HomeNewsDevelopers may loose up to US $15m in profits on failure to...

Developers may loose up to US $15m in profits on failure to deliver projects on time

Developers may end up losing a whopping US $15m of their profits if they fail to submit their projects on a given period of time due to one reason or another; this is according to a research by the Construction Industry Institute; a consortium of leading owners, engineering-contractor and supplier firms from both the public and private based in the US.

According to the report, for every day late, it equates to thousands of dollars lost, and a 10% overrun can lead to five million dollars blow to project profitability.

Search for construction leads
  • Region/Country

  • Sector

“With the average of 20% to 30% delay that most projects report, you are looking at a significant profit loss one that is just shy of US $15m,” reported Construction Industry Institute.

A good example is Two Rivers Mall which is currently the largest shopping complex in Kenya, postponed its opening dates thrice before finally opening in February last year.

Also Read: Village Market mall extension project launched

The mall was first planned for opening in October 2015 but it was later pushed to March 2016 then to September 2016 and later to Valentine’s Day last year in 2017 when it was finally opened. The developer attributed the delays to its increased letting space capacity and underestimation in the scale of work involved.

Moreover, whatever the reasons, such kinds of delays also reduce returns for its investors. At the same time, ready tenants miss out on revenues attributed to the shopping sprees within a particular lucrative season.

“Delays in project delivery can cost an organization a significant percentage of its return on investment. Also, it triggers a surge of negative issues such as drop in share prices on the stock market, profit reduction which can be hard to recover in the long term and a loss of interest from consumers; thus, they are forced to spend more in advertising and marketing in order to gather the initial momentum,” said Stella Kimani, a brand strategist.

Must Read

Framed Allure at Billionaires’ Row in Palm Jumeirah, Dubai, handed over

Framed Allure at Billionaires’ Row in Palm Jumeirah, has successfully been delivered by CK Architecture. This is one of the two signature villas CK...

Construction of Msenge Wind Farm in South Africa to commence

Msenge Wind Farm in South Africa, the country's first utility-scale private wind farm, is ready for construction near Bedford, Eastern Cape. This is after...

Construction of Mount Hermon Apartments in Florida begins

Mount Hermon Apartments, an affordable senior housing project is now underway in the Fort Lauderdale municipality of Broward county, Florida. Housing Trust Group (HTG)...

Brightline West, Los Angeles to Vegas High-Speed Rail

After reaching an agreement with a group of significant labor unions, Brightline, the corporation behind the project, expects construction on the bullet trains to...

Installation of 47 groundwater pumping stations in South Sudan in the pipeline

Plans are being laid for the establishment of 47 groundwater pumping stations in South Sudan. The venture was formally announced on March 3, 2023,...

US$ 131M loan secured for 23-10 42nd Road development in New York

A US$ 131M loan has been secured for the implementation of the 23-10 42nd Road development in New York. This was revealed by the...
Yvonne Andiva
Yvonne Andiva
Editor/ Business Developer at Group Africa Publishing Ltd


Please enter your comment!
Please enter your name here