How to reduce project delays and eliminate losses
Ensuring that the client, contractor, and consultant working on a project are in sync can go a long way towards reducing delays and eliminating potential loss scenarios
When medium to large projects ultimately kick off at site, it’s usually after a tortuous and protracted process. Early mistakes and missed opportunities only really manifest themselves at final account, all too often being traced back to the lack of senior resources at the outset.
How does this happen in an industry as developed as construction?
Typically, the main contractor’s primary office overheads should, arguably, cover the cost of tendering. If the tendering department is up to scratch, and the numbers have been run on securing the right sort of project for the right sort of margin, then we don’t have much to worry about just yet.
Granted, several tender addenda to cover last minute design updates are now considered a norm in the Middle East, but the exposure to both risk and open-ended expenditure on the part of the tenderer is limited. Once the bids are submitted however, the black hole of the award process starts to widen. Helpful hooks in the tender documents could again limit the tenderer’s open-ended exposure, such as a tender validity being stated or even better, a site works commencement date being included. But it takes a brave consultant to insist this information is included.
Most chartered surveyors find the principle of ‘offer’ (the competitive tender submission price) and ‘acceptance’ (the adjudicated competitive tender) being followed up by: “So, what’s your best and final price?” This is a fairly questionable principle, but then some clients appear to know better than qualified, impartial professionals.
As an industry, we’ve helped ourselves to a degree by allowing the parties to get moving by using interim measures such as a letter of acceptance, appointment, or intent. However, these temporary instruments are often left in place far longer than they should be, and signing the contract documents is kicked down the road as a lower priority.
But even before the ink dries, the contractor is expected to perform overnight miracles. Suddenly, the cliché of “Why aren’t you building?” is echoed by the client team.
Essentially, the client is demanding that a fairly significant machine – not to mention a high-end management function – hits the ground running.
The project director, construction manager or project manager needs to come aboard to lead the ship. In order to protect long term interest, the commercial or contracts manager also needs to move in quickly.
Add procurements, drafting, HSE, logistics, and a few other key functions, and it is fairly usual to find a significant gap in the management resources at the critical initial stage of the construction process.
It may be argued that a talented project leader will have many of these facets; however, the availability of a senior team to quickly mobilise on site is paramount to a successful project.
Typically, the longer any of these key positions are left unattended, the longer the main contractor takes to get on the front foot.
Short-term top-up specialists who can parachute in as and when required are often the solution in other parts of the world.
However, most suitably experienced candidates are unable to venture into the GCC market, as the entry cost to establish a trading company is expensive, prohibitive, and layered in bureaucracy.
Project managers or quantity surveyors consultants are a relatively reliable port of call for main contractors seeking support. They usually have the professionalism to have set up independently, and may also carry requisite professional indemnity insurances.
More importantly, it is the raw construction experience that these consultants have at a senior level which is typically harder to come by. Indeed, they may seem expensive for senior, short-term placements, but are necessary when weighed against the risk and exposure by not adhering to the contractual obligations.
This, it seems, is the price we must pay for our regulated market.