Do you plan (prepare) for all outcomes?
‘I didn’t budget for that’
A line that we have heard used many times over the course of our business in the construction/manufacturing industry. It is usually stated after;
- An incident had occurred
- Identified from an Audit or inspection
- Extra scope had been identified after the contract had started (not during the tender phase),
- Information in the contract specification had not been identified and accounted for earlier etc.
- More time is required for paperwork then first though.
- Quality issues need fixing etc.
- Scope has changed and extra resources are required which the organisation does not currently have.
It can be a shock to a small to medium size business, if they can not cover the extra work required on a contract (especially at short notice). One major item stated above we have seen on numerous occasions is; after the contract has been awarded that management had not identified extra requirements while tendering for the contract. This usually puts a burden on the project team to make up the short fall.
Items not costed for (or not budgeted for) have been:
- Time to complete Pre-qualifications documentation.
- Paperwork retention.
- Training requirements.
- Incidents and accident reporting.
- Penalties and fines (after an accident).
- Insurance increases.
We have sometimes seen organisations walk away from a project, because costs had blown out due to the extra work involved.
If more ‘Due diligence’ was conducted on projects in the early stages maybe little surprises will not creep up on your organisation. So, when you hear ‘I didn’t cost for that’ just think, are there lessons we can learn from this, so we don’t repeat these mistakes?
If you would like to know more of how to minimize the chances of occurring extra costs, email us at email@example.com