What happens if a project is not supervised correctly?

There are a lot of things that can go wrong with a construction project, as there are so many aspects to control. You have plans and permits, materials, labour, trades that need to come in at different times and of course things that are out of your hands, such lack of available supplies. The bigger the project, the more complex it is, and the bigger the chance of issues if it is not effectively managed.

A recent study showed that nine out of ten projects experience cost overrun and only 31% of projects came within 10% of their budget. When the study looked at large projects, the picture was even worse, with them typically taking 20% longer to finish than planned and being up to 80% over budget. You can find out more about why projects go over budget on our blog.

Sadly, we see this first hand being required for our Project Rescue Service more and more frequently. Most clients are struggling with their budget and their timelines and need us to come in and help them to regain control and complete the project successfully.

We want to highlight a number of ways things can go wrong without the right project supervision and monitoring and how you can to do it right! Please contact us if you have any questions about your development or luxury villa project in Spain.

Cost overrun or running out of money

This was the case with an development in Mijas Costa, when unfortunately, the developer had run out of funds due to an incomplete initial budget. The project was 6 months late, but only 70% complete and the development loan had been 100% consumed – needing a sizeable investment to complete it. MDCI’s challenge was to determine where we were, where we needed to go and how to get there ensuring a delivered project to the buyers. Thanks to our involvement and our proposed strategy the project was completed in phases (as opposed to all-in-one phase), allowing our developer to receive sales proceeds, the developer survived and made a profit.

Corners being cut

When budget is an issue, it can be tempting for your team to make switches to lower quality/cheaper materials, or not take the time needed to get a certain job done properly. This can have a serious impact on the final result, especially if this is being done in many areas of the project and can have longer term consequences affecting your guarantees to the end users and cause additional costs.

With a project manager monitoring the process and being there on the ground to assist with the decision-making, they will make sure that if switches are required, they don’t compromise the quality. They can also communicate with the client to ensure they are aware of the options and understand the impact that a modification can have – on the final result, the budget and the timeline, so that together they can make the right choice for the project to succeed.

Communication breakdown

One of the most common issues with a project is not having the channels of communication open and the trades and construction team not knowing how to explain issues, or the full impact of a decision to their clients. This can be due to language barriers, but also due to a very different level of understanding between the client and professional. Often, a client won’t know the right questions to ask to get the information they need to be able to make the right decisions, and nasty surprises can appear down the line, as a consequence of them accepting the advice/recommendation without having a technical interlocutor acting for them.

Communication issues also arise between different trades or companies on site, which can lead to process problems.

Last, but by no means least, a main contractor isn’t normally good at giving regular updates to clients during the project and even when they do, the information given tends to be angled in their favour. This leads to stress and a feeling of being out of the loop, whereas if you can have someone giving you detailed monthly reports, as a project manager would, you can relax, knowing everything is under control and you’re being consulted, when necessary, but aren’t holding things up with slow responses, or ill-informed decisions.

This is something which our clients really value from our project supervision in Marbella.

“MDCI provided their own independent assessment on the progress on the baseline schedule, a service which became of increasing value after it became apparent that material and resource availability had its negative impact on the progress.

The reports provided by MDCI gave us a trustworthy insight into the status and allowed us to plan accordingly, and where necessary discuss and review possible actions with MDCI and our legal advisor.”

Timelines slipping

If you have materials arriving late, or key components such as glazing being delayed, it can have a knock-on effect on everything else. These things sometimes happen but being able to manage the rest of the project around certain delays can save you huge amounts of time and minimise the problem. Sometimes you’ll need to bring in overlapping tradespeople, but you need to know when and how to do it, so that they aren’t tripping over each other and slowing both parties down causing frictions, disputes, poor workmanship and extra costs.

Fines and legal issues due to failure to secure the correct permits

Bureaucracy in Spain can be frustrating and licences are needed for almost all works. What you need, how you can get it and which department you need to talk to is all baffling to a foreign client wanting to build. If you get it wrong and start to build on land without the right permissions, or undertake works without the correct licence to do so, you can be in for big fines, or even serious legal issues.

Applying for and receiving permits to build can take much longer than clients would like and this alone can push a project back by many months. It’s important to understand the processes, the time frame and know the right people within the Town Halls that can help you speed up the process. Generally speaking, there are almost always conflicts with the actual sizes of the plots (as there exist 3 sets of statistics affecting these) – and these need skilful and knowledgeable management to resolve.

Find out more about building licences in Marbella on our blog.

The vision of the client not being realised as the team make decisions without consultation

The need for a quick decision onsite to keep the project on track is paramount. If the client is not there, and there’s no project manager, there is either a delay, or one of the team makes the decision themselves – sometimes without consultation, and worse, without taking the objectives of the Client into account. This happens when there are “silos of influence” (where the architect and technical architect are not independent of each other for example). While it’s great for people to be proactive, sadly we see that often these decisions are not in line with the brief and not to the client’s tastes, and it impacts on the final result.

Project Planning

Ensure your project is properly planned and that you have the right contracts in place to protect yourself and the project in the case of difficulties.

Unfortunately, many clients who come to us for our project rescue services have pushed the project forward themselves without complete plans and signed contracts which have trapped them into the wrong course of action, often requiring remedial actions that cause delays and cost additional amounts. This is especially tricky when working in a foreign environment.

These issues can be resolved down the line, but it is difficult and of course impacts on budgets and timescales. That’s why we recommend having specialist advisors from the beginning with experience of project management and development in Spain. They can ensure the project is feasible and together you can create a sound plan and ensure the contract conditions are correct and up to date.

Hire an external project manager rather than contracting project management from your architects or construction company – it is vital to have someone vouching for YOU!

Only by doing so can you have an independent third party representing your interests throughout the project.

Dedicated project managers are able to take a global vision over the whole process, whereas if your project manager is also part of the design or build team, they will approach it with their own area focus and agenda. Some architects will offer you their Project Management service. It is impossible to be neutral and wear two hats of design/build and project management and inevitably compromises will be made as a result. We work alongside the architects and construction companies to ensure the project meets your budget, timescales or business targets, but always remaining independent and authoritative in your favour, reporting back to you throughout the project and managing the team as your Client Representative.

Establish clear targets to hit

If you start your project without a clear plan with dates and targets to hit it is inevitable that the project will go off track, face unnecessary delays and take longer than it needs to. All suppliers and contractors should be accountable and commit to meeting their objectives and hitting the key deadlines in your plan. You also need someone overseeing this, checking in with everyone to make sure they are on track and problem solving to work around delays such as materials arriving late.

Having a clear initial plan and ongoing project monitoring is your best way to ensure success. Unfortunately, we often see owners depending too much on suppliers’ own initiative and allow them to make assumptions as they have no one on the ground to ask. This opens you up to many mistakes and you lose control of the project. Whereas if you have a dedicated Project Manager you can leave it all to them! Think of them as “conductors of the orchestra”, overseeing all matters and moving them to the established targets in a methodical, organised way and avoiding those pitfalls along the way.

Call in professionals if things are going wrong

We are often called in to ongoing projects with existing on-site management teams in place for project monitoring. This provides the expert oversight and supervision needed to keep the project on track and on schedule. Requests for project monitoring are often triggered due to breakdowns in communication, or when a project is straying off course, and we have established guidelines and procedures in place to allow us to quickly identify problem areas and make recommendations to the existing team and the clients. We are also able to check budgets and timelines and enforce quality controls, reporting back to you regularly so you have all the information you need to make the right decisions and ensure that the project can complete on time and on budget.

Our CEO Mark Lawson has been involved with court cases for clients who have been taken for a ride by their contractors or technical team.

He explains, “One client was charged for ‘direction of works’ through upfront payments through a monthly fixed fee. A year later, works had not started and he realised he had been charged about 90% of the fee in advance by having been presented with the monthly invoices for directing the works when no works had started – and that work still remained to be done. Unfortunately, I have had to attend a number of these cases here – it is an unfortunate fact that people here are often taken for ride – and many don’t realise it until too late.”

Before making any payment be sure you know:

• Exactly what you are paying for – who is doing what, by when and to what standard
• Have a clear and thorough contract in place and do not sign until you are certain you understand everything. Even better, have a Project Manager look it over from their experienced vantage point.
• Scrutinise all documents between the related parties in the development
• Once work starts, ensure each invoice refers only to services rendered and complies to your written agreements and payments stages and ensure the statutory deductions are applied!

This way you can avoid expensive legal action to reclaim monies incorrectly paid, which can later be a very lengthy, costly and complicated process.