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7 Reasons Why Management Should Visit Their Construction Projects

29/11/2016

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Image courtesy of Serge Bertasius Photography at FreeDigitalPhotos.net
"Remember to say hello to your team, and praise them for good work."
Does your manager visit your construction projects? How often? What do they do when they’re on the projects? When I was a construction project director and later the general manager of a construction division I tried to get to my projects as often as I could. Unfortunately, some were distant from our Head Office, and it took a full day or more to visit. However, I always enjoyed visiting my construction projects as it gave me an opportunity to connect with my construction team and our customers. I also know I regularly added value to the construction project with these visits.

In particular I tried to attend some of the project meetings with the customer. Often minutes or notes from these meetings are sterile and don’t provide the true vibe between the construction team and customer. Attending these meetings enabled me to better understand the relationship between the customer and our construction team and detect any underlying tensions. construction project meetings with your client

Of course, some managers are renowned for paying flying visits to a construction project, rushing around the project and criticizing the work. In some quarters they are known as seagulls. I guess we all know what can happen when a seagull flies overhead at the wrong time – it can be messy. Often these visits don’t achieve much and sometimes only serve to demoralize the construction team. Then there are other managers who visit their construction projects and spend the duration of the visit on their phones and computers, worrying about other projects. How do these visits help the construction team? 12 important phrases to use in construction
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"Are you adding value when you visit your construction projects?"

7 reasons managers should visit their construction projects

Here’s why I think it’s important for managers to regularly visit their construction projects:
  1. To see firsthand what’s happening on the construction project. Reading a project progress report never gives a true account of the project’s progress, quality and difficulties as actually seeing it in real life does. I know now with sophisticated technology, webcams and drones it is becoming easier to get live views of the project’s progress, but I wonder if these convey project life accurately, or maybe they lend themselves to being fast forwarded so some details could be missed. Knowing what was happening on the ground enabled me to better understand the project progress and cost reports.
  2. To offer the construction team knowledge and experience and give advice and assistance where needed. Being on a construction project every day and dealing with the daily frustrations can dull people’s senses. Walking onto a construction project with new eyes and the wisdom of years of experience enables managers to see things that are going wrong which the project team may have missed. Also, our Project and Site Managers don’t always want to bring every problem to their manager’s attention so attempt to deal with problems in their own way. Sometimes feeling overwhelmed and even trying to resolve problems in the wrong way. Managers who talk to their construction team may give them a refreshing outlook to the project as well as providing simple solutions to problems. I’ve frequently spotted quality problems, noticed potential safety hazards, pointed the team in the direction of a possible variation claim and suggested ways to improve productivity while visiting my projects. Does your company actively promote the reporting of problems?
  3. To meet the company’s construction team. Many who work on construction projects never get to visit the company’s Head Office. Visiting the project enables managers to meet their team – the team they depend on. They will be able to put a face to a name. When working in joint ventures with other construction companies I’ve often had their employees comment how they seldom saw their managers from Head Office, and the few times they did visit the project they saw them in the distance, never bothering to talk to anyone except the company’s Project Manager. They were impressed that I talked to most of my Supervisors and Engineers every time I visited the construction project. Of course, complimenting a Supervisor on good quality or safety always brought a wide smile, as did mentioning a previous construction project they had successfully completed. These greetings and compliments were much appreciated and bolstered morale.
  4. Meeting the customer and their team. I was often complimented by customers for being a regular visitor to their construction project and they appreciated seeing me. They felt I was giving their project the attention it deserved. I also received negative comments about managers from our competitors who seldom bothered to visit. Customers like to feel important. More importantly I could hear firsthand what they thought of our construction team and the company. I heard their problems and concerns, and could often smooth over the odd ruffled feather and allay any concerns. Why good relationships are important in construction
  5. To find leads for new construction projects. Talking to the customer, their project manager and design team often presents opportunities to hear about new forthcoming construction projects. I had the opportunity at one project function to discuss an upcoming construction project with the customer's Project Manager. I presented a strong case why they should persuade their client to negotiate the next project with us. Much to the surprise of our competitors the client ended up negotiating this mega construction project with us rather than going to open tender/bid as they had always done in the past. Managers should always be on the lookout for new project opportunities. Every site visit should be an occasion to build new contacts and remind existing contacts that the company is looking for the next construction project. Is It Your Job to Find New Construction Projects for Your Company?
  6. Provide support to the construction team. ​Some construction projects are in remote areas or far from Head Office. Often the project team can be beset by problems or face a tough client. These difficulties can weigh heavily on them, and they can sometimes feel abandoned by their managers. By visiting the project, managers demonstrate their support, reminding their construction team that they haven’t been abandoned, lending an ear for their complaints and providing them support to see the project through. But sometimes it’s even more than this, and managers can sometimes take up the battles with the client or project management team. Even shake up some tardy support from the contractor’s head office. It’s amazing what some seniority can do on a construction project to smooth out the wrinkles. providing feedback to the construction project team
  7. To understand the construction team better. As managers we have to decide salary increases, the value of an employee’s bonus, who gets promoted and who needs training. We literally decide the future of the people working for us. Visiting our construction projects and interacting with our construction teams enables us to understand their strengths and weaknesses allowing us to better utilise the strengths and support the weaknesses. Knowing each individual's abilities and performance allows managers to better reward those who have put the effort in and promote those who have the required abilities. using the strengths of your employees to build a successful company

Adding value to your construction projects

Visiting the construction project provides managers a better understanding of the project, they may see problems developing before the construction team sees them, or help the construction team solve problems, it also provides an opportunity to meet the customer and possibly find leads for future construction projects.
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Care should be taken that these visits aren’t rushed and distracted as it’s easy to quickly go through a construction project, missing potential problems and achieving little. It’s also essential that these visits don’t just become negative and critical visits which can demoralise staff without adding value – managers should avoid being seen as that pesky seagull that flies in and rushes home leaving only a nasty reminder of their visit.
Did you make a difference on your construction project today?
​This article was first published on the ClockShark website - Get The Industries' #1 Time-Tracking AppRunning a field service or construction business takes coordination and a great team. With ClockShark you get the industries' #1 timesheet ap

Learn more about Construction Project Management

"This book helps with practical tips learned from real experiences. A must read book for the people who are involved in construction projects, especially project managers."  
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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'
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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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Don't hire construction equipment before reading these money saving tips

23/11/2016

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Picture courtesy of Joao Neto
"Construction equipment is expensive to hire and operate but careful management will reduce these costs."
Most construction projects hire construction equipment. Sometimes these costs can form a significant portion of the project costs.

Say a construction project’s equipment rental costs make up 40% of the project’s total costs then just saving 5% of these costs could translate to an additional 2% or more profit. That doesn’t sound like a lot of money, but many construction projects only make 10% profit so an extra 2% of profit means the project will make 12% profit which is an increase of 20%. Wouldn’t the bosses be pleased with that? But put some of these tips into practice and you could find the savings are even larger – resulting in even bigger profits.


In this article I discuss some ways that you could save money on equipment rentals on your construction project.

​Pass these tips to your construction team.

Ordering construction equipment

  1. Make sure your order the right equipment of the right size. Some contractors think that bigger is better. But, bigger usually means more expensive to hire. It almost certainly means more fuel, which means more money. So unless you can use that extra capacity don’t go for the bigger model. Of course the opposite happens and contractors get a machine that’s too small and it’s scratching at the dirt or taking hours to load the trucks meaning it is inefficient. What Size Equipment Is Right for Your Construction Project?
  2. Ensure you are getting reliable construction equipment. Often cheaper items are older which could mean they aren’t as efficient as newer models, consume more fuel and break down more often. Older machines may also not have the latest safety features and they could be noisier, leak oil or be smoky. What you saved on a cheaper machine could be far exceeded by lower production and an increased fuel bill. The Alarming Truth about Using Old Construction Equipment
  3. Check what the rental rate covers. Often the extra charges can be nearly as expensive as the basic rental cost. The cheaper rental could work out more expensive than the expensive rental once all the additional costs are factored in.
  4. Ensure the construction equipment is insured. You don’t want to be paying several hundred thousand dollars should something happen to the equipment. Also check what your company’s insurance covers. Frequently contractors pay extra for insurance for equipment, while the company already has insurance in place which covers hired equipment. Many rental companies make extra profits on selling insurance for their construction equipment so it may be advisable to investigate alternative insurances.
  5. Some items may be cheaper to buy than rent. Projects are sometimes quick to rent a piece of construction equipment because it is cheaper. However, do the math and you may find, particularly for small items, or items required for an extended period, that it’s cheaper to buy than rent them.
  6. Make sure the rental company understands how long the equipment is required for. Longer rentals may have a reduced rate.
  7. Rented equipment is usually charged at an hourly rate, a daily rate or a monthly rate. Often there is a minimum period that the rental company expects to be paid. Will your project work the machine for those hours? The rental agreement may state that you have to pay a minimum of 10 hours a day. Well if your construction project only works 8 hours a day you’ll be paying 2 hours for nothing.
  8. Enquire what happens when the project can’t work because of inclement weather. One can often negotiate that equipment rental is reduced to 50% should the construction project be unable to work because of rain. If you are a good customer or a good negotiator you may even be able to negotiate this to a nil rate which is even better.​
​Become Great at Hiring Equipment for Your Construction Project

Construction equipment rental paperwork

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Image courtesy of fantasista at FreeDigitalPhotos.net
"The rental or hire agreement is a contract between you and the rental company. Understand what the contract says and read the fine print."
​Check the rental agreement and paperwork to ensure that:
  1. The agreement is in line with what you ordered, and the terms and rates are what were negotiated.
  2. There are no terms hidden in the small print that can’t be complied with.
  3. That you understand the terms and conditions in the agreement and ensure that these are complied with.

When construction equipment arrives on the project site

It is important to check construction equipment when it arrives on the project. This includes:
  1. Check that it is the item you ordered before it is off-loaded at the construction project. It can be expensive to reorganise transport to return the incorrect item of equipment.
  2. Check for any visible damage and report it immediately. Remember the owner will charge you for any damage when the item is returned. Prior damage that hasn’t been reported may be incorrectly charged to your company.
  3. Check the condition of wearing parts (such as; teeth on excavator buckets, cutting edges on graders, etc). Normally the project is charged for replacing these items and they can be very costly.
  4. Check the condition of tires. Again the hirer (that's your project) is usually responsible for the cost of worn or damaged tires. In addition badly worn tires may become punctured easily, causing lost time.
  5. Ensure that the equipment doesn’t have any oil leaks. Vehicles should have all the correct safety features and they must be functional. Equipment that travels on roads must be road worthy including having a current vehicle license.
  6. Check the fuel level and report the amount of fuel to the rental company if it’s not full. Most rental companies expect that the machine is returned with a full fuel tank, yet often the machine arrives with an empty tank.  Large machines could have a capacity of hundreds of litres which could cost several hundred dollars to fill.​
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"Check construction equipment before it is off loaded on the project."

Operating construction equipment efficiently

  1. Obviously it goes without saying that the construction equipment should only be operated by skilled and licensed operators. Using operators who aren’t qualified to use the machine could void warranties and insurances, result in accidents, damage the machine and result in poor productivities.
  2. Ensure that the equipment is properly maintained and that repairs and maintenance are only done by qualified people. Damaged construction equipment shouldn’t be operated until a competent person has assessed the damaged and warrants that it is safe to operate the machine. Preventive Maintenance Checklist for Construction Equipment
  3. Check that the equipment is only used for appropriate work. Construction equipment is often damaged when it is used for purposes it wasn’t designed to do.
  4. The construction equipment must be used productively – this includes:
    1. Ensuring it is used for what it was hired or rented for – often, for example, loaders are used for transporting equipment around the construction project instead of loading dirt.
    2. Making sure that construction equipment that isn’t required anymore is returned to the hirer.
    3. Ensuring the work couldn’t be performed by a cheaper item of equipment.
    4. Checking that there isn’t too much construction equipment on the project.
    5. Ensuring, particularly with earthmoving equipment, that the equipment teams are balanced – that the size of the excavator is correct for the trucks being loaded and that there are the right number of trucks so that the excavator isn’t waiting for trucks to load or that trucks aren’t waiting to be loaded. 
    6. Construction Equipment Productivity
    7. Construction Equipment Productivity Part 2
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"Ensure your construction equipment is used productively. Equipment standing idle costs money."

When the construction equipment has finished the task

  1. Check that the equipment has completed all the tasks on the construction project that it is meant to complete. Too often machines have to be remobilised because they were returned to the hirer before they had completed all the tasks on the project.
  2. Ensure the hire, or rental, company is notified in writing that the construction equipment is no longer required and organise transport to send it back.
  3. Check that all the items rented with the machine are returned with the equipment. Non-returned items may result in additional costs such as continued hire costs and extra transport costs to get the item back to the owner.
  4. Make sure that the item is clean and that the condition of the machine is checked and recorded. Unfortunately there have been cases of construction companies being charged for equipment damages that didn’t occur on their construction project.
"More valuable tips that will make your construction projects more profitable. These great books are available from Amazon and other stores."

Make your construction project more profitable

It is important that the construction team understands the cost of equipment and ensure that it is properly looked after and operated by competent operators, that it is used productively and is put off hire when it is no longer required.

Equipment costs contribute significantly to the overall cost of the construction project. Reducing these costs will improve your project’s profit.
​

If you found this article useful please like it and share it with your team and connections.

Please like and share this article.

Learn more about Construction Project Management

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

How to avoid construction disputes

8/11/2016

3 Comments

 
PictureImage courtesy of Sira Anamwong at FreeDigitalPhotos.net
Frequently construction projects end in lengthy and acrimonious disputes between the owner and the contractor, or between the general contractor and their subcontractors.

Construction projects will inevitably have changes, delays and variations. Where these are as a result of the client or owner’s actions, or due to some other actions which the contractor had no control of and couldn’t avoid, then the contractor, depending on the terms of the contract document, will have reason to claim for an extension of time caused by the delay and for the additional costs they incurred as a result of the variation. Unfortunately often these claims are refuted due to them not being legitimate, or because they weren’t submitted in terms of the contract or because they are incomplete and don’t have the necessary supporting documentation. However, sometimes the claims are rejected for the wrong reason. This might include the party that rejects the claim not understanding the claim, possibly not understanding the contract, or, in some cases purely because they believe they can bully the contractor into withdrawing their claim. Where the parties cannot agree the legitimacy or the quantum of the claim then the aggrieved party may declare a dispute.

Why disputes are bad
Where possible disputes should be avoided because they:
   1.  Are time consuming – contractors shouldn’t underestimate the time that disputes take to resolve - time that could be better utilised elsewhere on the construction project, or on other projects.
  2. Can damage the construction company’s reputation – clients/customers and subcontractors often avoid contractors that have a reputation for project disputes.
   3.  Damage the relationship between the parties – the relationship seldom returns to normal after a dispute.
    4.  They are costly especially when they become legal and involve lawyers.
   5.  They may end poorly for the contractor who doesn’t receive the full value of their claim.
    6.  They can disrupt the construction project and sometimes cause further problems.
How to avoid disputes
Generally most disputes can be avoided if appropriate actions are taken, such as ensuring:
  1.   There’s a legally enforceable contract in place which protects both parties’ interests.
   2.     The contract is well written and doesn’t have conflicting clauses or contractual loopholes.
   3.       The contractor understands the contract and complies with its provisions. Often the contractor’s Project Manager doesn’t read the contract until a dispute arises – it’s normally too late then!
  4.   The contractor communicates with the client and their own subcontractors, timeously notifying them when problems, delays and variations arise.
   5.      The contractor submits and resolves variations as soon as practical.
   6.      Clients act in a fair and reasonable manner.
   7.      Accurate records are maintained.
   8.      There’s willingness by the parties to talk and negotiate.
   9.      Personalities and emotions are kept out of the negotiations.
  10.     The contractor admits when they’re wrong and doesn’t lodge extravagant claims.
  11.     The consequences of escalating the dispute are weighed up carefully, since the costs of legal action may be more than the outcome is worth.
  12.  The construction contract is administered in a spirit of honesty and cooperation by all parties.
  13.   Senior management are made aware of potential disputes and problems on a project, thus enabling them to take the necessary action and intervene if required to avoid the problem escalating.
   14.    Expert advice is sought when necessary.
   15.   The contractor deals with their subcontractors and suppliers fairly and resolves claims when they arise.
Negotiating a claim successfully
Being able to negotiate is a skill that’s essential to successfully agreeing claims. There are many useful courses about negotiations. Negotiating is often a slow process and the success depends on:
    1.   Understanding the strengths and the weaknesses of the claim.
    2.   Being able to support the strengths of the claim with relevant documentation.
  3.  Being able to defend the weak points of the claim, but always ensuring that supporting a weakness isn’t done at the expense of credibility.
   4.   Understanding the other party’s arguments and having the facts to explain why they are incorrect. Take time to go through every argument even if you consider the points irrelevant or trivial.
   5.  Keeping emotions out of arguments. Even if the other party becomes personal or abusive it’s important to stay calm and stick to the facts.
    6.  Presenting arguments in a logical fashion.
    7.  Being prepared to grant the other party small wins.
    8.  Understanding the other party’s fears or concerns which will enable these fears to be addressed, pointing out why these fears are unnecessary, or presenting arguments that will allay the fears.
   9.   Learning to admit when you are wrong. Defending a claim, or part of a claim, with flimsy arguments wastes time, impacts integrity and frustrates the other party, even undermining any partial wins already  negotiated.
   10. Knowing what the ‘walk-away’ point is – what is the absolute minimum that can be accepted. When this point is reached, and in the face of stiff opposition, depending on other factors and claims it may be advisable to accept the settlement.
   11. Understanding the other party’s emotions. Some people will launch into blustery and abusive attacks while others may try and appeal to the contractor’s sympathy. Often these are made to disarm the contractor. Understand when they are bluffing and when there is serious intent.
   12. Knowing the other party’s bottom line or budget is helpful as often it is pointless arguing for a figure higher than this because it just might not be achievable.
    13. Not making threats or promises that can’t be kept.
   14. Learning when to take a break with the negotiations when your side needs to regroup or develop a new strategy, or when it’s obvious the employer is engrossed with other events, or is just in a ‘bad mood’. On the other hand when things are going well it may be worth extending the negotiations so that a deal can be struck while everyone is in agreement.
   15.  When there is a deadlock, knowing it’s pointless arguing the same point over and over again. Repeating the argument isn’t going to change minds – nor is raising one’s voice. Think of another tack or angle. It may be necessary to leave an issue unresolved and move onto another part of the claim or discuss other claims. Settlement of other issues may allow both parties to later approach the deadlocked issue with more open-minds.
   16. When a deadlock persists, sum-up the issue, including what points the parties agree on, what the disagreements are, and why the parties differ. Often this summary awakens both parties to how close they are to agreement.
Conclusion
Contractors who have a legitimate claim for a delay or additional costs shouldn’t hesitate to claim for these. However they must ensure that they formulate and submit their claim in terms of the conditions of the contract document. This claim should be properly presented and well thought out and should include all the necessary information and documentation to support the claim.

Only once the contractor has gone through all the options of negotiating a successful resolution of a claim should they proceed down the dispute resolution process. It’s important to follow the process outlined in the contract document. Contractors should note that they cannot simply stop work on a project because they have an unresolved dispute with their client.

I’ve been involved with over 120 projects and all have had variation claims – some for millions of dollars, almost doubling the project value. Yet, more than 99% of my claims were settled amicably without declaring a dispute, and most of what we claimed was approved. More importantly we completed further projects with these same employers.
Have you had a claim that’s ended in a dispute? How was the dispute resolved, and was it worth the time and effort?

This article is adapted from information contained in the author’s book 'Construction Claims: A Short Guide for Contractors'   available from Amazon and other on-line stores.
 If you found this article useful please like it and share it with your colleagues and connections.
 
Paul Netscher is also the author of the popular books 'Successful Construction Project Management: The Practical Guide' and 'Building a Successful Construction Company: The Practical Guide'. These books are available on Amazon and other online book stores. Paul publishes articles regularly on LinkedIn and his website. 
Read a preview of Construction Claims
Paul writes regular articles for other websites, gives lectures, mentors, and is available for podcasts and interviews.
© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.

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Who is responsible for winning new construction projects?

1/11/2016

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I worked for a construction company where the owner insisted that the estimating team priced every project that was available. Some of these projects were far (a thousand kilometres or more) from our other projects, while others were in a field we didn’t have experience with. Needless to say our estimators were run off their feet and worked long hours to price all the projects. (Now don’t get me wrong, we all sometimes price projects far from our home base or tackle projects slightly out of our normal field of expertise, but when you aren’t doing the projects close to home well, and you have other more suitable projects to price, should we be taking on additional risks and overloading our estimating team?)

Another company I worked for elevated the office runner to estimator. He had never even visited a construction project!

Yet I have also worked with fantastic well organised estimating teams and we won numerous projects due to our competitive pricing, our knowledge of the market and our competitors, the quality of our bid submission and our relationships with the customer – more importantly these projects were profitable.

I certainly wouldn’t like to be an estimator. Preparing and submitting tenders/prices/quotations day after day with little reward. A large multi-national construction company I worked for had an excellent estimating department and we were frequently complimented on the quality of the bids we submitted. Yet even with this expertise we only won around 10% of the projects we priced. We checked this over the years and our success rate was always around 10%, whether measured by the value of the work, or the number of projects, we won.

But estimators don’t just have to deal with this low success rate they invariably get blamed for losses and mistakes with their price on the projects the company wins. Listening to most construction managers it would seem the price on their projects is always riddled with errors – all costing the job of course! Seldom do construction managers compliment the estimator for their good work or for a well-crafted bid. You never hear of the positive errors in the price – errors that actually mean that the project will make more money than expected. A profitable construction project always seems to be only because of the construction team.

But are estimators solely to blame for the low success rate and are all the errors in the price only due to the estimator?

Who is responsible for the success of tenders, bids and quotations?

Management role in winning projects
Management plays a key role in winning work by:
  1. Ensuring that the estimating department has sufficient resources and experienced estimators.
  2. Gathering market data, which includes:
    1. Understanding the pipeline of work that will be coming out for pricing. Knowing this they can ensure that when work is scarce the company reduces profit margins to secure the work, while when work is more abundant they can become more selective with the projects that they bid for and also increase profit margins.
    2. Understanding the opposition – This includes how busy they are, what projects they are involved with, the type of projects they are looking for and their likely level of profit they’ll add to their price.
  3. Selecting the right project to price – projects where the company will be most competitive, projects that might grow in scope or lead to further work and projects which don’t have excessive risks.
  4. Discarding projects (early in the bidding process before estimators have committed too much time on the project) so the estimating team isn’t overburdened with pricing projects that aren’t suitable, ones the company has a low chance of winning, or projects that the company doesn’t have the resources for.
  5. Talking to prospective customers to ensure that the company will have the opportunity to price their next projects. Building good customer relationships is essential for every construction company.
  6. Developing new markets, engaging new customers and moving away from difficult customers and markets that are overly competitive.
  7. Supporting the estimating department with the right resources to submit a winning price. This might include delegating project managers experienced with the type of work to assist the estimating team.
  8. Selecting a reasonable profit margin which won’t make the price uncompetitive but one which will maximise the company’s profits.
  9. Reviewing bids before they are submitted to ensure that the company has sufficient resources, the contract conditions are acceptable, there aren’t excessive risks, the estimating team has come up with the best construction methods and there aren’t obvious errors in the price and construction schedule. This review process could include developing alternate proposals which could provide the contractor with a winning edge.
The construction project manager’s role
Many project managers perceive their role to be only about getting a project finished on time while maximising profits. But project managers can play an important role in winning new work (or losing work). But their role is more than this and includes:
  1. Ensuring that customers are satisfied. Customers don’t just want their project finished on time but they also want to deal with a contractor that creates the least problems for them, one that is a pleasure to do business with and one that delivers a quality product that they perceive as being of fair value. Most of my projects resulted in repeat work and for some customers we were their preferred contractor. That didn’t mean that we were compliant or didn’t submit variation claims. To the contrary, most of my projects increased in scope and had numerous variations and almost all of my projects were profitable, frequently exceeding the original expected profit margins. Yet, customers were prepared to pay a premium for us to build their next project.
  2. Providing constructive feed back to the estimating department. This doesn’t just entail telling the estimator where they made mistakes costing the project money. It means giving the estimator production figures for labour and equipment. It may mean that the estimator can cut some of their rates in future bids which might mean the project manager has to work harder on the project to ensure it’s profitable, but, cheaper rates in the next bid and quotation may just mean the difference between winning and losing the project. It’s also important for project managers to keep the estimating team informed of new suppliers and subcontractors that performed well on the project and should be approached to price other work. Of course the estimating department also needs to be aware of those subcontractors and suppliers who should be avoided.
  3. Project managers are constantly interacting with customers, designers, engineers, project managers, subcontractors and suppliers. They often get to hear of new projects long before management does. These potential leads to new work should be followed up and passed onto management.
  4. Project managers have the opportunity to build relationships with the customer and the customer’s project management team. We won many new projects, even when our price wasn’t the lowest bid, simply because the customer wanted to work with our team who they trusted and enjoyed working with.
  5. Project managers who have a good working relationship with customers often understand what they are looking for on their next project. These bits of information can be invaluable in ensuring that the bid meets the customer’s requirements.

What happens after you’ve submitted your price could win, or lose, the project?
Submitting the lowest price doesn’t automatically ensure that you are going to win the work. Customers often look at more than just the price. Savvy customers check that their contractors have the ability, experience and the resources to deliver their project to the required quality, without incident, with the least problems and on time. Contractors need to ensure that their price submission can satisfy all these requirements, convincing the customer that their price is the best (even though not necessarily the cheapest).

After examining the various prices customers often ask bidders questions to clarify and confirm the contractor’s price. Sometimes these questions are designed to get the contractor to reduce their price, but frequently they are just to confirm details and allay fears, ensuring that each contractor has priced the same products. It’s important these questions are dealt with promptly. Management may have to provide additional support to the estimating team and should certainly be consulted when the customer is looking for a discount or when the customer is materially changing the conditions or scope of the project.

Many customers summon bidders to clarification meetings to further discuss the contractor’s price. It pays for contractors to be prepared for these meetings. As managing director of a construction division I always attended these meetings with the estimator. In many cases we took our proposed construction project manager and, in some cases, other key members of the team. If we knew that the customer placed extra emphasis on safety, scheduling or quality we would ensure that we included the relevant experts in our negotiating team. Indeed, I know when leading our team on many occasions we persuaded the customer we were the best contractor for the project. Unfortunately, I’ve no doubt that on some occasions I blew the negotiations and we walked away empty handed. But, being at those meetings gave us an opportunity to sell our company, and we could better understand any doubts and concerns the customer had with using us, enabling us to present a case as to why these doubts and concerns were unfounded.

Conclusion
We depend on our estimators to bring in a constant stream of profitable new projects. They are the engine room of every construction company and the rest of the company depends on them. But the estimating team cannot win projects alone, without help. They need the support of management and the project teams. It is a team effort to find new projects to price, then to submit a winning bid and finally negotiate a successful project award.
​
In your company who is responsible for securing new projects?
If you found this article useful please share it with others.
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​This article was first published in estimators playbook and written by Paul Netscher

Paul Netscher is the author of the popular books 'Successful Construction Project Management: The Practical Guide' and 'Building a Successful Construction Company: The Practical Guide'.'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. 
Read a preview of Construction Claims

Paul writes regular articles for other websites, gives lectures, mentors, and is available for podcasts and interviews.

© 2016 This article is not to be reproduced for commercial purposes without written permission from the author.
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    The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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