Contractors are a benevolent lot. They give away millions of $ every year to the rich benefactors for whom they toil in all weather, sacrificing wafer thin margins for the joy of the job.
Don’t know what I’m talking about?
I’m talking about records and contractors’ failure to record even the most basic of project information that can be used to support legitimate claims to be reimbursed for project changes, client caused delays or terminated projects.
Contractors, almost universally, believe they are the most honest and trustworthy people ever to walk the earth and are prone to displays of extreme indignation and horror when their $10M global claim supported by 2 bits of paper, a fancy graph and a cost statement is not paid in full.
Unsurprisingly, this rarely happens.
Just as any loving relative would step in if it looked like Aunty Gertrude was going to bequeath her full estate to the local cat’s home, I decided enough was enough and at the start of this year, recommended that all contractors include improved record keeping on a list of three resolutions for 2017 designed to improve their bottom line.
Well it seems I was not the only one concerned about the plight of the common contractor. Those good folks at the Society of Construction Law have just issued the 2nd edition of their Delay and Disruption Protocol (download here).
The Protocol was first published in 2002 and quickly became a go to reference document for those in construction industry focused on preparing, disputing or resolving claims for delay and disruption.
In the latest edition, a section has been included to provide guidance on general principles of good record keeping during a project. The Society recommends that all the parties involved in a construction project should reach agreement on record keeping right at the start of the project – before a sod is turned or a brick laid.
This agreement would cover:
- The types of records to be produced and the information contained in them;
- Who is responsible for producing and checking the records;
- The frequency in which the records are produced or updated;
- A Distribution List for records;
- The format of the records; and
- Ownership, storage and access to the records
Records kept should always be objective and not offer opinions (the opinion part comes when they are used as part of a claim for reimbursement) and where possible be signed contemporaneously (at the time) by a representative of the employer and contractor.
Records can take many forms and the Society provide many examples in their protocol that can be broadly summarised as follows:
- Programme records that set out the Contractor’s plan for carrying out the works. and are updated at regular intervals to record the actual progress of works.
- Progress records that identify the actual progress at any point of time and can be used to substantiate programme updates.
- Resource records that document labour, plant and materials used on the project.
- Cost records that demonstrate the costs incurred in carrying out the works and assist in calculating the costs of variations or delay and disruption.
All of this may seem like the Society is teaching you to suck eggs but I am constantly amazed at just how many of you contractors from Tier 1’s down to small family enterprises fail to keep even the most basic of records such as proper site diaries.
Start thinking of these records as cold hard cash and you will quickly see improvements to your bottom line.
Brackenway can assist by auditing your current record keeping, suggesting ways to simplify record keeping and preparing record keeping agreements with your clients before you start work on a project, however, if you still want to throw your money away Brackenway has just opened a new cats’ home and is accepting donations!
Jon Davies
Principal of Brackenway Consulting
QS, Commercial Manager & Contract Facilitator