The most difficult part of subcontracting isn’t estimating, negotiating, or preparation. These are common tasks subcontractors learn over time but being good at them doesn’t ensure a profitable project outcome. It’s true that good estimates, subcontracts and preparation are important factors but what about learning to manage the variables that come up during construction that impact productivity?
Understanding Schedule Variables
What are the most common variables that come up during construction that commonly impacts productivity? First, let’s be clear on what the word ‘variable’ means. The word itself means changeable. It is during construction that things change from what was originally planned. In most cases, these variables or changes were not anticipated.
Although we can teach employees how to estimate a job, negotiate a contract and how to prepare to do the work, we rarely teach our employees how to identify, and manage variables that come up during construction. A variable that comes up often during construction is an unanticipated change in schedule.
In most cases, a project is estimated based on a bid schedule provided at the time of bid. However, during construction schedules commonly change. Start dates change, durations and completion dates change. Changes in schedule can appear insignificant yet these changes often have a compounding negative effect over the course of a project. The longer the project, a seemingly insignificant number of schedule changes can have a devastating impact on your bottom line.
Schedule changes are simply deviations from what was originally planned. To give you a sports analogy, quarterbacks will call a play in the huddle and then change the play before the ball is hiked due to the changes they see in the defense. In other words, the offense adjusts its play based on the defensive line up at the time of the play on the fly.
The same is true for subcontractors when their schedule changes. A change or deviation in schedule causes subcontractors to adjust their original plan of attack in some cases, day-by-day, which commonly impacts productivity.
C. William Ibbs, professor of construction management at University of California, Berkeley and an independent claims consultant, said, “There are very few subcontractors who can identify and manage schedule deviations effectively.”
Teaching: Managing Schedule Deviations
One of the most effective ways of teaching employees how to identify schedule deviations is to have them track schedule deviations.
Identifying schedule deviations is the first skill to teach, followed by how to manage the schedule deviation. Managing schedule deviations is comprised of two components:
- The ability to analyze schedule deviations and their impact;
- The ability to seek compensation if there is a cost impact.
When teaching your staff how to identify and manage schedule deviations, it’s important that your staff understands these three company expectations:
- As a company we expect our clients to manage schedules/projects properly.
- As a company we will not be burdened with the expense associated with a poorly managed/scheduled project.
- As a company, we expect to be compensated for schedule changes impacting our productivity.
Once your project management staff clearly understands these three critical company expectations, the standard is set, and at that point it’s a matter of providing your staff with the tools to track schedule deviations, and teaching them how to analyze the cost impact of schedule deviations (if any) and finally teaching them how to seek compensation in a convincing and compelling way at the time the deviation occurs (immediately).
A Familiar Story
As we all know, the combination of a great estimate, subcontract and well thought-out plan doesn’t always end in a profitable outcome as a result of the variables that come up during construction. In other words, we start jobs with high expectations, and as the job progresses, during construction variables deteriorate our profit margins.
At the end of a job, we often see and hear the actual causes of why our profit deteriorated or why we lost money. It’s oftentimes the result of how poorly our clients managed the project/schedule overall.
The familiar story or excuses we hear include, “The schedule got messed up, our start dates were changed, we had to do work out of sequence, too many change orders, the schedule was compressed, there was a lot of trade stacking,” and the list of reasons why the job went bad goes on.
The reasons for a job gone badly in many cases are the result of during construction variables. These during construction variables shouldn’t impact your bottom line if your company staff is trained to identify, manage and seek compensation for these unanticipated cost impacts.
Schedule deviations are simple to track and requiring your project teams to track schedule deviations is one of the best ways to teach them how to identify schedule deviations. It’s more difficult to teach them how to analyze the impact of schedule deviations, and it takes more effort to teach them how to present a compelling story to the client of how a schedule deviation resulted in a cost impact.
A tool my clients use to track schedule deviations is a daily log. According to Ibbs, the daily log accomplishes two things:
- It gives timely notice to the client, and;
- It gives you and your claims consultant vital day-by-day information.
In addition to the daily log, project managers can and should update the original bid schedule with actual during construction schedule changes. Together, the daily log and schedule comparison between original and actual gives you or your claims consultant the information needed to prepare an effective claim.
However, why hire a claims consultant when you can do these things yourself for the most part? In other words, if your staff is trained to identify for example schedule deviations impacting productivity, why not submit a cost (if there is a cost) at the time the deviation occurs?
I want to leave you with a tool that will help your project managers identify different during construction deviations. The sample report serves as a guide in identifying a variety of unanticipated deviations that commonly occur during construction. Download the Interactive Field Report to fill it in yourself.
As you teach your staff how to track, identify and seek compensation for unanticipated during construction variables, explain to them that although the general contractor and owner have total control of the schedule, it does not mean you can’t charge for schedule deviations impacting productivity, material, tools, equipment or supervision.
Click the links below to download the interactive field report and sample field report!