At the heart of the Full Contact PM philosophy is knowing the difference between “contract” and “extra” work. And I’ll state for the record that most contractors don’t really understand and appreciate that difference. Well then, what in the heck is “extra” work?
What is Extra Work?
For our purposes, extra work is defined this way: “Work which is beyond the scope of our contract, is going to be performed, and will be paid for by someone.” Of critical importance to us is that the Full Contact PM expects to be the payee, and not the payor. This is at the heart of the Full Contact PM mentality. And why is that?
Unfortunately, most contractors and PMs are nice people (maybe too nice) and are hopeful that the client will treat them fairly. They can easily get overextended into doing extra work because they are, after all, builders, and are accustomed to doing everything they possibly can to keep the project moving. That’s a noble goal, but it can also be costly to the project. How do we avoid this? As in other aspects of life, sports and otherwise, a little protection is in order.
“Winners have simply formed the habit of doing things losers don’t like to do.” Albert Gray
A Difference of Opinion
One of the reasons we get into these discussions in the first place is that our clients frequently have different ideas than we have regarding what is included in our bids. That having been said, what can we do to minimize the problem? It’s simple: be careful with what you agree to in the first place!
A Couple of Key Concepts
Wait a minute! Before we can go any further, you need to know a couple of other pieces of information that fit into this whole “extra work” discussion. One of the reasons we have huge disagreements on the scope of work is that the client’s project documents (“docs”) are often lacking in clarity. Believe it or not, sometimes the docs say two contradictory things! How can this be?
Plans and specs and bid solicitations get put together sequentially. Basically, these docs are built over a span of time. Plans are updated, and so are the specs. And the client will sometimes put out an addendum to the bid solicitation. There are also local building codes and access requirements, to name a couple more.
In any event, there are conflicting “authorities” facing the contractor. Which one does he pay attention to? A good set of project documents will take care of this: it will list something called “the order of precedence of documents”. And there, in one short list of a half-dozen to a dozen items, is the order in which certain documents are to be obeyed. In military terms, some of the docs have as much authority as a private, some are sergeants, while others are majors and even generals! They don’t all have the same “rank”.
Look for this list in your project docs. In the event your docs don’t have them, you might propose the following generic list when you have your pre-construction meeting:
Precedence of Contract Documents. If there is a conflict between any of the Contract Documents, the document highest in precedence shall control. The precedence shall be as follows:
1. Permits issued by jurisdictional regulatory agencies
2. Change Orders and/or Supplemental Agreements; whichever occurs last.
3. Contract/Agreement
4. Addenda
5. Bid/Proposal
6. Special Provisions
7. Plans
8. Standard Plans
9. Standard Specifications
10. Reference Specifications
What’s important to you is to find out which document it is that seems to require this potential extra work. Is it found in the original bid solicitation, but was later superseded by an addendum which deleted it? If that’s the case, and your client still wants it, then it is clearly something which wasn’t included in the original bid. Thus, it is compensable to the contractor. Sometimes, it’s just as simple a thing as everyone suddenly realizing that something was inadvertently left out of the plans and specs.
“Winning is not everything, but the effort to win is.” Zig Ziglar
And Don’t Forget about “Scope Creep” Either
Scope creep is that grey area between contract work and extra work. It can either turn into extra work which is paid for, or it will turn into extra work that the contractor performs and pays for himself. Scope creep occurs when the plans and specs do not clearly define an item of work.
Let’s say that a contractor planned on building a structure to industry standards. That’s what’s in the specs and is what his contract says. The client comes along and says, “Hey, what about the finish coat/the sealer/the hand buffing…” You know what I’m talking about, because this has either happened to you or to a colleague. The contractor explains that neither the industry standard nor the contract requires this item. The client insists that he wants it, and that the project will not be complete without it.
“Everybody pulls for David; nobody roots for Goliath.” Wilt Chamberlain
What we have here is known as “scope creep”, at least as far as the contractor is concerned. This item is going to be required, one way or another. The scope of work has changed. The only remaining question is whether the client or the contractor will pay for it. Now, let’s get back to the discussion.
Protecting Yourself
Let’s first of all adopt the mindset that we have included very little in the project. By “little”, I mean that we have a signed proposal or contract on which we list our scope of work. We also have plans and specs, maybe some addenda, that further define what it is we are supposed to do. Our “default” attitude, whenever an issue of extra work arises is this: It’s not included!
“Wait a minute,” you say, “what makes that so special? What’s so different?” Again, it’s attitude. Listen up. This is absolutely critical. Too many PMs, when confronted by their client, almost expect that they have to give away some work. That’s the ugly truth. It’s not that they want to. The problem is, they listen to their clients. And that seems reasonable enough, because their clients are smart people, obviously know all about the plans, specs and the rest of the documents, so they must be right–right? This kind of thinking can get you into serious trouble.
“What counts is not necessarily the size of the dog in the fight; it’s the size of the fight in the dog.” General Dwight D. Eisenhower
Let’s think about something. On virtually every one of your projects, don’t the plans and specs usually leave something to be desired? When you bid the project, was absolutely everything clearly spelled out? Probably not. Have you ever thought about that-the fact that things are not spelled out more clearly? That the plans don’t show more detail? That your scope of work is not delineated more succinctly in the documents?
Why is that? Could it have been done better? Absolutely. How? The client could have spent more money on architects, engineers and other consultants. How come your client didn’t? What’s your guess? Here’s mine: money! Simply put, better plans and specs require more effort. More money. So your client made a value judgment, and decided that he would save that money now and, if anything came up later, he would deal with it then. And he also thought, hopefully, that maybe he could get his subcontractors and contractors to take care of it-possibly for free!
Think I’m kidding? This technique is used every day in this country, sometimes on untold thousands of projects. And why not? A smart client relies on his own CMs, PMs, and superintendents to look after his interests. And here’s how it works.
“You get out in front-you stay out in front.” A.J. Foyt
You get a call from the project superintendent and he says something like this: “Hey, I noticed that when your crew finished up today on that first phase and moved over to the second, they didn’t do such and such. When will you be doing such and such?”
You are caught off-guard. You never figured to do such and such in your scope of work. It really didn’t even show up in the plans. Besides, that kind of work is usually done by another type of contractor.
Then the superintendent says to you, “You know, I’ve got another contractor scheduled to move into that area the day after tomorrow, and if your work is not complete, it’ll delay him. You need to finish your work tomorrow.”
So now you’re in a panic. What to do? You don’t think that the work is yours, but you’re not sure. The plans are not too clear, after all. Being the team player you are, you give in. You agree to do the work.
Or, maybe you do stand your ground a little bit, and you say to the superintendent, “That’s not in our contract. It’s up to the XYZ contractor to do that work.” That’s at least a better answer than just giving in. But the superintendent-one of those fire-breathing, knows-everything, Type A personality, 30-years-of-experience guys, comes right back and says, “Look, either you get this done immediately or I’ll bring in another contractor to do it and backcharge you.” You figure that it’s too big a hassle to argue, it’s not really that much work-probably cost you a few hundred or a few thousand–and you sure don’t want to get backcharged, so you give in. All too common a response.
“How you respond to the challenge in the second half will determine what you become after the game, whether you are a winner or a loser.” Lou Holtz
The Full Contact PM Response
There is a distinct difference between the way ordinary PMs respond, as opposed to the Full Contact PM response.
Here’s our approach-by the numbers:
1. Default position-”It’s not ours”
2. Send a “Winning RFI” (see next chapter). We outline the problem briefly and set the stage
for this question: “How do you want us to proceed?”
3. Ball is now in the client’s court. Client is now obligated to answer. He is back on his heels.
You have launched a pre-emptive strike and he is possibly disarmed.
4. More often than you now may realize, the client will ask you to proceed in some manner,
and on a paying basis.
So what just happened here? The tables were turned. We seized the initiative. We didn’t wait for the client to ask us to do something-possibly for free. We brought the issue to the client, because our foremen are trained to be on the lookout for changes in scope to our contract. Our foremen know exactly what is included in our proposal. More importantly, they know what is not included.
Full Contact PM 101 is a philosophy that should be implemented company-wide, from the top on down. You can initially implement it on your own projects alone, but you will find it so stunningly successful that you will very soon offer it to the rest of your company.
Coach’s Tip. When out-of-scope work appears, someone is going to pay for it. Seize the initiative, show why it is not included in your bid, then get paid for doing the work.
“You must play boldly to win.” Arnold Palmer
Successful implementation requires that you train your foremen/superintendents/PMs to recognize possible changes in scope as opportunities to improve the bottom lines of their projects.
Now that we are through with the basics, it’s time to go on to the next chapter and meet our First String Defense –the Winning RFI. At the conclusion of that Session, you’ll know enough to make a huge difference in the way your company manages its projects. Promise. The question is, are you ready?
Then let’s bring out our defense.