You want me to do what?
I don’t have to––I’m the owner (or GC) and it’s my way or the highway.
Those attitudes, still popular with many construction project participants today, reflect more than just a resistance to change, and dogged effort to maintain the status quo––they are the stimulus for disputes.
For each dollar you don’t have to spend dealing with disputes, you’ve got another dollar for something more positive.
When the master builders faded away, and construction became a commodity delivered by multiple parties, each bent on preserving their own self interests––collaborating was something to avoid. Fortunately, there is now widespread acknowledgement within construction circles that something does need to change, and it starts by encouraging more collaboration among project participants.
The well-publicized 2016 Dodge Smart Market Report, co-sponsored by Procore, tabulated responses from over 500 construction pros from every sector with the following results:
- More than 90% agreed that collaboration reduces risk
- The top obstacle to collaboration is poor communication among project participants
- The way risk is assigned in construction contracts actually discourages collaboration
The idea that construction projects function poorly when run like a factory from the 1800s is not new. But what is new, is the positive correlation between collaboration and administering construction contracts.
Disputes Stem from Contracts
When Arcadis, a design and consultancy firm, analyzed the data collected from the construction disputes they worked on in 2015, they found that “failure to properly administer the contract” was the number one cause of construction disputes across the globe. Not surprisingly, collaboration is necessary if you want to avoid disputes while enforcing contract provisions.
Here are just a few of the activities where collaboration is needed when administering a construction contract:
- Communicating and documenting compliance with specifications
- Listing responsibilities of the parties to the contract
- Establishing contract oversight
- Setting up timelines for compliance with contract provisions
- Establishing the deliverables of each party
- Assigning resources required for each contract management stage
- Establishing close-out expectations
When in-house, contract administration relies on a range of collaborative efforts among departments. But, when managing the contract with other project participants, the collaborative effort reaches new heights of complexity.
Better Collaboration Saves Money and Reduces Risk
If you are a trade contractor, you have a 60% chance of involvement in a dispute in any five-year span, according to the Dodge report. That goes up to 83% for general contractors. If you could cut those odds in half, you could free up money and resources for growth and security. For each dollar you don’t have to spend dealing with disputes, you’ve got another dollar for something more positive.
When you can handle more risk, you become more competitive. That’s because owners are transferring more and more risk to contractors, and they are increasingly looking for opportunities to consolidate risk with single entities. When your firm can realistically handle more project risk, it becomes more attractive to owners.
One of the main ways to reduce disputes is to manage risk. When better collaboration makes your firm better at managing risk, you not only reduce the incidence of disputes, but you also set up your firm to participate in projects with collaborative delivery methods. More than half of project owners want delivery methods that encourage team integration. And, the increased transparency that comes with more collaborative delivery methods is also sought by owners.
No matter what size construction firm, in any construction sector, follow these 3 strategies for improving collaboration:
- Choose Wisely: Regardless of your place in the construction hierarchy, if you have an independent business, you can choose who you do business with. Sometimes, there are things more important than winning a bid. There are also people you shouldn’t be in business with. Why miss an opportunity to work with someone who complements your style simply because you’re too busy working with someone who doesn’t? Learn to select projects and partners as if your business depends on it.
- Interact Cooperatively: Really good collaboration relies on trust, and trust requires honesty. You can’t control how honest others are, but you can control how honest you are. Give others the benefit of the doubt until proven otherwise. Construction has its share of those who are too self-absorbed to play collaboratively, but their numbers are dwindling. Most of the time, your example will pay off.
- Seek Collaborative Paths: Many projects continue using delivery methods that encourage participants to act more in self interest than project interest. That isn’t going away anytime soon. But, even within those scenarios there are opportunities to harness the power of collaboration. Every time you follow up that one extra time, or you provide notice ahead of time, you, and those you work with, have chances to gain benefits. When others start copying you, the collaborative ball really gets rolling.
Stay alert for opportunities to get on projects that emphasize collaboration. Projects using integrated project delivery, building information modeling, and other delivery methods that spark team effort are places to learn and grow. Say “yes” when someone suggests you try a new tech tool for improving collaboration with them and invite others to try the ones you use.
Better collaboration is a good way to immediately see improvement in project outcomes as well as lowering risk and reducing disputes. And because change is happening all the time, better collaboration brings everyone’s creative energy to the task of dealing with it.