The Real Cost of Poor Project Management on a Build
Spring & Co, Stockport. Construction & property consultants since 1992
Poor project management does not cost a fixed number. It costs a percentage, and it is larger than most developers expect. Across major projects, McKinsey found the average build finishes about 20 months late and roughly 80% over budget. On a modest commercial scheme, that kind of overrun is the difference between a profit and a write-off.
We have watched this happen from the other side of the table since 1992, working for property developers, banks and public bodies across Greater Manchester and the wider UK. The pattern almost never starts with one dramatic blunder. It starts with a decision that looked like a saving at the time.
That gap is rarely one big mistake.
So what does poor project management actually cost?
The money shows up in four places: extended site running costs, rework, contractual claims, and financing you never budgeted for. Professional project management typically runs at 2% to 5% of construction value. A six-month overrun can burn through that fee many times over in extended preliminaries alone, before you count a single item of rework. Here is how we see it break down.
| Where the money goes | Why it happens | The scale of it |
|---|---|---|
| Extended preliminaries: site cabins, plant, security, site staff | The programme slips, so the site stays open and manned for longer | Charged at a weekly rate, so every week lost is billed again |
| Rework and abortive work | Design gets coordinated on site instead of on paper | Often put at 5% or more of contract value across the industry |
| Contractual claims and disputes | Weak records and loose change control on variations | Can dwarf whatever the early saving was meant to be |
| Financing and lost income | Handover slips past the funding drawdown or letting date | Interest keeps running and rent does not start |
None of these are exotic. They are the ordinary consequences of a build where nobody with authority is holding the programme, the cost plan and the contract together in one place. Strip the management out to save a fee and you do not remove the work. You just move it from a desk, where it is cheap to fix, to a live site, where it is not.
Where does the money actually leak on a build?
The single biggest leak we see is pricing a job before the design is fixed enough to price. A developer wants to start on site, so the main contractor is appointed against a partial design and a provisional cost plan. Every unresolved detail then comes back as a variation, and variations on a live contract are priced by the party doing the work, not the party paying for it. By the time the drawings catch up, the budget has quietly moved by tens of thousands of pounds and there is no clean baseline left to argue against. Good cost management and quantity surveying fixes that baseline early and defends it through every valuation.
The second leak sits in the gaps between trades, and it is almost always mechanical and electrical coordination. I will say something a few of our competitors would argue with. We have made this mistake ourselves. Early on we once let a client value-engineer the M&E coordination out of the fee to win the appointment, and the clashes we would have caught on a drawing turned up in the risers on site. The reworked services cost more than the coordination we had trimmed. We do not accept that trade anymore, and we tell clients why.
The third leak is health and safety, and it is the one that can stop a job dead. The CDM Principal Designer and health and safety duties under the Construction (Design and Management) Regulations 2015 are legal obligations, not paperwork. Get them wrong and the Health and Safety Executive can serve a prohibition notice that shuts the site while the meter on your preliminaries keeps running. A CDM failure is rarely just a safety failure. It is a programme failure with a fine attached.
Is a cheaper project manager a saving or a risk?
Usually a risk. A project manager charging well below the market is often carrying too many jobs to attend yours properly, or is inexperienced enough to miss the early warning signs that a programme is drifting. The fee is 2% to 5% of construction value for a reason: it buys someone in the room every week who reads the cost report, challenges the contractor, and catches the slip in month two rather than month eight.
Here is the opinion plenty of people in this trade will not say out loud. The most expensive decision on most builds is appointing the contractor too early to save a few weeks on the programme. It feels efficient. It is a false economy, and we would rarely recommend it, because those few weeks come back as months of variations and claims later. We would rather lose a fortnight at the start pinning down the brief and the cost plan than claw back a quarter of the year on site. Not every client agrees with us, and one or two have gone elsewhere over exactly that. We are comfortable with that.
The counterweight to a live contract is a real one. A properly structured JCT or NEC4 contract, administered by someone who knows it, turns a vague dispute into a defined process. Independent project monitoring and auditing gives a funder or a board an honest read on progress and spend, rather than the contractor marking their own homework.
What does good project management look like in Stockport right now?
Locally, the pressure is coming off the town centre. Stockport is in the middle of a two billion pound regeneration led by its Mayoral Development Corporation, with around 130 acres of brownfield land in Town Centre West set for up to 3,000 new homes. A lot of that is mill conversion. Weir Mill, parts of it Grade II listed and dating to the late 1700s, is being turned into 253 apartments a short walk from Chestergate.
That kind of work is exactly where weak management gets punished. The ground on a former industrial site rarely matches the survey: old dye works, buried culverts feeding the Mersey, and listed brickwork you cannot simply cut into without consent. Every one of those is a variation waiting to happen, and every one is manageable if someone has sequenced the survey, the design and the listed building consent before the contractor is standing on site asking questions. That is the whole job of good construction project management: to turn the surprises into decisions taken early, on paper, where they are cheap.
We run every project against the RIBA Plan of Work stages, with a cost plan that gets reported monthly and defended at each valuation, and we align with RICS guidance on how those valuations and final accounts are settled. It is not glamorous. It is the difference between a project that lands on budget and one that spends its contingency by the halfway point.
How do you stop the leaks before they start?
You appoint someone whose only job is to protect your money and your programme, and you do it before the contractor, not after. If you have a scheme in Stockport, Greater Manchester or anywhere in the UK and you want a straight answer on whether it is set up to succeed, talk to our team at Spring & Co or call us on 0161 476 4456. We would rather tell you the risks now than price the rework later.
Written by James Valentine, a director at Spring & Co, construction and property consultants working across Greater Manchester and the UK since 1992.