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What makes a project successful?

22/7/2016

Picture courtesy of Pixabay

Many construction projects are unsuccessful. (Based on a study by KPMG last year only 31% of respondents’ projects over the previous three years came in within 10% of their budgeted cost and only one quarter of projects over that period came in within 10% of their original deadlines.) This judgement is based solely on the fact that they were finished over budget or late. But even when projects are finished within budget and on time are they necessarily a success? Well that answer often depends on your association to the project!

Let’ ask these questions

What happens when a project is finished on time and within the customer’s budget? Certainly the customer may regard the project as being a success. But what if the contractor lost money – obviously the project isn’t a success for the contractor.
What if the project is completed on time, within budget and the general contractor made money, but some subcontractors lost money? Well of course the project wasn’t successful for the subcontractors! What if the subcontractors weren’t paid – well then the project definitely wasn’t a success for them.
What about if a worker was killed while working on the project? The project certainly was a disaster for the worker and their relatives and probably has ramifications for the company that employed the worker. Can we regard a project with a poor safety record and injuries as a success?
Of course we often have projects delivered on time and within budget which don’t deliver value for money. Politicians often force through projects that are clearly unsuitable for the environment, the neighbourhood or simply are projects that can’t deliver what they are supposed to deliver or are unaffordable. The world is cluttered with white elephants. Again I would label these projects as unsuccessful, no matter how successful the construction phase was.
What if the construction of a new apartment complex is completed successfully, but the developer cannot sell the apartments because the apartment market is oversupplied, or the quality, style, or size of the apartments doesn’t suit what buyers are looking for?

Indeed there is the opposite, where some of the most disastrous construction projects have turned out to be hugely successful. Consider the Sydney Opera House – named in the Hall of Shame of landmark building projects with major cost blowouts (the project was completed 14 times over budget and 10 years late), yet today the Sydney Opera House now stands as a city icon (even a national icon) recognised worldwide, a mega tourist attraction and successful venue.

Project stakeholders
Every project has many stakeholders which include:

The customer.
The contractor.
The design team.
Neighbours.
Those who will directly benefit from the project.
The community.
The environment.
The customer’s operations staff.
Subcontractors.
Investors.
Shareholders.
Workers.

Each of these stakeholders often has competing demands that can jeopardise the success of a project. We want a win-win for all stakeholders. Is this possible?
Does the client have to get the project delivered under-budget at the expense of the contractor? Does the contractor only make a profit at the expense of their subcontractors and their workers?
Does the community want a cheap project that is a blight on the neighbourhood?
Is the design team interested in the long-term maintenance of the facility?

Dealing with stakeholders
Unfortunately often all of the stakeholders aren’t considered, while in other cases some stakeholders are allowed to dominate the process at the expense of others. In some instances personal interests and egos are allowed to dictate the project. Running through all of this is money – everyone wants the cheapest price and the most profit.
There needs to be honest dialogue with the various stakeholders to ensure the best outcomes for all parties and the project. They might not be the desired outcomes at the start of the process, but the outcome should be best result for all parties after due compromises have been made.

What defines project success?
A successful project is one which:

Is finished on time.
Is completed within budget.
Is of good quality.
The facility achieves what it is supposed to.
Adds value to the community.
Resulted in profits for the contractors.
Is completed safely
Makes efficient use of resources
Benefited the workers – wages, learnings and promotions
Doesn’t damage the environment
Doesn’t have major disputes – labour, legal or contractual
Results in long term success for the project achieving:
- Commercial success.
- Process efficiency.
- Minimal ongoing maintenance over the life of the project.
- Operational safety.
- Sustainable operations.

Indeed a Win-Win for all parties.

Conclusion
Is it possible for a project to tick all the boxes and be successful in every respect?
Good project management with open and honest dialogue and a team that is focused on the project and not on individuals and companies is surely a good start. One stakeholder’s success shouldn’t depend on another’s failure.
What do you think?
Have you delivered a truly successful project?
What disastrous projects have you been involved with?

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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 Book reviews'
To read more about the author visit the page 'Paul Netscher'
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© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.

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Who Else Wants More Profitable Construction Projects?

16/7/2016

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Construction is a tough industry and many construction companies are facing difficult times. Yet there are always some companies that are growing and increasing their profits. How do they do it? Are they lucky?
Construction shouldn’t be about luck. Sure we sometimes appear to have projects that appear to be luckier than others – projects where the sun seems to literally shine. However, managers of successful projects and companies create their own luck. They get the basics right.
My book ‘Building a Successful Construction Company: The Practical guide’ focusses on improving profits in construction companies. Below are some ideas that come from this book:

Price your projects correctly – This includes reading the pricing documents carefully and understanding what’s in your scope of work. Check that you can deliver the project safely and to the required quality in the time the customer demands. Don’t commit to a project when you don’t have the necessary resources or skills to construct it, or one that has an impossible duration. Rather, price a few chosen projects carefully, and don’t use use the ‘shot-gun’ approach of pricing as many projects as possible hoping you’ll win one. Visit the project site to ensure you have allowed for any problems or obstacles that may be encountered during construction. Understand the project risks and ensure they can be managed or are allowed. Develop new strategies of how you’ll win the project and deliver it successfully and profitably.
Reduce wastage on your projects – There always seem to be inordinate amounts of waste materials hauled from our project sites. Not only is there the original costs of the material but the costs of loading, hauling and dumping the waste is large – and dumping costs are increasing every year. Some of this waste is generated by poor quality work and construction errors which results in completed work being demolished and redone. Some waste is generated by poor handling of materials resulting in breakages. Often though, project teams over-order materials, order the wrong material, or don’t optimise the size of materials resulting in excessively large off-cuts and wastage. When you order materials take some time to ensure the quantities are correct, they’ll be packaged and transported in such a way to minimise breakages and so they’re effortlessly off-loaded at the project, and that you’ve ordered the size that will easily be handled and have the least amount of cutting and waste.
Improve productivity – Construction projects are notoriously for low productivities. I’m sure we’ve all witnessed people and machines standing idle on construction projects. Poor productivity can be due to a number of problems including:
1. The crews not working the hours they should – they return late from rest breaks and stop work early before the end of the shift.
2. Poor planning resulting in people waiting for equipment, materials or access to their work areas.
3. Having too many resources on the project, or the wrong type of resources.
4. Poorly skilled and trained workers work slower and often produce poorer quality than skilled tradespeople. Training your people is the best investment you can make.
Ensure you claim for work completed – I cannot believe how many contractors don’t claim for additional work they’ve done or don’t claim for items that the client was obligated to supply but didn’t. Part of this is because the contractor’s manager hasn’t read the contract, hasn’t looked at what was priced, or isn’t aware of what work has been performed on the project. Sometimes it’s because the project manager is of the mistaken belief that the client will be upset by a claim for additional works or delays. (My next book focusses on construction variation claims.)
Finish your projects on schedule – When I mean finish I mean 100% complete with all documentation handed-over and all snag lists (punch lists) completed. All too often I encounter contractors still working on projects long after they should have been completed. To ensure the project is completed on time use a properly prepared schedule which is regularly referred to and updated. Ensure the construction team understands the schedule. Complete documentation and punch listing as the project progresses so these items aren’t left to the end.
Negotiate with suppliers – Negotiate with your suppliers and subcontractors to get the best rates and payment terms. Ensure that they are paid on time so that payment discounts can be claimed. Always get more than one quote, preferably three, so you can check the prices you’ve received are competitive.
Ensure your invoices are paid on time............

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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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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 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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© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.

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Here’s a Quick Way to Keep Construction Projects Healthy

16/7/2016

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This last week I’ve had a cold which has made me feel tired and I have to constantly stop what I’m doing to blow my nose. This has impacted my work making me less efficient and leading to mistakes. Just as our performance suffers when we are ill our projects can suffer when they’re ill, or when they aren’t running as well as they should.
Do you know if your project is healthy, or is there a cancer that’s slowly eating your profits and impacting progress?

Project health tests
We are encouraged to undergo regular health check-ups. In the same way our projects undergo health check-ups. These may include:

Reviewing the updated construction schedule monthly – we check to see that the project is progressing on schedule and take action when there’s slippage.
Monthly cost reports – most companies require monthly project cost reports so their financial performance can be assessed against the budget.
Reviewing safety statistics – it should be common practice to review the monthly safety statistics and ensure the project hasn’t had serious accidents or is at risk of accidents occurring.
Quality reports – this normally includes reviewing the non-conformance reports for the previousBAD HOUSEKEEPING CAN BE A TELLTALE SIGN OF PROJECT WITH MANY OTHER PROBLEMS
month.

The problem with most health checks is that they aren’t always reliable. They also sometimes detect the problem when it’s too late or the problem is already large. Of course some problems are misdiagnosed or the wrong treatment is prescribed. Then there are many who choose to ignore the warning signs and carry on as normal.

But can we detect unhealthy projects earlier?
Unfortunately many managers try to manage their projects from the office, relying on meetings, emails and reports to monitor their project. However, there’s nothing that beats actually walking the project, being in the field and interacting with your team. When you do these walks, it’s usually obvious when the project isn’t healthy.
Is the project neat and organized, or is it chaotic?
Is everyone busy or are some standing around underutilized?
Is all the equipment being efficiently used?
Does there appear to be a plan in place?
When I walk around my projects I constantly look for 3 things:

Is the project safe? Are people working safely?
Is the quality of our work acceptable? Am I proud of the workmanship?
Could we do things better? Are we as productive as we should be?

But it’s also important to talk to your team. Observe how they interact with each other. Are they working as a team? Are they motivated to produce quality work, safely and as productively as possible? Do they have the right skills and equipment? Is morale good? Happy workers will be more productive than those who are simply waiting for the next pay-day.
As I walk around the field I also ask the following questions:
......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 Book reviews'
To read more about the author visit the page 'Paul Netscher'
Want to contact Paul Netscher please enter your details on 'Contacts'
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© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.

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How to Make your Construction Change Order Claims Successful

16/7/2016

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On almost every one of the 120 plus construction projects I’ve been involved in we have encountered variations which have resulted in us submitting change order claims. Some were for extension of time due to delays caused by our client. Other claims were for increased scope of work, changes in the scope, new specifications or altered project conditions. Many of these claims were for millions of dollars and some projects almost doubled in value. Yet, in most cases we received the full value of our claim or the full extension of time requested. Furthermore we resolved 99% of the claims amicably without resorting to arbitration or legal processes, and we maintained a good relationship with our customers, almost always going on to complete other projects with them.
So why were we so successful submitting construction change order claims and why do so many contractors’ change order claims end up not being accepted, or if they are it’s only after an expensive and time consuming legal process?

Your customer
The ease of settling a construction change order claim starts with your customer, your relationship with your customer and sometimes relates to their budget. Some customers are adversarial with their contractors and will dispute every change order submitted. Do you really want to work for these customers? It’s essential you understand your customer when bidding for a construction project. Don’t work for those who have a reputation for frequent legal disputes with their contractors.
Having a good relationship with your customer is essential. If you are adversarial they will take the same approach. Continually talking to your customer keeps them informed so when change orders are submitted they aren’t taken by surprise. If customers think they can trust you and that generally you’re honest with them they’ll often be more receptive to your claim. However, if you have a habit of submitting spurious or inflated claims they’re likely to oppose your claims immediately.
It helps if your customer has money in their budget to pay for change orders. Some clients have no funds to pay change orders and will do everything possible not to pay extra to their contractors. Try and ensure your customer remains within their budget and resist pricing projects where you know their budget is too tight.

The contract document
Contractors often get into trouble because they sign and agree to contract conditions which offer them little protection. Before pricing a project ensure the terms and conditions of the contract are equitable and that the risks you have to take on are reasonable and manageable. The terms of some contracts may make it very difficult to submit a claim or the contract may confer the risk of many variations on the contractor, even when they have little control of these risks.
It’s essential you understand the contract document, that you are familiar with the scope, and know both your obligations and your customer’s. Claims need to be submitted in the time frames in the contract and risk being refused if they aren’t.

Presenting your construction change order claim
I’ve seen many poorly put together change order requests. Some for millions of dollars, yet construction companies often apply minimal time and effort to formulating their claims. Some even delegate their claim preparation to junior inexperienced quantity surveyors or contract administrators. Sometimes the construction project manager isn’t even aware a claim has been submitted and is blindsided when their client takes offence to a spurious or unsupported claim.
I’ve seen claims with math errors, spelling mistakes (even incorrectly spelling the client’s name), factual errors, contradictory information, confusing language and unsupported evidence.
Construction companies should ensure that a knowledgeable and experienced person is allocated to draft the claim (familiar with the contract, the client and the work that’s been done) and that it’s reviewed and checked by the project manager before it’s submitted.
It’s preferable to keep claims separate unless they are linked and one impacts another. Combining different claims in the same submission can be confusing for the customer. Rejection of one claim could delay approval of the others.

What should be included?
A properly drafted and well thought out construction change order claim will be hard for your client to refute and it’s likely to be successful. Claims should be clear, concise and logical.
Successful change order claims should have:

A description of the event
The cause of the event
The date of the event, where relevant
The impact of the event
Steps taken to mitigate the impact
The cost and time impacts of the event
All supporting documentation attached, or should refer to supporting documentation correctly referencing the relevant contract clause numbers, construction drawing numbers, schedule or program item numbers, correspondence, Bill of Quantity items or construction contract specifications as required.

As part of formulating the impact of the event all calculations and schedules should be included. The change order claim schedule should reference the approved contract schedule. Calculations should reference where the facts and figures came from and how they were put together. The calculations should be checked for math errors (which can occur all too frequently).
Remember to include all of your legitimate and claimable costs. It’s usually difficult to add in extra forgotten costs after you have submitted your claim. It’s unprofessional and will annoy your client. It may even cast doubts on the legitimacy of your original claim.
It’s useful to discuss your change order claim with others in the project team to ensure you have the facts set down correctly and that you have referenced the relevant documents and included all of the costs. Get someone to check your claim for errors and to see if they can follow your logic. If your logic is flawed, or can’t be easily followed your customer will be inclined to reject it first, before asking questions. Once a change order claim is rejected it becomes more difficult to change their mind and convince your customer you’re entitled to the variation.

Submitting your change order claim
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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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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 Book reviews'
To read more about the author visit the page 'Paul Netscher'
Want to contact Paul Netscher please enter your details on 'Contacts'
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© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.

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10 lessons construction can learn from the Tour de France

10/7/2016

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Picture courtesy of Pixabay

What is arguably the greatest cycle race in the World is underway and I’m sure many are glued to their televisions, while millions more line the roads to cheer on their cycling heroes or just to be part of the atmosphere. Now I’m not a cyclist but I do enjoy seeing the beautiful French scenery and stunning villages and chateaus unfold while cyclists from a host of nations battle up the hills and dodge screaming spectators.

But watching the cyclists I’ve also realised that construction could learn from the race.

It takes a huge amount of preparation. For competitors the race doesn’t start on race day, but it takes months and years of preparation. I wish project teams spent as much time in preparing their projects. Customers often start projects in haste, concepts are sometimes not decided, designs aren’t finished, permits aren’t in place, the contract document and scope of works is incomplete, the contractor bidding and selection process is rushed, and everyone seems ill prepared for the project. It’s like a cyclist on the Tour starting with a puncture, the wrong shoes and their support team forgetting to take liquid refreshments. The project is bound to fail.
It takes teamwork. To the casual observer cycling would seem to be an individual sport, but in the Tour the top cyclists are supported by their whole team and they couldn’t achieve what they do without that support. Constructing a project is a team effort and I certainly would not have achieved what I did without the support of a great team I could rely on. We often only see and recognise the project manager, yet without their team they wouldn’t achieve what they do.
Good support is critical. As we watch the cyclists in the Tour their support vehicles are never far away, always attentive, providing drinks and food and always near to provide support should things go wrong. In construction it’s also essential that the project team receives support from their Head Office. Wages must be paid on time, suppliers and subcontractors need to be paid, management should be willing and able to assist and provide advice if the project team gets into trouble. Often managers leave the project team to stumble on with no support, expecting them to handle every problem on the project on their own. Good support is essential. Sometimes that cyclist needs advice from the team manager, needs to be reminded of the dangers ahead, and requires feedback on what’s happening around them. Project managers can get wrapped-up in their project and sometimes don’t see the obvious, so a timely visit and support from their manager may just help avert a problem.
Even with teamwork it still takes individual brilliance and hard work to succeed. Even with the best team, the best support and the best equipment, mediocre people won’t succeed. On construction projects there isn’t a place for people who can’t do their job or aren’t prepared to put the required effort in.
A good team attracts the best. There are about 20 teams in this year’s Tour de France. Some have better riders than others – why? Well obviously some teams have more money so they pay their riders more. But also, good riders want to cycle for winning teams. Riders want to be on a team with good riders – young riders especially can learn enormously from being in a team alongside strong experienced riders who will pass on their knowledge. Everyone wants to work with a team with a strong support. It’s the same with construction companies. Good people need to be attracted with a competitive salary. People want to work with a winning team, they want to work with experienced and knowledgeable people who will share their knowledge, and they want to work with a team that has the latest equipment and technology.
Planning. Cyclists on the Tour don’t simply wake up, get on their bicycle and start the day’s race. They’ve studied the route, they know the state of the road, where the route is uphill, the gradients, the curves, where they should conserve energy, where they need to expend the maximum energy and where dangerous portions are. The team has planned what sustenance the riders will need and when it should be supplied. There is a strategy in place to conquer what is required on that day. But of course the team has also considered what needs to be done on the following days. What hills must be climbed tomorrow. Where their competitors may catch them. What the team achieves today could set them up for victory or failure in the coming days. In construction we need to be planning – know what needs to be done today, but also understand what needs to be accomplished tomorrow and next week, because what we do today (or don’t complete today) may jeopardise the project’s progress later. Constructing a project is not a one day race.
Things will go wrong. Plans have to be adapted. On the Tour there are falls, punctures, mechanical failures, rain, wind and heat. Other riders will make a ‘breakaway’ and take you by surprise. So the team has to be able to change their plans at short notice and recover from these surprises. In construction no matter how good our planning is there will be equipment failures, things will go wrong, there will be bad weather. The project team has to put other plans in place to limit and overcome the problem.
Perseverance – get the job done no matter how bad things are going. Even the best cyclists will have a bad day. There will be accidents. But cyclists on the Tour have to pick themselves up – sometimes even get patched up, and carry on. Unfortunately in construction we sometimes have a bad project, a frustrating customer, an underbid project that no matter what we do will still lose money, or a project where the weather doesn't play ball. But we can’t give up. We can’t run away. We have to get the job done, the project completed – our company’s reputation depends on us completing the project. Our reputation depends on us finishing the project. So on the Tour the rider favoured to win who hits some rough patches usually perseveres, even though they are no longer in a position to win the race they still have a team and sponsors who expect them to complete the race and cycle for the full three weeks, no matter how they are hurting.
Good equipment helps enormously. You don’t see a cyclist in the Tour with an old bicycle. Having good reliable equipment is as important for cyclists on the Tour as it is for our projects. Equipment that breakdown frequently will cause delays. Unreliable equipment could cause accidents. Old equipment often doesn’t perform as efficiently as new equipment requiring more effort to operate while achieving less. Equipment and technology is continually evolving and the team that doesn’t keep up will be left behind.
There will always be cheats and crooks. Unfortunately, cycling like many other sports has been dominated by cheats. These days on the Tour de France drug testing is the norm. The testing is continually evolving to keep up with more sophisticated drugs. Bicycles are checked for hidden motors. Regrettably the construction industry is not immune to cheating so it’s essential that there are systems in place to ensure the project meets the required quality, safety and environmental standards. There will always be customers that will try avoid paying contractors and of course contractors, suppliers and subcontractors that will try and steal from customers. A sound contract document that is fair to all parties is essential. Proper accounting and costing systems are essential.

Conclusion
So even if cycling isn’t your passion it may be worth watching a few hours of the race, you never know what you could learn. Avid cycling fans now have an excuse for lazing on the couch watching the drama – at least you can say you are learning how to make your project more successful.

But more seriously we can make our projects more successful with a great team, strong support, committed employees, good equipment, the right preparation, excellent planning, hard work, the right systems and honesty and integrity.

What do you think it takes to make a project successful?

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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 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
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© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.

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Construction Cost Reports - The Good, The Bad and The Ugly

6/7/2016

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I’ve always prepared monthly project cost reports for my projects. They’ve often been the fun part of the project where we’ve seen how well we’ve done that month on the project – how much profit we have made. Of course there have been some projects where we’ve lost money and these cost reports haven’t been quite as fun. These cost reports produced their own challenges as we tried to figure out where we were losing money and what we could do to recover the money and prevent further losses in the future.

Construction project cost reports can provide a huge amount of valuable and useful information which can literally save projects, save companies, and save lots of money. But unfortunately some cost reports are wholly inappropriate for the construction industry, others are completed poorly, and a few take an inordinate amount of time to complete. Many don’t utilize the correct information - all of which can mean that the project team wastes their time producing misleading or useless data. In some cases the data may be out of date by the time it’s produced while in other cases the data is simply ignored.

The Good – How Cost Reports Help
Make sure your cost reports process is setup to help in the following ways:

Provide a basis for pricing future projects. Knowing where money was made and how much, as well as where money was lost, helps contractors price their next projects more accurately.
Investigate losses. Knowing about losses can help contractors prevent further losses from occurring and hopefully aid with recovering the loss. The losses could be due to:

Wasted materials on the project which could include excessive breakage or work that has to be redone due to quality issues.
Theft or fraud on the project. Sometimes this may be direct theft, other times it could be subcontractors and suppliers over-invoicing for their work or materials, even double invoicing for the same items.
The contractor failing to make claim for legitimate costs from their customer.
Poor productivity. Losses incurred with labor or equipment is often an indication that the productivity on the project is lower than allowed.

Make the project staff accountable. Reports afford a target for the project team to aim for - without a target to aim for the project team can become complacent, not focusing on productivity and the smart and efficient use of materials.
Assist the company with their financial forecasts, budgets and cash flow. Knowing the project is losing money may allow the company to make contingencies and take steps to survive the losses. More than one company has gone bankrupt when a project un-expectantly declared a large loss.
Identify project losses that are often indicative of other underlying problems on the project.
Provide information on which types of projects are profitable. Some contractors keep constructing particular types of projects even though they aren’t good at them and the projects always end unprofitably. Knowing which projects aren’t profitable means the contractor can avoid pricing them and concentrate on projects which they know they can complete profitably.

The Bad – Cost Report “Gotchas”
Unfortunately some cost reports can be complex and time consuming to prepare. Furthermore contractors sometimes make errors in their cost reports which then provide bad data. Occasionally management ignores the cost report and doesn’t take action to figure out why the project is incurring losses, or they misinterpret what the cost report is showing.

Some Project Managers leave the preparation and interpretation of the cost report entirely to their Estimators or Contract Administrators and pay little attention to the end report. They view it as just another document produced for their senior managers.

You’ll likely find the following problems with costs reports:

The reports take too much time to prepare. I’ve known some companies with cost reports that took several days to prepare. You couldn’t find the Project Manager for two days as he was locked away in his office trying to complete his report before month end. This meant that things went unattended on the project while the cost report took priority. The lengthy time taken to complete the report could be because:

The information required to complete the cost report isn’t readily available.
The cost report is too complex to complete.
The cost report breaks items down into too much detail making it difficult and time consuming to track down the costs and revenue.

The reports deal with historical data – often a month or more after the fact. This means by the time we detect a problem on the cost report it may be too late to take corrective action, or the problem may already have become worse than that reported. The more up to date the cost report the more useful it is to the project team. We need to understand the historical nature of the information and adapt our actions accordingly.
The reports don’t include all of the project costs. This may be because:

Subcontractors or suppliers are late with their invoices and no allowance is made for these in the cost reports.
Not all of the costs have been captured because of problems with the accounting system.
Invoices are held up because of disputes so they aren’t processed or allowed for in the report.

They aren’t comparing revenue against the correct costs. Although the overall result may be correct the report may indicate we are making money on some items while losing items on others. This is normally because costs and revenue haven’t been allocated to the correct cost codes.
The revenue used is incorrect. This is usually because:

The information hasn’t been entered correctly into the cost report.
The monthly valuation, or claim, is incorrect.
Often the preliminaries and overheads are claimed each month according to a set percentage. However the costs associated with the preliminaries are usually not incurred at the same rate. These costs usually vary depending on the stage of the project.

The report has math errors or the data hasn’t been entered correctly. Sometimes in the rush to complete the report the project team makes the incorrect assumptions or even guesses costs.
The cost report doesn’t take into account the costs to completion. Often projects appear to be profitable (their cost reports show a profit) until the last few months when things suddenly go wrong. This is especially the case with projects that run past their completion dates. Invariably the costs of remaining on the project beyond the scheduled completion date haven’t been allowed for. Project teams regularly underestimate the costs of completing punch-lists (final quality control items), completing project documentation, and handing over the project.
When the report is completed nobody bothers to read it because it is too lengthy and difficult to interpret.

The Ugly – Lies, Manipulation and More
But even when the project team has all the correct information we can encounter ugly, dangerous problems:

Some project teams don’t like to show a loss and will manipulate the cost report to show a profit. Of course ultimately the truth will come out. Regrettably I’ve never found a project making a loss to suddenly turn around and become profitable unless action was quickly taken to stem the loss and reduce costs or uncover additional revenue.
Unfortunately some managers don’t like bad news. I’ve been told to:

Not show the loss I had calculated on one project as the manager had previously reported to their manager that the project was going to be profitable.
Add in revenue from change order requests we hadn’t yet submitted. As long as the customer hasn’t approved a claim it is in doubt, and may be rejected, or the final agreed valuation may be less than what we claimed. I don’t like trading on claims which haven’t been approved since it’s dangerous. I would rather show a loss, and at least the project team is reminded to resolve the outstanding claim as soon as possible.
Immediately cut costs by reducing the number of employees, even though this wouldn’t have solved the problems and would have hurt the progress of the project.

The reports aren’t used or the information in the report is disregarded.
We assume the wrong reason or cause for a loss. On one project our cost report showed the project was losing money on concrete materials and the Project Manager attributed the loss to the fact that the client had changed the mix design and asked for higher cement content which we would claim later. Yes, this did contribute to the loss, but when we eventually uncovered the real cause, which was that cement was being stolen from the project, we had lost over a half million dollars. Sometimes the project team is quick to blame the estimating team for losses on the project when in fact the main contributing factors are something else.

What can we do to make cost reporting better?
.........Continue Reading.........
This article was first published on the Insightful Accountant website. Click the link to continue reading.

Written by Paul Netscher
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'Successful Construction Project Management: The Practical Guide'
'Building a Successful Construction Company: The Practical Guide'
'Construction Book reviews'
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© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.

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What Every Construction Manager Ought to Know About Fatigue Management

2/7/2016

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Are your workers tired? Would you notice if your team was suffering from fatigue? Is fatigue killing your project without you noticing?

Construction work is often strenuous, involves working long hours and working in difficult conditions – heat, rain, cold, dust and noise. Yet we expect our crews to deliver maximum productivity day after day, working tirelessly to meet the construction schedules we’ve committed to. Sometimes we forget that it’s people out in the field – not machines. But we rely on these people to produce quality work safely. As managers our jobs literally depend on our team delivering our projects on time.

But our crews do suffer from fatigue which:

Reduces productivity.
Can cause accidents and safety incidents.
May lead to critical mistakes leading to quality issues.
Could result in health problems.
Can lead to problems at home which can negatively impact morale and impact productivity.

In addition workers may consume caffeine laced drinks, or even take drugs so they can stay awake or remain at peak performance. These could cause lapses in judgement, resulting in accidents, or perhaps even lead to long term health issues.

What causes fatigue?

Fatigue can be due to a number of reasons:

Personnel working long shifts, or working on designated rest days due to:

- The project working longer hours and extended shifts to make up lost time.
- Personnel electing to work additional hours to earn more money.
- People working extended hours so they can take time off at a later date, perhaps for an extended weekend.
- Insufficient workers on the project, resulting in a high work load.
- Equipment breakdowns meaning work is delayed and cannot be completed within the normal shift.
- Poor planning resulting in materials which have to be off-loaded being delivered after-hours, or tasks such as placing concrete starting late in the day and continuing past the shift end.

Personnel taking insufficient rest breaks in the course of their shift, due to:

- Operational reasons (for instance workers may not be able to stop doing a task, like placing concrete, until it’s completed)
- Personnel electing to forego their designated rest breaks, so they can complete their shift earlier.

Working in hot and humid conditions.
Performing repetitive and boring tasks over an extended period.
Doing a physically hard task.
Working night shifts which disrupts worker’s body clocks and sleep patterns (they may also be unable to sleep properly during the day due to high temperatures, or noise around their accommodation).
Personnel having excessively long, daily commute times (sometimes workers travel over an hour to and from the project each day, making their working day even longer than it should be).
Workers have a lengthy commute returning to the project after the weekend (they may spend several hours travelling from home, often leaving early, or in some cases travelling through the night).
Personal problems and worries resulting in an individual not sleeping at night.
Illness, which causes fatigue, and may also disrupt sleep.
Partying late at night.

How can we reduce fatigue?
To reduce fatigue, the project should:

Resist the temptation to work longer project hours or additional shifts.
Schedule the project so that it can be completed in a reasonable time taking account of the available resources and the expected weather conditions.
Resource the project correctly with sufficient workers and equipment.
Not allow personnel to work extended, or additional, shifts out of choice.
Provide more frequent rest breaks during hot and humid conditions – providing sheltered cool rest areas.
Personnel performing physically demanding, or repetitious, tasks should be rotated to other tasks, work shorter shifts, or take frequent rest breaks.
Arrange accommodation as close as possible to the project, and where there is no alternative to a lengthy commute, consider working shorter shifts. Employ workers who live locally, close to the project.
After a rest day the project could work a shorter shift to take into account long commute times from home, if these are a factor.
Management and supervisors must be aware of changes in personal behavior, or illness, which may affect a person’s ability to work. Let’s put people first.
Provide the right tools and equipment to minimize heavy work.
Look at alternative materials or construction methods which could reduce manual lifting or repetitive tasks.

Are you suffering from fatigue?
.........Continue Reading........

This article was 1st published on the ClockShark Website. Please click on the link above to read the full article on ClockShark. ClockShark paperless Time Tracking.
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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 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
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© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.

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What makes a project successful?

Who Else Wants More Profitable Construction Projects?

Here’s a Quick Way to Keep Construction Projects Healthy

How to Make your Construction Change Order Claims Successful

10 lessons construction can learn from the Tour de France

Construction Cost Reports - The Good, The Bad and The Ugly

What Every Construction Manager Ought to Know About Fatigue Management

Archives

Categories

Construction Books

Construction services

What makes a project successful?

﻿Who Else Wants More Profitable Construction Projects?

﻿Here’s a Quick Way to Keep Construction Projects Healthy

How to Make your Construction Change Order Claims Successful

10 lessons construction can learn from the Tour de France

Construction Cost Reports - The Good, The Bad and The Ugly

What Every Construction Manager Ought to Know About Fat﻿igue Management

Archives

Categories

Construction Books

Construction services

Who Else Wants More Profitable Construction Projects?

Here’s a Quick Way to Keep Construction Projects Healthy

What Every Construction Manager Ought to Know About Fatigue Management