Wondering why more money is going out than expected? Here are a few tips on covering all of your costs and making a profit from your work on site…
Additional works/variations are mostly likely to happen on any project. However, is the Contractor’s internal systems causing them difficulty in getting paid all monies due? This blog looks at the key tools required by the Contractor to assist in getting over this hurdle. The first and most important tool is Communication within the organisation itself. Most contractors will have an Operations and Commercial Department and it is key that both these departments communicate on a daily basis. It is crucial to instil an accountability ethos, where both departments are responsibility for the key indicators (Safety, Time, and Cost & Quality). Traditionally these four key words have been split between the departments, but why can they not be linked together? However, for this blog, we are going to hone in on two of these indicators, namely Time & Cost. Both these indicators have an impact on getting paid the full amount for a variation.
The following best practises should be instilled:
• Contractors Site Management to complete a detailed daily diary, which will record: work activities, men on site, and issues on site (production and/or design).
• Request for Further Information (RFI’s). These should be sent out as soon as an issue becomes apparent. This should be a formal template (not an e-mail), which clearly shows the query, date of query and when an answered is required.
• Confirmation of Verbal Instructions (CVI’s). These are a vital part of any site toolkit. With the current construction methods being fast-track and we cannot await a Client Instruction being sent, these documents are used for record the variation and signed by the authorised person (normally the Contract Administrator).
• CVI’s issued to Contract Administrator. Once signed off, these should be scanned & e-mailed to this key person. They can stand alone as agreement to a variation on site. However, best practise is for a formal Clients Instruction to be issued instructing said CVI.
• Daywork Sheet. This sometimes can be for internal purposes only. It is a useful tool in recording the amount of time spent on an additional task/variation.
• Notifying of cost. It is crucial that the contractors QS notifies the client of the additional cost within 7 days. Even if this cost is qualified as a Budget Cost. The sooner you can notify of the cost, the better chance of getting paid the monies.
• Forecast Final Account (FFA). This is a useful for the client’s QS and aids in their Cost Reporting to the ultimate client. These are normally submitted at the time of an interim valuation and assists with budget control.
• Construction Programme – updated on a weekly basis. Refer to our other blog “Types of Construction Programmes”.
• Delay Lettering. The moment a delay becomes apparent, the Contractor should notify the Client. The normal way this becomes apparent when a work activity of construction programme is delayed, information request has not arrived.
Should you wish to discuss the above in more detail or need assistance with any commercial aspects of your construction projects, please get in touch: email@example.com