On time and on budget

Poland has problems all of its own, but wherever they are in the world, construction managers would do well to heed the advice of consultancy companies.

Efficient management of construction projects plays a crucial role in achieving goals and meeting deadlines. The lack of effective mechanisms for planning and managing a project can cause delays in delivery and may have serious repercussions on a budget. It can also lead to conflicts between the investor and the contractor.

Anthony Morgan, a partner with PricewaterhouseCoopers Forensic Services in the UK, recently spoke to representatives of Poland's construction and development sector. He listed the most common reasons for project failure in the UK and said that poor organization and management is the most common reason why things go wrong. Second on the list is failure to make objectives clear, followed by poor planning and monitoring, inappropriate resources, environmental problems, supplier failure and technical difficulties. "There is always room for improvement and the question is how to achieve this goal," adds Morgan.

Early warning signs

There are several early warning signs that show things are beginning to going wrong with a construction project. According to Morgan, failure to report the progress of prime performance criteria is a key indicator. This may be a symptom of a wider breakdown in communication that can lead to further problems if not quickly resolved. A project manager must also look out for any changes to the scope of the project, budget or timescale, as they are the most common factors which cause difficulties in meeting a project's deadlines and budget.

With 25 years' experience in the field, Morgan, sees himself as a "construction site detective" who is only brought in when a client feels that things are already going wrong. "Sometimes I get asked to go and troubleshoot, which is to help a client who is in distress with the project that is late and over budget," says Morgan. "I do practical work, which is before the problem has occurred, to put the governance regime and control environment in place to reduce the risk of a problem occurring."

Although the rules of project management may seem clear and more or less common for all industries, it still happens that projects are delayed and budgets are exceeded. In Morgan's view this is because of a lack of the proper implementation of the rules. "From my experience that I gained in the UK and other countries, projects fail because project control and governance is weak," explains Morgan. "I saw many projects where managers believed that they knew what was going on with the project, but they never tested their information to check if it was accurate. The reason why? Because it is just too expensive."

Team work is a crucial factor here, and Morgan believes that people should be supported and helped when a problem arises and not just told to get on with their work. Such an attitude will potentially cause a serious failure, and then it may be too late to set things straight. "If you spend time firefighting, you simply cannot be proactive," says Morgan.

Poland's reality

For Polish construction companies Morgan's advice may be interesting, however, they have a number of problems specific to Poland that make their lives difficult. "Our main problems are connected to spatial development plans in Poland's cities and obtaining building permits," says Wojciech Mazurkiewicz, a project manager from Echo Investment.

Mazurkiewicz also says that the shortage of labor is causing a lot of trouble to investors and is slowing down projects. Experts agree that this is the result of the migration of Poland's construction workers to Western Europe where legal work for significantly higher pay is readily available in the old EU countries.

PwC's Morgan suggests that Poland should consider opening up its labor market so workers from other countries could be employed on Poland's building sites. He also advises introducing new technologies to reduce the number of workers needed. "There are two obvious solutions, and one is to reduce the labor input into a project by using a lot of prefabricated materials in the construction process and just put things together like Lego," says Morgan. "The second option is that if you don't have enough labor in Poland, bring it from further east."

A tender issue

The real estate and construction sector is particularly prone to corruption and fraud due to the involvement of large amounts of money and long timescales for the completion of projects.

Kinga Barchoń, a certified fraud examiner at PwC Poland, believes that the most cases of fraud within construction industry in Poland take place during tender procedures. "It often happens that one participant in the tender is given more specific details regarding a project, which results in it preparing a better offer," says Barchoń. "And this cannot be called anything other than corruption."

Invest to save

One way to reduce the risk of fraud is to employ a consulting company to oversee a project. The problem in Poland, however, is that construction and development firms still do not have the budgets to pay for consultants. Barchoń says they must learn that money can be saved by investing a little bit. "Companies should soon understand that it is better to consult an advisory company and treat it as an investment rather then spend much more when a fraud situation occurs."

According to the Engineering and Construction supplement to PwC's Global Economic Crime Survey 2005, 43 percent of E&C companies were subject to economic crime in the last two years, each experiencing an average 7.4 incidents.

Barchoń points out that corruption can happen at any stage of a project's development. "It might happen at the first stage of a project, when the supplier needs to be chosen, during the signing of a contract, when unclear contract clauses could be included, as well as during the contract realization phase, with for example, a lower quantity or poorer quality of materials," says Barchoń. She also highlights the issue of trust, saying it is critical to a project's success. "If trust is broken by one party, an entire project might fail," she says.