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- Industry Insights May, 2010
- By Ron King, Vice President, Business Development
Protecting profits continues to be the name of the game in this economic climate. The past couple of articles I've written centered on maximizing fabrication opportunities. I'd like to explore another possible way to keep money on that ever shrinking bottom line.
I'm sure you've received the phone call when the owner states "I need to inform you that the equipment I ordered is not going to arrive when I originally stated". Or the general contractor states "You'll need to move your crews out of this area for the next two weeks due to….."
Identifying schedule impacts on the jobsite are sometimes hard to do and quantifying them can be just as challenging. One way to help you substantiate your claim is to submit a schedule with your original bid. This doesn't need to be a full blown, man-loaded, CPM schedule, but could be as simple as a bar chart schedule. The schedule needs to display the date(s) owner-supplied equipment is intended to arrive. They can easily be shown as "milestones" which clearly display the equipment arrival date(s) upon which your bid was predicated.
A contractor recently submitted a bid to install owner-supplied equipment which was to be mounted in modular towers. The owner stated the intended arrival date of the modules during the pre-bid, but the date was not mentioned in the documentation. All the foundation work was complete and the contractor ordered a Manitowoc 2250 crawler crane to be assembled by the date the equipment was to arrive. The afternoon before the arrival date, the contractor received a call stating the modules were being held up by wide-load permits due to road construction in the south. This eventually turned into a two-week delay problem. The end result was a crane sitting idle during this period and manpower that had to be reassigned to another jobsite. Now began the cost of the delay fight with the owner.
If a bar chart schedule had been submitted with the original bid, identifying the date the modules were to arrive, substantiating the claim would be easier. And if the contractor had taken the time to submit a schedule, it would have been very easy to show the as-planned versus actual arrival dates and how the delay effected manpower reassignment and equipment rental costs. Instead a battle ensued about the verbal delivery dates stated during the pre-bid meeting.
Another contractor had crews working on a commercial project when the general contractor stated the walls weren't going up as fast as planned and he needed to move his manpower to a different area of the jobsite. This clearly interrupted his planned activities and required the foreman to redirect the manpower to another area. Additionally, the foreman was impacted because material and tools were needed for the new area. This fire drill also impacted the purchasing and trucking departments to deliver the material and tools to keep the craft going in the new area. Again, had a simple bar chart schedule been submitted with the bid showing the activities and their durations, this impact would have been easier to quantify.
Another contractor had purchased rooftop equipment from a vendor who promised delivery by a certain date. Once the delivery date came closer, the vendor called stating the dates had slipped. The equipment finally arrived two weeks late. The contractor had used a purchase contract when ordering the equipment, but the delivery dates were not referenced in the contract. The purchase contract is a binding agreement between the contractor and the vendor, but the missing delivery date became crucial in settling the delay claim.
As you can see, delivery dates shown on a simple bar chart schedule submitted with the bid could have mitigated the first two contractors' risk. And properly referencing the delivery date in the purchase contract would have helped in the other case. These simple suggestions can help protect your bottom line especially when times are tough.
Illustration by Angelo Katsaros