involved and informed about the status of the project is key to limiting costly remediation. Monitoring key dates and deliverables must remain consistent and purposeful throughout the project’s development to avoid ending up off course.
Symptom 2: Unexpected Cost Events and Potential Change Order Logs that Expand Month after Month
Forty-eight percent of AGC respondents said risings costs—for materials, labor, financing and insurance—were the primary cause for projects delays in the past year. While there are many external forces working against development across industries, in the hospitality space, requests for information and potential change orders can wrack up significant charges, resulting in more dollars spent on unforced errors and self-inflicted missteps.
Project owners expect a reasonable number of change orders. Development doesn’t happen in a vacuum, meaning challenges arise and have to be overcome. There’s little anyone can do about a severe weather event or a specific machine part that is back ordered for months. But when there’s round after round of change-order requests, the project sinks deeper into the hole.
Certain preemptive measures will minimize unexpected budget issues. Starting in the planning stage, alignment among stakeholders is imperative, providing greater control over timelines and budgets and reducing risks to the project. All stakeholders need to be aware of the details of design, scope, specs and other documents at the start and stay informed as changes are made. A responsibility matrix is a key tool to eliminating confusion about who owns specific aspects of the project.
In the current economic environment, projects in the early phases are benefiting from a longer design and review process, finalizing more details before construction begins, which will ultimately reduce the need for change orders. While this approach doesn’t always work in an accelerating economy, it’s likely projects will benefit from patience and detailed decision making for the near future.
Symptom 3: Critical Path Items are Riddled with Issues
Quality control is an issue independent of lost time and unexpected spending. While quality is imperative to hospitality brands, the sheer magnitude of design scope can create lapses in quality, which are more likely to occur when a project is experiencing delays and the finer details are rushed or overlooked.
From lobbies and common areas to guestrooms and bathrooms, fitness rooms to industrial kitchens, hotels and hospitality projects contain hundreds of furniture, fixtures and equipment decisions. When ambiguous quality standards come head-to-head with supply-chain challenges, the result can be a mismatch of materials that don’t align to the brand’s image.
The simplest remedy is to provide detailed design standards to all team members along with documentation to assign responsibility for ordering, which can remedy problems before they derail the project timeline. A custom fabric for a hotel’s headboard could end up delaying building activation significantly if not ordered in enough time to manufacture and deliver to the furniture maker. Clearly laying out responsibility and dependencies for decisions can keep these seemingly minor delays from adding up. Many of these measures can be established through a quality management system such as ISO-9001, Six Sigma, or Total Quality Management.
The pandemic of sick projects has necessitated a new approach to quality control that is more forward looking and dynamic, that focuses more on preventing issues from arising than managing what’s already been uncovered. While many sick projects have acute symptoms that need to be addressed in the moment, they also present an opportunity to take a look at how decisions are managed throughout the development project and where missteps occur.
There are many elements of disruption that are intertwined throughout a hospitality project’s life cycle but they most frequently stem from poor planning and even worse execution. Just as an apple a day keeps the doctor away, open communication and clearly defined roles and responsibilities are often the best approach to avoiding serious project delays. But help is available when the symptoms become more serious than the current team can handle. It’s merely a matter of having someone that understands all the pieces that are broken, how they affect one another and can determine the correct course of treatment.
Mark Knott is VP and national hospitality sector lead for Project Management Advisors, a national real estate advisory firm.