Construction is a cash-intensive business and change orders are often one of the root causes of poor cash flow. A 30-day improvement to change management workflow can generate over $400K in additional cash flow for a $50M contractor.
A 10% improvement in change order pricing for a $50M per year contractor will add $500K to their bottom line. This is not about simply marking up the change more, but rather, including the many costs that are typically missed or undervalued.
Changes are a part of the construction process with many underlying causes. While we have all heard the average of 10% changes on construction projects, it is interesting to look at an industry study for validation.
The first step for contractors improving their management of changes on a project is simply earlier identification. This starts with a better definition of what a change really is, and then setting standards within your company around that definition.
Yoda would be the perfect coach for managing schedules on projects: “Do or do not. There is no try.” This is the heart of Percent Planned Complete (PPC) and the weekly cycle of continuous production improvement.
Contractors are continually faced with costly impacts to their labor productivity and schedule with many beyond their direct control. The best Project Managers know how to identify, communicate, and mitigate these impacts.
Effective planning processes are the foundation for great production. The planning process can be seen as a series of tighter and tighter concentric circles with the bullseye being the daily plan. Daily feedback improves performance and mitigates risk.
Effective planning combined with regular feedback (at least weekly) combined with a structured look at how to improve each week is the key to integrating the four key responsibilities of a Foreman.
Contractors build things and that comes down to the men and women in the field. They are the ones adding the value to the raw materials and that is ultimately what the customer is paying for.