3 Of 4 Developers Going Over Construction Budgets, Survey Finds
The survey, conducted in May and June, found that 75% of owners were over planned budgets on their projects, and 77% were late. For each development project, owners experienced an average of six changes to the budget and five changes to the schedule, with a 15% average increase in project costs as a result.
On average, projects were 70 days late compared to their original estimates, the survey found.
Some 69% of the respondents said that the greatest challenge to getting projects done is on-site labor shortages. Only 24% of respondents said they are staffed with the right skill sets for financial governance, reporting and controls, while 33% said they are well-staffed for planning, design and scoping.
“Trade and labor is part and parcel of estimating project timelines and viability, so when there’s a labor shortage, it impacts costs," IDC Research Vice President Warren Shiau said in a statement accompanying the survey results. "And the longer it takes to finish a project, the more your costs escalate.”
The competition for workers is a prime factor driving wages up, according to the Contractor Compensation Quarterly report. Contractors are projecting 2021 construction staff wages to increase an average of 3.23%, though it might be even higher.
At the same time, recent pressure on construction budgets caused by the price of lumber is easing. After lumber set an all-time price record in May, the market price has been dropping steadily and now is down to 2018 levels.
The survey, which IDC undertook on behalf of construction management software specialist Procore, included 505 U.S. (303) and Canadian (202) construction project owners and developers across a spectrum of owner and development entities. They included private corporations, governments, healthcare and education institutions, and commercial real estate companies.