MAKING MONEY OR LOOSING IT

Hai All. This week I am making internal audit for a firm under provision of "Construction Management Services in civil, Building & Infrastructure works". Great..The Quality Management System (QMS) Manual was nicely in place and fullfill all the ISO 9001:2008 requirements. Procedure and processes to achieve their goal all had been properly documented and followed. The question here is how do they can loose so much in a project !!!!!!. It cause millions.

It is no body fault. That is construction. After a light conversation with the owner, I realise Who is the culprit behind all the event that make them lost so much. Here is it.

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Project planning( Click this to purchase at Amazon) had failed.
The project had been awarded, However they could not start the construction due to le land accusation problem.

Time.
The above issue was only resolve almost a year after the contract awarded. Cost increase.

Project Pricing.
Pricing was done and accepted however there is no clause allow for price fluctuation variation order. From tendering until start work, it take almost two years!!! market price for almost all construction material had increase and the worst part is it goes up above their pricing. It is not contractor fault. They had include such situation in their budget but they still get beaten.

Service provider.
Their main service provider had pull out from that project to avoid the losses. They pull out without making any profit. They make such a loss in form of had not been able to captured other opportunity to make money  from other project. They don't dare to take the opportunity due to the reason that the project they had committed to is a mega project to them. Hence they can't wait any longer and decide to give up the project.

The firm decision.
To continue with the project no matter what it takes. They cannot pull out because of legal implication on them. They will be blacklisted!!!!!....They had to proceed with a lost.

Minimising the Lost.(Click this link to purchase)
Actively look for ways to minimise losses. Negotiating Skills required...!!!!!


Moral of the story.
1. Step back If you are not prepared to continue.
2. planning is a way to maximize your profit and ability.( Click here to buy).

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Related Article in this blog :
Top Secret of successful construction project.
Project planning guide
Tendering Guide
Quality Documentation filing
Tendering : Evaluate your financial capacity
Construction tender bidding procedure and processes
Big money in Construction Industry
Making Money in Construction
How to reduce the construction cost
Winning a tender
Important of project Planning
How to bid and win any tender
Construction Management

Top secret of successful construction project.

Being a contractor is always about making money by delivering projects to client. The question is, do you have a proper tool to make your dream come true?

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Here is the secret.  Successful contractor always have this four Alphabets in his mind.

" P-D-C-A" which is stand for , P=Plan, D=Do, C=Check and A=Action.

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As a contractor, in actual fact, all of them is doing the same thing. However the missing link is, this PDCA is always not documented properly and been compile into a manual. it is OK if all this PDCA work can be done alone by the owner of the firm but how about is this task is given to their staff ? For experience staff they might already have the idea on how to do it but it always not the case for newbies.

In view of this situation I attach herewith the link on part of the PDCA process. This process I name it PROJECT MONITORING PROCESS. it come together with how to monitor a project and what are the form that required in order to properly documenting the progress of a project. feel free to take a look on the list below.

Project monitoring process
Investigation form
project status review

PROJECT PLANING GUIDE

What is the purpose of Project Planning? In actual fact Project planning shall begin as early in the tendering process. The purpose of doing a planning is:

"TO DELIVERED THE PROJECT WITH-IN  THE STIPULATED TIME, SPECIFICATION AND REQUIREMENT."

Contractor that comply to the purpose above, no doubt that he/she will gain profit. In other words " planning is a tool that will guide contractor through out the construction process and to avoid any losses in term of money. As such the important document that a contractor shall have with him for every construction he/she undertake is Project Quality Plan (PQP). In this document there is guidance for his staff on site to do their works efficiently.

EXTENDED DEFECT LIABILITY PERIOD: WHAT IS THE IMPACT

 That is a good information for all developer. I not aware of this new requirement because I did not involve with private development. This is also good news for purchaser which the DLP will be even longer but will become another cost in price. ( Opportunity to price increase) however even with the extended DLP, if the construction work are properly executed as per specification and requirement and also good workmanship, There shall be minor increase in pricing or even no price hike at all. 

PS: When an Engineer do the design, they will design to meet at least minimum safety factor regardless how long the DLP going to be. An Architect will design to put in aesthetic value to the finish product. This will blend together to meet at least minimum requirement for a property. If this are going to be done properly by contractor, developer might not even need the DLP. DLP is just an assurance of the quality of the product delivered by developer and it is another marketing strategy and also value added service ( give confident to purchaser that the property is of good quality) to lure the will be purchaser to purchase the property.

Thank you again to you for this info. For the FB..I regrate to tell that my FB is my privacy. However we can always exchange opinions via this email.

Regards

AERO

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 the Government has gazette a new statutory requirement for all developer to extend the DLP to 36 month, up from 14 month previously. With this new requirement, you as contractor are to be more careful on workmanship as the developers transferring risk to contractor. As a contractor, how to going to demand for 30% increase on the construction cost from your client to ensure of better quality? what effect extended DLP to third party.

DEFECT LIABILITY PERIOD

FROM:

TO:

Hai,
 



Following the (by private company)   initiative, the Government has gazette a new statutory requirement for all developer to extend the DLP to 36 month, up from 14 month previously. With this new requirement, you as contractor are to be more careful on workmanship as the developers transferring risk to contractor. As a contractor, how to going to demand for 30% increase on the construction cost from your client to ensure of better quality? what effect extended DLP to third party.
 
 ** The above info is a Contribution by others.

_________________________________________________________________________________

Hai, 

Thank you for your comments.

Defect liability Period(DLP).

Start right after the issuance of Certificate of Practical Completion (CPC) This period depend on the contract agreement it self. For conventional contract (not design and build) normally it is 12 months.If i not mistaken the last defect list that shall be issue by client (if any) must be within this stipulated time frame, however some contract also Stated that the last defect can still being issued out to contractor for rectification with-in 14 days after DLP.That mean the DLP is 12mth+14days. 

As for the extended DLP, I personally had not gone through this. As far as I know, There is Approved EXTENDED CONSTRUCTION PERIOD which being granted by client to contractor through Extension of time which will change the completion period of the contract and then will automatically change the start date of the DLP but not the DLP Period. 

To get clear picture of the term "Construction period" and "Defect Liability period" the best answer is, if you can have a look on the actual contract document. However the difficulties is this document normally being treated as CONFIDENTIAL. 

Hope that this will answer your question.

Actually this is good question and I wish that you had written it out in my blog comment box, so that others can read and have better idea on DLP.

Thank you for your feedback.

Regards,

AERO

  

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From:
To:
Sent: Sunday, 18 November 2012, 22:14
Subject: RE: Blog

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Hai..i oledi visited u tender process...overall it was good, especially the tender participation form..im never view it before..

Yup, the information are simple and easy to understand, good sharing to member that new in construction industry...

recently i studying PAM form and JKR form...including tender process...tender validity period...tender memorandum...and so on...

Lastly, i got some question wanna ask sir....about extended Defect liability period...may i ?

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TENDER PARTICIPATION FORM

In my previous article, Tendering Process, I did mentioned that tendering is the core life of a contractor. However it does not mean that contractor will participate in any tender that was advertised. There is certain work to be done before a contractor decide to participate. In actual fact most of contractor do this activity. For experience contractor this not a difficult task to take on but it will be better if any finding before the decision is make being recorded. To do that I had developed a form which  I named it Tender participation form. This form might not be comprehensive form for every contractor but most of the required information can be captured  by using this form. Just click on the Tender Participation form to view. 

TENDERING GUIDE

Tendering is the core life of any contractor. Contractor that does not involve or participate in tender will and ultimately having short lifetime period. As shown in my previous article, CONSTRUCTION BASIC CORE PROCESSES, Tendering is placed no.1 above all basic core processes. This is intentionally highlighted as no.1 processes simply because it is the life of a contractor.

Further to that article, I had simplified the main process of tendering through the diagram that I called as Bidding/Tendering Process. In this process an input, Notice of tender, is the starting of the tendering process. From this input that contractor will start to evaluate important criteria, specification, requirement, capability and so on before they decide to participate. All those important information shall be captured by a person that had been assign by Top management to do the evaluation of a particular tender. Normally the personnel  involve are Director/s of company, Project Manager, Project Quantity Surveyor and Project Engineer. However there is cases where board of director will personally do the evaluation. Here is the link that show the Tendering Process.

Construction basic core processes

A good contractor is not contractor that only know to build but a contractor that  have knowledge on at least basic processes that involve in construction. Before a contractor can construct any structure he or she must be able to secure project. After securing a project or projects then the next process kick in. below are basic core processes that involve.

1. Tendering/bidding

2. Project planning & design.

3 .Procurement

4.control of construction drawings and specifications

5. Project monitoring

6. Handing Over for practical completion

7. Maintenance period.

All of the processes above always start after another. This link show the interaction between all of the processes. INTERACTION BETWEEN CORE PROCESSES.

Free inclement weather record

Incremental weather is an enemy to contractor, consultant and client when it come to construction issue.

Weather is an important factor and record that need to be track from time to time. in the even that the weather at the construction site had become unusual compare to the previous year, this type of record will be essential and become the most important document in obtaining the extension of time for contractor application to client.

Apart from this record, the rainfall data MUST also be recorded to proved that the rainfall for the particular day in beyond the expectation and had affected the progress of the construction activity. Rainfall data can always be captured by placing rainfall gauge at site. Below are link to the sample of Daily Record.

Daily Weather Record

In Sarawak the normal practice in the event there is no rainfall data gauge been provided at site, client, contractor and consultant will always resort to the nearest rainfall station which own by Hydrological Department that will provide the rainfall data for them to do assessment on the exceptional incremental weather for the purpose of extension of time. 

Quality Documentation filing

Construction works is not only about constructing structure, infrastructure, etc. that we need to focus on. In order to have a smooth flow of construction work, there is another area that most of contractor always overlook. The area that I mentioned here is no other than clerical works.

Normally most of us just leave the filing process to our general clerk. It is OK if the appointed clerk know how and have some knowledge of ISO system but if they are only average general clerk, we might facing difficulty in finding the records of  construction. Therefore a proper filing system shall be create and follow to ensure easy track back on all the issue pertaining to our construction.

In general project correspondence is divided into two (2) Major component that is Incoming correspondence and Out-going Correspondence  From this two major category, we than can break it out to another 3 sub major category that is Client, Consultant, Local Authorities/Local Council and miscellaneous. This category than can be further divided into different type of category such as monthly progress report, QAQC Report, Meeting, Progress payment or claim and etc..

Below is How I do my breakdown for the purpose of my project filing.

GUIDE FOR PROJECT FILING

The link below is for a more proper filing system.
QUALITY FILING SYSTEM