A major construction project can appear to be on time in planning software while already being destined to slip on site. McKinsey recommends building the schedule around achievable rates of design, installation and commissioning rather than working backwards from a desired completion date. For CEOs, this changes oversight: instead of a late report that a milestone was missed, they get an early signal of whether the system can deliver the promised volume of work.
How an unrealistic schedule precedes the first delay
A large capital project involves hundreds of people and thousands of connected tasks. Software can map the dependencies, but estimates of how long each task will take may be copied from an old schedule or supplied by a planner instead of being checked against the site’s actual performance. McKinsey compared plans with real production rates at different construction stages and found that about 80% of the plans reviewed assumed unrealistically fast execution. A completion date can therefore look coherent in a presentation even when the required daily output is already beyond the team’s capacity. Familiar performance measures may also arrive too late. Budget spent and milestone completion tell executives what has happened, but not necessarily how many drawings, cubic metres of concrete or metres of cable the team must produce next week. Near the end of a phase, managers may try to recover lost time by adding people, though access to the site, equipment or predecessor work prevents them from moving faster. The signal for a CEO is simple: a deadline without tested production capacity is an assumption, not a reliable plan.
Plan from the rate of work, not the desired date
McKinsey’s alternative is rate-based planning. The project team counts output in physical units: drawings released per week, concrete placed per day, cable installed and the quantity that can be achieved with available people and equipment. It compares the rate required by the target date with a rate the operation can actually sustain. The next task is to design the support system: material supply, access to work areas, engineering decisions, supervision and allowances for weather or moving crews. This approach matters before building begins as well as on site. Early on, the design team’s output must match the contractor’s need for approved drawings; near completion, commissioning work needs its own capacity check. In an infrastructure example discussed by the authors, a team about 60% of the way through the project changed its management rhythm. It looked daily for causes of variance and used targeted initiatives on critical work. McKinsey reports a 30–40% productivity improvement in those activities and lower costs. That is the outcome of one project, not a guaranteed return from the method. The transferable lesson is to measure the constraint early enough to change a decision.
Questions for the owner and the contractor
First, a CEO should know whether actual production rates are available. Some data are already held by a contractor but not shared with the owner; some are recorded inconsistently; sometimes a simple daily count is more useful than a sophisticated model built on weak inputs. The next issue is a common response to variance. If the proposed schedule requires an impossible rate, postponing the conversation until the next formal report is dangerous. Contracts and operating meetings should specify which data are shared, who removes obstacles and when the plan is revised. This is not principally about assigning blame. Materials, site access, drawings and subcontractor work form one system. McKinsey also describes a chemical project in which a plan grounded in realistic rates for many thousands of welds helped complete the work earlier and at lower cost than the initial plan. Another business should not simply import those numbers. It should take more care while testing assumptions so that it does not lose months during execution. AI tools may eventually speed analysis, but the first requirement is agreement on which units of work are measured and which decisions change when the data depart from plan.
Key takeaways
- In McKinsey’s review, roughly 80% of plans contained unrealistically optimistic assumptions about execution speed.
- Rate-based plans use physical units such as drawings per week, concrete or steel per day and installed cable length.
- The same logic applies to engineering, procurement, construction and commissioning.
- Without shared data between owner, main contractor and subcontractors, transparency will not lead to timely action.
What this means for CEOs
A CEO overseeing a large capital project should ask not only when the next milestone is due, but what weekly rate is needed, who can actually deliver it and what changes when the rate falls. A credible schedule starts with production capacity.