Ensuring the success of a construction project extends beyond budget management, adhering to timelines, and maintaining quality standards. A foundational yet sometimes underestimated aspect is stakeholder alignment.
Within the context of a construction project, stakeholders serve in a pivotal role by defining project objectives and exerting influence on decision-making processes.
Achieving a consensus among stakeholders is paramount to streamline project execution. Neglecting stakeholder alignment can disrupt even the most meticulously planned projects.
Here, we delve into stakeholder misalignment within the construction industry, shedding light on its consequential effects, and offering insights into effective prevention strategies.
Identifying Key Construction Stakeholders
Stakeholder alignment refers to the level of agreement or collaboration among the parties having a vested interest in the success of a project. Key construction stakeholders fall under six categories:
Key Construction Stakeholders
- Client / Project Owner (Financier)
- Design Team (Architects, Engineers, Consultants)
- III. General Contractor (Oversees Construction)
- Subcontractors (Specialized Trades – Suppliers, Plumbers)
- Financial Institutions – Legal Advisors – Regulatory Bodies
In any construction project, the effective collaboration and alignment of these key stakeholders are essential for its success with each bringing their expertise and interests to the table.
By understanding their roles and fostering strong communication, construction projects can navigate challenges, ensure compliance, and achieve the desired outcomes.
This harmonious partnership among diverse stakeholders is the cornerstone of a well-executed construction venture.
The Anatomy of Stakeholder Misalignment
Stakeholder misalignment in construction projects can take various forms. The most common is miscommunication and misunderstanding. Some stakeholders are unable to relay or comprehend certain information effectively.
Different stakeholders can also have different goals and objectives due to conflicting priorities. For example, the design team might prioritize aesthetics with disregard to financial considerations, as opposed to the client for whom financial matters are likely a primary concern.
Budget and cost discrepancies are another common area in which the stakeholders’ views on allocations are not in sync. Discrepancies can also arise from stakeholders having differing expectations regarding project timelines.
After the project has started, construction work is also prone to scope creep and change orders when there are revisions or additions of new tasks.
These changes can interfere with budget and timelines, leading to misunderstandings as well as disrupt the objectives of the project.
Also, regulatory compliance issues can occur if stakeholders do not have a unified understanding or dedication to adherence to regulatory guidelines.
Consequences of Stakeholder Misalignment
When all stakeholders are in agreement, they work toward common goals, thereby leading the project to success. The opposite also holds, with consequences varying from immediate to long-term.
Project delays are a common outcome in all cases of stakeholder misalignment. Disagreements require time to resolve, causing bottlenecks and stalling decision-making and inevitably, leading to construction delays.
Due to delays, construction costs also rise. For each day the project stalls, there are additional costs, such as interest accrual and storage fees for construction materials and equipment.
If the project is in a business premise, delayed completion means lost profits and delayed returns. Differing views on budget allocations can lead to unnecessary expenditures and cost overruns. Also, change orders tend to inflate construction costs.
Quality compromises are also prevalent when stakeholders have different views on project standards. Miscommunication and misunderstandings can lead to errors in execution that affect quality.
Naturally, litigation also arises as stakeholders seek legal redress for damages emanating from delays, cost overruns, or quality compromises.
Reputational damage is another possibility in the event of project failures or public legal disputes. This harm in credibility can lead to the loss of future business opportunities for the contractor and the design team.
Case Studies: Real-World Examples of Misalignment
Built between 1959 and 1973, the Sydney Opera House is among the most iconic architectural designs of the 20th century.
However, its construction was marked by a long-drawn-out feud between the architect, Jorn Utzon, and the client, the New South Wales government. The disagreements were mostly due to the following:
- Lack of clear project goals
- Poor communication
- Budget disputes
- Political interference
Even though the project turned out to be a success, it still failed to meet the original design specifications and included numerous design changes. The client-architect rift delayed its completion by 10 years and escalated construction costs from $7 million to over $100 million.
Preventing Stakeholder Misalignment
Early engagement and collaboration are the first steps to prevent stakeholder misalignment; this helps align stakeholders’ visions and expectations.
Contracts should be comprehensive to ensure clarity in scope, timelines, and costs, among other key project aspects. They should also clearly define the roles and responsibilities of each stakeholder to prevent overlaps and gaps.
Stakeholders should also maintain clear communication lines to promote understanding. Regular progress meetings are essential as they provide a platform for updates, feedback, and problem-solving.
Reactive approaches such as timely conflict resolution protocols should also be in place to quickly address issues.
Enlist the Experience of a Construction Litigation Attorney
In construction projects, disputes and grievances are inevitable. Even with the most rigorous preventative measures, unforeseen circumstances can arise, turning a carefully planned project into a difficult financial and legal situation.
As such, stakeholders should involve legal professionals from the onset to prevent misalignments or resolve them efficiently. KPPB LAW confidently provides comprehensive legal services to stakeholders in the construction industry.
With over 20 years of experience in the field, our team of construction attorneys offers stakeholder alignment, dispute resolution, legal representation, and advisory services to ensure project success. Contact KPPB LAW today to schedule a consultation.