Wednesday, March 19, 2008

Preventing Scope Creep Payment Disputes

Cynthia Tari , partner at Hermes Sargent Bates LLP in Dallas reiterates a frequent and at times costly process for GCs asked to modify original and/or contractually documented scopes of work will in the field (Construction Executive, February 2008). At debate is not whether to perform the additional work, but rather how to document the request to avoid payment disputes.

Tari offers clear advise for preventing disputes includes: "document the authorization to proceed" (p. 56). Very sound advice however, easier to manage from the office, but not always so in the field. This issue is an opportunity for ConstructHub to demonstrate two key attributes - efficiency and asset protection.

Efficiency gains to document changes in scope are easy with a 24/7 web-based tool such as ConstructHub. For example, an owner requests out-of-scope modifications when talking to your site superintendent. Following the conversation, your Sup documents the issue in his Daily Report and assigns the Ball-in-Court (BIC) to the PM on the job. The PM (or PMA) receives an alert on their PDA when the Daily Report is marked 'final' , compares the request with the Owner's Contract and notes the need to gain written authorization for the requested additional work. A COR is immediately generated via PDA - using the information entered from the Daily Report - and transmitted electronically to the Owner for approval. The owner authorizes the work by email and the work begins same day. Nobody had to travel to an office, re-enter data, or produce numerous physical copies to fax, mail or courier. And importantly, "email communications...are effective in proving such authorization" (p.58) shares Tari.

Nice and easy; Efficient and protected. Everybody benefits and work continues on schedule. Don't find out the hard way about the lack of strength in oral testimony and simply prevent any excuses or exclusions by having anytime, anyplace access to your project data, reports and legal documents.

Friday, March 7, 2008

We're Contractors not IT Guys

If I had a dime for every time this crossed the mind of PEs, PMs, and CMs in our market. And yet software companies for years have continued to push the adoption of technology in the construction industry - with mixed results.

As a small to medium GC, I likely opted to avoid the early adoption of systems, but today is different. Technology has matured; notably web-based technologies - to what is called version 2.0. The name alone means nothing. But, look under the hood and get hands on and you will see that web 2.o does have meaning and includes everyone!

Web 2.0 is different because it is focused on you - the customer. The technology should be flexible enough to adapt to your business process, not force you to mold to its methods. Web 2.0 technology should allow you - construction professional - to focus on construction and not think about (or invest in) technology or technologists. As a GC, I don't want to be forced to hire IT staff. I want to focus on my core strengths in my business of building actual structures!

It is refreshing to see that Construction Executive Magazine and Fred Ode (p. 47, January 2008) speak directly to this issue and provides valuable guidelines for those choosing a software provider.
  1. Know the Company behind the product you're considering.
  2. Gauge the Company's commitment to clients.
  3. Consider the technology sophistication of your organization.
  4. Evaluate your organization's 'readiness' (just because you buy it, doesn't ensure they will use it!)

A good software provider should be a resource to you in answering the above. The concept is familiar and applicable to our industry...Design-Build anyone? Bring your software provider to the table early - at the design stage - to avoid costly errors during the build phase. If you are a BIM enthusiast, consider it clash detection for running your construction business. Be smart about applying your construction intelligence to building your business and consider evaluation of software as foundational to that process.

ConstructHub gets it. We were born from a GC and refined by PMs and Sups in the trenches. Say it in either vernacular, but let ConstructHub provide your business a competitive advantage -- increasing your efficiency and focusing on your core competency of building. When do you want to get started?