CONSTRUCTION: TRACKING CONTRACTUAL AND TECHNICAL REQUIREMENTS

TRACKING CONTRACTUAL & TECHNICAL REQUIREMENTS

Project planning and management is the father to a successful construction. Establishing a Master work program is the initial step to start a construction project. Without work program, a contractor will easily get lost in ensuring that his project will be completed on time.

Work program is a path that all contractor shall follow closely. It is a guidance to all project management staff on what and when an activity shall start and finish. However Physical activity alone is not the only thing that is crucial for achieving the project goal. Proper tracking of documentation ranging from contractual requirement to technical correspondence are also playing an important role in ensuring the physical activity can be implement smoothly. 

Most contractor always failed to keep track on this matter. Due to that, I publish here a free sample on how I do my tracking. By filling this form I can easily know what been submitted and what is the status. For example, in any building construction activity, there is a lot of construction materials that need to be submitted for approval.prior to its usage for construction. All contractor know that they have to do this early and most of the material sample and specification usually had been submitted for approval with-in  three to four month after the award of a project. However some of the material submission needs few months to be study and consider before any approval is given. In this case, how does the tracking form become an important tool to ensure that the approval can be received. 

This is how it happen. Every weeks or months contractor will review what activity will start the next following week or month. By knowing the activity, contractor will immediately know what is the construction material needed and do this material need any approval. If  the answer is yes, than the form if properly recorded it will show whether the material had been submitted or not and what is the status of approval. With this approach, contractor do not have to flip open the whole file to know what is the status of the material. Does this look easier to us. 

Therefore, by implementing this tracking form in the project monitoring process by managers or engineers it will help in making the construction works can be done smoothly.  

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?

CLICK HERE TO PURCHASE THE SOFWARE FOR PROJECT MANAGER

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.

REQUEST FOR INFORMATION FORM

Request for information form (RFI) is one of the crucial form contractor or client must have. I will be more important especially in documenting issue at site which contractor or client representative are not really sure.

Most of the real scenario at site is contractor or client just having verbal instruction or discussion at site on what ever the issue arise. however both side usually failed to captured the discussion or verbal instruction officially. The problem started when the discussion or verbal instruction was carried out physically but it failed to improved the condition. Instead as the result of that the issue getting worse. when this happened, there is no ground for client or contractor to protect them-Selves. As the result it will bring more dispute especially when contractor and client start to question about the cost.

Therefore it is always being a wise step that any instruction being officially documented to protect everyone interest.

Here is the link to my improved Request for Information Form for reference.  However I claim no responsibility to the usage of the form if your going to use this sample. 

Project Behind Schedule

In construction Industry, it is very often that we heard the term "project is behind schedule". What does it meant with this term. Project Behind Schedule is when the achieved project progress percentage is less than the planned or targeted percentage for reporting period. This normally happened due to several factors. Among them are;

1. exceptionally incremental weather (of which the weather condition is not as usual or not as previously recorded for that particular area),

2. shortage of the construction material ,

3.insufficient and inefficient of manpower and machinery,

4. cash-flow for the project,

5.instruction by the client to change design and requirement,

6.Delayed in approval (material, method and etc) by client or their representative,

7.legal issue and many other reasons.

In this situation contractor need to study why the project is behind schedule. Some of the delay might have been contributed by the act of client. and if there is any, contractor might want to consider applying for the extension of time to enable them to complete the project beyond the original contract period and also this will help contractor from being penalised due to late delivery of the project. If the extension of time is approved then the contractor have the ground to revised the work program to take into account the approved extended period. the second advantage to contractor is they have the ground to claim for loss and expense due to this event. however to lodge a claim for this is advisable that contract need to study their contract whether this is allowed in the contract.

In the occasion that the delay is due to contractor own fault, than contractor have to come out with the catch-up plan. This mean contractor might need to increase their productivity by engaging more machinery and manpower. The other option is to work around the clock to meet their deadline date.In the event the contractor cannot delivered the project on time, they are at a risk of being penalised or even being terminated from the contract.

To avoid or minimised this "project behind schedule" situation, a good project manager is the key. The project had to be well planned. All aspect need to be consider especially the cash flow, procurement of materials, manpower's, machinery's and weather conditions. With all these explanation, having a good Project Manger is crucial in ensuring project is deliver with in the contract period.

Pre-construction Meeting Agenda

Pre-construction meeting is the meeting that need to be conducted before any physical construction works started. Sometime this meeting being named as "Kick off meeting". Usually this meeting is to brief the contractor and consultants on the contract particular such as the official date of the site possession, the contract value, contract duration, the procedure of construction and contract and the do's and don't for the contract.

Below are the common agenda for the Pre-construction meeting.

1. Opening by the Chairman.

2. Contract Particular.

3. Introducing the construction team( Client, Consultant & Contractor )

4. Scope of work

5. Contractual requirement such as;

- Insurances

- Performance bond/Performance Guarantee

- Levy

- etc;

6. Line of Communication

7. Progress Claims and Payments

8. Requirement for Project Quality Plan

9. Requirement for Health and safety Plan

10. Environmental requirement (if any)

11. Monthly Progress reporting.

12. Other matters arising.

Construction Codes & Inspection Handbook

Writing Meeting Minutes and Agendas. Taking notes of meetings. Sample minutes and agendas, ideas for formats and templates. Minute taking training ... examples and exercises. (Easy 4 Me 2 Learn).

Preliminaries work

Preliminaries work.
Preliminaries work is description that always being used in tender and contract documents. It consist of more than one work or things that is essential and without it the construction work will not be able to proceed. Below are list of preliminaries work normally being included in the tender and contract document.
1. CIDB Levy,
2. Insurances,
3. Performance Bond,
4. Site office for contractor,
5. Site office for Superintending officer and representative,
6. site clearing,
7. Mobilization and demobilization,
8. Temporary works,
10. Progress report, Quality assurance and Quality control report, Safety and health report.
11. Environment monitoring report.
12. Safety and health officer/supervisor,
13. Environmental consultant,
14.Safety and health protective equipment,
15.As-built drawings,
16.Statutory and regulatory requirement,
17.Transpotation services for S.O and S.O.R's
18.monthly Site meeting
19. Site clearing prior to completion.
20. others..

 
The item that is listed above is the normal preliminaries work in a tender or contract document.

Construction Failure

I bought an apartment costing $137,980.00 in 2004 in Malaysia. However until 2011 the apartment have not being completed and handed over to me. This sound familiar to numbers of house buyer or Property purchaser. I consider this a bad investment, I wanted to dispose this property but I am Not sure whether I can gain back my capital. What I know is, certainly not, because it is uncompleted property.

The above scenario is a scenario of failing construction or to be more accurate, failure in project management by the developer. This developer fail to delivered the property in time, they failed to pay the penalty of late delivery of the purchaser. This had resulted to the purchaser file in the winding up process on this developer. Know the developer is a bankruptcy.




However, the question is, will the purchaser get their property back if the development was finance by the bank? If yes how? How about the remaining of the purchaser who do not do anything or take any legal practice on the developer? Is there anyone who know how in the case of Malaysia legal law. There are number of claimant on the property. First the financier of the development,Second the group that lodge the winding up, third, other parties that had given the financial means to help the developer run their day in day out business and the last but not least the purchaser that had not taken legal action on the developer but instead signing the deeds of settlement that allowed the developer to complete the development within 8 months from the date of signing, however until this being publish here the deed of settlement was not stamped with stamped duty.

In this scenario who's fault is this?. Is it The developer, The Consultants or the Kementerian Pembangunan Perumahan Negeri Sarawak, Malaysia and their agency( because they failed to monitor and taken positive action in preventing this issue from happening).

BROKE DOWN CONTRACTOR

Have you ever been a broke down contractor?...

What does it mean with broke down contractor? it is very common that we here that contractor complaining that they cant bring some more construction material. this is not because that they do not have even a single sen but it merely because what they have is just enough to run the company. Most of the time construction payment is base on monthly or progressive payment certified by the client or their representative. However there is cases that after the evaluation and verification process after contractor submit their claim, contractor had being paid very late. some time they only received their payment after 3 months or even more. with this view, lets we make some calculation;

lets say, contract sum = $50M

construction period = 12months

Average (prorated) spending /months = $50M/12 = $4.167M

Hence total spending for 3 months = 3 X $4.167M =$12.5M

let say, Evaluation on work done take 2 weeks after progress claim submission.

therefore spending for 2 weeks =( $4.167/4weeks) X 2 weeks = $2.08M

The total spending from the date contractor submit their claim until they received their payment

will be;

=3 months spending + 2weeks spending = $12.5M + $2.08M = $ 14.58M

With that you have to fork out $14.58M!!!!!!!! its is a big sum of money.

Looking at this scenario, It is very important that a proper financial planning being carried out for every construction project.

This scenario is only for one project. what if you have 2 or even more project in hand !! It can be a deadly disaster...

Looking into this situation, if contractor is now well prepared with the financial planning when they are participating in a quotation or tender it will be a trap for your self...you will be one of the broke down contractor or even a bankruptcy!!!!!!!!!!!!

Construction is not for those that are not prepared to be a broke down person.

MODE OF COMMUNICATION

Communication is very important in construction industries. Bellow are mode of communication that can be use to communicate effectively.

1. Fax
2. Phone
3. Email
4. Mail

However for documentation and official record it advise that all information must be done in writting and it shall be as simple as it can. the most important is the content must be clear and can be easily understand by anybody that received the information.

How to reduce the construction cost

How to reduce the construction cost.
Construction Industry is an industry like the other field of business. It is all about trading for what each and every one wanted for. The client will want to have a product that is value for money and the consultant always wanted to be part of the business with a reasonable price for their render service. The builder which known as contractor which will offer how much they need to be pay for realising the quality product.
The first stage that the contractor needs to do is win this competition. Next is start building the product with the agree contract sum between the client and them. When start building the product the contractor will have to find a way on how they can maximize their profit. The term is to do some cost saving in their activity in order to increase their profit margin from what have been included in their original contract sum.
There is a numbers of process or technique that contractor need to applied if they wanted to increase their profit margin. The answer is cost reduction for the construction. How can this being done. Here are some techniques that can be use.

1. Shopping for the cheapest and quality material available in the market.
2. Mitigate the risk of increase in construction work by sublet certain portion of work especially labour. ( Lump sum cost for certain work which the increase of labour cost will be absorb by the subcontractor)
3. Method of construction ( eg. By machine or man power)
4. Building component (temporary or permanent work). Eg. Recyclable falsework & formwork, Factory fabricated building component such as floor slab.
5. Plan for the project and adhere strictly to the programme.
6. Complete the project at the shortest time frame which will save more in the plant, equipment & manpower cost.

Acquire own machinery, plant & equipment instead of renting. For the long run this strategy will significantly reduce the contractor construction cost. However beware of the maintenance cost.

How to Win Tenders: Win More Tenders by Qualifying (Part 2)

How to Win Tenders: Win More Tenders by Qualifying (Part 2)

How to Win Tenders: Win More Tenders by Qualifying (Part 1)

How to Win Tenders: Win More Tenders by Qualifying (Part 1)

WINNING A TENDER

HOW TO WIN A TENDER

Construction industry is always about winning a tender. There will be no business for contractor if they do not participate in any tender or quotation. However tender or quotation is only the first step for contractor to get their business running. The important point here is winning a quotation or tender.
How to win in a tender or quotation competition? Here we will discuss some of the most important point on how it shall be. Bellow are what really important for contractor to know and do.

1. Completeness of tender document.
   
   Make sure all instruction in the "INSTRUCTION TO TENDERER" being fulfilled such as all pages that need to be sign are already sign and all required supporting document being attached in. In other words completeness of the tender document.
   
    
2. Cash flow of the contractor.
   
   The cash flow normally being defines as how much the capital that a contractor have and ready to be utilised in the event that the contractor being award the project. Normally the available amount shall not less that by 5% of the tender sum. The capital can be combination of the cash in hand (Bank balance) and credit facilities (eg. Overdraft, project financing facilities from the bank, fixed deposit and ect.). How to know wether you have enough or not.
   
    
   Let say;
   Total tender sum = $ 100M.
   Construction period = 12 months
   Average prorated cash flow = $100/12mths = $8.34M
   
    
   Minimum Ready capital needed = $100M X 5% = $5.5M
   ( This minimum is because that in actual fact that normally in the first 3months the expenses for the project will be considerably low due to the reason that the first 3 months expenses could be only the preliminary expenses such as preparation for insurances, Bank guarantee, site office, and all office and accommodation required under the contract by client.)
   
    
   With reference to the above calculation contractor now can compare wether they have enough capital to win the project. For example:
   
    
   Available cash flow = bank balance + Fixed deposit + credit facilities.
   Say:            = $ 3M + $1M + $7M = $11M > $8.34M >$5.5M
   
    

• Contractor already passed the cash flow evaluation.

 

1. Construction period.
   In tendering contractor must never exceed the construction period required by client. One common mistake by contractor is never specified the duration they offered. This condition will cause them to be disqualified.

 

1. Contractor resources
   Resources can be categorised as follows:
   
   1. Plant and equipment.
   2. Machinery
   3. Man power
   All of the resources above must be as relevant as impossible to the nature of the project. For example in road construction, the plants that you will need are premix plant, soil test laboratory, Excavator, Dozer, Engineer, Site Supervisor, labour and ect.

 

1. Contractor current commitment.
   Contractor current commitment is define as current project that still progressing undertake by contractor. The more commitment the contractor have in hand the more slim chances that they have to win a tender. However, if the current commitments that they have are almost completed, there is a chance for them to win a tender. The only thing is that make sure that the current project report is ahead of schedule or on time. This is the factor that will contribute to the reputation of the contractor.

 

1. Previous Experience.
   Previous experience is defined as the project that had been completed by contractor. This Experience shall be as relevant as it be to the nature of tender that the contractor participating. The other factor to this is the size of the project. In this case the value of project is counted. Let say the tender price for this tender is $100M then the contractor experience must reach at least nearly $100M or more. With that, the client will be more comfortable to award the tender to the contractor who have completed the same nature of project and almost the same value or event more value from what he currently tendered for.

 

1. Tender Price.
   This tender price is the one that weighted most in the event that contractor already pas all the evaluation above. When it comes to this Factor there are a few item that will be considered. The Most important item is that the tender price shall not exceed the client budgeting price.
   The next issue is that it is in the range of what the market offer and the last but not least item is value of money.
   
    
   For instant if the client budget is $120M with the construction period of 12 months, the revenue collected when the project completed and in operation is $2M/mths.The recommended contractor have the following offer;
   
    

Tenderor no./Name	Offered tender price	Offered construction period	Ahead completion	Revenue
A	$100M	10 mths	2 Mths	$4M
B	$98M	12 mths	0mth	$0
C	110M	8 mths	4 Mths	$16M

 

Locking into the data above which one will be choose.

Lets do some analysis.

 

Take into account early completion :

Client will make extra 2M with contractor A after deduct $2M extra compare to contractor A and revenue of $4M in choosing Contractor C.

 

If I were the client, I will choose contractor C because after considering the expenses for this project do not exceed the project budget and in return, I will make extra $4M if I can operate this property earlier that planned.

 

This selection is what we called "Value for Money".

 
With the tips mentioned above contractor shall be able to secure another project under their cap.

A Project Planner

This a quoted from the following link.

PROJECT PLANNING IN CONSTRUCTION INDUSTRY

Project planning for Managers.
Project planning is an important ingredient to ensure the successfulness of a project. Top priority of every project that we undertake is to make money. This must be the first objective for every person that involve in the construction. However, in the process to achieve this goal, is importance to deliver the end product in the most economic way and with the best quality in accordance to the requirement and specification line out by the client and inline with the good engineering practice.
The solution to this is project planning. In this article we will discuss the basic information that must be consider in the project planning.
Two important rules that a project planner must adhere to is TIME and COST. With these two keywords a planner will be able to plan a project to achieve the company objective.
The definition of TIME in the contact of a project is the agreed time frame for a contractor to deliver a complete end product with the required specification without neglecting the rules and regulation by the authority and also the statutory requirement.
COST is the value of the contractor offer and being accepted by the client in order to deliver the end product. This cost in actual fact is already inclusive of the contractor profit margin. Therefore it is very important to a planner to know what the exact construction cost for the project is.
With the definition above you now have the idea on how to create a project plan.
Software, is another important tools that a planner. There are numbers of software or programme for a planner to plan a project. The most common and widely use software is primavera project planning, Microsoft project or even Microsoft excel (for a straight forward project that does not involve a complex lineout).
In scheduling various works that needed to complete a project, a planner need to know when to start, when to finished, what is the work involve, the sequence of work, what the plant and equipment involved and how many numbers of these needed. All of these then will enable a planner to do some calculation whether or not the line out given meet the construction cost that of the contractor. If not an adjustment must be make or a planner can also adjust their plan to gain more profitable margin.
Below are sample of the illustration on how exactly to plan a work. (Sample that being created with the Microsoft excels).

 
Example only:
Construction of the 7.2m(W) X 10.8m(H) X 200mm (thk) brick-wall complete with plastering and weather proof painting.
Step.1 : listing major item involve in construction.

1. Time frame to complete the work 8 weeks.
2. Agreed contract sum $10,000.00
3. Work Involve :
   1. Material Procurement
   2. Bricklaying
   3. Wall Plastering
   4. Installation of scaffoldings
   5. Wall painting.
4. Major Plant and equipment needed
   1. Cement & Sand mixer
   2. Scaffoldings
5. Manpower needed
   1. Bricklayer
   2. Plasterer
   3. Painter
   4. Scaffolding erector
   5. General workers
6. Construction material required.
   a). Ordinary Portland cement
   b). wash sand
   c). special cement powder for plastering
   d). Red brick
   f). Prime coat paint
   g). specified brand for weather bond paint.

 
step 2.: simple calculation on the quantity needed(for material).
Step 3: Simple calculation on the numbers of plant & equipment as well as manpower needed.
Step 4: list down the work involve in a correct sequence.
Step 5: incorporate all the quantity, cost and time required to delivered the project in whatever software you are using.
Step6 : Analysed if you meet the profit margin or if you want to increase the gross profit margin.

IMPORTANCE OF PROJECT PLANNING

Project planning is important ingredient in every construction work undertake by contractor. without a proper planning it is only by chances that a project can be run smoothly even though at the end of the day, the project will be delivered, but, with a very high price that contractor need to pay. The cost could be another capital loosing for doing a construction project. For some this is a very painful but valuable lesson that must not be forgotten. The moral of this will be "learn from the past experience".
Now a days, to be a competitive contractor it is not only that one need a good networking of supplier, strong cash flow, having numbers of skill workers , equipment, plant and machineries but proper project planning. With a proper construction planning, all of the resources usage can be optimised to deliver even higher profit margin without jeopardizing the quality of the end product. With a good construction practice and well planed project, contractor should be able to meet their contract requirement as well as their own objective that is making more money.

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SITE DIARY FOR CONSTRUCTION WORK

It is very important that contractor to keep a proper record of their daily site activity. One of the common way to do this is by preparing a site diary. All recorded daily site activity must be verify by the Superintending Officer (S.O) or their representative(S.O.R). If the site diary is keep by the S.O or S.O.R, it is very important that contractor must have the copy of this Site Diary.

The information in the site diary can be part of the vital evident if there is any dispute in the project.

Purchase Your site Diary Here.

Drawing or Document Register

Control of document or drawing is part and partial of the process to ensure a construction project can be delivered on time and meet the specification. It is an important area that all personnel involve need to practice. The proper record of document or drawing issue, will make it easier for all parties to track and dispute on the matter of drawing or document distribution can me minimised or prevented