Christmas is here again, and with it, the end of another year. My wife and I find ourselves in a new home, surrounded by boxes that need to be unpacked full of things we should have purged long ago. To say we’re tired of moving would be an understatement (4th move in 4 years)! We both keep saying this will be our last move – seriously!

As usual, I like to close out the year with a topic that is different from the other issues. This year, I have chosen to share with you some of the favorite lines that I used over the years to reinforce a point about which I am passionate. I will share the line and then give you some of my comments for its application.

1. What is common sense is not common practice.

This is probably my favorite line of all, which is why I feature it on my website. I cannot begin to tell you how often it comes to mind during the course of my work and personal life. I’m sure if you stopped to think about the actions that people around you take, when compared with their stated objectives, you would agree that what they do simply doesn’t make sense most of the time. I am convinced that the root of most problems is a lack of common sense.

2. Dress me slowly because I’m in a hurry.

This was a line that my mom used to tell me when I was young as I rushed to get ready for school, or some other function. It is attributed to Napoleon Bonaparte who, as legend has it, would tell his “dresser” to be methodical when preparing him for a battle, or an important appearance.

Lately I’ve been dealing with numerous service folks in our home taking care of punch list items, or to fix work that was not done correctly. In most cases it appears that the work was not completed properly as a result of the rush to finish the original construction. In all cases the amount of work required to correct the defect far exceeded the time and effort that should have been taken to do it right the first time.

I like to tell people all the time that the only thing we do in a hurry is make mistakes!

3. Just because you can, doesn’t mean you should.

One of my pet peeves lately has been the overabundant use of technology, especially in situations where it is not necessary, or when the potential for problems could outweigh the benefits.

An example of this is our new refrigerator; which has a Keurig dispenser built into a door panel (accessible from the outside, like you dispense water, or ice). At first my wife and I thought “what a great idea”. But, we have realized after using it for a while that this novelty doesn’t come without some drawbacks (less space inside, a slow heating time, the need to go through added steps to dispense, and of course the potential for more frequent repairs to the appliance). Besides all this, we both prefer “cafe con leche” brewed in our espresso machine anyway!

I’m sure if you look around at many of the new products, or what are promoted as “technological improvements” to existing products, you will see additional examples of this phenomenon and agree with me that “just because you can, doesn’t mean you should”.

A HOLIDAY GREETING

As another year ends, I pause to reflect on our increasingly busy world. I think of the good fortune I’ve had, and the wonderful bonds I’ve created with friends throughout the years. I am filled with gratitude!

I hope that this holiday season you will take stock of your blessings and give thanks as well. I extend my most sincere wishes for your good health, family relations, and profitable business in the coming year!

Finally, I would also like to thank those of you I may have been able to serve this past year for trusting me with your business challenges, and those who have invited me into their businesses to present one of my educational seminars.

In humble gratitude, and with my warmest personal regards,

Paco Farach

Merry Christmas, Happy Hanukkah & Happy New Year !

© Farach Consultants, Inc.  •  all rights reserved  •  954.579.5058

I found myself with some extra time today after a missed connection in San Francisco on my way back from Seattle.

It seems that an early morning fog caused a hold at the SFO airport that prevented flights from landing (quite common in the Bay Area, I was told). That event resulted in my flight from Seattle being parked on the runway until the hold was removed. Consequently, our connecting flight to Orlando was missed and the best re-booking possible was a red-eye flight that will arrive tomorrow around 7am.

As I contemplate the events that left me stranded at the airport for an extra 7 hours, I am reminded about one of my favorite pet peeves. The apparent loss of common sense!

Having heard the explanations on the plane about the situation and the options (or lack thereof) for resolving the problems created for many of the passengers, it struck me how the same technology that is employed to provide solutions, can also be at the root of many of our problems.

Let me explain further. Most humans are endowed with a wonderful gift of reasoning that we call “common sense.” Although this gift is present in most people, few actually use it, based on personal observation. However, when it comes to machine based systems (aka computers and the software that is analogous to “reason” in them) common sense is not an option. After all, software programs employed in business are designed to produce outcomes that are repetitive, and cost-effective, in order to yield a profit.

Though I don’t have the empirical evidence to prove this, it seems to me that the larger a company is, the more the automated system appears to have real “control” over the possibilities and outcomes in a given situation. That can be a shame, and may even produce results that could be counter-productive to the long-term objectives of the business.

Take the example I witnessed on the plane this morning. Not far from my seat were a few passengers that were traveling to Amsterdam, but connecting through SFO. It appeared that they were going to be very close to making their connecting flight, but still outside the boarding window, which meant that they would miss their flight. I heard an attendant explain that the airline had just recently revamped their software system so that all schedule problems were “automatically” resolved by the system which now decides which flights to hold, and which ones will be missed.

During the entire flight those passengers were anxious and continued to ask if there was a way for someone to place a hold on their flight for the few minutes that would be required to allow them to make their scheduled connection, but the attendants repeatedly answered that the new system made the decisions, and there was no way to override it. They continued to assure them that the system took into consideration all of the factors in making its decision. If they were forced to wait, it would be as a result of the system deciding that it was the best possible outcome for all conditions and variables that existed.

I don’t know if those passengers made it on their scheduled flight to Amsterdam, or if they were forced to wait (as I was) for another flight. However, the experience prompted me to consider the following questions:

1. Was the software system correctly programmed to include all relevant criteria to be able to make a best case decision?
2. Did the program place any weight on the long-term customer satisfaction (or dissatisfaction) that would result from the decision?
3. Was there a way to provide the means to expedite communication of changes to affected passengers so they would not be subject to undue anxiety for a long period of time?

It seemed to me (and probably many of the passengers on my flight) that there was no longer a human factor in making these important decisions as there had been in the past. I wonder if the gains in profitability (if any) that result from these system-based decisions are worth the consequences that arise from the human results that accompany them.

This led me to think about automated systems in general, and their use in the construction industry in specific. I believe our industry suffers from the same dilemma; the more technology is in control, the greater the risk that our outcomes may lack common sense!

Think about the practice of BIM, for example. While the concept is quite noble and should produce excellent results, its execution is often poor due to the lack of coordinated designs, poor quality of the 3D models, and delayed delivery of design (often after construction has progressed for a while).

Or, how about the elaborate CPM project schedules that are used on most jobs? What is the likelihood that the logic between related activities is correct? What is the accuracy of the status information on updates to the schedule? How accurate is the Critical Path that is rendered by the system based on those inputs? I’m sure you could add a few more examples of this problem to the two that I’ve listed. Let me be clear, my point is NOT that technology is not good, should not be used, or produces bad results. Rather, it is simply that you should be careful when you select and apply the technology-based tools that seem to be offered to you as the “solution” for the problems in nearly all aspects of your business.

As you select and use these systems, you should ask yourself many “common sense” questions. Finally, when you enter data into your system, you should be mindful of the old saying; “garbage in = garbage out.”

“Man is still the most extraordinary computer of all.” – John F. Kennedy

If you would like to learn more about ways to reduce your risk in construction projects, order my book Document to Reduce Risk. It explains how to apply the “rules” from the contract for better project management. You’ll also find numerous examples to help you prepare sound construction documentation to address typical project conditions. You can obtain a print, or e-book copy by clicking the image on this page.

With my best regards to all of you, until my next issue, Paco.

© Farach Consultants, Inc.  •  all rights reserved  •  954.579.5058

It’s been some time since I have written here; it seems like if I don’t write each month it becomes easier to postpone the task. I’m sure you can relate to that.

Years ago I wrote a piece titled “The Daily Report: More Important Than You Think!” (see Issue #25 on my website). I thought it was appropriate to give you more on this subject now. But first, let me recap the main points made in that issue:

1. Daily Reports (DRs) are required by contract and are the only document that records the history of the project.
2. DRs are useful to substantiate extra work requests, T&M backups, and for time extension requests.
3. DRs are the main source of as-built data for schedule analysis work after the job is complete.
4. Some subcontracts require DRs to record events that may be the cause of a claim, or you may waive the right to make a claim for those causes.

Most subcontractors I speak with don’t like the idea of turning their field supervisors into “scribes”; requiring them to write detailed daily commentaries about the work, when they could be directing traffic in the field. I understand their point.

However, preparing good, consistent Daily Reports does not have to be difficult, or time-consuming. It simply requires one to be disciplined and organized. It also helps to use a form that will simplify the task. With some foresight and pre–planning, you should be able to come up with a report that will provide for the collection of required information as well as critical data that may not be assembled otherwise.

What do I mean by “critical data?” Let me answer that by asking you another question. If you’re a subcontractor, when you complete a project, can you easily provide the true actual start and finish dates for your critical activities from your own records, not from the GC’s schedule update? If you’re able to answer that question affirmatively, then you are the first subcontractor that I have known who can do that!

Subcontractors typically say they can provide that information, however, when pressed, they scramble to come up with only a portion of the data at best and cannot guarantee its accuracy. If you are looking to prepare an analysis of the impact of events on your work, it is essential that you collect this type of information routinely as you perform your work.

To facilitate this effort, I’ve come up with a simple form that will allow you to collect what is needed without much work. I call it the “Critical Activities Status Report” (use the link below for a pdf version). You can download this form from my website for your use.

Critical Activities Status Report

The form should be set up for your project before work begins by entering the pertinent schedule data from your key (critical) work activities. Your field supervisors can then track the progress of those activities as the project evolves (logging the start and finish dates for each). In addition, potential start delays and events that impact the completion of activities once they are under way should be recorded.

This form can also be submitted as an attachment to your Daily Report or periodic correspondence, to provide a summary of the status of your work and any problems that may impact your performance.

When submitted properly, it can serve as a very effective notice in accordance with your contract. If the form is used proactively to report on potential problems that may impact your work, it could be of great value to the general contractor, CM, or owner who is responsible for overall coordination of the work.

The events that impact your critical activities and the additional information that is entered in this form should be communicated as soon as they are known through your Daily Reports. The form is simply a good way to capture all the data efficiently in one place so that it will be available when needed during the job, or after completion.

“The more disciplined I become, the easier life gets.” – PictureQuotes.com

If you would like to learn more about ways to reduce your risk in construction projects, order my book Document to Reduce Risk. It explains how to apply the “rules” from the contract to the job of project management. You’ll also find numerous examples to help you prepare sound construction documentation to address typical project conditions. You can obtain a print or e-book copy through my website or the following link: order book.

Perhaps you might be ready to host an in-house training seminar on risk reduction for your management team? Call or write me to schedule a session. For more information on these programs please check my website.

[Please note that as of August 1st I will only be available through my main phone number 954.579.5058. All other numbers used in the past will not be valid.]

With my best regards to all of you, until my next issue (next month I hope), Paco.

© Farach Consultants, Inc.  •  all rights reserved  •  954.579.5058

For many of my readers in the South, this week has brought a change in the weather; Fall has finally made its entry, and with it, has pushed out the heavy, humid, hot air. This time of year brings me to start taking stock of the current year and gets me thinking of the year ahead. For those of you that own or manage your business it’s a good time to go through an inventory of what went right/wrong, and plan for the future. Your checklist may look something like this:

• How have we performed against our marketing goals (sales, profitability, number of new customers)?
• Where do we appear to be in the business cycle for our industry and geographic location? What changes should we consider?
• What were our biggest wins/losses? Why?
• How have our personnel performed?
• What can we do to improve our performance next year?

If you don’t have a formal review or planning process, the above list of general questions might be a good place from which you could start. As an owner/manager you have the responsibility to plan, review, and measure the performance of your business, or your specific department. Most experienced managers are good at setting tangible goals or objectives. However, often they fail to see that the shortcomings in results are due to poor performance on the part of their employees. A common problem in my experience dealing with many companies is the lack of investment in training/education programs.

Training for project management personnel needs to be a comprehensive program. To be truly effective, project personnel must have a good grasp of many diverse skills. They should be proficient at least in some aspects of:

1. Specific field of work (technical knowledge)
2. Estimating or budgeting
3. Accounting systems (job cost, payroll and billing systems)
4. Safety practices and regulations
5. Hiring/discharging employees and jobsite work rules
6. Contracts and administration
7. Scheduling and resource planning
8. Written correspondence and oral communications
9. Motivation/supervision of personnel
10. Time management

A cursory review of this list serves to remind us of the breadth of skills that a qualified project manager must possess. In addition to the need to develop the skills of your project managers, there is the challenge faced by companies to have all their management staff working along the same lines. It isn’t good enough to have qualified PMs, you need to have them all following a standard set of procedures and policies to ensure that your company is executing in a consistent manner on all of its projects. This begs the question:

“What are you doing to maintain, or improve the skills of your project management team?”

Many of my clients do a fairly good job providing safety, equipment, product, or other job specific training for their employees. However, very few take the next step to provide a comprehensive managerial training program to ensure that their project managers get the rest of the skills that are needed to perform successfully in their jobs. Even fewer companies actually have workable guidelines, or procedures for managing their company’s projects.

The task of developing procedures and creating the necessary management training program can be overwhelming, when added to the long list of demands that are placed on your time as it is. This is where an outside consultant can be of benefit to you, someone you can “rent” to bring their expertise and skills to work with your organization to tailor the right plan for you.

I’ve had the privilege of working with several companies to assist them to create procedures, forms, and educational programs for their project management staff. In some cases, they have established an in-house continuing education program where their staff (foremen, superintendents, estimators, project managers, and executives) come together periodically to refresh concepts, or learn new skills to help them build excellence in their businesses. By outsourcing their training program, they’re able to focus on their day-to-day management tasks.

If you are interested in taking this approach, please call me to discuss how we can work together to improve the quality of your management team!

“I did then what I knew how to do. Now that I know better, I do better.”

– Maya Angelou

Would you like to learn more about ways to reduce your risk in construction projects? Order my book Document to Reduce Risk. It explains how to apply the “rules” from the contract to the job of project management. You’ll also find numerous, practical examples to help you prepare sound construction documentation to address typical project conditions. Obtain a print or e-book copy through my website.

With Halloween around the corner, I couldn’t resist sharing this picture of my Ninja and M&M (cheerleader?) grandchildren from last year. Yes, they are quite creative! — With my best regards to all, until the next issue, Paco.

© Farach Consultants, Inc.  •  all rights reserved  •  954.579.5058

I recently had a very interesting conversation with a subcontractor client who I respect for his business savvy. I was sharing my view on his company’s need to do everything possible to negotiate subcontracts, based on the disproportionate risks that continue to be shifted to the subcontractor’s side of the ledger. If that isn’t bad enough, I added, subcontractors don’t seem interested in using what leverage they have to negotiate with general contractors (other than for price).

It was at this point that my client turned to me and said, “you may not like what I’m about to tell you, but in all honesty, I don’t even read the subcontract language at all, I just have my folks check the scope, then I execute the document.” He went on to tell me that he realizes he is taking on all of the risks of the unbalanced language in the terms and conditions of the subcontract, but he manages his projects from day one to use all of the performance leverage that he has to attempt to get what he needs and ultimately to be paid.

Well, I found his honesty very refreshing. Finally, someone confirmed what I had suspected was the truth about subcontractors and their approach to the contracts they sign!

From my perspective, a subcontractor today that is working on large projects in the “open bid” market is operating in an environment that’s not too different than that of a casino, from a risk perspective. Let’s review the dynamics of the relationship you have when you walk into a casino:

1. They have more money than you.
2. They make the rules.
3. The rules are guaranteed to work in their favor in the long run.
4. If for some reason you represent a threat to them, they can have you removed!

Let’s be honest, that isn’t very far off the mark as an analogy, is it?

By now you may be asking, “what can we do as a subcontractor to make the playing field a bit more level?” There is no question that the business leverage has shifted more heavily in favor of the GCs over the Subs. Furthermore, after decades of following this trend, subs have become accustomed (or resigned) to this reality and its practical effects on contract negotiations. This only makes things worse, since it’s much more difficult for you to try to buck the trend, when others are willing to accept things just the way they are.

Here’s some practical advice for those subcontractors who are willing to make the effort:

1. Make a list of the top 5 – 10 conditions that you need in a contract in order to reduce your risk of loss from actions caused by others.
2. Work with a good lawyer or consultant to develop a rider to submit for inclusion in the contracts that you want to sign during negotiations.
3. Negotiate like a madman with the GCs to accept as many of your top conditions as possible in your contracts.
4. Properly document everything that interferes with your ability to perform (impacts to scope, cost, or time).
5. Use any leverage you have during construction to get what you need.
6. Don’t wait until the end of the job to work out your problems (waiting until the end only guarantees you’ll get the short end of the stick).
7. If none of the above works for you, give me a call, you’re going to need help!

One last bit of advice, if you don’t like what I have to say in this issue… maybe you should consider GETTING OUT OF THE SUBCONTRACTING BUSINESS, it’s probably not meant for you…

“As long as people are talking instead of fighting, nobody loses very much blood – unless he happens to bite his tongue.” – David Eddings

I was fortunate to visit Mt. Rainier this June while spending time with my son’s family that lives in Washington. It had been 22 years since I visited there (also with my son in 1996). I’ve included a couple of pictures (before and now).

The one with my son was taken very high up the mountain (we went further than we should have gone without hiking gear). Yes, it was mid-Summer and it was that snowy and cold up there.

The more recent picture was taken next to a slice of a tree from the year 1239!

Unfortunately , the weather was overcast and raining that day, so I could not hike into the mountain as I did in ’96. However, just being there brought back many memories (how time flies!).

— With my best regards to all, until my next issue, Paco.

© Farach Consultants, Inc.  •  all rights reserved  •  954.579.5058

Two years ago in an issue titled “What Makes Your Business Different?” I asked several questions designed to get you thinking about managing your business from a “big picture” perspective (see Issue #28).

Where is your business today, and how does it differ from your competitors? More importantly, what is your goal for your business and what is your plan to get there?

In my consulting work over the past 26 years, I’ve had the opportunity to interact with businesses of all sizes. I have observed many different styles of management and noted a variety of organizational structures that were employed to achieve similar end results; namely, the construction of new facilities, or maintenance of existing properties.
There are two general observations that emerge from my experiences:

1. There was usually a notable difference between the perception, or image that I had of a company (based on my external exposure to them), versus the impression that I obtained once I interacted with the company from within (based on direct management exposure).
2. The overwhelming majority of the companies did not have an actual defined business plan that they could articulate (never mind a written one) which could be used to guide them on a path to achieve their goals. The closest thing some companies had was a mission statement which could have been written for nearly any business.

This confirms one of the fundamental management problems of small businesses – the lack of a defined business plan that is designed to achieve the goals of the owner(s). Most construction companies I deal with seem to be operating on the “one size fits all” business plan. They do what everybody else seems to be doing, regardless of the results (or lack thereof) in the marketplace. Year after year, project after project, they go about doing things the way that each new manager thinks is best. As a result, it’s not uncommon to find a variety of management styles and systems in place within a single business.

This ad-hoc approach to management is confusing and error-prone. In addition, since it is not a unified approach, it won’t advance the goals of the company and creates internal conflicts that, over time, will set the company back.

Let’s face it, even though your business may be providing the same basic functions as your peers, it’s NOT THE SAME as all others. For starters, you and your key employees possess different strengths and weaknesses than your counterparts in other companies. Off the top of my head I can list a few reasons why you would want to have your own specific plan for the success of your business. This is due to the differences that exist in the following factors:

1. Owner(s) objectives for business (including risk tolerance).
2. Working capital, lines of credit and bonding limits.
3. Managerial staff depth, experience and comfort with certain types of work.
4. Quality and experience of key field managers and superintendents.
5. Management structure.
6. Geographic interest.
7. Management staff’s strength and breadth of contacts.

I could continue listing factors, but my point is that due to the differences between businesses, when it comes to planning, one size doesn’t fit all.

Creating an effective plan for a business is an exercise that should be taken seriously. There is no simple short cut, magic solution, just as there aren’t two companies that are exactly the same. Coming up with your plan is a process that will vary in much the same way as personalities and personal goals vary. Some companies find it useful to seek outside help to guide them through the process and to provide a framework for development. One approach is to begin with a special meeting of key personnel to create the backbone of your plan. Then, turn it over to a few executives to complete the details.

Good business plans take into consideration the philosophy of the business owner(s) and their vision of the future for their company. The plan will need to consider the strengths and weaknesses of its key staff, the company’s financial condition and many other factors which, in the eyes of the executives, will interact to achieve the desired results that will determine the future success of the business.

In order to construct a realistic plan, you need to begin with an honest assessment of where your company stands today in all areas of the business. In creating a plan, it’s useful to think in terms of short-term objectives that will advance you toward the long-term goals you want to achieve. Constructing a business plan does not have to be difficult. Done properly, it can produce results you’ve only been able to dream about.

So, I ask you once again – do you have a plan to reach your goals? If not, why not get started today!

I wish you great success in turning your dreams into a real plan for your business. With my best regards, Paco Farach.

“There are some people who live in a dream world, and there are some who face reality; and then there are those who turn one into the other.” – Douglas H. Everett

© Farach Consultants, Inc.  •  all rights reserved  •  954.434.7710

No, I did not make a mistake with the title of this issue. It was quite purposeful, after all we’re in the middle of March and I’m finally getting around to writing again (the last issue was in December)!

I must admit that recently I’ve been in procrastination mode, putting off writing these monthly issues. It was easy to say to myself “I’ll get to it tomorrow”. But, as successive weeks came and went, I realized what I was doing.

If we’re to be honest, we’re all guilty of procrastinating from time to time. We can probably name some people who are even very good at it (hopefully I’m not on any of your lists).

Procrastination becomes a habit, which like most habits, may require a great deal of effort to correct. The longer we engage in procrastination, the more difficult it is to break out of its controlling effect.

Putting off important tasks can be a very damaging habit for Project Managers to adopt. Effective PMs must deal with problems and often take quick action to avoid costly outcomes.

When it comes to important communications, procrastination can lead to extreme consequences, like losing the opportunity to receive compensation or time for issues that you did not cause. A couple of examples should serve to demonstrate the hazards. I assure you these are not far-fetched cases, I have witnessed situations such as these and many others.

1) A GC has a subcontractor that’s failing to perform as required. The sub’s work continues to lag, causing delay for all the follow-on trades. The sub happens to be one of the GC’s favorites (and a good friend), so the GC is dragging his feet on taking serious measures to have the sub perform, or to supplement the work with another. After some time, the GC is not given a choice. The consequences of the late action result in delayed completion of the project and a series of costly claims and counter-claims.

2) A plumbing sub is trying to expedite the installation of fixtures in the bathrooms of a high-rise project. The superintendent has a productive crew working on the bathroom fixtures, but notices they are not installing the protective covers on the tubs to keep them from being damaged by follow-on trades. Aware that it could lead to problems down the road, he keeps telling himself that he’ll get to that minor bit of work later, when he can free up someone for the task. As the weeks go by, he continues to address bigger issues on the job, pushing the “small task” of protecting the tubs into the future. Inevitably, the follow-on trades working to complete the bathrooms damage many of the tubs. The punch list for the plumbing work is peppered with damaged tubs throughout the building which must be replaced at significant additional cost. The usual finger-pointing and “blame game” ensues.

Okay, you say, I get it. But, it’s not possible to do it all when you’re in the middle of the action. Let me give you two simple rules to apply to the issue of what needs to be acted upon with urgency. I suggest you ask yourself two questions:

1. Will taking action on this, advance my goal or objectives?

2. Will my failure to take action on this possibly result in damaging consequences?

Your answer to these two questions could go a long way toward prioritizing your time and avoiding procrastinating on those things that will matter most.

So maybe my title for this issue has a double meaning, since perhaps you SHOULD put off until tomorrow those things that are not important as long as they won’t turn into problems tomorrow! That probably makes sense provided you DO those things that need to be done today!

The “lesson learned”; you have to manage your work through your filter of priorities!

Remember, before choosing from the many tasks that compete for your time ask yourself the two questions I suggest. It may help clarify your choices.

Interested in learning more about what’s important to do and what not to do in managing your projects? Order a copy of my book Document to Reduce Risk. It explains how the contract contains “the rules for construction” and demonstrates how to apply those rules to the job of project management. You will also find numerous examples to help you prepare construction documentation in ways that will allow you to minimize the risks that are inherent in all projects when dealing with various conditions. You can obtain a print or e-book copy through my website or by clicking on the image in page 1 of this issue.

Wishing you good decisions on what you can put off until tomorrow! With my best regards, Paco.

“A wise person does at once what a fool does at last. Both do the same thing; only at different times.” – Lord Acton

© Farach Consultants, Inc.  •  all rights reserved  •  954.434.7710

As another year ends, we pause our busy world of work to reflect. When we think of the good fortune we’ve had, the wonderful bonds we’ve created, and the good times we’ve shared with customers, co-workers, and friends throughout the past year, we realize we should be grateful.

I find that gratitude is an attitude that many people would do well to adopt more often (myself included). When we are grateful we are focusing on that which is outside of us, not of our own making. Whether it be our relationships, our physical condition, our peace of mind, or our material wealth; each of us can relate to the fact that in one or more of these areas we have been blessed in abundance!

I sincerely hope that this Holiday Season you will take stock of your blessings, and in grateful recognition, share some of your good fortune, your time, or affection with those who you know are less fortunate or in need of it most.

I extend my most sincere wishes for your good health, family relations, and profitable business in the coming year! I would also like to thank my clients for trusting me with their business challenges.

In humble gratitude, and with my warmest personal regards and best wishes for a most joyful Holiday Season to you and your loved ones,

Paco Farach

© Farach Consultants, Inc.  •  all rights reserved  •  954.434.7710

Construction contracting is a very risky business. It’s one of the few arenas where the financial rewards can come very quickly. However, it’s also an undertaking where even large, established companies can go out of business just as quickly!

There are several reasons for this, among them:

1. Contract amounts are based on estimates for the work created from incomplete bid documents.
2. Contract language that can create risks and unforeseen obligations, without a corresponding opportunity for recovery.
3. On most projects, the contractor (primarily the lower-tiered ones) is financing the cost of the work – especially for changes that typically don’t get approved until well after the work has been completed.
4. Numerous other variables that change over time and add to costs and time of performance for the work.

All of the above have the effect of stacking the deck against you, diminishing your chances of success.

In my opinion, the most serious of the reasons is that of the terms and conditions of the contract. The failure to negotiate fair terms and conditions in contracts has the potential all by itself of producing devastating results for your company when things don’t go the way you planned on a job. Let’s face it, there is always the potential for that!

A long time ago, when I was working as a subcontractor, I was involved in a project that had gone bad. I had just finished attending a bitter all-day mediation session in which I had settled my company’s modest claims for additional compensation. My customer, the general contractor on the project, had not fared as well, having lost a significant sum of money despite years of hard work.

During the car ride back to our offices I observed that he was understandably upset over the outcome, yet relieved that his ordeal had finally come to an end. I took the opportunity to ask him what he would have done differently, now that he had the benefit of looking back. Without hesitation, he stated “we should have walked away from the contract when we were in negotiations.” He informed me that his company had spent a great deal of money in legal fees over several months in order to be able to execute the contract.

He went on to explain that his customer (a developer) was run by a group of lawyers who were intent on crafting a deal which was as one-sided as possible. His company’s desire to build the project had overshadowed the need to have a fair contract that could have provided the foundation for a workable relationship with his customer.

The “lesson learned”; he should have just walked away!

Learn more about contracts and their risks in my book Document to Reduce Risk. There, I explain how the contract contains “the rules for construction” and I demonstrate how to apply those rules to the job of project management. You will also find numerous examples to help you prepare construction documentation in ways that will allow you to minimize the risks that are inherent in all projects when dealing with various conditions (sample letters included in Appendix B of the book). You can obtain a print or e-book copy through my website. The e-book version will allow you to cut and paste the sample letters you need.

“A wise person does at once what a fool does at last.  Both do the same thing; only at different times.” – Lord Acton

                                                      A THANKSGIVING MESSAGE
At this time of year I am always reminded of how fortunate I am to have a very loving family, friends, and good health. I want to take this opportunity to wish all of you a very Happy Thanksgiving. Please take the some time to appreciate one another, and to give thanks for all of the blessings you have in your life.
With my best personal wishes, Paco Farach.

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