While there are many valid criticism of the spread option, one thing is true, when is executed well, it works! It is especially good at keeping the offense on the field and "controlling the clock." When you control the clock in football, your chances of winning games improve (of course, it helps if you're also able to score too and we're averaging 38.8 points per game).
This strategy, when applied to construction management can also work wonders. In construction, time is money and time management is vital for success. I'd like to talk about one area of time management in particular, that of specialty vendor (or subcontract) orders that are critical to a project.
These may be the specialty lighting fixtures, a chiller, imported granite tops, or custom wall panels that cannot be obtained from anyone else. Whether you're an Owner, GC or Subcontractor, these kind of orders must be carefully managed or they could derail the project schedule all by themselves.
Since most contracts have a liquidated damages clause for delays, the failure to meet delivery dates for these specialty products can cost you dearly if you happen to take your eye off the ball, causing a "turn-over" (in football terms). You have to control the clock when faced with critical specialty orders.
To do so, you may have to employ means that go above and beyond the call of duty. For instance, you may need to do one or both of the following:
1. Schedule a factory visit to confirm that your order has actually entered production, or to check on its status,
2. Offer to pay the cost to expedite the order (even if you're not at fault) just to make sure you can "control the clock", since the cost to expedite may be much less than the contract damages you will incur.
In all cases, you must keep tabs on these critical orders during their lifetime, before their physical arrival at the job site, in order to be able to employ all options when needed quickly to retain control over the time.
When LDs are a factor, as they usually are, you must first make sure that your vendor order (or subcontract) contains the same terms as your own, with the same consequences for failing to meet the delivery dates needed for the schedule. In those cases when you are unable to negotiate that type of pass-through language, you will need to take out some form of insurance. That could be reserving some funds for expediting, or as an incentive (or bonus) for meeting the date that you need. Hope will not serve as a good strategy for avoiding LDs caused by delay.
Even when you do have the proper language that ties your vendor (or sub) to the schedule for delivery, you will need to be careful to make sure you document all potential delays and follow through with notice provisions for doing so.
In those cases where the material is only available from a sole source, don't be fooled into thinking that you can relax and let them show up whenever they do, because you don't control the problem. I recently had a client that did just that and found out later why that was not appropriate. Even under those circumstances you are expected to employ all available means to get the materials to the job as quickly as possible. You must minimize the delay and mitigate the damages. If your customer is at fault, he will likely appreciate your proactive approach and approve your extra costs to expedite an order that would otherwise subject him to a claim from all parties affected by the delay. That is looking out for your customer, and good business practice.
The lesson learned is "control the clock" to help you win the game!
Author: Paco Farach, Farach Consultants
To get customized advice for application to your business or request a seminar with Farach Consultants, Inc. go to www.farachconsultants.com or contact Mr. Paco Farach at pfarach@gmail.com or (954) 579-5058
