Tag Archives: profit

Check Geotechnical Information

Check and double check geotechnical information supplied by the client.

If the client supplies the information, it would be ideal for the contract to specify that your design/construction relies on the accuracy of that information and if it is wrong you can claim for losses. However, in reality the contract from the client may state that the contractor must verify the accuracy of the supplied technical data

If the client will not accept that that contractors can rely on the accuracy of the geotechniocal information in the tender stage, you could add in a cost line item to the tendered cost breakdown with the risk costs associated with the geotechnical data. Show a price based on accurate data, and the cost if you assume the worst case (much softer ground compared to what the data says). The client may accept a tender like that because it is not just fat built in the price, but a specific amount based on a stated  risk (which will not be charged if the risk doesn’t arise).

Failure to cover these risks in the contract can lead to substantial extra costs to your company as the contractor, possibly leading to making a loss rather than a profit on the project. The difficulties in negotiations related to the geotechnical information could also lead to reputation loss whereby you will be less likely to win future projects from that client.

Remember also that any bad impression that the client has of you or your company will affect their decision to engage you again in the future and will also affect their rating of you as a reference to other companies and to industry surveys.

Know Why the Project Was Initiated

Find out why a project was started.

Some reasons could be different to just business as usual, and these may affect the priority on time, cost, or quality

  • Was it internal business reasons (business process improvement)?
  • Is your organisation using the project as a demonstration of its capability? To show off and make itself known.
  • Is the project a way to break into a new market (low or no profit may be expected because it will be used as a learning and development exercise).

Submit claims as soon as possible

As a project manager you should make sure all your team members submit claims, hours, expenses etc as soon as possible, and definitely before the end of month accounting date.

If that information comes in late the profit/margin on the project can quickly change and affect plans.

The hours must also be made to the correct project. You don’t want hours suddenly being transferred to your project from a few months ago because they were incorrectly allocated. This could make an in profit project suddenly be making a loss. If it was done correctly first time, the losses could have been seen earlier and planned or allowed for.