Once again, the construction industry fails to estimate costs on large projects. Plant Vogtle a nuclear power plant in eastern Georgia must increase budget by $737M US to become a $6,850M project.  The legislators that must approve the cost increase want to penalize Georgia Power for missing the mark.

“The price tag keeps going up. The timeframe they are going to build it has been extended year after year after year,” said state Rep. Mike Fasano, a Republican and nuclear power supporter.

Construction schedule for the project is shown here, but the costs keep increasing. The photo below shows the complexity and scale of the work.

Coupled with the low cost of natural gas, the project looks like a poor investment for the stake-holders.

Why has the construction industry continued to fail at effectively managing large projects? We continue to punish conservative projections, on the one hand. Managers and executive often won’t deal with bad news and demand better costs without making technical changes.

On the other hand, the design management seems likely to be failing. I don’t know enough about nuclear project design to be sure, but I’d bet that either the rules are changing or the someone isn’t properly managing the design process. Either way, a great opportunity exists for folks in construction to improve on the current state.

Think about how you manage the challenges and changes in your business. Do you keep focused on controlling the most important elements? That’s a secret to success in these volatile times. In a nutshell:

1. Fiercely control the design (pay attention and conflict now, not later)
2. Budget conservatively (things rarely go much better than expected)
3. Develop a monthly cost review system that actually works