Delays, cost overruns and disputes have long been part of the commercial construction industry, making the work of reactive forensic analysis by consultants and attorneys a necessary component. Yet many internal practices and issues within construction companies strongly correlate with projects that result in legal disputes and financial losses. There are seven proactive steps that can help companies minimize losses and claims.

Prepare a Cost- and Resource-Loaded Critical Path Method Schedule

This is the first step any contractor can take to establish and document a manpower plan, a timeline and an intended flow for its work. Doing so is beneficial for two reasons: it will become the basis for measuring impacts and variances to both cost and schedule in a delay, dispute or claim setting; and it will serve as a great project management resource or tool. Without thinking through manpower, durations and workflow in great detail at the beginning of the project, contractors put themselves at risk of becoming delayed and blowing the budget.

Use the CPM Schedule for Managing the Project, Not as a Reporting Tool

As projects become impacted and delayed over time, the end date often stays the same. This indicates the schedule is being compressed, which typically results in costly overruns. Although the optimism of a scheduler or construction team in this situation is admirable, it’s also a telltale sign that the schedule is no longer being utilized as a means to manage the project. Rather, it has become a tool to show the project owner that everything is okay, and the truth eventually presents itself too late. CPM scheduling technology is useful, but it requires collaboration and a dose of reality. If a project is delayed, the delay should be shown in the CPM schedule and discussed with the teams involved to prepare and document a mitigation strategy to overcome that delay. Additionally, teams should not remove logic and shorten durations unless doing so is part of a thoroughly discussed mitigation strategy. Crashing the schedule month after month is a bad habit that results in an infeasible, unusable schedule, which inevitably starts costing all stakeholders more money in a silent, unknown and inconspicuous way.

Track Manpower in a Disciplined and Detailed Fashion

While manpower is tracked on most projects for accounting and payroll purposes, it is rarely captured in a manner that allows productivity to be studied and understood at the level it needs to be in construction. Productivity should be studied at the activity or task level, as per the CPM schedule, or at the very least for every trade in every area of the project (e.g., on a given floor). This data also needs to be captured every day for all work going on in a project. If tradesmen worked on an activity, how many people worked and for how long should be tracked and documented. This provides powerful information as it relates to controlling costs and schedules.

Study Impacts and Causation Regularly

If project management has created a resource-loaded baseline schedule, has updated it and utilized it to accurately reflect the planned course of construction on a regular basis, has tracked detailed manpower breakouts on a daily basis and has used that information to build a robust as-built schedule in real time, then management has the ability to understand impacts and causation at any given point of the project, throughout the life of the project. One of the key reasons projects become delayed or impacted, or they suffer from budget overruns, is the lack of knowledge of critical impacts as they are occurring. Critical delays and impacts often begin as minor issues and eventually snowball into major problems that a project can’t recover from. The sooner critical impacting issues are identified, the better chances are of overcoming them.

Discuss Problems as They Arise

Contractors may think it’s a bad idea to discuss impacts with anyone because it’s a lose-lose situation. The industry has become so dispute heavy that construction companies often avoid discussions about problems because they either don’t want to “show their cards” or because they fear the owner will throw a fit if they use the term delay, impact, cardinal change or any variation thereof. While this is understandable, more information and collaboration help improve projects—and if construction companies can establish open-door policies related to such information, they may find that projects run smoother, trust increases, disputes decrease and relationships become stronger in the long run.

Document the Outcome of Discussions on Delays

Stakeholders should make sure that all discussions about impacts, mitigation plans, acceleration requests and other aspects of a project are documented. This ensures no funny business arises when a project is in closeout. Project correspondence, such as requests for information, change orders and letters are all part of the process, but email is sufficient and efficient for documentation purposes. It’s amazing how often a verbal conversation is forgotten or “misinterpreted” when millions of dollars are at stake.

Use Technology

Part of the reason the above recommendations are not successfully implemented is because the process is fairly specialized and time consuming, and therefore an expensive proposition. Trying to train people and/or ask them to add this to the list of things they do—is a dead end as well. There are more and more technologies out there that support the schedule management and analytics process—and designed in a manner that is for non-schedulers. With a little training, these tools can add maximum value. To make the most of these proactive steps, construction companies should establish a protocol for getting it done with multiple project management personnel. Setting up effective systems leads to transformation—saving time, money and relationships in the process.