Thursday, March 22, 2012

Managing the last five percent of the work.

When I managed construction contracts I always said that managing the last five percent of the work was always the hardest. That was not because the activity was difficult, it’s because the parties want to move on to the next project and much of the remaining work was small. It can be cleaning up a “punch list” of items that needed to be corrected or it was more administrative in nature such as pulling together all the required documentation. To the buyer that information may be critical so before getting to that last five percent I would always go through all the documents that made up the contract and generate a list of everything that was required to be provided and their quantities.I would provide that to my counterpart as a checklist of all the things they needed to deliver.

Examples of the types of documents that might be required are:

1.As constructed drawings that reflect all the changes that were made to the work. These are needed for the owner to understand what actually exists and where to find things. It also provides the basis for the owner to further document any changes they make going forward.

2.Copies of all equipment warranties from the original equipment manufacturer.

3.Copies of operating manuals that explain how to use equipment that was included.

4.Copies of maintenance manuals so the owner can perform routine preventative maintenance.

5.Training materials and documentation on use of any equipment provided.

6.Contact information for any warranty or service on third party equipment.

7.Contract information for any warranty claims with the supplier.

8.Spare parts or supplies that were requirement to be provided.

9.Tools to be provided to perform maintenance.

10.Source and cost to obtain additional copies of materials.

11.Source and cost to obtain training on operation or maintenance.

As you can see from the listing, the majority of these last minute deliverables are things you need to be able to effectively use and maintain what you just purchased or had constructed. Not getting them delivered in a timely manner can cause problems or inefficiency.

I always recommend retaining a significant amount of the final payment until all of the required deliverables have been provided and are accepted as meeting the requirement. I find that withholding money keeps significant attention focused on the other party providing what was required.

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