By Michael Pink CEO Construx Solutions Advisory Group
I am a consultant who has spent the past 15 years of my career assisting entities involved in commercial construction in various ways. Because the industry is the way it is, a large percentage of my work has be reactive as oppose to proactive. Some may call me a “claims consultant” or even a “hired gun”. While the title “hired gun” sounds pretty cool, the reality is that both of these titles come with some sort of a negative connotation within the construction industry. There are several reasons for this, but it really becomes a question of objectivity versus subjectivity in a forensic analysis.
I personally like the objective (fact based) approach because it puts my clients at less risk during the dispute resolution process, and more importantly it gives my clients significant amounts of clarity on the real issues that affected the project, whether it be their own fault or someone else’s. This enables my clients to prepare an iron clad strategy for settlement while also empowering them to correct any internal issues that may contributed to the current problem, and move forward as a better company.
As such, in my time analyzing many construction projects in great detail, I have picked up on many internal issues that I believe strongly correlate with projects that result in losses and claims. As a result, I have developed a list of things that I believe companies can do to minimize losses and claims:
- Always Prepare a Cost Loaded / Resource Loaded CPM Schedule – A cost loaded, resource loaded schedule is the first step any contractor can take at establishing and documenting a manpower plan, timeline and intended flow for its work. This is beneficial for 2 reasons: A) It will become the basis for measuring impacts and variances to both cost and schedule in a delay/dispute/claim setting and B) It will serve as a great project management resource/tool. Without thinking through manpower, durations and workflow in great detail at the beginning of the project, a contractor will put itself at risk of becoming delayed and blowing the budget.
- Use the CPM Schedule as a means to managing the project, not a reporting tool – In a large proportion of claims that I have been involved in it becomes very apparent that as project became impacted and delayed over time, while the end date always stays the same. This is evidence that the schedule was being compressed – which often results in costly overruns. While I applaud the optimism of any scheduler or construction team, this is a tell-tale sign that the schedule is no longer being utilized as a means to manage, rather a tool to show the project owner that everything is OK – and the truth eventually presents itself after its too late. CPM scheduling technology is useful, but it requires collaboration and a dose of reality. If a project is delayed, show the delay in the CPM schedule and discuss it with the teams involved to prepare (and document) a mitigation strategy to overcome that delay. Don’t just start removing logic and shortening durations (unless that is part of your thoroughly discussed mitigation strategy). Crashing the schedule month after month is a very bad habit that results in an infeasible, unusable schedule that inevitably starts costing everyone more money in a very silent, unknown and inconspicuous way.
- Track Actual Manpower in a disciplined and detailed fashion – While manpower is tracked on most projects for accounting and payroll purposes, it is rarely captured in a manner that allows anyone to study and understand productivity at the level that productivity needs to be studied in construction. In my opinion, productivity needs to be studied at the activity/task level (as per the CPM schedule), or at the very least for every trade in every “area” of the project (for example on a given floor, or building). I also believe this data needs to be captured every day for all work going on in a project. If tradesmen worked on an activity, I want to know how many and for how long. This is a very powerful set of information as it relates to controlling cost and schedule, so powerful that my company has developed a tracking and analysis technology around it.
- Build a detailed “As Built” Schedule – The first thing that I do on any delay or impact analysis that I get involved in is attempt to build a detailed “as-built” schedule – and I am not talking about the “as-built” printout that Primavera or Microsoft will output. These programs lack significant amounts of detail in the historic side of the equation. Start dates, finish dates and monthly percent completes do not cut it in the dispute world nor is it helpful in trying to pinpoint and manage through impacts while they are occurring. A well-constructed and detailed as-built schedule is the holy-grail to understanding the entire history of a project. This is useful in understanding which work is being impacted and why while it is happening, and is also the most useful set of data in a dispute scenario. Every project manager should make it priority to take 15 minutes out of their day, every day, to construct an as-built schedule. It’s worth its weight in gold.
- Study Impacts and Causation regularly – If project management has created a resource loaded baseline schedule, has updated it and utilized it to accurately reflect the planned course of construction on a regular basis, has tracked detailed manpower breakouts on a daily basis and has used that information to build a robust as built schedule in real time, then management has the ability to understand impacts and causation at any given point of the project, throughout the life of the project. In my experience, one of the biggest reasons that projects become delayed, impacted or suffer from budget overruns is through the lack of knowledge of critical impacts as they are occurring. In a majority of the projects that I have been involved in, a significant portion of critical delays and impacts identified began as very minor issues and eventually snowballed into major problems that a project couldn’t recover from. The sooner one identifies critical impacting issues, the better the chance of overcoming them.
- Discuss problems as they arise – I often hear that contractors think it’s a bad idea to discuss impacts with anyone because it is a lose-lose situation. The industry has become so dispute heavy that construction companies often avoid these discussions because they either don’t want to “show their cards” or because they fear the owner will throw a fit if they use the term delay, impact, cardinal change or any variation thereof. I don’t necessarily blame them for thinking this, but what I have found is that more information and collaboration is better for any project – and if construction companies can establish an open door policy of such information, projects run smoother, there is a greater amount of trust, there are less disputes and relationships become stronger in the long run.
- Document the outcome of your discussions on delays – OK, so the last thing you need to do is a little CYA. Make sure all discussions surrounding impacts, mitigation plans, acceleration requests, etc. are documented. This ensures that there is no funny business when a project is in closeout. Project correspondence like RFI’s, CO’s, Letters, etc., is great, but email is good enough and very efficient. It’s amazing how often a verbal conversation is forgotten or “misinterpreted” when there are millions of dollars at stake…
So – it’s that easy! Got it? Good. I know it sounds like a lot of work, but it’s really not if you establish a protocol for getting it all done with multiple project management personnel. I have worked with clients on getting these systems set up within their respective organizations, and it’s amazing the transformation’s these organizations undergo almost immediately. For more information on our services, technology and free webinars, visit us at www.construxsolutions.com.