Best Practice: Tracking of Increased Construction Costs for Proving Claims

Record keeping is one of the most important activity in any work in progress. They are important tools in the decision-making process. One is able to track the flow of resources, manage the business and maintain the business course. It is important to note that in execution of a construction project, documentation is an indispensable tool for the managers and other participants.
Best Practices
1.Reviewing cost codes
Organizations have distinct ways of tracking their expenses. Having codes makes tracking operations easy. However, in other companies, there are numerous cost codes with numerous granular details that they use for the same purpose. It is important for one to know what works best for their business.
2.Including Change Orders
Change orders tend to throw project budgets for a loop. Cos codes and job costing still apply. Detailed information on material and labor cost on change orders help one understand the effect they will have on the budget. Normally, materials and labor costs on the change orders have effect on the overall project. Tracking them, therefore, means that one will get a greater insight on the overall project health.
3.Monitoring billings
Majority of the construction companies perform their job costing on a simplified basis so as to bill customers on their specific projects. Money is what makes a business to run effectively. In most cases in any construction activity, the payment is done in advance so as to facilitate in buying of materials and sourcing for labour. To ensure that payments are done for completed work, companies need to monitor their billings closely.
4.Implementing a mobile time tracking solution
The use of paper time cards is inefficient since it is a manual process that results to inaccurate information. Technology has taken advantage of the wide use of digital mobile phones which have applications that possess the capability of automating time tracking. This has enabled real-time information updates on labor when reviewing projects.
5. Reviewing projects and reports regularly
Monitoring the project as it is ongoing is the best decision to ensure that changes can be made where possible before it is too late. It should be done on a constant timeline, be it weekly or even monthly. Examples of job costing reports include: budget versus actuals, cost code summary reports, cost to complete and labor productivity reports.
Documentation review is the best basis for evidence in tracking claims for the increased cost of construction. The disciplined keeping of records and writing reports keeps the project managers accountable for any unplanned changes that may occur during the implementation phase of the project.
Methods
On top of having daily records, there are fundamental documents that hold important information for a particular project. They assist the project manager to be accountable for every activity of the project. Such documents include:
  • Correspondence file. This file carries all the correspondence relating to a given claim. They include letters and memoranda from the subcontractors.

  • Meeting minutes and internal memoranda. They hold information concerning the claim. This information should be maintained so that they can record attempts to solve matters with the stakeholders.
  • Job photographs and videotapes for the status of the work in progress and additional evidence of conditions leading to the change.
  • Miscellaneous evidence file contains all other evidence that can help support the given claim. For example flowcharts, accident reports, projections, work progress photographs, inspection reports, completion schedules and any other tangible evidence.
  • Plans and specifications. These include all details, clarifications, and options of the owner about the plans specifications.
  • Schedules include all the plans and updates.
  • Subcontractor and supplier files document all the deals between the contractor and the subcontractor about the scope of the claim.
  • Work order file. It gives details of changes or the work orders that are requested in regards to a specific aspect of the work that is subject to the claim.
Another recommendable best practice is doing construction job costing. It is a way of tracking project expenses. The project is broken down into smaller pieces to allow tracking of expenses in specific areas. It is advantageous in that a contractor can view an expense at both macro and micro levels. Having this level of information helps entrepreneurs determine which projects are profitable and which are not.
We have also conducted a webinar on this topic to know more about this please click here
To Know More About Edupliance,Visit: www.edupliance.com

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