Lessons Learned #28: What Makes Your Business Different?

If you’re like me, you’re constantly busy, trying to take care of several things at once, moving from one project to the next in a seemingly endless chain.  After a while of running the “rat race”, I find it necessary to pause, and ask thought provoking questions.  Last weekend, as I was taking some down time during one of those “pauses”, I found myself thinking about what it is that makes a business different from its peers.

If you care to participate in this thought exercise with me, I encourage you to be open minded and do as I suggest.  Ask yourself:

  • What sets my company apart from the rest?
  • Is there really a difference between my business and all the others with which I compete?
  • If I were one of my customers, what would my experience with my business be like?
  • What would I notice?
  • How would I feel at the conclusion of the project or after delivering the service that my company provides?
  • Would I feel that I received good value from the exchange?
  • Did my company do what it promised?
  • Would I be eager to do business with my company the next time the opportunity arose?

Well, I could go on, but I think these kind of questions are enough to make my point.  They should provoke you to think about how your business is organized and how it operates.  Is it by design, or does it just happen?

You might be thinking by now that these questions could all be answered with the adoption of a mission statement by your company.  You may be right.  However, my experience with business has taught me that mission statements, while beneficial, are only an expression of good intentions or a goal to which a company aspires.

There can be an enormous disconnect between your company’s mission statement (no matter how skillfully crafted) and the actual embodiment of that statement in your company’s practices, ethics, policies, and communications with its customers.

A solid mission statement can be a wonderful foundation from which to start the transformation of your company to fit that unique vision that you have as the owner.  However, the fact that you have a mission statement alone, cannot accomplish what is needed to make your plans come alive.  You will need to do the hard work of hiring, training, developing procedures, policies, and providing oversight and leadership to ensure that the aim of your mission statement will be met repetitively, providing the meaningful results that you desire.

I will share with you my formula for transforming an ordinary business into a great business in a future issue.  In the meantime, don’t forget to keep asking yourself the series of questions I posed.  You may not be able to answer them now, but being able to do so is the first step you must take toward achieving greatness for your business!

“Always be a first rate version of yourself and not a second rate version of someone else.” – Judy Garland

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

Lessons Learned #27: On Friendships And Business

You have a good customer, a “true friend” in the construction world. You have cultivated the relationship, enjoy each other’s company on a personal level; attend sporting events, play golf or fish together, have dinner with your spouses. In return, your friend treats you well at bid time, you may even have “last look”, or right of refusal on most jobs you want. That’s the way it should be. You should work hard to develop good relationships with those whom you do business.

BUT (yes, there’s always a “but”, isn’t there) serious problems will arrive if you let your friendships interfere with sound business practice.

It may start with your failure to scrutinize the contracts and lead to ignoring the document altogether over time.  Or, you might begin by suggesting to your managers that they relax the way they administer the work; letting smaller issues go unreported, forgiving problems that may cost your company money in the desire to keep your good relationship going, not wishing to upset your friend.  You may even allow your “friend” to talk you into holding off on documenting larger issues, convincing you to trust him to resolving the problems soon, and that the situation will improve.

I have listed only a few of the ways that you might start abandoning good business practices in exchange for others that are influenced by your friendship with a good customer. While you might be able to proceed along that path for some time, eventually the day comes when the problems on one project blow up to the point where the damage cannot be covered or smoothed over by that great relationship.

At that point, all the good relationship capital in the world will not allow you to recover the damage caused from the mistakes you made, failing to do the things that were necessary.  Among them are adhering to prudent business practices for construction contracting that must be followed without exception:

  • Reviewing your contracts
  • Giving notice of problems
  • Demanding timely payment
  • Pressing for timely responses and approvals
  • Requesting changes for extra work and delays
  • Being careful not to release your rights to recover extra work or pending claims

I could go on of course, but I think you get my point.

Experience has taught me one thing for certain, when problems blow up on a project, what really matters is what the contract says, not what was promised or expected by way of a “good relationship”.  When there is a crisis, that longtime friend will turn to his (or her) legal representative who will use the contract as a shield, or a weapon, if necessary, to produce the best result for his company. That’s a response you can count on!

Remember, don’t let a good friendship interfere with sound business practice.  Do what’s required and keep that separate from your personal relationship with your customer.

“Business, you know, may bring you money, but friendship hardly ever does.” – Jane Austen

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

Lessons Learned #26: When Plans Turn Into Chaos

You’ve been working on the project for a year and things are tense, the job has slowly but consistently been falling behind schedule to the point where the original schedule is no longer of any use. The two week look-ahead schedules show that the key activities continue to slide, and despite the arguments, finger pointing and promises, there hasn’t been any improvement.

Everything seemed to be fine at the beginning. You started out going along with the flow of the job, playing by the “team approach” trying not to rock the boat, but something about the current situation doesn’t feel right. A few months ago you started working some overtime to help out in one area, as a favor to your customer, but now it appears that the entire job is working overtime for all kinds of reasons, and worse, the overtime is expected to continue.

Problems are occurring more frequently and randomly. Serious field conflicts between subcontractors are taking place daily all over the project. At the last project meeting there was even mention of the threat of liquidated damages! The job appears to have gotten out of control. What was once a working plan has now turned into chaos.

You know all of these problems are costing your company money that was not in the budget. Looking back now, you realize you were always so busy dealing with issues, putting out the fires that you were not able to write about the conflicts, the delays, or the overtime work. You know you voiced your concerns in some of the meetings you attended and you believe there may have been one or two emails in which you wrote about the problems. But you’re getting nervous because you vaguely remember there may have been something in the contract about giving notice in writing for issues, as you skimmed through the documents before the job started. Does this sound familiar?

The situation I describe above is more common than we care to admit. Managing construction projects is tough work, loaded with pressure day after day. As a subcontractor, I experienced it directly from the trenches, dealing with the consequences and feeling the effect on my company’s bottom line. In my role as a consultant during the past 24 years, I’ve been called in when things go wrong on projects. I have reviewed the records of countless projects and tried to help my clients, despite the usual deficiencies that I noted in their documentation.

My experience has convinced me of the following:

  1. Contractors wait too long to begin to document issues on their jobs.
  2. They fail to use their contract to manage their projects.
  3. When they finally decide to document issues, they take the wrong approach.
  4. The lack of proper, timely documentation of issues is at the heart of most unsuccessful projects.

Documenting significant project issues is not as difficult as it seems. The time and effort required to prepare a good record of the issues is insignificant, when weighed against the benefits that result. What’s required is a good understanding of the reason why it’s important to give notice and the knowledge of how to do it in a manner that is proactive and preserves your rights under the contract.

The seminar “Document to Reduce Risk” has been presented to many contractors who recognized the problem and decided to take action. This seminar is presented with a practical, “hands on” approach to drive home the reasons, the timing and the manner in which project documentation should be done. A private, in-house seminar for your key employees is a very affordable way to enhance your company training program. Make the decision to improve the quality of your project management team, contact me to schedule this seminar for your company.

My book “Construction Management: Document to Reduce Risk” is the perfect supplement to the seminar, offering additional training and resources that go beyond what is presented in the seminar. You can order copies from Amazon, Barnes & Noble, or The Book Patch.

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

Lessons Learned #25: The Daily Report, More Important Than You Think!

If you’re like most subcontractors, Daily Reports are simply a requirement of the subcontract and are not given much thought. I’d like to change that by giving you my perspective on the value of Daily Reports.

Most of the subcontractors I work with don’t pay much attention to the information that gets into the Daily Reports (DRs) that are turned in by their company. That can be a costly mistake. The DR is a multi-faceted documenting tool with many uses and tremendous value. Since it is required by contract, it’s the only daily document that records the history of the project for your company. As a document that is created in the field to record activities and contemporaneous progress of work, it is presumed to be more accurate than many other documents.

In addition to complying with the contract, DRs are typically used for measuring productivity, preparing change requests, substantiating T&M changes, and in time extension requests. Finally, as the only daily record of work, when grouped, they become the backbone of an as-built analysis of work on a project.

While the DR may not fit the strict definition of the “notice” requirement in most subcontracts, some subcontracts have elevated the importance of DRs by requiring you to record events in the DR that may be the cause of a claim as a condition precedent to a claim (or the claim is considered to be waived). If your subcontracts contain this type of provision, you should make every effort to ensure that your DRs include any conditions that may give rise to a claim. This means that your field supervisor who fills out the DR must be knowledgeable of this requirement and sensitive to the type of conditions that occur on the job which could result in a claim.

I will have more to share about DRs in future issues. However, one more key point is that you have your supervisors complete the DRs at the end of the day (or early the day after) in order to have the information be as accurate as possible.

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

Lessons Learned #24: …and Vice Versa

If you are a subcontractor, one of the biggest challenges you face is being able to negotiate a fair contract. Let’s face it, a general contractor has substantially greater leverage when the time comes to negotiate the deal.

Whether it’s the fact that they have a large share of the market, or that they are higher up in the “food chain”, or that there are many more competitors at the subcontractor level, general contractors have a built-in edge in negotiations.

I found myself thinking about this recently, as I reviewed a subcontract which was very one-sided, and about as “unfair” in key areas as I have seen. If my client (the sub) experienced delays or changed conditions (even if not his fault, or caused by the general contractor’s negligence) it appeared that he would have no right to any remedy.

Unfortunately, many subcontractors have adopted the belief that it doesn’t pay to try to negotiate better contracts. They seem to sign them “as-is” (lopsided as they may be), without reading them closely, either unable or unwilling to invest the effort to create better terms. They trust or hope that through their personal efforts they can somehow endure through the difficulties that will inevitably arrive. They genuinely believe that they will overcome the unfairness in their agreements by relying on their “good relationship” with key individuals on the other side.

My experience has confirmed that marketing, personal relationships, and good will don’t go very far when the going gets tough and the contract language is pulled out for reference, as is the case in disputes involving anything that is not “trivial”.

Given these realities, a subcontractor would be smart to think in ways or to adopt methods that might be considered “outside the box” in an effort to obtain some fairness in his business dealings.

While thinking about this topic, I remembered a situation that occurred many years ago, when I was trying to modify some “very tough” terms in an agreement. After much debate with the other side (who had drafted the agreement) and listening to their attempts to interpret what the language “really meant”, my attorney came up with a very interesting “outside the box” suggestion. He took out his pen, and in a very elegant, and concise way added the following words at the end of the section we had been debating, “…and vice versa.” It caught everyone by surprise! He explained that we would accept whatever the terms were, as long as the same terms applied equally to the other side. I recall that at that point there was a change in everyone’s thinking, which allowed us to come up with a much better agreement as a result.

From my perspective, this unfairness is at the very core of the majority of the contract/subcontractor conflicts with which I have dealt during the past 37 years in the industry. I also suspect that grossly unfair contracts are an underlying factor in most of the losses incurred by subcontractors (and by general contractors in the case of one-sided owner contracts).

If you’re a subcontractor, signing a bad subcontract without negotiation of the clauses that could allow you some relief when legitimate problems arise, is like going into the boxing ring with both hands tied behind your back and expecting to emerge in one piece after 15 rounds. The odds are heavily stacked against you!

As a general contractor, the practice of forcing subcontractors to enter into lopsided subcontracts without any relief will result in lack of cooperation, additional problems during construction, and might give you a bad reputation which can work against your long term success.

“A fair contract provides the fertile soil to nourish the teamwork and cooperation so vital for a successful project” – Paco Farach

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

Lessons Learned #23: Actions Speak Louder Than Words

Watching the recent Republican Party debate and the events immediately afterward confirmed the validity of something that I learned long ago, which I adopted as a guiding principle for my life; it can take you a lifetime to build a good reputation, but only a moment to ruin it.

Yes, as you’ve probably guessed, I’m referring to the responses and subsequent remarks made by Donald Trump.  Regardless of your political viewpoint, I think you will agree with me that rather than taking advantage of the opportunity to convince potential voters of the seriousness of his candidacy by advancing his ideas, policies, and vision, Mr. Trump managed to confirm the worst fears of those who may have wanted to support him.

As I watched the debate with my 24 year old step son, I was able to see clearly how his enthusiasm for the “plain speaking, politically incorrect, successful businessman” candidate deteriorated each time Mr. Trump failed to address the questions posed to him, choosing to repeat his “cliche catch phrases” rather than to provide the audience with information or substance, as the majority of his opponents attempted to do.  I saw how my step son’s respect for the candidate waned as Mr. Trump offered trite, flip, rude responses that failed to match what he had expected from a successful businessman.  The contrast with the rest of the candidates created by his responses (or lack thereof) grew as the debate progressed.  The transformation in my step son’s opinion of Mr. Trump was dramatic; from enthusiastic, potential supporter, to critical disappointment for someone he had esteemed only a couple of hours before!  Of course, as additional comments from Mr. Trump were revealed over the 24 hours after the debate, his opinion of him became quite negative.

That Mr. Trump was able to engineer the collapse of potential support from a young man within such a short span of time is proof of the fact that it can take only a moment to ruin a reputation built over a long time.

It’s not hard to understand this scenario.  If you consider and carefully observe the behavior of popular culture in America, you would conclude that character can be created or “purchased” simply through repetitive lip service, slogans, catch phrases, or well-crafted mission statements.  In other words, if you want to have others believe that your character (being a reflection of your core values) is sound or lofty, you need only say certain “programmed” phrases, or speak in specific ways often enough to “prove” it.  The belief being, that by saying those things, you will be judged by others to possess that character which you desire.

It is not uncommon for one to see business leaders profess to their customers that their company (and employees) possess the loftiest, most honorable core values like honesty, competitive pricing, commitment to quality, and reliability in all their dealings.  However, quite often, after you enter into a first-hand relationship with them, your experience is radically different.  Unfortunately, their actions don’t seem to match their rhetoric!

While it is true that your words may reveal your character over time, that only holds true if they are not contradicted by your actions.  You see, personal character (and by extension, the character of your business), is proven daily by your actions, and not simply by your words.  Remember, after all your words are heard, it is your actions that will speak and be heard much louder than your words.

“Character is much easier kept than recovered.”Thomas Paine

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

Lessons Learned #22: You May Need To Change Your Mind

There is an alternative rock band from Gainesville, Florida called Sister Hazel that released an album in 2000 with a song titled “Change Your Mind”. That was a year of transition for me, and the lyrics from that song stuck with me: “If you want to be somebody else, change your mind.”

Without making a conscious effort, that became the theme for my transition at the time. Even now, 15 years later, when I or someone I know is facing a difficult challenge, I bring up those lyrics and discus how all change begins in our minds.

I am no psychologist (ironically, both of my kids are), however, I know that in order to effect a change, especially a significant one, we must first create that change in our minds. The more our minds can visualize the new behavior, in all of its detail, the better chance we have of making the transformation in our lives.

I’ve read that it takes 30 days to make a new habit. We can train our minds through repetition of thoughts or in response to certain stimulus, in order to adopt new behaviors.

Usually, it takes a major event that shakes us profoundly enough to make a significant change in our thinking, or in the way we act. The catalyst for change on a business level may be a business failure, litigation, or a large loss on a project. On a personal level it may be the death of someone close, divorce, illness, or loss of a job.

However, you don’t need to wait for a life-changing event to create the change you want in your life. Most of us go through life as if on automatic pilot, living in established routines. While that can be good, if you don’t like your circumstances, living on auto-pilot can keep you there indefinitely, stuck in your dissatisfaction. The keys to making the positive changes you desire are:LL_22 - Sister Hazel CD cover

  1. Change your mind.
  2. Be determined to make it happen.
  3. Develop the new habit over time.

As a general example, if you want to avoid being taken advantage of by others on projects or business dealings, you need to change your thinking so that you spot the situations that can make you vulnerable, resolve each time to act, and most importantly, take action by documenting to eliminate the vulnerability.

* * * * * * * * * *

Well, speaking of making changes, I have just completed the first step in the transition to relocate from South Florida to Central Florida.  It was a very hectic month for Nancy and I as we downsized from a large home in Cooper City to our temporary new home – a condo on Indian Harbour Beach (in the Melbourne area)!  We have been talking for a few years Beach sunriseabout finding a more relaxed area to live, and to relocate closer to family that has also
started moving north.  The second step will take place when we find what we are looking for.  I’ll let you know when that happens, since we haven’t found it yet!

From the center of the state, I will be able to serve all of Florida without difficulty.  The move will be of no consequence to my clients outside of Florida, thanks to the marvels of technology.

“If you want to be somebody else, change your mind”Sister Hazel

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

Lessons Learned #21: Do You Have A Plan? Or Are You Planning To Fail?

LL_21 - Billy Joel CD coverOne of Billy Joel’s songs has a phrase in the lyrics that rings so true, as universal truths tend to do – “time is relentless.” I heard it first when I played the CD from the live concert held in New York to celebrate the turn of the century (year 2000).

That phrase came to mind as I prepared to write this issue, since it was about 4 months ago that I sent out the previous one. Time does go by “relentlessly”, waiting for no one, no matter what. This year, more than in years past, I have been surprised by how fast the months have gone by. Fortunately for me, it was due to how busy I’ve been. But, in taking care of priorities, I failed to make the time to write to my readers on a regular basis as I had in the past.

So let me get down to business; your business, that is! I have been thinking about most companies that start up from scratch. As the owner, you are proud that your small business has grown to the point where you have the ability to take on larger contracts, have a backlog of work, and can attract competent employees to help you share the load so you wouldn’t have to work so hard.

But, “wait a minute” you say, “I seem to be killing myself and not getting where I want to go!” You had no idea when you started, how much of your time and energy would be spent worrying about cash flow to make critical payrolls each week, or how to get a bond that would allow you to sign that lucrative project you’ve had to pass up so many times.

Do these thoughts or conversations with yourself sound familiar? If you own or manage a company that has been fortunate to grow over the years, this scenario should be familiar to you by now.

As the owner/manager of a small to mid-sized contracting business, you need to recognize when it’s time to change the old ways of management and shift your operation to another gear. A well-constructed business plan prepared with the help of an experienced consultant may be just what your business needs.

Your carefully prepared plan, properly executed, can be a powerful tool to help you “build” the transition “bridge” on your road to success. Without a sound business plan, your task may appear overwhelming at first.

“But why should I waste my time with a business plan?” you ask. “How could it be so important for the success of my business? I have always been able to plan in my head, I don’t need to put my plans in writing.”

Stop and think for a moment how in our industry we take for granted the need to have accurate plans and specifications in order to construct a new facility. Moreover, consider how even with very detailed plans and specs, sometimes we discover how expensive it can be to follow the plans when they are inaccurate or flawed. How many times have you seen boilerplate documents that weren’t suited for the particular project result in higher costs, with damaging results for those who participate, including the owner?

I suggest to you that the same holds true for your business. Look around you, chances are that the companies that have succeeded (sometimes with spectacular results) have built their success on a solid foundation of a well-designed and executed business plan tailored to their goals.

Like in the construction arena, where a change order is used to alter the design and construction of a project, your business plan also needs to be updated from time to time, taking into consideration the changes in your business, as well as the fluid conditions of your market.

Teamwork is essential when preparing your business plan. It’s not just your ideas that need to be considered, but those of key members in your company, and others who might not be a part of the company. In fact, a qualified outsider is often in a better position to offer valuable advice and direction to the key members of your business to shape plans and provide a necessary, unbiased perspective.

The development of a business plan for your company will foster teamwork among key employees, serve to be a “growth” experience, and will motivate them to do a better job in their area of expertise.

One thing appears certain, if you’re failing to plan, you’re planning to fail. So, what are you waiting for? After all, “time is relentless.”

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

Lessons Learned #20: Happy Holidays! The Lessons of 2014, and More…

As another year comes to a close, I would like to review the lessons that I covered in these pages during the year.  Below is the subject, title, a brief summary, the feature quote and a link to all issues.

Issue 11 – Is Technology Serving (or Hurting) You? (Part 1). This issue raised questions about technology overkill, implementation without training, and trying to force technology where inappropriate. “I fear the day when technology will surpass our human interaction.  The world will have a generation of idiots.” (Albert Einstein).

Issue 12 – Technology (Part 2). A discussion of the challenges faced when applying technology to manage field operations.  “Technology is like a tool to a craftsman, you must select the proper one and learn how to use it well to get the job done.” (Your’s truly).

Issue 13 – Technology (Part 3).  Applying technology to help manage your business.

Issue 14 – You Have More Leverage Than You Think, Use It!  Negotiate what you can, but don’t ignore your contract, once it’s signed.  Use it to manage your work.  “Insanity is doing the same thing over and over again and expecting different results.” (Albert Einstein).

Issue 15 – Perseverance Results in My Book!  This summer I was able to release my book “Document to Reduce Risk” which was the product of many years of work and captures my philosophy for construction management. “Perseverance can help you accomplish what might first appear only to be a dream.” (Your’s truly).

Issue 16 – Once You Lose A Point, You Never Get It Back.  Time is a precious commodity in construction, treat it with great care.  “Once you lose a day, you never get it back.” (Your’s truly).

Issue 17 Don’t Rush When You’re in A Hurry.  Whether you’re estimating, accounting for work, or building in the field, mistakes from rushing your work can be very expensive!  “Dress me slowly, because I’m in a hurry.” (Napoleon Bonaparte).

Issue 18 Learn From Your Mistakes – Do A “PM” Analysis.  Conducting a “post mortem” analysis of your construction projects will yield profitable benefits.  “We do not learn from experience…we learn from reflecting on experience.” (John Dewey).

Issue 19 – If You Control The Clock, You Can Win The Game.  As in football, when you can exercise control over your work activities during construction, you will secure a better chance of a profitable finish.  “If you control the clock, you usually control the game.” (Tiki Barber).

Once again, we’ve covered a variety of topics from application of technology to negotiating contracts, and managing time and construction schedules.  If you missed reading some of the issues, you can get a copy from the “Lessons Learned” tab on my website [download here].

* * * * * * * * * *

And now for an update on the Yellow Jackets!  Since the last issue, my team went on to defeat #18-Clemson and our arch-rival, the Georgia Bulldogs (who were ranked #8 at the time).  That was the first time we had beat our in-state rivals in 13 years!  The victory was all the sweeter since it took place in their stadium.  That win over Georgia also lifted our ranking to #12 and set up the matchup against FSU for the ACC Championship.

I received many calls and words of encouragement from many of you, who, for a variety of reasonsLL_20-GT Homecoming Game 2014, were hoping our team would beat the Seminoles.  Unfortunately, the Seminoles played error-free, arguably their best game of the year, ending up on top in what was a close contest.

We are now headed to the Orange Bowl Game to play Mississippi State on New Years Eve.  I plan to be there with a loyal contingent of family…

It was cold at the Homecoming Game! My wife and I with my daughter’s family (including a future GT cheerleader & linebacker) endured the weather & cheered our team to victory!

* * * * * * * * * *

As we reach the end of a year, it is customary to reflect on the year that is concluding.  For my family, this was a year of personal loss, as both my wife and I lost a parent (her father and my mother).  Though painful for us, we are consoled by the knowledge that they are resting in everlasting peace.

I want to take this opportunity to offer my sincerest personal thanks to all who have helped me in so many ways this year: my wonderful family, trusted clients, and friends.

Through all that I experience each moment of every day, I am constantly reminded that all the health, joy and physical riches in my life are made possible through the grace of God.

May you and your loved ones be blessed with the joy and love that I have been most fortunate to receive, and may the New Year bring you good health, peace, and prosperity in great abundance!

Happy Holidays, Paco Farach

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

Lessons Learned #19: If You Control The Clock, You Can Win The Game

I am quite passionate about college football, and so far this year my Yellow Jackets (Georgia Tech) have “engineered” an 8-2 record and are currently ranked 22nd in the nation. Not bad for a team that runs a “boring” spread option offense which many say is outdated and doesn’t have a chance.

While there are many valid criticism of the spread option, one thing is true, when is executed well, it works! It is especially good at keeping the offense on the field and “controlling the clock.” When you control the clock in football, your chances of winning games improve (of course, it helps if you’re also able to score too and we’re averaging 38.8 points per game).

This strategy, when applied to construction management can also work wonders. In construction, time is money and time management is vital for success. I’d like to talk about one area of time management in particular, that of specialty vendor (or subcontract) orders that are critical to a project.

These may be the specialty lighting fixtures, a chiller, imported granite tops, or custom wall panels that cannot be obtained from anyone else. Whether you’re an Owner, GC or Subcontractor, these kind of orders must be carefully managed or they could derail the project schedule all by themselves.

Since most contracts have a liquidated damages clause for delays, the failure to meet delivery dates for these specialty products can cost you dearly if you happen to take your eye off the ball, causing a “turn-over” (in football terms).  You have to control the clock when faced with critical specialty orders.

To do so, you may have to employ means that go above and beyond the call of duty. For instance, you may need to do one or both of the following:

  1. schedule a factory visit to confirm that your order has actually entered production, or to check on its status,
  2. offer to pay the cost to expedite the order (even if you’re not at fault) just to make sure you can “control the clock”, since the cost to expedite may be much less than the contract damages you will incur.

In all cases, you must keep tabs on these critical orders during their lifetime, before their physical arrival at the jobsite, in order to be able to employ all options when needed quickly to retain control over the time.

When LDs are a factor, as they usually are, you must first make sure that your vendor order (or subcontract) contains the same terms as your own, with the same consequences for failing to meet the delivery dates needed for the schedule. In those cases when you are unable to negotiate that type of pass-through language, you will need to take out some form of insurance. That could be reserving some funds for expediting, or as an incentive (or bonus) for meeting the date that you need. Hope will not serve as a good strategy for avoiding LDs caused by delay.

Even when you do have the proper language that ties your vendor (or sub) to the schedule for delivery, you will need to be careful to make sure you document all potential delays and follow through with notice provisions for doing so.

In those cases where the material is only available from a sole source, don’t be fooled into thinking that you can relax and let them show up whenever they do, because you don’t control the problem. I recently had a client that did just that and found out later why that was not appropriate. Even under those circumstances you are expected to employ all available means to get the materials to the job as quickly as possible. You must minimize the delay and mitigate the damages. If your customer is at fault, he will likely appreciate your proactive approach and approve your extra costs to expedite an order that would otherwise subject him to a claim from all parties affected by the delay. That is looking out for your customer, and good business practice.

The lesson learned is “control the clock” to help you win the game!

“If you control the clock, you usually control the game.” – Tiki Barber

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