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Who wants to go home tonight?

29/4/2018

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Click on the link for A great read Although sobering.
A lesson for us all!

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10 money saving tactics that could cost your construction project and company

24/4/2018

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Image courtesy of Sira Anamwong at FreeDigitalPhotos.net

I’m sure at some stage we’ve all had a construction project that no matter what we did, or how hard we worked, the project was doomed to lose money. Month end cost reports just brought more bad news. Our bosses were grumpy and usually blamed us for the losses. We were told to cut costs, cut people and get the project back on track.

Most construction companies go through periods of good times, which are inevitably followed by a cycle when work is scarce, when profits turn to losses.

In an attempt to remain profitable, construction companies and projects resort to cost saving measures. Many of these cost saving measures are necessary and yield the desired results. Unfortunately, some measures are handled badly, go to extremes, or are counterproductive and eventually exacerbate the losses.

Cost saving measures that can cost money

Employing someone because they are affordable. The right person could literally be worth their weight in gold. The right person can save the company thousands of dollars. The wrong person is often very costly. They’ll make mistakes. They could damage the company’s reputation. Always employ the right person for the job at a salary that’s commensurate with their knowledge and experience. Good people attract good people. An experienced and knowledgeable person can do the work of two or more inexperienced people. Pay your employees what they are worth.
Not employing sufficient people. The default action of most managers when a project is losing money is to cut people. But, often this is the wrong thing to do. Sure, people who aren’t performing need to shape-up or ship-out, and when the company is struggling it may be a good time to trim dead wood. Unfortunately, some projects are under resourced – regrettably I was sometimes guilty of under resourcing my projects. Having too few people could result in the project slipping against the construction schedule, it could result in shortcuts being taken with quality, and it could mean that mistakes are made because managers are under pressure and don’t get to all the items that they should. But, more importantly is to ensure that there are sufficient people with the right skills, so that others aren’t been held up waiting for tasks that should have been completed. Getting rid of people often causes low morale, which can negatively impact productivity. Furthermore, often the good people leave first on projects that are under resourced. Good people are often the ones shouldering the additional work load and they’re the ones to feel the pressure first.
Not training. Often the first thing that gets cut when times are tight is training. Yet, we depend on experienced and knowledgeable people. Where will we get experienced people for our next project if we aren’t training them now? People with the right training will add value to construction projects and to the company. Training your team shows commitment from the company, and this commitment is usually rewarded by increased loyalty and productivity. Sure, we shouldn’t just be training for the sake of training, but rather we need to be filling in the knowledge and skills gaps for now, and for the company’s future.
Paying suppliers and subcontractors late. Paying suppliers and subcontractors late will cost the company money. Suppliers and subcontractors who are paid late are less committed to help out when the project is in trouble. They’ll have a low morale. Subcontractors and suppliers who are paid late could run into financial trouble – even becoming bankrupt before the project is completed and they’ve delivered what they should. Losing a contractor or supplier midway through a project will be costly. But also, contractors and subcontractors who are paid late will be loath to work for the company again, so next time they price a project for the company they’ll inevitably add more money to their price to cover for the inconvenience of being paid late. High subcontractor and supplier prices could cause the company to become uncompetitive on future projects resulting in the company not winning projects. Treat your suppliers and subcontractors fairly and you’ll have the best suppliers and subcontractors wanting to work with the company in the future.
Employing the cheapest suppliers and subcontractors. It’s important to employ reliable suppliers and subcontractors that will deliver quality work and products on time. Don’t employ subcontractors and suppliers only because they’re the cheapest. Check their capabilities and ensure they can deliver the products when you require them. Poor subcontractors and suppliers can damage your company’s reputation, they take more time to manage and they can delay the project. Poor subcontractors and suppliers cost money.
Not servicing and maintaining equipment correctly. When construction equipment breaks down the cost of the repairs are often only the small cost. The greater costs are caused by the loss of productivity resulting from the breakdown. Usually people and other equipment are left standing while the machine is repaired. The breakdown could result in time being lost on the construction schedule – which results in further costs and even penalties from the client for late completion. But as important, construction equipment that isn’t maintained and serviced correctly will probably have a reduced life, and its resale value will be less.
Not investing in technology. The right technology implemented properly can benefit construction companies. It can save time and it can improve productivity. The new generation have been brought up with the latest technology at their fingertips. They expect to have access to the latest technology – not in their office, but out in the field close to the action. People will often change companies to have access to the best technology.
Taking short cuts with safety. Don’t play with peoples’ lives. Poor safety could cost your company and project money. Accidents cost money. Accidents lead to higher insurance premiums, they take management time to investigate, they’re bad for reputation, they could lead to monetary fines, the project could be shut down until safety is improved, and a key person could be injured, or an item of equipment damaged which will interrupt progress on the project.
Cutting on quality. Bad quality destroys reputation. It often leads to additional expenses to fix the poor quality which delays the project further. In the worst case, it can even endanger peoples’ lives. Even if you lose money, a good quality project can lead to other work which hopefully will be profitable.
Cutting out all celebrations. When times are tough it’s easy for morale to be low. Low morale often results in reduced productivity. It can also lead to good people leaving. It’s sometimes important to celebrate milestones and small wins – obviously not with excessive and extravagant functions. Even a couple of drinks with staff after work can help lighten the mood and bring enthusiasm and determination back to the team.

Conclusion
If your construction project or company is losing money it's important to understand why, and then get to the underlying cause. Maybe you are losing money on wages and salary, but what is the real cause? It’s often not simply because there are too many people, and cutting staff may in fact exacerbate the problem. Sometimes there are even a number of reasons contributing to the problem so it’s important to uncover them all. Knowing the real reason the project or company is losing money enables you to rectify the problems.

Frequently it only takes small adjustments, or changing a few key people and the project can turn around. Unfortunately, some projects are doomed to make a loss – maybe they were priced badly, things didn’t go according to plan, or mistakes were made at the beginning. In these instances it's important to get the project finished as soon as possible while maintaining good quality and safety standards.

It’s easy to be depressed sometimes, but depression can be like a viral infection quickly spreading through the rest of the team, impacting morale and productivity. It’s important to keep the team’s morale up, to maintain good productivity. People don’t want to feel like they’re working for a losing team.

Construction companies will go through cycles of little work and scarce profits, but in these times good people, the right technology, good equipment and a good reputation are even more vital to the company’s survival.

It’s always vital to take a critical look at costs to see how we can reduce them, but we must do things for the right reason and not just for the sake of cutting costs. Don’t let your cost cutting measures cost you more than they are worth.

What cost cutting measures has your company taken that have backfired?
Have you taken a critical look at your costs recently to see how they could be reduced?

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' is another of Paul's useful books.
Paul has recently published 'Construction Management: From Project Concept to completion'.
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.

© 2018 This article is not to be reproduced for commercial purposes without written permission from the author.

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Negotiating a construction variation claim – read this first to improve your success

17/4/2018

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Most of us have at some time submitted variation claims to our customers for changes encountered during the course of the project. Some are for extra costs only, while others are the extension of time claims which usually also result in additional costs. On some projects, these claims are worth millions of dollars.

It’s essential that you submit a well thought through and substantiated variation claim. However, even if your claim is well presented and includes all the facts, clients usually require a meeting to discuss your claim. They often have questions, dispute your facts and calculations, or just believe that contractors automatically inflate their claims and it’s, therefore, their right to negotiate the claim down to a smaller value. Sometimes they don’t understand the claim. In fact meeting with the client soon after the claim is submitted enables you to answer questions and explain the basis of the claim before the client’s team has made a firm decision regarding your variation claim. Once a claim is formally rejected it can be difficult to reverse the decision. Often egos come into play and people don’t want to be seen to lose face by backing down.

These claim meetings are important because they can secure extension of time and variation claims which can be worth millions of dollars. Failure to resolve these claims can see them drag out for months and even years – often costing huge amounts of time and money. They can become bitter disputes, souring the relationship with your client and even damaging the project. As long as these variations aren’t settled your company is probably not being paid the claim, which can be detrimental to your company’s cash flow and possibly put your company’s future in jeopardy. You need to settle variation claims as amicably and as quickly as possible, ensuring you win what’s due to your company.

Face to face meetings with your client and their team is often useful to shortcut the claims process, giving you an opportunity to answer their questions and understand their concerns. Unfortunately, many contractors go into these meetings ill-prepared, or with an attitude spoiling for a fight.

Here are a few tips to help you win your variation claims.

Before the meeting:

Read through the variation claim to refresh your memory.
Ensure you take a colleague with, to back you up.
Explain the claim to the other person and ensure you both understand why there is a claim and how the costs or time for the claim were calculated. You don’t want to be contradicting each other in the meeting or have your colleague accept a lesser figure than you want.
Understand the strengths and weaknesses of your claim. Be ready to support the strengths and to defend the weak points.
Take all the relevant documents, ensuring they are filed in the correct order and where supporting documents can be easily found.
Know what the ‘fall-back’ position or minimum is that you require. You won’t always be granted what you would like or what you have asked for.
If you know some of the concerns or arguments that your client might have, then go prepared with counterarguments.
Know your contract document and your rights.

During the meeting:

Be patient. Explain the basis of the claim clearly, logically and concisely. Present supporting documentation to support your words.
Don’t assume the other party is familiar with the facts of the case. Explain it all.
Stay calm. Keep emotions out of the argument
Listen to what the other side has to say.
Understand the other party’s arguments and use facts and the contract to explain why they are incorrect. Take the time to go through every argument even when you consider them annoying, irrelevant or trivial.
Understand the other party’s fears or concerns and address these pointing out why the fears are unnecessary and presenting arguments to allay their concerns.
Admit when you are wrong. It’s pointless arguing over something when you are wrong. It costs you the moral high ground and you lose integrity.
Be prepared to grant small wins. Always keep your eye on the big picture.
Take notes during the meeting, particularly of questions that need to be answered and points that were agreed.
Don’t be swayed by emotional arguments. Don’t be intimidated by bullying tactics. There should be nothing personal about presenting a variation claim. The contract is the contract and the facts are the facts and everyone must abide by the contract rules.
Don’t make threats or promises you can’t keep.
Don’t make rushed decisions. If necessary take a break to compare notes with your colleagues, rework calculations, and carefully consider options. However, when things are going well and the client is conceding points then keep the conversation moving quickly to a final agreement, even if this means making some small concessions.
Learn when to break with the negotiations when your side needs to regroup or develop another strategy, or when it’s obvious the client is in a bad mood or preoccupied with other matters.
... Continue Reading....

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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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'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 Management: From Project Concept to Completion'
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10 Tips To Submit Winning Variation Claims

8/4/2018

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Most construction projects have changes and encounter delays. Indeed I’ve had some projects that have doubled in value, and some which have had approved extensions of time of several months. Most of my variation claims were successful, and nearly all were resolved amicably without entering expensive and lengthy legal disputes. In nearly every case we did further projects and work for the client.

How can you ensure the success of your variation claims?

Read and understand the contract document before starting the project. Many contractors don’t read their contract documents until they are in trouble. It’s too late then. Know your rights and obligations before starting work. Understand what the client’s obligations are and ensure these are met.
Have an approved construction schedule which is updated regularly. The schedule must reflect the chosen construction methods and be linked correctly. The construction schedule will form the basis of all delay claims. The construction schedule protects both the contractor and the customer.
Ensure that good accurate records are kept. This includes daily diaries or reports. Check that meeting minutes are a fair reflection of what was said at the meeting. Remember, even minor inconsistencies between different documents could trip your claim up. A missing document could be the difference between a successful claim and one that’s rejected. Accurate documents are essential to support your variation claims.
All instructions of a contractual nature must be in writing. It’s very difficult to substantiate verbal instructions. People can be very forgetful – especially when money is involved.
Spend time on preparing variation claims. You work hard to make a $10,000 dollar profit. Why shouldn’t you put effort into preparing a variation claim for $10,000?
Ask for help. Discuss the variation claim with those directly involved with the work. They may remember things and costs which you were unaware of or forgot. Ask for expert advice when necessary.
Don’t play mister nice guy, just play by the rules. If you are entitled to lodge a variation claim then do so immediately. If the client has delayed you then submit a delay claim. Don’t hope it will work out at the end of the project. If the project is finished late the client will deduct delay damages from you – that’s just the rules of the contract. Many contracts have clauses which time bar claims that are late. Anyway, clients hate unpleasant surprises when contractors realise they’re in trouble at the end of the project and submit a whole bunch of variation claims.
...Continue Reading....

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Want More Repeat Business? Then Don’t Make This Mistake!

4/4/2018

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The other day we were flying from Denmark to Australia via Frankfort and Singapore. An hour before the flight was due to leave I checked the departures board to see the gate number and I couldn’t find the flight listed. At information, I enquired why the flight wasn’t listed to be told they thought the flight had been cancelled and I should go to the transfer desk to find more information. At the transfer desk, I took a number and waited to be served. The airline (a major European airline) had no representation at the airport, despite having numerous flights every day from the airport. Instead, all inquiries were handled by Star Alliance representatives. When my number came up I was informed that indeed the flight had been cancelled, no reason was given and they had no further information. I was told to return in an hour.

An hour later I returned, took a number and waited for several others to be attended to. The partner representative informed us that they had no further information from the airline. Our baggage had in the meantime been put on a conveyor belt at the arrivals hall and we could collect it, then ask for a hotel voucher from the ticketing office. There was no sign of any airline representative and no information about when our flights would be rescheduled (including all our connections). By now there was an airplane load of passengers all congregating at the desk, taking tickets and waiting to receive very scant information. Needless to say, some were becoming rather irritable.

We phoned the airline office directly and were told there was nothing they could do until we had collected our baggage and ‘unchecked’ it from the flight.

At no time did anyone explain why the flight was cancelled, although we saw on the airline website that all flights into and out of Frankfurt had been cancelled or delayed by a large storm.

With no news, we decided to exit the departures hall and collect our bags from the arrivals hall. There we found the bags had all already been offloaded from the belt and another airline’s bags were going around. We went to the office in the baggage claims area. The Star Alliance representative seemed surprised to have us ask for help, but he set to work, disappeared to a back office, then returned and escorted us out the baggage hall to another counter where he again disappeared. He returned a few minutes later with boarding passes for our flights the next day, a hotel voucher, train tickets to the hotel and back to the airport, and a map of how to get to the hotel. He explained that he had arranged a late checkout at the hotel as our flight was in the evening and the hotel voucher included dinner and breakfast. This one person had literally saved the day for us and the airline company. He had efficiently sorted everything out and clearly explained where we had to go and what we had to do. He went out of his way to help us even though it probably wasn’t all part of his job.

While eating dinner at our hotel we noticed several passengers from our flight checking into the hotel, long after we had arrived. Everyone looking tired and frustrated. Obviously, they had taken even longer to get the correct information.

The following night we returned to get on our new flight. This was delayed by 40 minutes. Again there was little communication about the delay and onward connections with no sign of an airline representative.

From this experience, we can see how vital good communication is with customers. How much easier would it have been for a company representative, or a designated person with the correct information, to have made a general announcement informing passengers immediately it was known the flight was cancelled, the reasons why it was cancelled and the next steps to be taken by passengers so they could exit the airport as quickly as possible. Knowing there was a problem a couple of employees should have been designated to deal with the problem and issue the hotel vouchers and replacement flight information in an ordered fashion.

This example also shows how valuable some employees are to a company when they go out of their way to assist customers, turning a bad experience around. These employees need to be cherished because they really add value to your brand.

Construction is like any other service industry. Things will go wrong on our projects, but it is how we deal with these problems that make the difference with our customers. It’s vital to communicate with customers. But just as important is to communicate with our employees, so they understand what is happening, and, that when they talk to the customer there is a consistent story.

.....Continue Reading......

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Who wants to go home tonight?

10 money saving tactics that could cost your construction project and company

Negotiating a construction variation claim – read this first to improve your success

10 Tips To Submit Winning Variation Claims

Want More Repeat Business? Then Don’t Make This Mistake!

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