Construction Today - December 2017 - 15

BEST PRACTICES

try due to the high risk of getting offside
with cash. Those who manage cash well
have access to capital.
* Lump sum projects - The ability to take
on a lump sum project should be conditioned on a clear scope and engineering
complete or nearly complete. It is critical
to have an experienced project manager in that type of project, and a project
execution plan that is aligned with the
bid/contract. If you have deep experience in these types of projects, it may be
a competitive advantage, allowing you
to achieve high margins. To incentivize
the crew, there should be a bonus shared
with the people to align interests. If these
conditions are not in place, a lump sum
project structure can lead to losses.
* Project manager - People make the
same mistakes in managing projects as
they learn and move up in the ranks.
The trick is to start project managers on
small, low-risk projects then move them
up to increasingly more challenging
and larger scopes. You want a PM who
has had something go sideways and
had to regroup to get the project back
on track. One of the single largest factors
in projects not going well is a mismatch
between the PM and the project scope.
* Soil conditions - Many times contractors take on the risk of soil conditions.
You can't control what is down there and
surveys don't get you all the information
you need. Any time a risk is completely
outside your control, you should avoid
it. That means if the contract puts the
responsibility on you, you should take
exception to that clause and return the
responsibility to the owner.
* New technology - There are always
hiccups with new technology. Think
about your computer or phone. If you
get the first release, there are always
bugs that get fixed over the course of
weeks or months. The same is true for
new technology in facilities. You don't
know where the issues will arise, so it is

It is important to build
lessons into company
culture and processes.

important to contractually avoid responsibility for the hiccups
that will occur when dealing with new technology that will
surely cause you losses if you have responsibility. Whether it is
installation or startup, there are almost always delays. Make sure
to protect yourself.
* Constrained site - Many times when bids are being put together and negotiated into a contract, the project execution plan is
not considered. In the case of a constrained site, many challenges may arise such as accessibility to materials when and where
needed, and work flows that create a challenge for efficiently
building your project. A keen eye on the construction execution
plan should be included as part of the estimating process before
getting to a price and contract.
* Labor Availability - Depending upon where you are located, this one may seem obvious right now. You've likely built
increased turnover and higher labor rates into your contracts.
This may be an issue when you are at the front end of a cycle and
you have a delay in the start date. That delay can put you into a
seasonal or cyclical period where labor availability declines and
cost increases. Your contract should be clear that delays beyond
a certain time frame allows you to adjust your rates and your
completion date.

«

Heidi Pozzo helps
leaders grow their
businesses in good times
and bad. She has a deep
background in the construction industry, both
as a senior executive and
as a consultant. She was
recognized by the Portland Business Journal for
her work at Longview as
CFO of the Year - Large
Company. To contact her,
visit www.PozzoConsulting.com.

These are the most impactful of the many risks that are regularly
experienced in the construction industry. In many of the cases highlighted, top contractors have turned them to competitive advantages. How are you identifying and addressing risks in your business?

15

DECEMBER 2017 CONSTRUCTION-TODAY.COM


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Table of Contents for the Digital Edition of Construction Today - December 2017

Contents
Construction Today - December 2017 - Cover1
Construction Today - December 2017 - Cover2
Construction Today - December 2017 - 1
Construction Today - December 2017 - Contents
Construction Today - December 2017 - 3
Construction Today - December 2017 - 4
Construction Today - December 2017 - 5
Construction Today - December 2017 - 6
Construction Today - December 2017 - 7
Construction Today - December 2017 - 8
Construction Today - December 2017 - 9
Construction Today - December 2017 - 10
Construction Today - December 2017 - 11
Construction Today - December 2017 - 12
Construction Today - December 2017 - 13
Construction Today - December 2017 - 14
Construction Today - December 2017 - 15
Construction Today - December 2017 - 16
Construction Today - December 2017 - 17
Construction Today - December 2017 - 18
Construction Today - December 2017 - 19
Construction Today - December 2017 - 20
Construction Today - December 2017 - 21
Construction Today - December 2017 - 22
Construction Today - December 2017 - 23
Construction Today - December 2017 - 24
Construction Today - December 2017 - 25
Construction Today - December 2017 - 26
Construction Today - December 2017 - 27
Construction Today - December 2017 - 28
Construction Today - December 2017 - 29
Construction Today - December 2017 - 30
Construction Today - December 2017 - 31
Construction Today - December 2017 - 32
Construction Today - December 2017 - 33
Construction Today - December 2017 - 34
Construction Today - December 2017 - 35
Construction Today - December 2017 - 36
Construction Today - December 2017 - 37
Construction Today - December 2017 - 38
Construction Today - December 2017 - 39
Construction Today - December 2017 - 40
Construction Today - December 2017 - 41
Construction Today - December 2017 - 42
Construction Today - December 2017 - 43
Construction Today - December 2017 - 44
Construction Today - December 2017 - 45
Construction Today - December 2017 - 46
Construction Today - December 2017 - 47
Construction Today - December 2017 - 48
Construction Today - December 2017 - 49
Construction Today - December 2017 - 50
Construction Today - December 2017 - 51
Construction Today - December 2017 - 52
Construction Today - December 2017 - 53
Construction Today - December 2017 - 54
Construction Today - December 2017 - 55
Construction Today - December 2017 - 56
Construction Today - December 2017 - 57
Construction Today - December 2017 - 58
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Construction Today - December 2017 - 60
Construction Today - December 2017 - 61
Construction Today - December 2017 - 62
Construction Today - December 2017 - 63
Construction Today - December 2017 - 64
Construction Today - December 2017 - 65
Construction Today - December 2017 - 66
Construction Today - December 2017 - 67
Construction Today - December 2017 - 68
Construction Today - December 2017 - 69
Construction Today - December 2017 - 70
Construction Today - December 2017 - 71
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Construction Today - December 2017 - 75
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Construction Today - December 2017 - 107
Construction Today - December 2017 - 108
Construction Today - December 2017 - 109
Construction Today - December 2017 - 110
Construction Today - December 2017 - 111
Construction Today - December 2017 - 112
Construction Today - December 2017 - Cover3
Construction Today - December 2017 - Cover4
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