Construction Industry Disputes: How To Avoid Them

construction industry disputes

When the global consulting firm HKA released a report analyzing construction claims and disputes, many knowledgeable construction industry leaders were stunned. CRUX Insight is an annual publication and was released 3Q 2020. It reports “colossal costs lost to construction claims and disputes.”

Causes of Construction Industry Claims, Disputes

The analysis revealed “eye-watering sums of money and time being lost, as well as the patterns of root causes.” Information was obtained from the Americas, Africa, Asia-Pacific, Europe, and the Middle East. The leading cause of construction industry claims and disputes is design issues.

The report said “fast-track construction” is putting pressure on the design phase. The fast pace often compromises project control. “More investment in up-front planning, design and coordination is imperative, along with smarter procurement and more balanced risk allocation.”

Inadequate contract management might be contributing to design problems, according to Construction Dive. The top causes of claims and disputes in 410 North, Central, and South America projects were:

  • Access to project site restricted
  • Adverse weather conditions
  • Changes in scope
  • Claims – “Spurious, over-inflated, opportunistic and/or unsubstantiated.”
  • Contract mismanagement
  • Designs
    • Incomplete
    • Incorrect
    • Late
  • Failure to anticipate physical conditions
  • Installation failures
  • Subcontractor mismanagement
  • Supplier/third-party interfaces mismanagement
  • Workmanship deficiencies

The pandemic and shaky markets, trade tensions, supply chain issues, and the shortage of skilled administrative talent all currently challenge the construction industry. Internationally, change in scope, design, and poor subcontractor management were leading causes of construction industry claims and disputes.

5 Ways To Reduce Claims and Disputes

Construction industry writer/editor Julie Strupp offers five recommendations to reduce project claims and disputes:

  1. Allocate adequate design resources/set realistic timelines. 
    • Ensure stakeholders are involved in a design review process. 
  2. Assign risk management to appropriate personnel. 
  3. Develop/implement a project execution plan with buy-in from the client and supply chain. 
  4. Don’t rush Requests for Proposals (RFPs).
    • Wait until the design is reasonably advanced, so timeframe/costs are more reliable. 
    • Weigh factors such as experience/expertise, quality/price to gauge bidders’ true value. 
  5. Promote transparency among all parties.
    • Promptly communicate/resolve issues.

Ask questions to lessen mistakes in construction projects. When you know more, you make better choices. Construction Monitor is the best project lead-generating service. Ask us.

COVID Vaccine Mandates Problem or Protection?

COVID Vaccine Mandates

It’s confusing on its best day. The construction industry is promoting COVID vaccine policies for all workers. But the Occupational Safety and Health Administration is mandating vaccinations, and that isn’t sitting well with many construction companies. Employees must vaccinate or prepare to test weekly by January 4, 2022.

OSHA’s COVID vaccine mandate would make all businesses with 100+ employees face fines for violations. The proposed maximum penalty is $13,653/violation and “willful or repeated violations” at $136,532 or less per violation.

Most opponents contend the OSHA vaccine mandate:

  • Exceeds CMS’s (Centers for Medicare & Medicaid Services’) authority
  • Violates 42 U.S. Code 1395; “…to exercise any supervision or control over the practice of medicine…”
  • Violates APA (Administrative Procedure Act) and is “arbitrary and capricious” under the APA
  • Violates the CRA (Congressional Review Act)

Construction industry-related organizations, including:

  • American Road and Transportation Builders Association
  • Associated General Contractors of America
  • Signatory Wall and Ceiling Contractors Alliance

…filed a petition for OSHA to review the mandate. The contention is it will cause employers to lose employees in what is currently a labor shortage.

In addition to construction industry-related organizations, several states are filing suit. States protesting the mandate include:

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • Florida
  • Georgia
  • Idaho
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • New Hampshire
  • North Dakota
  • Oklahoma
  • South Carolina
  • South Dakota
  • Texas
  • Utah
  • West Virginia
  • Wyoming

November 2021, Georgia governor Brian Kemp said the mandate is an unprecedented and unconscionable use of power by a president that will cripple Georgia’s economy. Georgia Agriculture Commissioner Gary Black said, “If the rule of law prevails, Georgia’s economy will be stable.”

Construction Monitor Customers

Who uses the software services Construction Monitor provides?

  • A few power-hungry startups seeking alliances, partnerships, and competitors’ information receive weekly reports.
  • A food truck service mapping its citywide service to construction sites.
  • A small business in Ohio with fewer than 40 employees utilizes our mass-mailing service.
  • Some international organizations seeking to develop U.S. areas of opportunity use our real-time leads.

The fact is, if you’re in any business in the U.S.A., we likely have information that would benefit your company. Ask us. We’re marketing pros with ideas we’re eager to share. Contact Construction Monitor.

Construction Business Excavations and Underground Utilities’ Inefficiencies

Construction Business Excavations

In 2005, the Call Before You Dig awareness campaign officially adopted 811 as the universal number for consumers to call to request information about utility lines on properties. Construction business owners are diligent about this, but the system’s failures have come home to roost.

There are more than 100 billion feet of underground utilities in the U.S., which means there’s over a football field’s length of line per person.Pipesy.com

The Infrastructure Protection Coalition completed a study to determine issues and solutions to revamping underground utility systems. Clearly, the marking and reporting system isn’t working as-is.

The inefficiency and waste cost utilities customers and construction business owners a whopping $61 billion per year. This is in addition to the $30 billion annual out-of-pocket costs directly due to underground utilities’ damages. An underground utility line is damaged every six minutes nationwide.

“Surprise” is not a strong enough word.“Shock” is the appropriate word.
Mark Bridges, Continuum Capital

  • In addition to the monetary loss, the lack of efficiency in underground utility systems poses health and safety threats.
  • The location markers identification system is a big factor in mistakes made during underground excavations. Markers were often lost or destroyed.
  • Utilities’ personnel were frequently given poor instructions for projects that might or might not happen.

Over a 3-5 year timeframe, the solutions would cost $1.2 billion and save about $30 billion:

  • A third-party enforcement board will deal with issues.
  • All asset owners, operators, and other personnel must enroll in the 811 system with no exemptions.
  • All parties (asset owners, excavators, locators) will manage similar risks so the penalty structure is more balanced.
  • Dig laws revised so all underground utility damages must be reported.

The Ultimate Lead Source

Building and solar permit information drive our industry and every size construction business. Construction Monitor is truly the ultimate lead source for key project data to help suppliers, subcontractors, building professionals, and general contractors to better target and reach new customers. To learn more about developing a marketing program for your construction business, contact our professionals.

New and Improved Construction Industry Bidding

construction industry bidding

If you google “construction bidding,” you’ll get more software hits than Heinz has pickles. And that’s okay. Software is leveling the playing field for construction’s small business owners that want to win profitable jobs by making the most cost-effective bids.

But if you’re a drywall contractor, do you really need to use the same software as an electrician? You’re factoring the cost of gypsum plaster and plasterboard with a high R-value to meet contract requirements for a building with 120 studio apartments.

Often, by the time the project needs drywall, it’s already behind-schedule and over-budget. No pressure.

Construction bidding has to be more precise because material costs are more expensive and unpredictable. Try factoring unpredictability into a math equation and you’ll see why software is your best friend.

Contractors’ Construction Industry Bidding Software

It’s frustrating – for all of us – when your basic bidding software is already obsolete. But these are complicated times, and you need to be able to affordably and profitably price complicated projects.

Software Advice rates 57 construction bidding management programs. In order of recommendation, the top 5 are:

  • CoConstruct
  • Pipeline Suite
  • B2W
  • BuilderTREND
  • Contractor Foreman

One of these software companies added a bid management feature that allows you to sort project bids by phases. They say it’s “one-of-a-kind and exclusive.” The word “revolutionary” also comes to mind.

Your construction bidding software can:

  • Bid project phases
  • Conceal various subcontractors’ quotes
  • Dashboard prior bids or bid phases
  • Have separate bid dates per bid submission
  • Include trade-specific wording
  • List separate project contacts for each bid package
  • Rebid faster

One company’s example was:

Let’s say you’re sending a Bid Invitation with special invitation verbiage for electrical subs and different verbiage for others. And you have some files that you only want some Bid Packages and subcontractors to see. And you’d also like to assign a project contact for each Bid Package…in a few weeks, you want to rebid the whole thing in one click and track the history…No problem.

Construction Monitor’ blog provides information only. No software brand is recommended or endorsed (except our own). For information about the software that generates profits, contact Construction Monitor.

7 Construction Contractor Tips for Newcomers

We are making positive changes that will impact our industry for generations. We are grooming younger students for construction industry apprenticeships. Technology continues to dominate our development.

It’s a good time to be a construction industry business owner.

A construction business is still, after all is said a done, a business. Here are 7 contractor tips* to help you get a better idea of how to succeed in the construction contracting industry.

  1. Create financial relationships – Get prequalified to “establish surety credit for future projects and growth,” says Liberty Mutual. Make sure you have the right insurance and permits for every job. Look for partners that include:
    • Bank
    • Construction industry CPA
    • Knowledgeable-in-construction surety company
    • Surety bond producer
  2. Develop a business plan – What’s your mission? Your vision? You’ll return to your business plan when times are tough. It serves as a reminder of what you want to accomplish as a construction contractor.
  3. Document processes – In construction, there are many variables but implementing industry-best policies and procedures should be every contractor’s goal. Another reason to develop and document procedures: If a critical employee is unavailable, can someone step up to the plate and serve, using the documented processes for the job?
  4. Don’t hire the wrong people – It’s difficult to avoid hiring friends and relatives but unless they are qualified for the job’s responsibilities it’s a big mistake. If you do hire the wrong people, replace them asap.
  5. Equipment (lease or buy) – Operating expenses are different for every company so explore the benefits of leasing vs. buying equipment. Monthly payments are one thing; maintenance and repair are another.
  6. Invest in technology – Tracking finances with the right software is critical to your success. Software can keep billings and payments on schedule and provide a real-time look at your business. Estimating software is equally important. Your new business may not recover easily from a badly estimated project.
  7. Scrutinize every contract – If you don’t trust yourself to adequately understand a legal document, partner with someone who does. Conflict resolution, scope of work, and deliverable timelines must be clear to all parties.

For more information you can use, call 800.925.6085 (International/435.586.1205) or contact Construction Monitor today.
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*This is not professional/legal advice; it is provided for information only.

Construction Business Project Management: Cost Control

construction business project management

It’s critical to know how much a project will cost. Lately, that’s been more of a crapshoot than it should be, but construction business managers are finding innovative ways to guesstimate costs and when costs will hit the budget.

Time-Phased Budgets for Construction Business Projects

The challenges of cost-loaded schedules for construction business projects are real:

  • The goals aren’t necessarily shared commonalities.
    • Construction business manager wants to monitor costs
    • General contractor and sub-contractors want control over how costs are entered
    • Owner wants to stay within budget and on-time
  • The schedules may not adequately reflect the “real” expenses.
    • Pareto’s Rule: 80% of the outcome of any project is determined by 20 percent of its included elements…
  • The stakeholders may have different concepts of what a cost-loaded schedule is.
…The biggest problem is, (the) cost loaded schedule needs to match with accounting records. …The cost engineers must spend countless hours to find the difference; troubleshooting cost and hours when using cost loaded schedule method in the project. …Secondly, how do you communicate the schedule and who has the financial information when cost loaded schedule is used on the project?Rahul Shinde, Support Engineer

Even complicated time-phasing schedules are more flexible and transparent. “Because the nature of construction itself is time-phased, successful project teams plan for costs, revenues, escalation/risk windows, and key resources via their phases of timing,” says Rick Deans of technology solutions company InEight.

Getting project income and expenses to the finish line at the same time is the goal. Spreadsheet solutions present a myriad of problems, not the least which is, whose version reflects the most recent updates? Software solutions* can keep your project revenue and expenses in real-time.

Construction Monitor Software Generates Real-Time Leads

We update our data – your information – every week. It may be a cliché, but it rings true: When it comes to our building permit analysis, if you don’t use it you lose it (construction business opportunities).

Do you want to win more projects? You can, with the right information. Call 800.925.6085 (International/435.586.1205) or contact Construction Monitor.

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*Construction Monitor does not recommend nor endorse any brand of construction business software (except our own).

Your Construction Business: Building Your Own Talent Pool

construction workers

The time to address the labor shortage issues impacting your construction business was yesterday. But’s it’s never too late.

We say on-the-job education and training are the advantages of a career in construction. But are you ready to put a plan in motion to train and develop construction business professionals for your company?

Preparing Your Construction Business for Attitude Adjustment

“If you train them, they will stay.” This isn’t necessarily true if your work environment isn’t more employee-retention oriented. Business reporter Leslie Shaver says if you don’t develop a culture that encourages retention, you may be training employees for your competitors.

To cultivate this new culture, you need to focus on current company culture. Your employees should be aware that training for new technology is available to everyone; not just new hires. Training programs’ advantages are:

  • Commitment to training – Daily training is expensive and time-consuming. Management and staff must be 100% invested. Consider getting creative with work/shift schedules.
  • Reskilling/upskilling as a construction business imperative – But most of us don’t know how to do it.
  • Specialized skills gaps can be filled  – New and current employees can take this opportunity to develop critical construction business skills during your recruiting/retention program.
  • You and your management team already know who the “right” employees for training are – An employee that already has soft skills but has never demonstrated an interest in improving company processes or even personal development may not be the right candidate for training.
  • You can train to what your company needs most – The most in-demand skills are:
    • Automated equipment operation
    • Carpentry
    • Construction equipment operation
    • Electrical
    • Machining
    • Plumbing/pipefitting
    • Welding/soldering

Schedule regular reviews to evaluate the training program and its participants and consider outside help, says Shaver. You may want to invest in:

  • Developing trade school outreach strategies
  • Partnering with building products manufacturers
  • Skilled trades education at the high-school level
  • Working with organizations that specialize in skills development

Construction Monitor Marketing

We offer data analytics that can generate business for your company. Of course, our marketing professionals want to “sell” you our services but they also want to educate – train you – in the most productive use of our information.

We have the tools you need to develop your marketing strategy. Contact Construction Monitor to learn more.

The New Construction Era: Drive It or Survive It?

construction industry

The digital transformation has led to a new construction era. Some companies are driving the change. Others are playing catch-up. Our new construction era is a lot of things, but it isn’t a spectator sport. To become or continue to be a thriving construction company, you need to become a part of the digital transformation.

3 Business Plan Elements for the New Construction Era

Do you remember the popularity of the 5-year business plan? Every organization worth its salt had to have one.

If you wanted to make a 5-year business plan for the new construction era you would include anticipated:

  • Cash flow
  • Expenses
  • Income
  • Trends

…for the next five years, even though you can’t predict supply chain crises and employee turnover for the next 5 days. Instead of focusing on the duration, focus on embracing the technology.

Here are 3 elements you need for your digital transformation business plan:

1. People

Every employee must be included in your digital transformation process. “Unfortunately, when going digital, many construction firms neglect to seek…buy-in from their key stakeholders. This leads to a major disconnect between the initial implementation of new technology, and how many workers actually use it on a day-to-day basis,” says Construction Dive. Instead of setting timeline goals, patiently focus on getting employees on board with training. Your people are worth it.

2. Process

While manufacturing productivity has averaged a 3.6% increase, construction productivity has grown a measly 1 percent a year. A digital transformation could increase our productivity by as much as 15% and reduce financial loss by as much as 5% per project.

Do you know where the bottlenecks are in your productivity? You should. Correcting unnecessary time- and money-wasting will contribute to growth. And your digital solutions will overcome the bottlenecks to your business that are holding you back.

3. Technology

Construction continues to be among the least digitized industries, but we’re improving. Digital transformation can streamline and minimize process and project issues in the new construction era.

New technology should be implemented to fix pain points that are actually hindering growth. For best results, tech solutions must be delivered as fully integrated, cohesive systems… Briq

We Digitize. You Analyze.

For the marketing professionals at Construction Monitor, the new construction era is proving to be an exciting time. After all these years – we saw the future of data analytics as early as 1989 – we are finally “preaching to the choir.” The construction industry is moving much faster to embrace technology, including ours.

To find out what our building permit datasorts can do for you, call  800.925.6085 (International/435.586.1205) or contact Construction Monitor.