In our last article we discussed actions to take if your construction project is losing money. Read: Is Your Construction Project Losing Money?
In this article I some of the causes which result in construction projects losing money. These include:
# Poor productivity due to:
•Low worker morale.
•Incorrect resources on the project - the wrong type or too few os some and too many of others.
•Direct theft on the project.
•Suppliers and subcontractors claiming for stuff they did not deliver or work they have not done.
.Suppliers short delivering.
# Material wastage due to:
•Breakages from poor handling and installation.
•Storing materials incorrectly.
•Large quantities of off-cuts.
•Over ordering materials.
•Applying materials thicker than they should be.
# Ordering items that are the wrong specification.
# Non performance of suppliers or subcontractors.
# The project not completed on time.
# Poor quality work.
# Not invoicing the client for work done.
# Over payments of subcontractors and suppliers:
•Paying invoices twice.
•Forgetting to deduct discounts or previous payments.
# Not claiming variations and delays that you are entitled to claim, such as:
•Change in specifications.
•Delays and disruptions.
.Client not fulfilling their obligations.
# A poor price estimate due to errors, not understanding project site conditions, wrong rates, not understanding the contract.
Ensure your construction project does not lose money
Contractors regularly lose money on their construction projects. This could lead to the contractor going bankrupt. Nobody likes to do work for free or lose money on projects. Simple checks and sound project management can eliminate many of the causes of project losses.
Of course it is important to have systems in place - project cost reports which are accurate - which give an early warning to project managers when their construction project is in trouble.
Knowing immediately that the construction project is losing money enables the project manager to take early action to prevent further losses and possibly even recover some of the lost money.
It is important to identify the real reason for project losses and not leap to the wrong conclusion and blame others - like the estimator - for the loss.
Do you want to learn how to manage construction projects successfully?
Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.
The books are available in paper and ebook from most online stores including Amazon.
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Copyright 2016 - The attached articles cannot be reproduced for commercial purposes without the consent of the author.
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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