Construction contract
management
You are the Managing director of a large
construction company. Can you make the
right decisions to win the contract for your
company, make the work profitable and
ultimately save your job
You receive the contract
documentation to build a multi-story
apartment block
You have been loosing too many
contracts at the tendering stage lately
• Your rival companies have been winning numerous
contracts and expanding their business.
• The shareholders and the board of directors are putting
pressure on you to win the contract to construct the
apartment block, things are beginning to get a bit
desperate…You call a meeting with your contracts
manager and his team….Its decision time…
What should you do…?
Tender for
the contract
in your usual
format and
hope you
win
the contract
Offer
the client a
contract
which
is stacked
with penalty
clauses
which could
be very
favourable
for the client to
guarantee you
get the work
Re-structure
your
tendering
Policy
and try to
beat your
rivals
by employing
new building
techniques and
cutting down
on your costs
Put pressure
on your
contracts
Manager
to cut the
price in your
tender and offer
a quick
completion
date that the
client cant get
from any other
offer to seal
the deal
You have been sacked!
The board of directors feel
you have shown no
innovation !
Congratulations
It appears you have made the right decision
your company needs to update its tendering
methods!.
Hmm…
Well your colleagues are a little disappointed
but you have averted a crisis for the moment,
but the penalty clauses may catch up with the
company at a later stage
Revolution!
The contracts management team are unhappy with
the situation you have placed them in because they
feel the company can't meet unrealistic deadlines.
The team have emailed the board to complain about
your actions! The board call an extraordinary
general meeting to discuss your actions, they decide
that you have put the contracts team under undue
pressure and therefore have no option but to
terminate your contract.
Starting the work:
Can you meet your contractual
obligations ?
The job starts well enough, the site has
been cleared, the building set out, the
foundations have been excavated and
have been completed to ground slab
level. You are ready continue with the
build when your workforce strike due to a
wage dispute. They were promised £ 180
pounds per day but they are only being
paid £ 140
The job has stopped, what should
you do…?
Sack the
workforce
and employ
new people
Find a
Compromise
and meet the
men
half way
plus a
bonus payment
for
early
completion
Pay the men
what
you
promised
them
Scrap the
current
pay scheme
and introduce
an incentive
bonus scheme
Congratulations
It appears you have made the right decision but
will you have the money to pay the men a bonus
if the contract comes in early
Hmm…
This leaves the workforce feeling a bit
betrayed but in the main they are willing to go
along with it providing they earn a decent
weekly salary. This situation is a little
precarious for the company as the men could
leave when a better offer comes along
Disaster
• The job went massively over the budget due
to the wage bill. This was your companies
last chance saloon and you have blown it.
The company have gone bust and your left
out of work …..bye bye
Material shortage
The company that you employ to
supply you with concrete are
having problems at their plant,
they currently have four concrete
trucks out of action. Progress is
slow because of this and the job
has fallen behind the programme
by two weeks already
What should you do next…?
Accept it
and hope that
you
can make the
time
up over the
coming weeks
Drop the
concrete
company
and employ
a new one
Use another
company until
the contracted
company sort
out their
problems
Put pressure
on the
contracted
company
with legal
action as
they are not
complying
with the terms
of the contract
Good decision…
• This should keep everyone happy. The work can
progress the concrete company wont be dropped
( but may incur a penalty ) and you wont have
too get involved in legal tangles…
The bricklayers aren`t up to scratch. Their work is poor
and the clerk of works has condemned four walls they
have built. What should you do ?
Sack the bricklayers, employ new gangs
Ask them to improve their standards, warning them that if
they don’t they will have their contracts terminated
Employ the best brickies available and pay them more
money
Put the bricklayers through an on-site skills test by building
a sample wall.
Bad news
• You have sacked the bricklayers and not
replaced them quick enough. The job is
further delayed and you are history
sunshine!
A good move
• The brickies improve and the job
progresses, well done
Bad move
• The new gang are good but cost you a
critical amount of wages. The other
tradesmen find out about their pay and bang
you’ve got a disgruntled workforce
Bad move
• If time wasn’t of the essence this would be a
humanistic approach, giving the brickies a
chance, but time is against you and in
business you’ve got to drop sentiment. The
job falls further behind and you are demoted
to the junior management ranks
This should work,
you have given the
company enough
chances and you need
a more reliable
concrete company .
However the new
company might be no
better. More questions
lie ahead
Rall
y
The job is moving on
• Things are going well the workforce is
happy and you are running to the
programme of work on time
Fatality on site
• There has been a tragic accident on site and
the HSE have placed a prohibition notice
against the site, you cant work. How can
you progress and keep your workforce on
board.
What should you do next…?
You must
redeploy your
workforce to
other sites
Temporarily.
While keeping
a skeleton staff
to carry out
menial tasks
such as repair,
stock taking
and tidying up
the site until the
notice is lifted
Let the HSE do
their work and
wait until the
notice is lifted
and
carry on as
normal
Be strong and
ride the storm.
Strength from
the leadership
at this time is
paramount don’t
worry about the
Investigation,
work will
commence
in two weeks
time
Ignore the
notice
they have
proved
nothing yet it
probably isn`t
your companies
fault
The best decision
• This is the best option of all, you must
comply with the HSE but at the same time
you have to keep your workforce earning a
living. There are certain tasks that can be
carried out. Ie stock taking tidying and
repairing equipment.
Hmmmm
• This is an option - but you really should be
setting out a programme of tasks as in
option one. You should redeploy your
workforce or they may seek employment
somewhere else. It could have problems
This could back fire
• You could appear to be arrogant and not as
co-operative as you might be. This could
upset the HSE at a time when you really
need to help them and assist the
investigation. You do need to be strong but
an air of arrogance can be a weakness. Be
careful
Disaster
• The notice is enforced you must comply
failure to do so loses you your job. Bye bye
Severe weather
• High winds followed by four weeks of frost
are causing havoc with the programme. The
upper floors of the building are progressing
slowly due to the high winds, the minus 6
temperatures have delayed the concrete
pour and the brickies can`t lay bricks in the
frosty conditions
What should you do next…?
Ignore the weather,
the Site is falling
behind the
programme
and you
must continue
and hope the
weather breaks
Stop work or risk
material wastage
or even the workers
lives. You will just
have to wait until
the weather breaks
Hire gas heaters
to keep the
Temperature high
enough to keep
laying bricks and
pouring concrete
Gas heaters are
too expensive
to run, making
the progress
Uneconomical.
Why not cover the
Brickwork with
sheets and hope
the temperature
is no lower than
Minus 2. Pour the
upper floor
concrete
slabs when the
wind drops
Disastrous
• The weather is king here. High winds can
cause terrible accidents with cranes and
lifting equipment. Frosty weather ruins the
wet mortar in brickwork and will collapse
or be condemned by the clerk of works
Hmmmmmm
• Stopping work is an option but the lack of
progression could be damaging
Probably the best option… but
• This is a short term option but it can work
out costly.
Hmmmm
• This is the most common solution but you
are taking a chance on the low
temperatures. Frost sheet will protect wet
mortar and concrete down to about minus 1.
this could backfire on you
The situation worsens
• The job falls behind a further two weeks
because the concrete company can`t get the
parts to repair the trucks soon enough.
• You have made a fundamental error here
you should have insisted that your project
manager took quick decisive action
• You are fired !
Legal action should be the last resort !
• This is a bit heavy handed but it can force
the company to sort their problems out.
However it could also ruin the company and
cause them to go into receivership. It may
work it may not but you are possibly
wasting precious time. The consequences
may come back to haunt you…
This is disastrous
• Unfortunately you are unable to recruit a
new experienced workforce and the work is
stalled. The delays stack up and days turn
into weeks, you manage to recruit some
workers but its too little too late. The client
is forced to terminate the contract with you
and takes legal action. The board of
directors sack you in an attempt to save the
company… You are history, bye, bye
Method statement
• Following the fatal accident the HSE have
set a number of conditions that you must
adhere to. One of the conditions is to renew
your health and safety documentation
including a new method statement and risk
assessments for all work activities.
Which method statement format should you
choose…?
One which
focuses
On health and
safety
Issues whatever
the cost
in operational
Activity
restrictions. This
will impress the
HSE
A method
statement
which is quick too
produce and easy to
implement because
more delays are
the last thing you
want
One which covers
The basics and
addresses
the things
the HSE have
Outlined, but the
Sub contractors
can produce
their own
A concise
method
Statement,
covering
all operational
Activities which
is adhered to by
all who work
on the site
Too difficult to work with
• This is a good method statement in terms of
its intentions, but the implementation of it is
proving impossible. The job falls behind
and the company brings in a new MD, sadly
you are moved onto junior management
Hmmmmmm
• You might just get away with this but the
simplicity of the statement may not cover
all eventualities…… time will tell Mr
Managing director
Oooops - big time
• You omitted the sub contractors from your
method statement. This is a fundamental
mistake and you are fired!
Well done!
• A method statement from the main
contractor should cover anyone who works
on the site. The HSE are happy and things
progress,
Theft
• The other night your store cabin was raided
and all the expensive ironmongery and
fittings were stolen. The thieves haven't
been caught because your CCTV wasn’t
working properly and it is suspected that the
security guard was asleep – something he
denies and says he just didn’t see them.
What should you do…?
Sack the security
guard and employ
someone else
Get some new
CCTV cameras
Re- train the
security personnel
and give him two
weeks off work
to recover
from the stress
Request a new
security guard
from the security
company and
use guard dogs
Wrong move !
• He hasn`t been found guilty of this crime
and he denies that he was asleep, you have
no legal grounds to sack him and doing so
has just cost your company a substantial
amount of money due to wrongful
dismissal.
Hmmmmmm
• This may work but it doesn't address
everything fully, you still have the same
security guard and in general this seems like
too little too late. This may come back to
haunt you!
A bit weak
• This makes the company look soft on crime
and the staff are left bemused at your blasé
attitude
Well done!
• This is the right move the guard has become
a bit lax and the dogs are a good change of
security policy – you look like you mean
business in terms of improved security
Trade conflict
The programme of work has been so badly
interrupted due to one thing or another that your
programme of work has been thrown into
disarray.Consequently the different trades on site
are no longer in “sync”and the work areas are over
crowded with electricians, Joiners and plumbers.
This must be resolved as a matter of urgency
What should you do next…?
Delay the
Plumbers and
electricians
until the joinery
is complete
Allow each trade
area to complete
their work in
allotted times
Work out which
trade area
needs to be out
of the area first,
second then third
to allow the job
to progress