If you’re in charge of overseeing a construction project or if you own a construction business, there are numerous ways for you to incur current financial loss on an hourly or even daily basis. Construction projects are inherently risky, requiring meticulous coordination and careful tracking of physical assets. To minimize potential current financial loss on your construction project, it is crucial to focus on the following three areas

Management of Hidden Risks on current financial loss

Risk management is a significant aspect of project management in construction. By utilizing accurate estimates for your work breakdown structure and constructing your schedule while considering the countless variables involved, you can mitigate a substantial portion of potential risks. Each risk you successfully address or eliminate reduces the likelihood of current financial loss. However, there are hidden risks within your project contracts that can frequently result in unnoticed expenses.

If your contract’s objective is to transfer all risks downstream, it creates one-sided contracts with your partners. Consequently, this fosters adversarial relationships right from the start of your projects. Imposing oppressive indemnity, warranty, and payment provisions increases project costs and may render the contracts unenforceable. These tactics drain funds through defensive actions taken by the parties disadvantaged by the contract. Those who find themselves on the unfair side of the contract scrutinize every minor specification modification or schedule change, seeking opportunities to utilize change orders and claim reimbursement for delays.

By adhering to sound contracting procedures, managing schedules effectively, and safeguarding physical assets, you not only prevent current financial loss but also experience additional benefits such as reduced stress and improved project outcomes.

Even minor inaccuracies in design documents can become contentious issues. The adversities faced result in both direct and indirect costs. Time and resources spent on addressing changes, claims, and rework silently deplete your finances. It is far more advantageous to establish fair contracts and allocate risks to those in the best position to manage them.

When it comes to managing your own risks, one often overlooked aspect of contracts is insurance coverage for the property. If the project owner carries property or builder’s risk coverage, contractors and subcontractors should consider obtaining their own installation floater insurance to cover any damage to equipment and supplies from the moment of acquisition until they are received by the owner. This type of insurance ensures reimbursement for any damage or loss of materials and equipment during transportation, storage, or installation.

Schedule Leakage

There are numerous ways in which you can incur current financial loss on a daily basis due to an inadequate schedule. The unfortunate aspect is that often you remain unaware of these issues until the project is completed and you begin reviewing its performance.

One of the primary causes of this is an incomplete breakdown of work sequences. This occurs in a couple of ways. If the sequence of work lacks essential steps for tasks, not only will that particular activity fall behind schedule, but all subsequent activities relying on its completion will also experience delays.

Almost equally detrimental to missing tasks are hidden tasks. When a schedule indicates that an activity requires four tasks when it actually requires six, schedulers have likely not accurately allocated resources and time. In such cases, you will encounter current financial loss when the scarcity of resources delays the completion of the activity, or when dependent activities are also delayed or face resource shortages.

As emphasized by Bob Muir, PE, in his paper “Supplemental Reading for CIEG 486-010 Construction Methods & Management,” proactive control of the schedule is essential to avoid various avenues of current financial loss. If project managers, superintendents, or other individuals responsible for project outcomes operate in a reactive mode towards the schedule, then external events are driving the project. This results in a constantly changing and updating schedule to accommodate the chaos, where even minor occurrences have significant impacts on project outcomes.

Projects operating in a reactive mode will experience reduced productivity, compromised delivery, resource limitations, frequent changes in scope, and will be more vulnerable to weather and site condition variations.

Pilferage of Tools, Materials, and Equipment

According to a study conducted by LoJack Corporation, theft of tools, equipment, and materials poses a multi-million dollar problem for the construction industry. While equipment theft garners significant attention due to the high monetary value involved in each incident, the cumulative losses from theft of smaller items like tools and materials could potentially be even greater, considering that much of it goes unreported or unnoticed.

Each time you have to reorder materials because the initial supply ran out before the completion of a task, it may not necessarily indicate an issue with estimation. It is possible that theft is the underlying problem.

Loss and damage to equipment, tools, and materials are an unavoidable reality. While you typically account for material waste during the estimation process, you often overlook materials left unprotected from the weather or stolen. Similarly, the theft of tools and equipment is not factored into your annual operating budget.

All these unforeseen losses resulting from theft or negligence represent operating capital or profits slipping through your fingers. Controlling such losses requires implementing systems and processes that meticulously track tools, materials, and equipment throughout their anticipated utilization. It is also beneficial to regularly remind individuals about the importance of safeguarding company property to prevent theft and losses from other causes.

By adhering to sound contracting procedures, effectively managing schedules, and ensuring the proper care of physical assets, you not only avoid current financial loss but also experience additional advantages such as reduced stress and improved project outcomes.

Minimize Losses and Optimize Project Success with APPMVN’s Project Management Services

In the dynamic world of construction projects, minimizing current financial loss and ensuring project success are crucial objectives. One company that specializes in providing comprehensive project management services to achieve these goals is APPMVN. With a deep understanding of the challenges faced by construction businesses, Asia Pacific Projects (APPMVN) offers effective solutions to prevent loss of money and optimize project outcomes.

AMPPVN’s expertise in project management stems from their commitment to meticulous planning, efficient coordination, and strategic risk management. By leveraging industry best practices and innovative approaches, they empower construction project stakeholders to navigate the complex landscape and achieve their objectives within set limitations.

One of the key areas where APPMVN excels is in risk management. They recognize that risk is an inherent aspect of any construction project and take proactive measures to mitigate potential risks. By employing accurate estimates, conducting thorough work breakdown structure analysis, and considering various variables, APPMVN helps eliminate many risks that could lead to current financial loss. They also emphasize fair and well-structured contracts that assign risk to the parties best equipped to manage it, preventing adversarial relationships and costly disputes.

Additionally, APPMVN understands the importance of efficient scheduling. They recognize that incomplete work sequences and hidden tasks can significantly impact project timelines and budget. Through proactive control of the schedule and constant monitoring, they help identify and address potential bottlenecks, avoiding delays and unnecessary expenses. By keeping the project on track, APPMVN ensures that resources are effectively allocated, productivity is maximized, and project outcomes are optimized.

Furthermore, APPMVN recognizes the value of protecting physical assets in construction projects. They address the issue of theft of tools, equipment, and materials, which can result in substantial current financial loss. By implementing systems and processes to account for these assets throughout their lifecycle and raising awareness among project participants, APPMVN helps minimize losses and safeguard the project’s profitability.

In summary, APPMVN stands as a reliable partner for construction businesses seeking professional project management services. Their emphasis on risk management, efficient scheduling, and asset protection ensures that projects are executed with minimal current financial loss and optimal outcomes. By entrusting your project to APPMVN, you can gain peace of mind, streamline operations, and maximize your return on investment.

Please send information or requests that you need to consult for Asia Pacific Projects via:

NGUYEN THI HIEU | Local Relations

Mobile phone: +84 918 331 489

Email: hieu.nguyen@appmvn.com