Government infrastructure projects are notorious for exceeding budgets and taking more time to complete than originally projected. In fact, according to the Associated General Contractors of America, 72 percent of contractor firms said their projects took longer than scheduled. Moreover, 84 percent of contractor firms reported higher costs than anticipated. This often equates to projects costing millions of dollars over budget and finishing months past their deadlines.
But why?
GovDesignHub recently sat down with Balaji Sreenivasan, Founder and CEO of Aurigo, to find out why infrastructure projects are often inefficient, what contributes to cost overruns and delays, and how the transition from planning to construction can be challenging for all stakeholders.
GovDesignHub (GDH): Large capital improvement projects are notorious for exceeding budgets and running late. Why are these projects so difficult to manage, and why do infrastructure projects always seem to get out of control?
Balaji Sreenivasan: Large capital improvement projects are notoriously wasteful because the construction industry is one of the slowest to adopt new technology. You can’t build tomorrow’s infrastructure with yesterday’s technology.
Infrastructure owners have relied on grossly inefficient and outdated systems that cannot support the complexity of today’s capital programs. These projects are challenging to manage and almost always get out of control because many leaders still make billion-dollar decisions using homegrown spreadsheets, email, and outdated systems.
A new highway, for example, could cost billions of dollars and have thousands of individuals contributing to the program over several years. A construction cycle with an average lifecycle of four to five years generates voluminous data and requires focused planning, accurate reporting, and tight budgeting. Lack of digitization leads to unstructured workflows, a lack of a single source of truth, miscommunication, no collaboration between various stakeholders, manually managing data, lack of data analysis, lack of document management, inaccurate reporting, and myriad other problems that lead to projects getting out of hand.
In my opinion, one of the biggest challenges in executing a capital program is at the beginning—in the capital planning phase. Owners need to decide which projects to take on, identify when to implement them, and determine how to fund them. A wrong decision in the capital planning phase can set you back by decades.
GDH: What challenges do government organizations and agencies face in the planning process of these large infrastructure projects?
Balaji Sreenivasan: In my experience working with public sector agencies that manage large infrastructure projects, I have observed two challenges during the capital planning process. The first challenge is the overarching obstacles, such as upgrading aging infrastructure, building for growth, planning for an ever-changing climate landscape, and developing new technology.
“The lack of digitization is the root cause of most of the problems in the planning process.” — Balaji Sreenivasan
Here, prioritizing investments becomes your team’s most crucial decision during the capital planning process. On top of this, you also need to ensure stakeholder and public buy-in for the proposed projects.
I also see that most of these agencies have vast amounts of historical data for various projects completed in the past, and this gold mine of data is unharnessed. This is due to the construction industry’s lack of artificial intelligence (AI) advancements. Leveraging AI and machine learning models to analyze and interpret the data can help public agencies plan for future capital programs accurately.
The second set of challenges is project specific—ones that can come quickly and furiously. From funding, budgets, and what-if analysis to document management and reporting, if these steps are not automated and synced, the agencies are most likely to hit roadblocks along the way.
It’s common for agencies to use a collection of old systems, including MS Office, SharePoint, and homegrown reporting tools, that have been pieced together to manage these projects. The lack of digitization is the root cause of most of the problems in the planning process.
GDH: What challenges do government organizations and agencies face when transitioning from planning to construction? The construction process seems to be where these projects go off the rails. Why is that?
Balaji Sreenivasan: Construction projects, by their nature, are complex. They involve multiple stakeholders with different objectives, have unique circumstances, and are under pressure to deliver within a specific timeframe and budget. With so many moving pieces, changes to the original plan become inevitable.
“A lack of a single source of truth, poor communication and collaboration, and limited visibility into projects are intractable problems in the industry that add to errors, delays, and blame games.” — Balaji Sreenivasan
The real challenge arises when teams have to execute ideas and plans on paper on the ground. Planning and construction involve a different set of teams, and problems occur when there’s a lack of communication between them. Both teams have unused data sitting in silos.
Most often, plans made by public sector agencies during the planning phase do not harvest the existing data of the completed projects to forecast errors and minimize any scope changes due to the non-adoption of AI technology. As a result, these plans are not foolproof and have several unstable variables, making their execution difficult.
The construction phase has many more moving elements than the planning phase, such as submittals, clearances, material and resource management, design changes, change orders, communication gaps, and approval workflows. These changes can occur for various reasons, such as owner-requested changes, unforeseen conditions on site, schedule delays, price increases, and design mistakes or alterations.
A lack of a single source of truth, poor communication and collaboration, and limited visibility into projects are intractable problems in the industry that add to errors, delays, and blame games.
“Millions of dollars are added to costs, as poor project monitoring and control lead to issues in the field.” — Balaji Sreenivasan
Many funding sources for public projects are “use it or lose it,” as they have expiration dates within the current or next fiscal year. This constraint makes project delays even more detrimental since they may have to forfeit funding sources they were planning on using. In addition, these organizations lose valuable time in delays as they get concurrence from the growing number of federal stakeholders over project scope, resourcing, and budgets.
The slow process of putting together project resources and materials compounds the problem. Millions of dollars are added to costs, as poor project monitoring and control lead to issues in the field. This has a snowballing effect on the project schedule.
GDH: Once construction projects are complete, government agencies are effectively handed the keys to take over the management and maintenance of the project. What challenges do they face in this phase?
Balaji Sreenivasan: Once the construction phase is done and the handover is complete, the next big challenge agencies face is the management and maintenance of the project. The team that manages or maintains capital infrastructure is unaware of how it was created but is handed large volumes of physical documents. In case of any breakdown or unexpected repairs, they often find themselves in soup, rummaging through heaps of paper trails to find the original document.
“Maintaining capital infrastructure is easier when there is a single source where all the data can be accessed quickly and its trail can be traced.” — Balaji Sreenivasan
Poor document management is a common problem in the construction industry. Case studies show significant data loss during the construction process due to the lack of a robust, centralized management system. Large projects easily generate thousands of pages of printed materials.
Digitizing these records helps the owners find critical information, such as warranties, training manuals, cut sheets, and lien releases when needed. However, these records can be easily misplaced or filed incorrectly in paper format. Maintaining capital infrastructure is easier when there is a single source where all the data can be accessed quickly and its trail can be traced.
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