Dive Brief:
- After analyzing 20 $100 million-plus pharmaceutical construction projects in the U.S., Asia and Europe, global consultancy Turner & Townsend found that 70% finished over their budgets by an average of 15% and that, overall, the projects' typical delay was four months.
- Of the projects that exceeded their budgets, the report said, 90% did so in the areas of process equipment; clean utilities; and mechanical, engineering and plumbing. Together, these phases of the work made up an average of 44% of the projects' total cost and approximately 50% of their schedules.
- During a time when getting drugs like the COVID-19 vaccine to market is critically important, Turner & Townsend suggested the best way forward is to engage in more thorough early planning on these projects and to develop and apply a system of industry benchmarks.
Dive Insight:
Jason D'Orlando, a North America vice president at Turner & Townsend, wrote the research article dealing with pharmaceutical construction delays and said that the "need for speed" causes some pharma companies to hurry through planning and to rely too much on historical project data. Companies end up requesting the necessary funding without validating their conceptual estimates and without a thorough schedule and costs analysis. Basing their projections on outdated or incorrect numbers also leads to higher engineering costs.
Making necessary changes when the project's design phase is well underway, D'Orlando wrote, also makes it difficult for project teams to deploy the correct procurement strategy, again, to delays and higher-than-expected project costs.
Another example D'Orlando gives of how rushing through the planning process ends up adding more time to the schedule has to do with the commissioning, qualification and validation stage of the project, which, in total, eats up about 40% of the project schedule. Project teams, he wrote, often try to make up time lost early in the project by accelerating the CQV stage by adding additional, costly resources. Use of these extra resources are mostly garnered from outside the construction project team and often result in a drop in productivity.
Turner & Townsend's average construction costs by type of work on projects around the world are:
- Process equipment/piping - 30.5%
- Civil structural architectural - 13.5%
- Construction management - 12.5%
- Engineering - 12%
- Mechanical, electrical and plumbing- 7.5%
- Electrical and instrumentation - 6.5%
- Clean/process utilities - 5.5%
- General conditions - 4.5%
- Commissioning and qualification - 4%
- Automation - 3%
Collaboration, D'Orlando wrote, is key to achieving better outcomes for these pharma projects as well as building correct estimates and validating them independently, conducting interactive planning sessions and utilizing proactive risk management.
