is likely a sign that the contractor is
having financial difficulties or is in
a dispute with its subcontractors.
Coordination of various activities is
important to staying on time and on
budget. The loss of workers or failure
to provide sufficient labor at a key
time creates delays and increasing
costs. Thus, lenders should pay
particular attention to ensure that the
company has an appropriate strategy
to manage any labor issues arising
from turnover and/or shortages.
A number of cities that recently hosted
the Olympics experienced the impact
of falling behind schedule. With hard-
and-fast deadlines set for the games,
organizers had to do whatever was
required, no matter the cost, to complete
venues, athlete accommodations,
and other infrastructure projects.
8 An absence of monthly schedule updates.
Unexplained delays often result
from poor scheduling updates.
The contractor should update its
critical path schedule monthly to
show both progress and delays. If
a project delay is not the owner’s
fault, contractors often try to
conceal the issue by not providing
the proper schedule update.
A review of matters discussed
at monthly meetings involving
consultants and other contractors,
as reflected in meeting minutes, is
likely to highlight future schedule
problems long before they occur.
9 An absence of third-party consultant reports.
It is impossible for a lender to
stay on top of all the necessary
project delays and, in extreme
cases, termination of a project.
7 The contractor has not secured sufficient skilled labor for
critical path activities.
Increasing construction activity
tends to lead to skilled labor shortages,
which can result in quality drop-offs,
project delays, and increasing costs.
The construction industry has one of
the highest employee turnover rates
among all industries. Failure to provide
sufficient labor for critical path activities
continued from page 25
An independent engineering review of the
status of the project on a regular basis
can provide valuable and timely insight.