Optimize your sales order flow for construction industry

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so change orders and variations what are they how do they impact your construction project this video this training is going to give you everything you need to know about what you need to negotiate in your contracts with regards to variations change orders what are various and change armors what's the difference in terminology all the good stuff watch this video and you'll be an absolute Pro um hi my name is Kim Brennan I'm CEO of a company called Quantum contract Solutions the reason we make these videos is so many construction companies out there that are losing money hand over this and they don't need to and we're going to show you how to stop that so if you get some value please like And subscribe and so you get notified when there's new videos open you can learn more and you can learn from other construction companies who have made tons of mistakes so you don't make the same ones enjoy hey construction Legends or soon to be construction Legends uh today's presentation and training is All About Time bars it's called contractors King and time buyers that bite this is a really really interesting topic um in construction it's a global thing it's all around in the world I'll talk about one particular court case that happens to be in Australia but it is a global thing predominantly in all the major companies countries they all have the same thing I've worked for companies in the US in the Middle East in Australia not in Ireland and they all have this particular thing it's called time bars right so let's get into what time bars are and how they can affect um the project okay so let's talk about the time bar game so originally you've got in construction you've got your tiers in of contractors and so originally what used to happen is if some if you know we've got the head contractor and imagine he had 10 or 12 subcontractors below them performing the work now what was happening in the old days was everything would look absolutely fine on on the program on the CL on the on the main contractors you know budget everything looks okay we're all on track and then at the end all of a sudden it become very clear that it was very very late and people needed more money to finish and you know so for when they're um trying to forecast their budget it was like flat fla flattening bang right at the end all this flurry of costs used to come in and a big delay is used coming used to all happen at the very end of the project which obviously for planning purposes is not a good thing and so what they brought in was what's called a Time bar the time bar basically said that whenever you are delayed on site or whenever you've been asked to do additional work or if you think you've been asked to do additional work you have you have a certain period of time to notify Us in the first instance and then submit variation change order or submit an extension of time there are your periods of time to do this that is what the time bar is now the reason for that was so that they captured delays and they captured costs as the project was going on so they could forecast their costs and completion days more accurately however in those Time bar Clauses more often than not not always but more often than not it'll say that if you've been delayed or you think you've been delayed and you don't notify us you are taking on that delay as your own you're saying that it's not a delay essentially if you've been asked to do additional work and you don't notify us within a particular time you were taking on that additional work as your own cost and then any delay associated with that so what happens now in construction is they try and make those time bars super super small you know 48 Hours 72 hours to try and make sure that you don't get your notice in on time so you're not able to get your notice in from the delay on site into um into them so lots of things have happened in that 48 Hours you know you have to look at it see if it's a real delay see if you can try and somehow mitigate the delay then realize you can't or you can but it's still going to be delay and then and then go back to the office get someone to ride up this notice and submit it so you know it seems pretty easy but there's actually a lot of steps involved site and the office may be very very far away so communication is obviously you know a thing so long story shorts so many construction companies don't get their notices in on time they don't get the variations change orders or extension of times in on time and so they end up not getting paid they get this letter back saying your variation has been rejected or you're a change order your extension of time is being rejected and therefore you're not getting paid for it happens all the time now that's all to a court case to back up this thing and this is a BHB Billiton project so a huge Mining Company in Western Australia and they engage a very very large tier one contractor called John Holland to demolish a wharf and I'll send out to upgrade the wharf and then John Holland subcontracted the demolition scope if I'm correct to CMA assets now CMA assets their whole job was to come and demolish demolish dolphins and whatever whatever's there right dolphins are these concrete structures so the first thing is they got up there with investors and when you've got a vessel the vessels cost 100 grams a day you know a lot of me you're talking for the vessel itself you're talking whole crew that's on the vessel all the equipment that a vessel these vessels cost a lot of my day a lot of money on standby per day and so when they got there John Hollins were all underway and they couldn't access where they need to so this delay was a long time because it couldn't it couldn't start work clearly not there right next thing was there was these Dolphins uh which increase structures on the side my understanding said that the rebar in the Dolphins was different than what it was long story short it took a lot longer to demolish than it was originally anticipated which once again was not CMS CMA asset's fault their eot it was rejected for the reasons that I've said previously they didn't submit their notice on time they didn't submit their eot on time went to court went to Supreme Court of Western Australia and the judge held that he says here on the on my screen there was no doubt that a strict application of clause 10.12 and 10 10.13 is Harsh but long story short he he held it and so because cmiasis didn't submit a notice order or the eot on time even though you know it was if they were entitled to it really they didn't get paid not only did they not get paid but because it delayed the project because the delay was now theirs they got hit with liquidate damages and they lost obviously a lot of money so this is a global thing there will be cork there will be court cases in each of your countries with similar things there are there abouts now there's obviously lots of little things have happened in these things so contractually if you're a good contracts person you've got to get your notices in you've got to go eotes you got to get your variations in on time so contractually what we're trying to do here is we're trying to close the gap between delivering on site and delivering contracts we're trying to make it easier so when we're looking in a contract to negotiate a contract what we want to do is we want to find all the time barriers and we're going to bump them up we want to bump them up to about five days okay you need to so that's contracts that's all you're doing with time bars is you're bumping up the days the days for the for your for your evaluations and change orders and depending what your terminology is and then your eotes Bump them up for the for those and the note and the notices okay now a couple of little tricky little things that we can talk about now while we're here is you need to have a system to easily track all the changes and delays so let's submit your notices more as like a memo style not like a personal email letter type so it might make it look more procedural ideally a little trick is do it fire like dock control at yourcompany.com rather than person to person depending on your contract might have a specific way of submitting notices more often that's fine and record all of your delays in your section in your weekly minutes and submit your variations regularly don't wait for lots of variations to come to submit it and one don't do that because you won't comply with the contract bottom line is the Practical steps you need to implement is you need to find all the time bars in the contract and you need to ask them to be increased to about five days for all the time bars okay that's it um and I'll see you in the next one [Music]