Few contractors enter into a project without first reviewing the project's scope and requirements. However, not enough contractors take the time to perform a thorough preconstruction review to ensure the project will achieve the owner's budget and design goals while delivering the desired profit targets for the contractor. A comprehensive preconstruction process increases the likelihood that your company will complete projects on time, maximize profits, build credibility, and obtain referrals from satisfied owners. Here's a look at what a thorough, successful preconstruction review entails.
Understanding the Project's Scope
This top-down overview of the work to be completed on the project is a critical first step in the preconstruction process. You should carefully review the designs and drawings to ensure that you are aware of the full scope of the project. You need to determine the manner in which work will be completed, which subcontractors will be required on site, any restrictions your crew members should be aware of, and the target dates for completing critical steps.
Developing a First-effort Schedule
Your next step is to refine this broad overview by creating a detailed schedule. Your schedule should identify the dates you expect to hit critical milestones and complete various stages of the project. You'll need to work with the owner to ensure that your dates are in line with his or her needs and goals for the project. Essentially, this stage of the preconstruction process is your first-effort schedule that shows how your company plans to prepare and execute the job.
Identifying Needed Resources
Developing a checklist of required materials and equipment before the project's start date will help ensure that your construction schedule stays on track. You'll need to work closely with subcontractors at this stage so that any special equipment or materials they need can be ordered well in advance.
Assigning Responsibilities
Identify and document individuals responsible for various parts of the project and clarify exactly what their roles and responsibilities will be. Assigning clearly defined responsibilities will help to prevent overlap and confusion. It also keeps the project moving according to schedule.
Assessing and Managing Potential Risk
You'll want to assess the financial and practical risks associated with each project. That requires identifying and assigning a score to each potential risk. Once the risks are identified, you can map out a strategy to minimize them. For example, will your company face financial penalties if certain targets are not completed on schedule? How will you prepare for that? Or, will the location of the project limit easy access and egress for workers, equipment, and supplies? Is there an on-site staging area for your vehicles, equipment, and tools?
Change orders are a key potential risk that can eat into your profit margin. Check the contract to ensure that you can bill for every change order. Some contracts specify the method for pricing changes. When the contract does not offer pricing guidance, you'll have to be sure to include both direct and indirect costs, such as additional project management and staff time to compile and bill the change.
Plan for Success
A comprehensive preconstruction review is a critical step for contractors focused on controlling expenses and maximizing profits. As the new year begins, remember that we're here to help you with advice and feedback on strategies for making 2014 a financial success. Please be in touch.
"You'll want to assess the financial and practical risks associated with each project."
