The president of a prominent construction company once described himself to me as a “risk manager” rather than a contractor. When I asked him why, he explained that his firm’s profitability and even their ability to stay in business is tied to their ability to manage numerous risks even on a daily basis.
After meeting with well over a thousand general contractors over the last thirty years, I fully appreciate the reference to “risk managers”. No project ever goes 100% according to plan. Challenges and issues surface every day. Whether contractors are working with incomplete 2D or 3D plans, managing the procurement process, spending countless hours locating materials on the jobsite, managing labor crews and their respective schedules, responding to severe weather, or managing proposed change orders and the formal approval process. These are just a few of the risks that general contractors are continually having to mitigate. There are really far too many to list in this brief article.
One general contractor I am familiar with unfortunately had to “walk off” a project because his team had performed change order work valued in the millions, millions they were never paid because the change orders were not formally approved by the owner.
While there is no substitute for experience, there are software management tools today for contractors that complement the expertise of your team and go a long way in minimizing risk. Take for instance the benefits gained by software tools that support “clash detection”. Finding clashes long before your crews or subcontractors uncover these issues in the field provides significant cost savings.
Another area where general contractors can minimize risk is in making sure their subcontractors and their associated bids cover the full scope of the project. Managing the completeness of bids received from subcontractors can be complex. As a general contractor, it’s incumbent upon you to closely review the “inclusions and exclusions” on every one of your subcontractor bids, and make the necessary adjustments to any bids that are incomplete. Your inability to discover holes in the entire scope of the project, particularly with your subcontractors, can not only cost you money but can severely damage your reputation as a reliable and trustworthy general contractor with an attention to detail.
In addition to managing subcontractor scope coverage, you also need to be able to quickly review and compare subcontractor bids on projects that not only have a base bid, but any number of alternates. Making the wrong subcontractor selection can also eat away at your firm’s profitability, or even prevent a firm from being awarded the project in the first place.
As in the “clash detection” example, software tools, like Bridgetown Software’s BidMatrix, are available today that can minimize the risks associated with subcontractor selection on your projects. It is no longer necessary to have your team working in individual spreadsheets. In fact, teams working with separate spread sheets can sometimes invite problems when all that work is not in sync and the risk associated with properly merging individual spreadsheets into a single master spreadsheet is no longer necessary.
Bridgetown Software’s BidMatrix can leverage the expertise of your project team and manage what is normally described as “bid day” chaos. For more information on how BidMatrix can help improve your firm’s workflow and profitability and enhance your ability to manage risk, feel free to contact us. We look forward to speaking with you.
About the author:
Steve Watt is the President / CEO of Bridgetown Software, Inc. Bridgetown Software is the developer of BidMatrix. BidMatrix is the leading software application for the management and selection of subcontractor bids for both “negotiated” and “hard bid” construction projects.
