Improve the working environment,
and create a successful construction team.
Yes, Claims don’t result from differing site conditions, bad contract documents, or defective contract administration. They are a direct result of the contractor losing money on the job. This is either because of the above reasons, for which a contract adjustment may be an appropriate remedy, or because of the contractor’s actions (or inactions) in estimating/planning/executing the work, for which the contractor should bear the burden. The best way to avoid construction claims is to allow the bidders to get enough money in the job to build it, and manage the project with the attitude that all parties take responsibility for their own actions/inactions—all in accordance with the contract agreement. This will improve profits and encourage all parties to work as a team. Of course, on many projects it’s much easier to set forth this philosophy than to effectively implement it.
Improve the working environment, and create a successful construction team.
This simple “money-making-equation” is the first step in understanding how to avoid construction contract claims:
Revenue – Cost = Profit
Revenue: The money the contractor gets. This amount is usually determined during the bidding—that relatively short period of several weeks when the contractor tries to get as smart as the owner and the engineer (who have been working on the job for the past 2 or 3 years), puts a price tag on the cost to build it, and accepts the risks that the owner has defined in the multiple-volume contract documents. The bid amount (revenue) is a function of the “anticipated” cost, or the cost that can be predicted during the bidding period.
Cost: The money the contractor spends during construction, varying in indirect proportion to skill in managing labor, devising innovative methods, and avoiding or insuring certain risks.
Increasing the accuracy of bid estimates, or rather improving the predictability of the final cost, is one of the keys to avoiding claims. Below are a few helpful tools:
Partnering: Addresses construction cost by redirecting the parties’ attitudes from confrontation to cooperation. A partnered job doesn’t have a construction manager who thinks he or she has to be a spec policeman, or a contractor who thinks the CM only exists to make life more difficult. The attitudes that pervade a partnered site are those of people who “work together,” with the owner’s staff assisting the contractor to build the project.
Geotechnical Baseline Reports: Can contribute to a more accurate estimate of anticipated ground behavior, thus affecting the revenue by making the estimate more predictable. It’s not the “baselines” that do this; it’s the narrative description of the design philosophy, which can further the contractor’s understanding of the project during the bidding period.
Unit Pricing: Pays the contractor for work that can’t be accurately predicted in advance, such as pile driving, where the length of pile used is a direct function of the ground. Bidding underground projects on a lump sum basis actually decreases the predictability of the bid estimates. Unit price bid schedules are a good tool for work elements such as grouting, and primary support systems that depend mostly on the ground.
Improving the Working Environment
Improving the working environment is crucial to building a successful construction team. When workers are happy, they tend to be more productive, leading to a higher quality of work and lower labor costs. Here are some ways to improve the working environment:
- Provide Adequate Tools and Equipment: Having the right tools and equipment is essential to the productivity of workers. Investing in high-quality tools and equipment also reduces the risk of accidents and injuries.
- Train Your Workers: Regular training sessions are essential to keep workers up-to-date with new technologies and construction techniques. This leads to a more efficient and effective workforce.
- Listen to Your Workers: Encourage feedback from workers and address their concerns. This makes them feel valued and respected, leading to a more positive working environment.
- Offer Incentives: Rewarding workers for their hard work and dedication can go a long way in boosting morale and productivity.
Create a system of incentives such as bonuses, performance-based rewards, or recognition programs to acknowledge and appreciate the efforts of your employees.
Promote Work-Life Balance: Recognize the importance of work-life balance and support your workers in maintaining it. Encourage regular breaks, provide flexible scheduling options whenever possible, and promote a healthy work-life integration.
Foster Effective Communication: Establish open lines of communication between management and workers. Encourage regular team meetings, provide avenues for feedback, and ensure that everyone feels comfortable expressing their ideas and concerns.
Create a Safe and Healthy Work Environment: Prioritize workplace safety by implementing proper safety protocols, providing necessary safety equipment, and conducting regular safety inspections. Additionally, promote a healthy environment by offering wellness programs, access to exercise facilities, or initiatives that encourage a healthy lifestyle.
Encourage Collaboration and Teamwork: Foster a sense of camaraderie and collaboration among team members. Encourage teamwork through team-building activities, promote cross-functional projects, and create opportunities for employees to work together and support one another.
Promote Professional Development: Offer opportunities for professional growth and advancement within the company. Provide training programs, support employees in attending conferences or workshops, and encourage the development of new skills.
Lead by Example: As a leader, set a positive example by demonstrating professionalism, respect, and a strong work ethic. Show appreciation for your employees’ efforts, communicate effectively, and maintain a positive attitude.
Regularly Evaluate and Improve: Continuously assess the working environment and gather feedback from employees. Use this information to identify areas for improvement and implement necessary changes to enhance the working conditions.
By implementing these strategies, you can create a positive and supportive working environment that promotes productivity, job satisfaction, and the overall success of your construction team.
In conclusion, avoiding construction contract claims requires a collaborative approach and innovative methods. By improving the working environment and implementing tools such as partnering, geotechnical baseline reports, and unit pricing, contractors can achieve a more accurate estimate of anticipated costs and maximize their profits.
Q1: How can contractors improve the accuracy of bid estimates in construction projects?
A1: Contractors can improve the accuracy of bid estimates by implementing the following strategies:
- Partnering: Foster a cooperative environment where the construction team, including the owner and contractor, work together towards the project’s success.
- Geotechnical Baseline Reports: Utilize reports that provide a narrative description of the design philosophy, aiding the contractor in understanding the project and making more predictable estimates.
- Unit Pricing: Implement unit price bid schedules for elements such as grouting or primary support systems that depend on the ground conditions, as it allows for a more accurate prediction of costs.
Q2: What can be done to improve the working environment in construction?
A2: To improve the working environment in construction, consider the following approaches:
- Provide Adequate Tools and Equipment: Ensure workers have access to the right tools and equipment, promoting productivity and reducing the risk of accidents.
- Train Your Workers: Conduct regular training sessions to keep workers updated on new technologies and construction techniques, resulting in a more efficient workforce.
- Listen to Your Workers: Encourage feedback and address concerns raised by workers, creating a positive and respectful environment.
- Offer Incentives: Implement a system of rewards and recognition to boost morale and productivity.
- Promote Work-Life Balance: Recognize the importance of work-life balance and support workers in maintaining it through regular breaks and flexible scheduling options.
Q3: How can effective communication be fostered in construction teams?
A3: To foster effective communication in construction teams, consider the following practices:
- Establish Open Lines of Communication: Encourage regular team meetings and provide platforms for feedback, ensuring that everyone feels comfortable expressing ideas and concerns.
- Promote Collaboration and Teamwork: Foster a sense of camaraderie among team members through team-building activities and cross-functional projects.
- Lead by Example: Demonstrate professionalism, respect, and a strong work ethic as a leader, while appreciating employees’ efforts.
- Regularly Evaluate and Improve: Continuously assess the working environment and gather feedback to identify areas for improvement and implement necessary changes.
Q4: How can workplace safety and health be prioritized in construction?
A4: To prioritize workplace safety and health in construction, consider the following steps:
- Implement Safety Protocols: Establish and enforce proper safety protocols to minimize the risk of accidents and injuries.
- Provide Safety Equipment: Ensure workers have access to necessary safety equipment and encourage its proper usage.
- Conduct Regular Safety Inspections: Regularly inspect the work environment to identify and address any potential hazards.
- Promote a Healthy Lifestyle: Offer wellness programs, access to exercise facilities, or initiatives that encourage a healthy work-life integration.
Q5: How can professional development be promoted within a construction company?
A5: To promote professional development within a construction company, implement the following measures:
- Offer Training Programs: Provide opportunities for employees to enhance their skills and knowledge through training sessions.
- Support Attendance at Conferences or Workshops: Encourage and support employees in attending industry conferences or workshops to broaden their professional network and stay updated on industry trends.
- Encourage Skill Development: Motivate employees to acquire new skills by providing resources and opportunities for growth.
- Recognize and Reward Progress: Acknowledge and appreciate employees’ professional achievements and advancements within the company.
- Foster a Learning Culture: Create an environment that encourages continuous learning and professional growth through knowledge sharing and mentorship programs.