contracts

Establish Unit Rates in Your Contracts

“Negotiating mark-ups and unit rates are much easier before the contract is executed.”

 

In today’s episode, I discuss adding unit rates and allowable mark-ups to your contract agreements to simplify the change process.

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E571: Ask Coach – Good Project Scopes

Complete comprehensive “scopes of work” for your projects to avoid disputes.

 

Q: What’s the best way to make sure my project scope is clear?

A: Write a detailed scope during estimating, review your contract, and have a scope review meeting with your client.

 

  1. Project scope can be very complex
    1. Not everything is clear in the contract documents
    2. Our client may have a different interpretation of something
    3. Prime contractors often rely on catch-all phrases to make us perform things
  2. We need to protect ourselves with a clear scope of work
    1. Include a detailed scope of work with your estimate
      1. List your inclusions and exclusions
    2. Review you contract to make sure it matches your scope of work
    3. Have a scope meeting with your client prior to signing the contract
      1. Review line by line and make sure you both agree on what each line means
    4. Make all adjustments before signing the contract

E542: Scope Clarifications In Contract

Review your contracts with estimating to clarify the scopes.

 

  1. Most estimates have them
    1. Clarifications to the bid
    2. Exclusions and inclusions
    3. Discussion items in negotiations
  2. Problems arise if not in contract
    1. Often happens when the project is on-going
    2. The project team is expected to perform per contract but contract is wrong
    3. Items are missed in the scope and now there is a cost gap
  3. Establish procedures to protect yourself
    1. Contract review procedures with estimating involved
    2. Check the proposal versus the contract and construction documents
    3. If there are questions or interpretations get them clarified

E522: Estimating The Contract

Review your contracts carefully during the estimating process.

 

  1. Contracts are the basis of all projects
    1. Contracts = risks / deliverables = cost
    2. Contracts can be simple or complex
    3. Review the clauses and account for them in your estimates
  2. Risks & deliverables cost money
    1. Depending on the risk / deliverable the value will fluctuate
      1. You can break them into Actual and Potential
    2. Actual: reporting, scheduling, manpower, supervision, security, etc.
    3. Potential: Acceleration, change order mark-ups, delays, hold harmless, etc.
    4. Account for them in the estimate
  3. Review and add to your estimate
    1. Treat like a contingency – have adds/deducts
    2. Review each clause to determine what time / effort is required
    3. What are the possibilities on the project