The COVID-19 pandemic and resulting economic slowdown have made careful planning of every job essential. More stringent safety protocols, including safe distancing where feasible, now should be considered when mapping out a project. And because so many jobs have been delayed or canceled, those that do move forward often represent a bigger piece of a construction company’s annual revenue. Let’s review some key aspects of preconstruction.
At the start, try to approach the project from the owner’s viewpoint. This may seem counterintuitive, but you need to fully understand the owner’s goals and budget expectations before you can decide how realistic either one is.
As you’re no doubt aware, a project’s budget may expand or narrow over time. A big part of preconstruction is looking for ways to fit the budget into a flexible dollar range. Start with the contract: Its type and specific language will determine whether and how you’ll be compensated for changes in work scope.
If possible, establish a contingency fund and set up sufficient cash flows to help ensure project continuity should the owner fail to remit timely payments. Doing so may not be easily achieved in a down economy, but it’s still a good idea to have a plan if the job goes sideways.
This aspect of preconstruction is critical and very much related to the budget. When everyone on the project team understands what work is to be done, it’s much easier to calculate the budget required. Subcontractor bids are more likely to reflect their actual costs, with less need for add-on charges later.
As you know, this is easier said than done. One way to refine preconstruction is to do an “assumption check.” Are you or the owner assuming things which the other is unaware of or seeing from a different perspective? If you suspect this is the case, communication is key. An extra preconstruction meeting or phone call can eliminate misunderstandings and prevent them from growing into conflicts.
Pulling together a team that can work together smoothly is another key component of the preconstruction process. Sometimes, in the rush to get a job started, the importance of collaborative culture is overlooked.
As you get acquainted with the project requirements and everyone involved, look to assign compatible members of your own staff to work with the other parties. You should also pinpoint subcontractors and consultants with appropriate work styles.
Focus on value
In a construction context, every job can benefit from a systematized approach to identifying and providing each project element at its lowest possible cost — also known as value engineering. By formalizing and refining your company’s approach, you can elevate the effectiveness of preconstruction.
For example, preconstruction is the optimal time to consider alternative and less expensive materials choices and delivery methods. This is particularly important when materials costs may be in flux because of tariffs or other global economic changes. Just be sure to check the contract language to determine whether these choices are acceptable.
Scheduling and safety
As you know, many factors can affect a construction schedule. Your preconstruction planning should consider the critical path and obstacles that may occur — including holidays, bad weather, materials delivery lead times and equipment availability. You might also want to discuss the possibility of job shutdowns because of a spike in COVID-19 cases in your area.
Last, but in no way least, talk about safety measures and how these might affect the schedule. If workers are going to be more distanced throughout a jobsite, this could slow down execution of certain tasks. On the other hand, some processes — such as materials deliveries — may speed up if a “contact-free” approach is followed.
As construction companies move forward in a new environment of safety concerns and a changed economy, preconstruction is one of the keys to managing risk and maintaining profitability. Work closely with your team and CPA to stay up to date on the latest approaches.
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