Study reveals the large, hidden costs of RFIs

Using data collected from 168 projects, researchers in Australia have calculated that the average cost of processing requests for information (RFIs) on a project is US$656,000 (AUS$910,000), a figure that is eating unnecessarily into contractors’ profit margins, but which can be reduced by more timely and efficient handling of RFIs.

Their research, published in the current edition of Construction Research & Innovation, found wide variations in RFI management across the cases, with projects that resolve RFIs quickly and earlier in the project facing substantially less cost.

The use of cloud-based project facilitation platforms for managing RFI workflow lets project teams control RFIs and their unwanted impact better, they propose.

Indeed, the anonymous data they analysed were drawn from 168 projects in Australia and New Zealand that were managed on Aconex’s platform based out of Australia and New Zealand region. The research was a collaboration between the authors, led by Dr Ajibade A. Aibinu, senior lecturer in quantity surveying and construction economics, and the Aconex Data Analytics team.

The average cost of RFIs per project in Australia knocks 1% off a contractor’s profit margin, researchers calculated, saying this is significant considering all the other drains on margins.

In New Zealand the average cost of processing RFIs was less, at around US$243,000 (AUS$337,400), a difference the researchers put down to the greater size and complexity of the Australian projects.

"Regardless of the origin of RFIs, there is no doubt RFIs are a necessary evil because while they are a critical project control tool, they require timely processing and response, and they can be potential sources of delays if response is slow, which can give rise to contractual claims," the paper says. "It is best if RFI frequency can be minimised and RFI turnaround time shortened."

A major factor in RFI turnaround time was the number of people handling RFIs using the cloud-based project facilitation system (users). If a project has three or more users per organisation, the average RFI turnaround time drops to fewer than five days, from more than 14 days for projects which have around two people per organisation using the system for RFI handling.

"Project managers need to pay greater attention to staffing levels needed to handle RFIs to reduce RFI turnaround time," they stated.

The study also found wide variations, among project types, in when RFIs are occurring in project life cycles. Education building projects tended to get more than 80% of their RFIs dealt with by the project’s half-way point, while, in commercial projects, half or more of all RFIs were being processed in the second half.

Project managers should keep an eye on this factor, researchers said, because late RFIs will generally be harder to resolve the more developed a project becomes.

"Managers need to pay attention to timing of RFIs and keep track using this data as benchmark," they said.

  • The paper, "Necessary evils: Controlling Requests for Information (RFIs) to reduce cost and improve margins", is available at CRI here.

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