In recent years, IPA has observed a worrying trend in site and sustaining capital projects (one that is mirrored in large projects as well): We are seeing an uptick in the percentage of small projects considered to be schedule-driven. IPA defines a schedule-driven project as one in which the business is willing to trade capital cost to achieve schedule – in other words, willing to put additional funds toward using overtime, expediting equipment, or other approaches to ensure on-time or faster schedule. Clarity around the business objectives is a clear driver of better project outcomes, and there is nothing inherently wrong with being schedule driven. If there is a clear need for schedule – market timing, addressing a pressing safety issue, etc. - of course, paying for speed is a logical approach.
Unfortunately, many of the schedule-driven projects that IPA sees do not have a clear schedule driver. Rather, many suffer from late identification or late handover to the project organization, which cause them to become schedule driven. In other words, the project ends up being treated as schedule driven and rushed, even though there is no financial or safety value in fast delivery.
Back in 2006, the percentage of schedule-driven projects was close to 15 percent, the lowest it’s been in the past decade. However, since then it has crept steadily up. In 2011, almost one in every three small projects we evaluated was considered schedule driven. Since then, the number has dipped a bit, but remains around 25 percent. This rate is pretty consistent across the different companies, industries, and regions.
Consider what that means in simple numbers. Does it make sense to sacrifice cost in one in three, or even one in five, of your small projects? Is that really what your business wants? IPA research has shown that a high rate of schedule-driven projects is detrimental to a site’s overall performance. Schedule-driven projects are more likely to incur high costs, cost overruns, and even safety incidents. The average schedule-driven project has 5 percent higher cost than an equivalent non-schedule-driven project. This may not seem like a substantial amount, but it adds up to millions of dollars spent on schedule in a typical project portfolio.
Hence, we recommend limiting the use of a schedule-driven approach to only those projects in which timing is truly of critical importance. If you are seeing a high rate of schedule-driven projects in your portfolio, it’s time to understand what that is doing to your cost performance and whether it is really worth it. If late project identification is a root cause of the issue, IPA’s research on portfolio management offers simple Best Practices to improve the situation.
Contact Katherine Marusin to discuss.