Friday, July 23, 2010

A week may be a long time in politics, but is it enough in construction?

Subcontract conditions being used for major projects in Queensland can be extremely difficult to comply with; and the consequences of failure to meet them are dire.

Subcontractors must give the main contractor written notice of a delay to the construction program, and its effect, within 5 days of the start of the delay, followed by weekly updates. This notice is a strict condition precedent to being granted an extension of time. Liquidated damages for late completion are high, up to $60,000 per DAY. How many subcontractors could realistically sustain NO payment for delays and extensions of time, for any reason, with severe penalties for delay, at the whim of the head contractor, laid at their door?

Do you identify with this scenario?
-
Something happens on site on Wednesday to cause a delay to your work. Perhaps a critical work area is not ready to commence or some other cause of delay beyond your control -
1) The tradesman mentions it to the site supervisor, who takes a note in his site diary.
2) Your site supervisor (SS) makes a note in his diary and talks to the head contractor's site supervisor about the problem, who promises to get back to him, but redirects your team to another work area for the moment. (SS notes the change in his diary).
3) SS raises it at his weekly management meeting on Monday.
4) After the meeting your project manager asks your (contract) programmer to check the delay when he is doing his weekly progress update, which he does on a Friday.
5) Programmer looks at the issue after his weekly status. He emails the PM Monday to tell him that the effect on your critical path is 3 days.
6) You are now 3 days past your last date for giving notice of delay and you have lost your entitlement to claim an EOT. You must either accelerate the job at your own cost or face $180,000 in liquidated damages, plus the disruption cost of moving a team and re-programming your work.


It is not possible in practice to meet these extremely tight notice deadlines using normal business communications and business meeting cycles in a construction environment. You must have a system to collect and transfer site intelligence instantly for quick action from the responsible parties.

Systems like thepowertool Site Diary allow you to gather critical time-sensitive information at site with text, voice and marked-up photos, synchronised to the office as a task (with deadlines) for immediate action.

Subcontractors who accept conditions that are difficult to meet must ensure that they have fast, foolproof communications and systems to manage their contractual responsibilities.

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