Construction contract management

You are the Managing director of a large construction company. Can you make the right decisions to win the contract for your company, make the work profitable and ultimately save your job

You receive the contract documentation to build a multi-story

apartment block

You have been loosing too many contracts at the tendering stage lately

• Your rival companies have been winning numerous contracts and expanding their business.

• The shareholders and the board of directors are putting pressure on you to win the contract to construct the apartment block, things are beginning to get a bit desperate…You call a meeting with your contracts manager and his team….Its decision time…

What should you do…?

Tender for the contractin your usualformat andhope youwin the contract

Offer the client a contract which is stackedwith penalty clauses which could be very favourablefor the client to guarantee youget the work

Re-structure your tenderingPolicy and try tobeat your rivalsby employingnew buildingtechniques andcutting down

on your costs

Put pressure on your contracts Managerto cut the price in your tender and offera quickcompletion date that the client cant get from any other offer to seal

the deal

You have been sacked!

The board of directors feel you have shown no innovation !

Congratulations

It appears you have made the right decision your company needs to update its tendering methods!.

Hmm…

Well your colleagues are a little disappointed but you have averted a crisis for the moment, but the penalty clauses may catch up with the company at a later stage

Revolution!

The contracts management team are unhappy with the situation you have placed them in because they feel the company can't meet unrealistic deadlines. The team have emailed the board to complain about your actions! The board call an extraordinary general meeting to discuss your actions, they decide that you have put the contracts team under undue pressure and therefore have no option but to terminate your contract.

Starting the work: Can you meet your contractual

obligations ?

The job starts well enough, the site has been cleared, the building set out, the foundations have been excavated and have been completed to ground slab level. You are ready continue with the build when your workforce strike due to a wage dispute. They were promised £ 180 pounds per day but they are only being paid £ 140

The job has stopped, what should you do…?

Sack the workforceand employnew people

Find a Compromiseand meet the men half way plus abonus paymentfor early completion

Pay the menwhat you promisedthem

Scrap the current pay scheme and introducean incentive bonus scheme

Congratulations

It appears you have made the right decision but will you have the money to pay the men a bonus if the contract comes in early

Hmm…

This leaves the workforce feeling a bit betrayed but in the main they are willing to go along with it providing they earn a decent weekly salary. This situation is a little precarious for the company as the men could leave when a better offer comes along

Disaster

• The job went massively over the budget due to the wage bill. This was your companies last chance saloon and you have blown it. The company have gone bust and your left out of work …..bye bye

Material shortage

The company that you employ to supply you with concrete are having problems at their plant, they currently have four concrete trucks out of action. Progress is slow because of this and the job has fallen behind the programme by two weeks already

What should you do next…?

Accept itand hope thatyoucan make the timeup over the coming weeks

Drop the concretecompany and employ a new one

Use another company until the contracted company sort

out their problems

Put pressure on the contracted company with legalaction as they are not complying with the terms of the contract

Good decision…

• This should keep everyone happy. The work can progress the concrete company wont be dropped ( but may incur a penalty ) and you wont have too get involved in legal tangles…

The bricklayers aren`t up to scratch. Their work is poor and the clerk of works has condemned four walls they

have built. What should you do ?

Ask them to improve their standards, warning them that if they don’t they will have their contracts terminated

Sack the bricklayers, employ new gangs

Put the bricklayers through an on-site skills test by building a sample wall.

Employ the best brickies available and pay them more money

Bad news

• You have sacked the bricklayers and not replaced them quick enough. The job is further delayed and you are history sunshine!

A good move

• The brickies improve and the job progresses, well done

Bad move

• The new gang are good but cost you a critical amount of wages. The other tradesmen find out about their pay and bang you’ve got a disgruntled workforce

Bad move

• If time wasn’t of the essence this would be a humanistic approach, giving the brickies a chance, but time is against you and in business you’ve got to drop sentiment. The job falls further behind and you are demoted to the junior management ranks

Rally

This should work, you have given the company enough chances and you need a more reliable concrete company . However the new company might be no better. More questions lie ahead

The job is moving on

• Things are going well the workforce is happy and you are running to the programme of work on time

Fatality on site

• There has been a tragic accident on site and the HSE have placed a prohibition notice against the site, you cant work. How can you progress and keep your workforce on board.

What should you do next…?

You must redeploy your workforce to other sitesTemporarily. While keeping a skeleton staff to carry out menial tasks such as repair, stock taking and tidying up the site until the notice is lifted

Let the HSE do their work and wait until the notice is lifted and carry on as normal

Be strong and ride the storm.Strength from the leadershipat this time is paramount don’t worry about the Investigation, work will commence in two weeks time

Ignore the noticethey have proved nothing yet it probably isn`t your companies fault

The best decision

• This is the best option of all, you must comply with the HSE but at the same time you have to keep your workforce earning a living. There are certain tasks that can be carried out. Ie stock taking tidying and repairing equipment.

Hmmmm

• This is an option - but you really should be setting out a programme of tasks as in option one. You should redeploy your workforce or they may seek employment somewhere else. It could have problems

This could back fire

• You could appear to be arrogant and not as co-operative as you might be. This could upset the HSE at a time when you really need to help them and assist the investigation. You do need to be strong but an air of arrogance can be a weakness. Be careful

Disaster

• The notice is enforced you must comply failure to do so loses you your job. Bye bye

Severe weather

• High winds followed by four weeks of frost are causing havoc with the programme. The upper floors of the building are progressing slowly due to the high winds, the minus 6 temperatures have delayed the concrete pour and the brickies can`t lay bricks in the frosty conditions

What should you do next…?

Ignore the weather, the Site is fallingbehind theprogramme and you must continue and hope the weather breaks

Stop work or risk material wastage or even the workers lives. You will just have to wait until the weather breaks

Hire gas heaters to keep the Temperature high enough to keep laying bricks and pouring concrete

Gas heaters are too expensiveto run, makingthe progressUneconomical.Why not cover the Brickwork with sheets and hope the temperatureis no lower than Minus 2. Pour theupper floor concreteslabs when the wind drops

Disastrous

• The weather is king here. High winds can cause terrible accidents with cranes and lifting equipment. Frosty weather ruins the wet mortar in brickwork and will collapse or be condemned by the clerk of works

Hmmmmmm

• Stopping work is an option but the lack of progression could be damaging

Probably the best option… but

• This is a short term option but it can work out costly.

Hmmmm

• This is the most common solution but you are taking a chance on the low temperatures. Frost sheet will protect wet mortar and concrete down to about minus 1. this could backfire on you

The situation worsens

• The job falls behind a further two weeks because the concrete company can`t get the parts to repair the trucks soon enough.

• You have made a fundamental error here you should have insisted that your project manager took quick decisive action

• You are fired !

Legal action should be the last resort !

• This is a bit heavy handed but it can force the company to sort their problems out. However it could also ruin the company and cause them to go into receivership. It may work it may not but you are possibly wasting precious time. The consequences may come back to haunt you…

This is disastrous

• Unfortunately you are unable to recruit a new experienced workforce and the work is stalled. The delays stack up and days turn into weeks, you manage to recruit some workers but its too little too late. The client is forced to terminate the contract with you and takes legal action. The board of directors sack you in an attempt to save the company… You are history, bye, bye

Method statement

• Following the fatal accident the HSE have set a number of conditions that you must adhere to. One of the conditions is to renew your health and safety documentation including a new method statement and risk assessments for all work activities.

Which method statement format should you choose…?

One which focuses On health and safetyIssues whatever the costin operational Activity restrictions. This will impress the HSE

A method statementwhich is quick too produce and easy toimplement becausemore delays are the last thing youwant

One which coversThe basics and addresses the thingsthe HSE haveOutlined, but the Sub contractors can producetheir own

A concise method Statement, coveringall operational Activities whichis adhered to by all who work on the site

Too difficult to work with

• This is a good method statement in terms of its intentions, but the implementation of it is proving impossible. The job falls behind and the company brings in a new MD, sadly you are moved onto junior management

Hmmmmmm

• You might just get away with this but the simplicity of the statement may not cover all eventualities…… time will tell Mr Managing director

Oooops - big time

• You omitted the sub contractors from your method statement. This is a fundamental mistake and you are fired!

Well done!

• A method statement from the main contractor should cover anyone who works on the site. The HSE are happy and things progress,

Theft

• The other night your store cabin was raided and all the expensive ironmongery and fittings were stolen. The thieves haven't been caught because your CCTV wasn’t working properly and it is suspected that the security guard was asleep – something he denies and says he just didn’t see them.

What should you do…?

Sack the security guard and employ someone else

Get some new CCTV cameras

Re- train thesecurity personneland give him two weeks off work to recover from the stress

Request a new security guardfrom the securitycompany and use guard dogs

Wrong move !

• He hasn`t been found guilty of this crime and he denies that he was asleep, you have no legal grounds to sack him and doing so has just cost your company a substantial amount of money due to wrongful dismissal.

Hmmmmmm

• This may work but it doesn't address everything fully, you still have the same security guard and in general this seems like too little too late. This may come back to haunt you!

A bit weak

• This makes the company look soft on crime and the staff are left bemused at your blasé attitude

Well done!

• This is the right move the guard has become a bit lax and the dogs are a good change of security policy – you look like you mean business in terms of improved security

Trade conflict

The programme of work has been so badly interrupted due to one thing or another that your programme of work has been thrown into disarray.Consequently the different trades on site are no longer in “sync”and the work areas are over crowded with electricians, Joiners and plumbers. This must be resolved as a matter of urgency

What should you do next…?

Delay the Plumbers andelectriciansuntil the joinery is complete

Allow each trade area to completetheir work in allotted times

Work out which trade area needs to be out of the area first, second then thirdto allow the job to progress