Ron Babich is the COO of Hard Dollar, a project cost management (PCM) software company serving the mining, oil and gas, infrastructure and energy industries. A 20-year technology and cost management veteran to many of the world’s largest organizations, Babich’s path to leadership has resulted in increased value, profits and repeatable process infrastructure with successful technology organizations. For more information, visit www.harddollar.com.
Minimize costly jobsite errors with a simple process shift.
Construction projects often involve tracking hundreds, or even thousands, of details. Every day presents an opportunity for project expenditures to spiral out of control. Minimizing costly jobsite errors requires a shift in process.
Identify and Track the Details
It’s typically not the large expenditures that derail a project. Instead, the devil is in the details. The best step toward preventing errors from derailing a project is to ensure that the team actively manages small expenses. A mistake can easily be overlooked until a project is underway, and once all hands are on the jobsite, it’s too late—or very expensive—to make corrections.
Zeroing in on details before ground is broken is important for owners and contractors. Owners need to be clear upfront about expectations and include as much detail as possible in the contract. After the contract has been signed, contractors have little room to avoid doing what is asked or to claim they didn’t know what the project entailed.
Setting a unit of measurement before the project begins keeps the owner and contractor on the same page. The unit itself—cubic yards, linear feet—doesn’t matter, but the point is to standardize the measurement among all involved parties so that expectations are aligned, reporting is clear and progress is visible. After a unit of measurement is agreed upon, the number of units that must be reached each day can be determined in order for the project to stay on schedule and on budget. When these two standards are set, add them to the contract alongside a requirement for weekly reports to give the project total visibility.
While monthly reports are the norm for most projects, weekly reports can go a long way toward preventing costly mistakes. This increased reporting frequency gives the owner more visibility into project status regarding materials, labor availability and other potentially fluctuating factors. Unpredictable elements such as weather must be taken into account so that additional costs and delays are avoided or minimized. Reviewing historical data, specifically prior projects completed on the same calendar dates, can help the team gauge and prepare for potential weather-induced setbacks. By evaluating historical data and staying on top of weekly reports, alternate jobsite plans can be mapped out ahead of time.
The best way to handle weekly reporting is for the contractor to receive jobsite data daily and to compile that data into weekly reports delivered to the owner. When the owner is able to view the status of the moving parts of a project on a weekly basis, adjustments can be made quickly to ensure that progress is not slowed and costs remain within the budget.
Another way that weekly reporting saves money and expedites progress is by keeping earned value front and center. Earned value instantly tells the owner whether the project is on track. Continual monitoring of the project’s earned value allows for the scheduling performance and cost performance to be gauged. Weekly reporting is crucial for providing owners with the information they need in order to identify errors in a timely manner.
Support the Shift
Implementing these changes may sound easy, but objections are bound to surface. Such objections may stem from a fear of change, and it’s important to know how to respond to them. Showing contractors and coworkers the logic is one effective way to curtail these doubts. By implementing a logical, consistent pay-item structure, for instance, reporting is easier and the collections process is simplified, resulting in faster payments. If objections are based on a reluctance to change longstanding practices, make it clear that the market is changing and adaptation is necessary to survive. Help the team to understand that giving owners more visibility allows for more effective project management.
Although not every construction project possibility can be accounted for in advance, covering as many bases as possible before work begins helps curtail costly jobsite mistakes. Insist on upfront, detailed contracts, and trust contractors to deliver weekly reports so you can make amendments to the plan as the need arises. Shifting the process from haphazard to fully-planned will eliminate money-wasting delays and allow you to get the job done on time and within budget.