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How Uncontrolled Time-Driven Costs Are Wrecking Your Budget

September 29, 2022 by Scott Nyborg

One fundamental truth about construction is that time is money. It’s a cold, hard fact entry-level field professionals learn their first week on the job and common knowledge to seasoned veterans. The time-money connection is a tightrope that owners must continually walk, and a minefield they must always be navigating to ensure projects are completed on time and under budget. 

When schedules extend, costs balloon right alongside them, driven by everything from construction management and labor, to equipment time, temporary power, storage, security — even portable toilet rentals. If the schedule extensions aren’t justified, those costs come right out of your pocket. But even when they are completely justified, being able to recover those costs is never a guarantee. Why not? Because having to talk with the owner about a change order for a schedule extension is never an easy conversation, no matter how justified.

This means your project teams’ ability to control time on the job has a direct impact on your ability to protect margins. Ahead are three key capabilities your teams and processes must deliver to get a better handle on controlling time.

1. Get the Design Ready to Build

Nothing grinds work to a halt faster than incomplete, conflicting, or straight-up unbuildable designs and nothing messes with the schedule quite like unproductive work crews. Design information for a given scope of work should be complete and fully actionable, so that the field can execute on that scope without delay. If your teams are working from the bad information or waiting around for answers they need to continue their task, you’re already hemorrhaging time. 

A good design makes things easier for everyone involved in a project, and carefully scrutinizing it before field work begins is the simplest way to spot any potential schedule-jeopardizing issues. But you’re never going to spot every single issue, so a collaborative peer review process including a project’s owners, engineers, architect, GCs and subs is a helpful way to ensure everyone’s aligned.

Manual processes leave too much to chance, and increase the likelihood of scheduling issues, either as a result of rework or miscommunication. If stakeholders lack the tools to communicate in real time to identify issues early on, it’s impossible to keep everyone on the same page. Small problems that go unnoticed or unaddressed have a way of ballooning into budget-killing calamities.

2. Identify and Mitigate Schedule Risk Quickly

An ounce of prevention is worth a pound of cure holds true in construction, so catching schedule-busting issues early is essential to mitigating the damage they can cause. However, the number of jobs where you’ll actually be able to predict and identify every issue before it becomes a problem is exactly zero.

Because schedule risk factors can be so unpredictable, your only hope is to incorporate construction management processes that allow you to surface and respond to schedule risk as quickly as it appears. This is especially true with out-of-left-field problems like hidden conditions and design issues that nobody can see coming. 

Every construction project involves risk, and some of that risk is guaranteed to come about unexpectedly. You can’t prevent it from happening, but you can prepare for it. This involves having contingency plans in place and clearly defined roles so everybody knows their responsibility when something unexpected crops up.

3. Capture Justifiable Schedule Extension with Change Management

You can’t control the weather, you can’t keep the owner from changing their mind, and you can’t get rid of that Volkswagen-sized boulder in your way with anything besides a breaker and time. What you can do is establish a change management workflow that ensures you can capture the costs that result from an unexpected schedule extension.

Documenting an EOT claim must thoroughly detail the reason for the delay, how it will affect the project, and any potential costs related to it. Claims should include every bit of corroborating information, from photos to revised schedules, weather reports and emails, whatever is necessary to support the request.

You can’t manage change effectively without clarity around the contractual baseline scope of the work, so read your contract very carefully. Contract terms might dictate notices requesting schedule extensions be sent within a certain timeframe or impose other requirements. They might also only grant an extension of time, rather than reimbursing contractors for additional costs incurred as a result of the delay. It’s critical to be in agreement about the contract terms before work begins to avoid potentially thorny issues down the road. 

Conclusion

Construction companies continuously operate under the gun when it comes to schedules. One major delay can cause a ripple effect that impacts the rest of your business. Unfortunately, some delays are inevitable in the industry, so the best we can do is to be prepared for the worst.

Proactively managing the schedule is one of the most effective tactics available to project teams in managing costs and protecting margins. To keep budgets and schedules in line, it’s essential to provide project teams with complete and accurate designs, have plans in place for the unexpected, and be crystal clear on any contract terms governing schedule delays.

Categories: Cover Stories, Featured, United States Tags: Change Management, Construction Project Management, Construction Project Scheduling

Scott Nyborg

Scott is a Manager of Product Marketing at Procore, where he focuses on General Contractors and the technology that can help them. Scott spent 15 years in construction and considers himself a lifelong student of the greatest industry in the world.

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