Articles on Construction Management

Death, Taxes…and Changes

Benjamin Franklin was once quoted saying, “In this world nothing can be said to be certain, except death and taxes.” Franklin was not a construction expert; otherwise he would have included project changes in his famous quote. Most projects have ...[Full Article]  [Article PDF]
 

A Game Plan for Successful Construction Contracts – Focus on Blocking and Tackling

There are many ways to avoid problem construction projects. However, an old sports metaphor best comes to mind – focus on blocking and tackling and the rest will take care of itself. In football, blocking and tackling are the fundamentals ...[Full Article]  [Article PDF]
 

Every Step Counts in Successful Project Management

Introduction The goal of any contractor is to build a project on time and within budget. To be an effective and productive contractor, one must have a complete understanding of the construction process, which includes not only building the project, but, more importantly, effective scheduling and management of the project. The contractor is ultimately responsible for managing its activities as well as the activities of the construction parties under its supervision.  ...[Full Article]  [Article PDF]
 

The Cost of Doing Business – Is Your Company Suffering from Increasing Material Prices?

Introduction This year, exceptionally high price increases of construction materials have caused serious problems for the construction industry. A major factor is the current economic and construction boom occurring in China. China is experiencing rapid growth and, with it, tremendous construction activity which is creating shortages in the US and throughout the world. Background Basic economics tell us that, in an open marketplace, prices will rise when demand increases or when supply...[Full Article]  [Article PDF]
 

Failing to Plan is Planning to Fail: Tips for Owners for Successful Projects

Part one of this two-part series addressed change order management and claims from the contractor’s perspective. This article will focus on techniques from the owner’s perspective for planning for and managing project change and avoiding claims. Although this information is geared towards owners, the information can help all parties on a construction project. Construction is not a one-way street, and it is beneficial for each of the parties to have a more complete understanding of the other... [Full Article]  [Article PDF]
 

Project Change: Deal with It

Every construction project, regardless of its size, inevitably encounters change. Changes can be minor, such as field rerouting of pipe to avoid an interference, or they can be major, such as a massive acceleration effort costing millions of dollars for additional personnel and overtime premiums. Managing change is an important aspect of construction project management and successful project completion. This article is the first in a two-part series that addresses issues relevant to managing ... [Full Article]  [Article PDF]
 

An Ounce of Prevention: Creative Solutions for Change Orders May Avoid Costly Litigation

Objective Is Prompt Resolution of Change Orders A claim is an unresolved change order. Fortunately, a change order upon which all parties agree does not become a claim. Change orders that are resolved fairly and quickly benefit both the owner and the contractor by avoiding costly and time-consuming dispute resolution processes such as mediation, arbitration, and/or litigation. Prompt resolution of change orders is essential as this would typically minimize the total project cost to an... [Full Article]  [Article PDF]
 

Change Order Management

A claim is an unresolved change order. Conversely, a change order that is agreed upon and processed does not become a claim. Change order situations that are resolved knowledgeably, fairly, and promptly will benefit both the owner and the contractor. Federal government studies have shown that early settlement of change order problems minimizes cost to owners. Likewise, contractors benefit by avoiding disruption to their project schedule and cash flow. Know and Use the Contract In a... [Full Article]
 

Increasing Material Prices Gouge Construction Industry

Introduction This year, exceptionally high price increases of construction materials have caused serious problems for the construction industry. A major factor is the current economic and construction boom occurring in China. China is experiencing rapid growth and, with it, tremendous construction activity which is creating shortages in the US and throughout the world. Background Basic economics tell us that, in an open marketplace, prices will rise when demand increases or when supply... [Full Article]  [Article PDF]
 

Contracts Must Be Reasonable

Contracts, which are intended to eliminate problems, can be the open doorway to disputes and claims. Contracts that are one-sided promote dispute resolution through litigation. Bias in contract language and interpretation leads to increased costs for all parties. The following article suggests ways in which owners and contractors can work toward equitable contracting. Disruptions or Disputes Are Expensive to Both Owners and Contractors Construction contracts are drafted to... [Full Article]
 

Dangers of Owner - Supplied Equipment and Materials

The Risks vs. The Benefits Before agreeing to furnish materials for a construction project, owners must evaluate related risks and benefits to factor these into procurement decisions made during the sensitive preparation phase. Unfortunately, while the immediate monetary benefits of using owner-furnished items are easily ascertained, the risks are difficult to quantify. Owners often take on considerable liability in return for small, immediate gains. In effect, owners take on... [Full Article]
 

Effective Documentation

Documentation is a vital function of construction management. If your profitability depends upon the collection of extras or the defense of claims made against you, and you have no records, the world's best consultants and lawyers will be unable to create them for you. And if you do have the records, but your documentation's organization and quality are poor, the cost of compiling suitable information for the pursuit or defense of a claim may be high. Effective documentation is the... [Full Article]
 

Identifying Warranty Risks

Overview The special or general conditions of many construction contracts contain warranty provisions. A typical warranty clause may require the contractor to repair or replace defects in materials or workmanship for up to one year after acceptance of the work by the owner. This type of provision reflects risks that most contractors or subcontractors can identify and analyze based on experienced warranty or call-back costs. When dealing with equipment vendors, contractors and... [Full Article]
 

Interpreting Force Majeure in the Wake of Disaster

In general terms, force majeure is considered to be “an act of God” or an occurrence outside the control of the parties which impacts or delays the project. Force majeure includes issues such as unusually severe weather, labor strikes, natural disasters, or governmental actions/changes in law that negatively impact the work. Typically, force majeure is not considered to be a compensable delay, meaning neither party is entitled to compensation as a result of the impact of the... [Full Article]  [Article PDF]

 

Is Design Build Right For Your Project

Over the past 20 years, the design-build process has gained popularity throughout the engineering and construction industries. The Design-Build Institute of America estimates that by 2010, approximately 50% of all construction projects in America will use design-build. Regardless of whether these projections prove to be accurate, it is impossible to ignore that more projects are employing this alternative project delivery method. As shown in the table below, some projects lend themselves... [Full Article]  [Article PDF]
 

Ten Steps to Dispute Avoidance

Most would agree that the earlier a construction dispute, or potential dispute, is addressed, the better the chances of a fair and prompt solution. Undisputed facts may be available at the time of occurrence, facts that often become muddied with time and emotions. But acting promptly is not enough in itself. All potential disputes must be accurately and fully documented as they occur - not reconstructed with hindsight based solely on project cost overruns. By observing the following... [Full Article]

Time Equals Money -  Maximize Efforts to Resolve Project Changes

In the construction industry, the ability to manage change can determine the success or failure of a project’s objectives. The failure to recognize and promptly manage change frequently costs the parties involved money and time. Establishing a change order management process using either contractual change order requirements or a firm’s proprietary system increases the effectiveness of progress reporting, labor productivity evaluation, work scheduling, and other elements of... [Full Article]  [Article PDF]