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Do Your Material Deliveries Suck? How to avoid problems

28/4/2017

Have you been waiting for an important package to be delivered only to find it was delayed because it was delivered to the wrong address, or it arrived when you were out so it was sent back to the warehouse? Sometimes when the parcel arrives it’s been damaged – unfortunately, you only notice after the mailman has left and you have to go through the process of sending the item back and waiting for the replacement. Then I’m sure we’ve all received something that wasn’t the correct size or didn’t look like the picture. Disappointment, plus the inconvenience of having to sort the problem out!

Construction is dependent on equipment and materials which are delivered from a wide variety of suppliers and contractors. Unfortunately, things don’t always go according to plan.

Often materials arrive on a project site when no one is expecting them and there are no plans in place for where the material should be offloaded or how it will be unloaded. Sometimes these materials are delivered after-hours when there is no one to receive them. Consequently, this often results in the item being offloaded in the incorrect location and I’ve even had cases of projects accepting materials that were not meant for them. This results in double handling since the items have to be moved again, and the cost of this can be significant if a special crane or truck is required. When deliveries can’t be offloaded the truck may return to the depot with the item and it may take several days to reschedule the delivery – possibly delaying the project. When trucks can’t be offloaded there are often additional demurrage costs to be paid while the truck stands idle. In the haste to offload the item, sometimes, other operations are stopped so a crane and team can help – often causing frustrations and impacting progress.

Are you prepared for the delivery?
When deliveries of material are expected:

Ensure employees know where the materials should be placed.
That the area where they will be offloaded is suitable, for example:
- It may need to be leveled (some large items of equipment or buildings can be damaged if they are not stored in a level position).
- Ensure the ground is firm enough to support both the item of equipment and the crane offloading it.
- The area should be well-drained to enable the area to be accessed even after rain.
- Check the delivery vehicle can access the area, and modify the entrance roads if required.
(If required) have packers or bearers available to place under the item so it doesn’t sit directly on the ground, and also to enable lifting equipment to be removed from under the load.
Ensure the required special slings and spreader beams are available for heavy loads, and that lifting studies have been approved and the crane is of sufficient capacity.
Check weather conditions, (since rain may make parts of the site impassable or high winds prevent cranes from operating) and if necessary delay the transport of large items.
If the item of equipment is being placed directly in its final position check the area is ready – for instance concrete structures should have all the quality checks completed to verify the concrete has reached the required strength, the structure has been constructed in the correct position and height, and all holding down bolts are in their correct positions and the right size. There will be nothing worse than having a major item of equipment suspended from a crane when you discover the item doesn’t fit due to an error with the concrete construction!

Checking deliveries
The person receiving and checking the material being delivered should be both competent and reliable. This person should:

Verify the item delivered is the same item as written on the consignment note.
Verify the quantity and note and report discrepancies – all too often .....Continue Reading......

This article was first published on the ClockShark website. To visit this website and continue reading the article click on the link above.
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To read more about the author’s books and find out where you can purchase them visit the pages on this website by clicking the links below:
'Successful Construction Project Management: The Practical Guide'
'Building a Successful Construction Company: The Practical Guide'
'Construction Claims: A Short Guide for Contractors'
'Construction Project Management: Tips and Insights'
'Construction Book reviews'
To read more about the author visit the page 'Paul Netscher'
Want to contact Paul Netscher please enter your details on 'Contacts'
Find out how Paul Netscher can help you

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© 2017 This article is not to be reproduced for commercial purposes without written permission from the author.

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Don’t Screw Up Your Construction Insurance Claim!

20/4/2017

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How to Succeed with Your Construction Insurance Claim.
Don’t let an insurable event leave you out of pocket.

I’m sure many of us have a bad story to tell about construction insurance claims that weren’t paid out or were only partly paid. But sometimes we are our own worst enemy because we didn’t read the fine print and failed to act in accordance with the insurance policy. Often we don’t lodge our claim correctly or fail to claim all of our costs.

Sometimes events occur on construction projects which result in a loss, and these costs are claimable under either the contractor’s or the employer’s insurance policies. These include losses due to accidents, theft or from weather damage.

Most policies only pay for the cost of removing debris and replacing the damaged items or sections of work. They don’t recompense the construction contractor for any lost time, or any penalties or damages that the employer may impose against the contractor for late completion caused by these events. They also won’t pay any consequential damages. Often the construction contractor has to claim against the insurer for the cost of repairing the damage as well as submitting a variation claim to the client for the time lost.

Notifying the insurance company
When an insurable loss occurs at your construction company, it’s important that the relevant insurance company is notified as soon as possible. The contractor should know if the event is insurable, under what policy it can be claimed, and who the insurer is, and what the excess or deductibles are. Photographs should be taken of the damage, and the area made safe and secure (where possible keep a record of the costs of making the area safe as these costs should be claimable).

A report must be prepared and submitted to the insurer. This report should include:

The insurance policy number.
The date and time of the event.
The location of the construction project.
What the event was.
What the damage is
An estimate of the repair costs.
Mitigating actions were taken, if applicable.
Photographs of the event and subsequent damage.
Any injuries.
The repairs implemented, or actions taken, to secure the facility and make it safe.
Names of witnesses if applicable.
Contact details of the person submitting the report.
The urgency of the response required from the insurer.
Police case numbers if relevant.

Other actions
The employer should be immediately advised if the facility and construction works have been damaged.

The owners of equipment damaged in the event need to be advised right away. The construction contractor should keep a record of who was advised of the damage and the applicable case numbers.

In certain incidents, the police will have to be notified – again the construction contractor must obtain a case number. Certain accidents on the project are notifiable to the authorities – especially if there is a serious injury or death or if a member of the public was involved.

When the insurer is contacted they will normally advise if an assessor will inspect the damage and what the next steps are to repair it. Only once the insurance assessor gives the go-ahead to proceed can the damage be repaired.

Obviously, time is of the essence since the damage may be delaying progress on the project, and normally most insurance policies will not cover the impact of these delays. It’s important the insurer understands how critical it is for work on the project to continue and for repairs to be completed.

Costs to be included in construction your construction insurance claim
Insurance Claims should include all of the costs associated with carrying out the repairs and making good damage including:
......Continue Reading......

This article was first published on the ClockShark website. To visit this website and continue reading the article click on the link above.
Please share this post
To read more about the author’s books and find out where you can purchase them visit the pages on this website by clicking the links below:
'Successful Construction Project Management: The Practical Guide'
'Building a Successful Construction Company: The Practical Guide'
'Construction Claims: A Short Guide for Contractors'
'Construction Project Management: Tips and Insights'
'Construction Book reviews'
To read more about the author visit the page 'Paul Netscher'
Want to contact Paul Netscher please enter your details on 'Contacts'
Find out how Paul Netscher can help you

Order your books from Amazon
Order your books from Amazon UK
© 2017 This article is not to be reproduced for commercial purposes without written permission from the author.

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Ethics in Construction. What are unethical behaviours? Why should we care?

7/4/2017

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Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Are you ethical?
Unfortunately, many businesses carry out unethical practices. Contractors and the construction industry are often viewed as being unethical. Regrettably, there are many contractors who are unethical, but equally, there are many clients who also engage in unethical practices and don’t pay contractors the monies they are due. But not all contractors are unethical, and nor are all clients unethical.

Why are ethics important?
Being ethical sets the tone of the relationship between the contracting parties. As soon as one party partakes in unethical practices we see the relationships begin to break down, often causing the project to suffer. When unethical behaviour is uncovered it leads to a breakdown in trust. The other party is left wondering what other unethical behaviours have been concealed and haven’t been noticed.

But good ethical practices are an essential part of a company’s reputation. Who wants to work for a client that is unethical? Who was to employ a contractor that engages in unethical practices?

Unfortunately unethical behaviour is sometimes contagious. If management engages in unethical behaviour you can almost be certain that their employees also engage in unethical practices. When one party is unethical we sometimes see an unethical response from the other party. When someone engages in an unethical practice we often find they get caught-up with more unethical practices. Once someone has paid, or received, a bribe it’s easier to repeat the offence in the future. If management are corrupt in their dealings with the client, or contractor, they sometimes engage in other unethical practices, even stealing from their own company.

Our ethics, or lack of ethics, express who we are, and define our dealings with others.

What behaviours could be viewed as being unethical?

Not ensuring your project is safe. This includes making sure neither your workers or other people will be injured. To not care about a person’s well-being or safety is unethical.
Giving the client a poor-quality project, or one that is defective. Frequently contractors knowingly hide mistakes and poor quality work. In some cases these defects have resulted in buildings collapsing, even killing people. Contractors have signed a contract which binds them to delivering particular quality requirements and specifications. To deliver less is, in essence, a form of theft.
Deliberately omitting items, or supplying products that do not conform with the project specifications. Some contractors try and save money by purchasing substandard materials. There are even reported cases of contractors not installing all of the reinforcing in concrete structures, sometimes even removing reinforcing steel after the work has been inspected by the client. Last year a building collapsed in an earthquake, revealing the concrete foundations were filled with empty oilcans which were used by the contractor to save concrete.
Paying bribes or providing incentives to the client’s representatives so they award the project to you, or so they will accept work of a poor standard, or agree to approve variation claims which are inflated or bogus. Sometimes contractors or clients pay bribes to the authorities to ‘smooth’ the project approval process. Paying bribes leads to more problems when the person receiving the bribe accepts it as standard practice, demanding more and bigger bribes from other parties. Paying bribes reduces productivity and increases costs for everyone.
Not paying employees their agreed wages and salaries at the agreed time. These wages and salaries should be above the minimum wages for the country and state, and should also be a ‘fair’ wage.
Employing illegal migrants. Some companies employ workers without the correct documentation. Often these workers are literally held hostage, unable to leave while paid wages below the minimum.
Accommodating workers in cramped, dirty accommodation. Workers deserve to be treated fairly.
Contractors that ‘rig’ or fix prices. Usually clients invite a number of contractors to price their project, with the expectation that the bidding or tendering process will be competitive and the contractors will submit their cheapest possible price. Contractors have been known to ‘organise’ these bidding processes. This could be done in several ways, including all those pricing the project adding in a pre-agreed ‘losers fee’ which is a fee that the winning contractor will pay to all the other contractors that priced the project. A fee that the client actually, unbeknown to them, is paying. In other instances, contractors pre-arrange who will have the ‘lowest’ price. Often this price is inflated, and then the other contractors must ensure that their prices are more expensive than the contractor who has the ‘lowest’ price. On the next project another contractor is provided the opportunity to submit the ‘lowest price’, and so work is shared around amongst contractors. This means that clients pay more for their projects, but it also results in contractors becoming ‘lazy’, profits are easy to come by so there is little incentive to improve productivity, save costs and work smarter. These contractors can find it difficult to work in a competitive bidding environment.
Clients awarding projects to contractors when the contractor’s price is clearly too low. Now many would say there is no harm done by this. I don’t believe that clients should profit from contractor’s mistakes. But, there is a real danger when clients award a project to a contractor whose price is too low. The contractor could become bankrupt part way through the project, leaving the client with delays and additional costs when they have to employ another contractor to finish the project. Contractors who are losing money on a project may be tempted to take short cuts, they may include substandard materials to save money. Contractors who are losing money probably won’t put sufficient resources on the project which will jeopardise the schedule and quality on the project. There’s nothing wrong with awarding a project to the lowest bidder providing they have the resources and the skills to successfully deliver the project. If the contractor has obviously made a mistake with their price then clients should have the integrity to point the error out.
Clients that ‘bid shop’. When a number of contractors have competitively priced the project the client tells their preferred contractor what price they must provide to beat the other contractors. Contractors that submitted the lowest price have wasted their time since the client has rigged the bidding process and only ever intended to award the project to their favoured contractor. Eventually contractors won’t submit prices to these clients, who will ultimately pay more for their projects in the future.
Clients that don’t pay their contractors in accordance with the contract. Contractors who don’t pay their subcontractors and suppliers on time. Those that make unfair deductions, or withhold monies for no due reason.
Clients that don’t respond to variation claims, that deliberately ignore claims, or refuse to pay variation claims for no reason.
Contractors that submit bogus or overly inflated variation claims.
Vexatious legal disputes raised by any of the parties. Usually contract documents are clear, but moreover, one expects all parties to enter a contract in a fair and honest way. Legal disputes take time and cost money, and the only winners are usually lawyers. I’ve found that most disputes can be resolved with clear and honest dialogue.
Poor environmental practices. Both clients and contractors are guilty of dumping hazardous waste in normal garbage. Some contractors dump construction waste in vacant lots or in parkland. Oil and dangerous chemicals are knowingly dumped on the ground or in stormwater drains. Contractors who carry out illegal environmental practices probably engage in other unethical practices. Clients should ensure that they and their contractors engage in good environmental practices. If we care for our environment we are probably going to care for people. It’s about respect.
Theft of any sort. This includes employees who don’t work the full hours they claim, and the unauthorised use of company property.

What behaviours shouldn’t be viewed as being unethical?
Unfortunately contractors are sometimes accused of being unethical for reasons I don’t believe are unethical. I realise that some may disagree with some of the points below.

Submitting variation claims for delays or extra work or changes, where the contractor is entitled to claim for these in terms of the contract, and providing these are a fair reflection of their entitlements. Some clients detest contractors who submit variation claims, even when these claims are correct.
Making a large profit on a project. Many clients believe that contractors aren’t entitled to make a large profit on a project and the only reason they have made significant profits is because the contractor has ‘ripped the client off’. They regard these profits as being ill-gotten gains. Construction is a risky business and sometimes contractors lose money on a project. On occasion projects do go well, the risks the contractor allowed for in their price didn’t eventuate, sometimes the contractor developed innovative solutions which reduced costs, possibly productivities were better than allowed, or the contractor bought materials for less than they expected. Yes, things do sometimes go favourably – just as sometimes punters do win at the casino or on the lottery! Should we begrudge them their wins? Sometimes when the construction market is buoyant and there’s plenty of work contractors can lift their prices and increase their profit margins. Inevitably, due to the cyclical nature of construction, the volume of work will reduce and profit margins will fall again. Contractors are entitled to make big profits occasionally, providing these are made through legitimate means.
Deducting monies from contractors, subcontractors or suppliers, where these are legitimate charges for items which they should have supplied but didn’t supply. However, it’s good practice to timely notify the contractor, subcontractor or supplier of these charges, and where possible to agree the quantum of the charges beforehand.

Conclusion
Being ethical is about how we deal with the client, how we deal with our employees and how we treat our suppliers and subcontractors. It's about how clients treat their contractors.

Unethical behaviour can lead to a loss of reputation, which impacts future work. It can be costly and contractors have faced lengthy legal battles and suffered large monetary fines for unethical behaviour. It could even mean that contractors are barred from working for some clients.

But equally, clients need to be ethical. When clients have a reputation for unethical behaviour then contractors will avoid pricing their projects, or will add on additional monies to their price to compensate for the problems they know they’ll have when they deal with the client. Ultimately the client will be paying more for their projects. In the same way contractors who engage in unethical behaviour with their subcontractors and suppliers may also find it difficult to find suppliers and subcontractors to work for them in the future.

Contractors who mistreat their employees will inevitably find that productivities on their projects aren’t what they should be, which costs them more. In some cases unhappy employees have been known to deliberately damage equipment, materials and completed work, or even steal from the project. (I’m sure we have all heard stories of disgruntled workers allowing concrete to get into plumbing pipes?)

Ethical behaviour is about being honest and fair in all of your dealings. It means not compromising safety or quality. It means complying with the conditions of the project and paying what is due and fair. It’s about not profiting from someone else’s misfortune.
I’m sure we have all been guilty of being unethical at some stage – but is this the way you always operate?

What unethical behaviours have you encountered on your projects?
Are your behaviours always ethical?

This article is adapted from information in the author’s popular books: 'Successful Construction Project Management: The Practical Guide' and 'Building a Successful Construction Company: The Practical Guide' and 'Construction Project Management: Tips and Insights'
'Construction Claims: A Short Guide for Contractors' has just been published. These books are available on Amazon and other online book stores.
Paul publishes articles regularly on LinkedIn and his website.

Paul writes regular articles for other websites, gives lectures, mentors, and is available for podcasts and interviews.
© 2017 This article is not to be reproduced for commercial purposes without written permission from the author.

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Do Your Material Deliveries Suck? How to avoid problems

Don’t Screw Up Your Construction Insurance Claim!

Ethics in Construction. What are unethical behaviours? Why should we care?

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