Construction Project Management for the Not So Smart!
4 Steps to Successful Construction Project Management
By William Goodman
Because of the ever-growing array of huge, complex and technically challenging projects in today’s world, project management has become a critical skill. People need special tools, techniques and knowledge to handle their project management assignments, such as confirming a project’s justification, developing project objectives and schedules, maintaining commitment for a project, holding people accountable, and avoiding common pitfalls.
Having or obtaining these critical skills may be somewhat overwhelming and intimidating. However, by following a few basic and simple steps a manager can avoid getting tangled up with the technical challenges and pitfalls that inherently come with being in this position.
It’s no secret that following a simple rule called KISS can be good philosophy to have: Keep It Simple Stupid. But, here are some additional steps to take to avoid traps and challenges:
1. Know Your Contract.
You must know the contract: what it says, the objectives, the contractors’, owners;/clients’ and architect’s responsibilities, , the deliverables, milestones, the common terms, etc. Be sure to highlight and tab the essential parts of the contract that require action for quick reference later.
By understanding the contract, you can manage assignments and project justification. Prepare a matrix to track the assignments and who is responsible for each task or action required.
2. Communicate, Communicate, Communicate.
The manager must be able to communicate whether in writing or verbally. According to Dale Carnegie, author of How to Win Friends and Influence People, 85% of success on the job is due to one’s ability to lead people and personality. Only 15% of success is due to one’s technical knowledge. Therefore, the ability to communicate with people is vital and essential in increasing your success tremendously. It takes time to develop good communication skills and a good part of that development requires you to be a good listener. You should be listening two times more than speaking.
Try to avoid these kinds of pitfalls when communicating: expressing your feelings, making it personal, guessing or making assumptions. These types of emotions do not go over well in the business world, let alone in construction. Stick to the topic and facts. Be proactive – not reactive. Always maintain your composure and confidence. And, always be ready for that unexpected curve ball that undoubtedly will come at some point in time, but do not waiver or overreact to these types of situations.
3. Be Prepared.
One of the more important and time consuming tasks that a manager is responsible for is preparing and administering project meetings. Plan to start preparing for a scheduled meeting – whether it’s a conference call or in-person – at least a week in advance.
First, start by drafting the meeting agenda. Then, gather and assemble supportive documentation and exhibits that will be reviewed at the meeting. Be sure that all participants have confirmed or accepted the meeting request or invite. If applicable, send out the meeting agenda and attachment to the participants a day in advanced.
Finally, when it comes time for the meeting, allow for some interaction and light conversation between all attendees. Most importantly, be prepared and anticipate the unexpected.
4. Keep Things In Proper Perspective.
You must be able to adapt to an array of personalities and the unexpected. Therefore, you need to be flexible with your management style so that you can make adjustments to achieve your goals and end results. Do not take yourself too seriously. Instead, strive to balance seriousness and light humor. This is something you are more apt to figure out through real-life experiences.
William Goodman, Senior Project Manager for Triune, is a highly accomplished multi-talented project manager with over 30 years of construction experience. He encompasses excellent skills in preparing schedules and managing job costs, budgeting, contract negotiation, Design Build, and pre-construction services.
The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2014 TMV, LLC (Triune). Any and all rights reserved.
15 Issues Leading to Construction Subcontractors Being More Heavily Scrutinized by Bonding Companies
15 Issues Leading to Construction Subcontractors Being More Heavily Scrutinized by Bonding Companies
By Brady Cox
It might seem counter intuitive, but some Bonding Companies do not embrace the opportunity to serve subcontractors. So what’s different about subcontractors and subcontracts? Why do some sureties redline this entire segment of the market?
Some of the possible reasons are as follows:
The Number One Issue – Low on the Food Chain!
One complaint underwriters have about subcontractors is that they are farther down the food chain than General Contractors (GC’s) are.
GCs have a “prime” contract, meaning they work directly for the project owner and are the first recipient of cash payments. Only then are subcontractors subsequently paid by the GC. Subs may face delays and sometimes even harassment at the hands of GC’s.
Remember, subcontracts are all private contracts not regulated by governmental or institutional rules, even if the prime contract is so regulated. Put simply, subs have a harder time collecting their money.
14 Other Issues for Subs and Their Sureties
1. GCs may not normally disclose bid results (2nd & 3rd bidders’ figures). This makes it difficult to evaluate contract price adequacy – a disadvantage for both the sub and surety.
2. Unregulated procurement procedures and contract administration: GCs may be aggressive in their procurement methods, pressuring subs for price concessions: “Knock their heads together.” Such practices make the subcontracts less profitable and therefore more risky for the sub and surety. Subs can also be victimized with verbal awards and unwritten change orders.
3. Contract documents (including bond forms) may be nonstandard, drafted by GCs specifically to give strong advantages over subs and sureties. In some cases, the normal Performance Bond transforms into a forfeiture-type financial obligation.
4. Flow-down or pass-through clauses in subcontracts force subs to assume obligations rightfully belonging to the GC. An example would be wording that makes the sub responsible for the liquidated damage amount on the prime contract if they are found to have caused a delay on the subcontract.
5. “Pay when paid” language can result in delayed payment to the sub. “Pay if paid” can result in the sub never being paid.
6. Unbonded public work is rare, but in such cases there is no Payment Bond at the GC level to protect the sub, and liens (filed against the project for failure to receive payment) may be prohibited.
7. Indemnification: Broad-form indemnity clauses can make the sub financially responsible even if they are not at fault.
8. Delay damages: Subs may be barred from seeking financial recovery.
9. Lien waivers: When read literally, these documents may operate to waive and release claims for which the subcontractor has not yet been paid.
10. Termination for Convenience: This contract clause can enable the GC to terminate the contract and leave the sub with a series of unreimbursed expenses and lost profits.
11. Some trades perform their work late in the project, meaning the bond is carried for a lengthy period with no progress on the contract.
12. Certain trades can operate with minimal capitalization, so the field may be populated with lightly financed companies. Such competitors can drive down contract prices, making it harder for others to bond their work.
13. Financial reporting may be less sophisticated than for GCs (CPA financial statements vs. bookkeeper or QuickBooks).
14. Due to their size and circumstances, subs may lack bank support, such as a working capital line.
Conclusion
Subcontractors literally perform the majority of all construction work. They are the backbone of the construction industry and cannot be ignored by sureties.
When it comes to bonding, subcontractors need to demonstrate that they are well-managed companies that reflect the same attributes as a successful GC.
Brady K. Cox is a Principle with the Baldwin-Cox Agency, LLC. in Dallas, TX. The agency was founded in 1990, and has always focused on providing construction bonds to contractors. Today the Baldwin-Cox Agency,LLC is one of the largest bond producers within all of North Texas.
The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2014 TMV, LLC (Triune). Any and all rights reserved.
That’s Not In the Contract, Do I Still Have To Do It?
Changes Clause, Request for Equitable Adjustment and Claims Overview
By Kay Kendall
Claims Clause!
In most federal government contracts, there is the Changes Clause that allows the government to direct changes to the contract. In that situation, the contractor, in accordance with the Changes Clause, can submit a request for equitable adjustment, or REA, if the contractor determines that the change will increase the cost or duration of the performance of any part of the work under the contract.
Requests for Equitable Adjustments (REAs)
Sometimes contractors experience constructive changes instead of a directed change. A constructive change is not the result of the government directing the contractor to do something, but could be a result of a circumstance the contractor encounters in performing the work. Even though constructive changes are not addressed in the Changes Clause, they are remedied as though it were a change directed to the contract.
Furthermore, well-settled case law has established that when a contractor performs work beyond that required by the contract without a formal change order, and such work was informally ordered by the government or is caused by government fault, a constructive change has occurred, thereby entitling the contractor to an equitable adjustment (American Line builders, Inc. v. United States, 26 Cl. Ct. 1155, 1179. 1992). As such, the contractor can submit a REA requesting to recover the additional costs and time to perform this work.
Where Should REAs Be Submitted?
REAs should be submitted to the person in the government that has the authority to make decisions to obligate the government to financial liability. In most cases it is not the resident engineer or contracting officer technical representative (COTR). Delegation of authority was discussed in the first article Delegation of Authority and Notifications. Refer to that article for more discussion on the delegation of authority.
What Happens If My REA Is Denied?
In the event the REA is denied or cannot be settled at a lower level, the contractor can elevate the REA to a Certified Claim. The FAR contains a Disputes Clause which provides the contractor another avenue to pursue recovery. If the contract contains the Disputes Clause then it is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. 601-613). If the contractor elects to submit a Certified Claim under the Contract Disputes Act of 1978, then the contractor must include certification language in that claim certifying that the claim is made in good faith; that the supporting data are accurate and complete to the best of the certifier’s knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable; and that the person certifying the claim is duly authorized to certify the claim on behalf of the contractor.
It is not a requirement to submit an REA and have it denied or be unresolved before submitting a certified claim.
However, there is an advantage to submitting the REA first. The costs for preparing and submitting a REA and supporting documentation are generally allowable costs to include in the REA. The costs for preparing and submitting a Certified Claim are not allowable costs to include in the REA. When a claim is properly submitted and certified, interest begins to accrue on the claim from the date the contracting officer receives the claim, but the government interest rates are low.
The Certified Claim MUST be submitted to the contracting officer or to the person designated in the contract. The Certified Claim, should be submitted in a manner such that the date it is received can be verified. Certified mail with return receipt requested is a common way to send it formally. A second copy can be forwarded by email, but a hard copy should be sent and tracked.
For contractor claims of $100,000 or less, the contracting officer must, if requested in writing by the contractor, render a decision within 60 days of the request. For contractor Certified Claims over $100,000, the contracting officer must within 60 days decide the claim or notify the contractor of the date by which the decision will be made.
If the contracting officer fails to notify the contractor of the decision or provide the date in which the decision will be made, then the claim can be “deemed” denied. At that point the contractor has the option to file a timely Notice of Appeal to the Armed Services Board of Contract Appeals (ASBCA) within 90 days of the denial, or to file a lawsuit in the United States Court of Federal Claims within one year of the denial (except as provided in the Contract Disputes Act of 1978, 41 USC 603 regarding Maritime Contracts).
Do I Have To Continue To Work If My Claim Is Denied?
Regardless of whether the REA or claim is denied, the contractor is required to proceed diligently with performance of the contract.
REAs and Certified Claims should reflect the accurate costs that the contractor believes it is entitled to recover. The government has no tolerance for inflated or exaggerated claims. In the next few articles we will discuss how to prepare and price the government construction REA and Claim.
Kay Kendall is currently president of Kendall-Dinielli Consulting, providing consulting services to government and commercial clients. She has extensive experience in preparing requests for equitable adjustment proposals and claims for government construction contractors. She has also consulted Contractors with DCAA audits and resolving audit disputes. You can visit Kendall-Dinielli Consulting at www.kendall-dinielli.com.
Vince – the blogger Reality Bite: Do I still have to work if the federal customer directs me to complete work that is not in the original scope or where they have not provided a contract modification? The quick answer is absolutely. The customer does not want you to use a work stoppage as a means of holding them hostage.
However, I have seen instances where the work is clearly not within your scope, yet you are still required to proceed even if it puts your company at financial risk. In such a case you may want to seek assistance from other interested parties such as the Small Business Administration or your congressional representative.
Remember, regardless of how some may act, most people in the federal government still believe they are not in the business of putting small businesses out of business.
The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.
4 Critical “Breach of Contract” Killers
By Sarita Smithee
The most important part of a breach of contract suit is the contract itself. The first thing a court is going to look at when it judges your claim is what the contract says. For that reason, both drafting the contract and drafting the breach of contract lawsuit regarding the contract language are critically important to a breach of contract claim’s success. There are four critical issues that can kill a breach of contract claim, and some simple things you can do to keep them from complicating your lawsuit.
Misrepresentations or Non-Disclosures
If fraud or misrepresentation occurs during the negotiation process, any resulting contract may be unenforceable. The policy behind this is to encourage honesty and good-faith bargaining. Misrepresentations commonly occur when a party says something false (such as telling a general contractor that all your employees have been approved to work on a project, but the majority of them are not eligible) or, in some other way, concealing or misrepresenting a state of affairs (such saying that you have never been disbarred from doing federal contracts by changing your company’s name). A nondisclosure is essentially misrepresentation through silence—when someone neglects to disclose an important fact he had a duty to disclose about the deal. Standard protections against misrepresentation and nondisclosure claims consist of including specific contract terms to address prior representations; however, these must be extremely carefully drafted to have any legal effect.
Violations of Public Policy
Contracts can be found unenforceable on grounds of public policy not only to protect one of the parties involved, but also because what the contract represents could pose a threat to society as a whole. For example, a court will never enforce a contract promoting something already against state or federal law or an agreement that offends the “public sensibilities.” Any contract that would permit a party to perform a service that he is not statutorily licensed to do would also be unenforceable. If a court does find the contract unenforceable, and the contract permits it, the court may choose just to rewrite the unenforceable term.
Impossibility or Impracticability
In some cases, a contract is deemed unenforceable because it would be impossible or impracticable to carry out its terms. These are usually cases when some unforeseen event, such as a natural disaster, occurs before the contract is carried out and makes performing the contract much more difficult or expensive than the parties originally anticipated. Standard protections against an impossibility claim involve removing the “unforeseen” nature of the claim and assigning that risk to the other party to the contract. For example, many contracts specifically state whether acts of God or interference by third parties are a defense for non-performance.
Failure to Include Material Terms
If the contract doesn’t contain the terms you’re suing on, the court can’t write them in for you. The best way to protect yourself against breaches of contract and to put yourself in the best position if you ever do have to sue is to have solid contract terms. In a standard business contract, the following terms should be clearly spelled out:
- Payment Obligations – Specify who pays whom, when the payments must be made, and the conditions for making payments. Money is almost always a contentious issue, so this part should be very detailed, and it should include the specific circumstances that constitute a breach of the contract. If you’re going to pay in installments or only when work is completed to your satisfaction, say so and list dates, times, and requirements. Include the method of payment as well. While some people might be okay with a business check or business charge card, others might want a cashier’s check or a wire transfer.
- What happens when a breach occurs? When certain breaches occur, the other party has the option to terminate the contract without being on the hook legally for his own breach. In other situations, if the breach is not so serious, the other party can recover his damages from the breach, but he can’t terminate the contract. The court can sort out these circumstances if a lawsuit ensues, but it makes more sense to set these out in the contract so that the parties know the consequences of their behavior ahead of time. For example, serious breaches that give the other party the right to terminate the contract might be missing a certain number of payments or failing to make a critical delivery.
- Anticipation of changed circumstances. The contract should assign the risk of any anticipated circumstances that might affect the contract. These might include the destruction of the property that is the subject of the contract, bankruptcy of a party, interference by third parties, and even acts of God. The contract should state who bears the loss caused by these circumstances in the event they occur, and whether the occurrence of these excuses performance of the contract.
- Resolving disputes. If you want to receive written notice of a breach and have time to correct it before the other party files a lawsuit, specify those terms in the contract. Or, if you want to handle any disputes through arbitration or mediation instead of going to court, specify those terms as well. The contract should also state what state’s laws apply, and what county any lawsuit must be filed in should a dispute arise.
Sarita Smithee is an associate with The Beckham Group in Dallas, Texas. The Beckham Group has extensive experience with, and specializes in, business litigation both as a Plaintiff and a Defendant. The firm drafts and prosecutes/defends civil cases involving numerous types of contracts, and has just about seen it all.
Vince Fudzie– the blogger’s Reality Bite: This is some basic contract information but it is imperative that you understand it, whether you are a subcontractor or general contractor. After all, we are in the contracting business, which means there will be many contracts you will have to enter into if you are successful.
The issues that Sarita brings up about misrepresentation and non-disclosure can be extremely detrimental to subcontractors as well as adversely affecting general contractors. Recently, we had a subcontractor with a $1.5 million contract who made significant misrepresentation that allowed us to terminate his subcontract and legally not pay him for work that he thought he had performed.
The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2014 TMV, LLC (Triune). Any and all rights reserved.
Five Ways To Avoid Costly Construction Litigation
By Robert Wolf
Nobody, except lawyers, actually likes litigation. It’s time-consuming. It’s expensive. It’s stressful. But, there are some ways to help prevent such an expensive litigation process. Although no plan is perfect, these guidelines could help minimize your time, expenses, and stress level.
1. Use an Attorney To Begin With
I cannot tell you the number of times I’ve seen a contract, purchase order, or employment agreement where I’ve thought to myself or told a client, “If you had just come to us to draft this document to begin with, you would not be in this situation right now.” With so many “samples” of various types of documents on the internet, it seems that many businesses want to try their hand at drafting key contracts, employment agreements, and non-compete agreements themselves. While I can appreciate the need to conserve financial resources, companies often end up spiting their nose to save their face by creating documents tailored for their organizations without the benefit of legal aid.
2. Find an Attorney Who Understands Contracts
“My brother-in-law’s second cousin has a friend married to a guy who knows an attorney, who represented him on some traffic tickets. I’ll just use that attorney.” Well, you’ve at least followed Rule #1 – you are using an actual attorney. But, are you using the “right” attorney?
I don’t want a cardiologist performing brain surgery on my loved ones, and I don’t want an attorney specializing in criminal law to write my contracts. Likewise, I would not want an attorney specializing in contracts to defend anyone in my family on a criminal matter. So, make sure you are using an attorney specializing in the area you need, as opposed to a jack-of-all-trades-but-master-of-none attorney.
3. Find an Attorney Who Does NOT Need a Learning Curve
Although everyone learns something new every day, and the facts of each case are going to be different, you can spend a LOT OF UNNECESSARY MONEY if you don’t research your potential attorney’s actual case experience. You may have found an attorney specializing in contracts, but does that attorney have significant experience with the type of contract that you need, such as a subcontract agreement or independent contractor agreement?
If not, you could be spending thousands of dollars while the attorney conducts online legal research and re-creates the wheel, so to speak. Don’t be afraid to ask questions at the outset and determine your attorney’s own practical experience with the issue you are inquiring about.
4. If You Are Not Using a Litigator, Have a Litigator Review the Contract
So, you’ve done the right thing and found an attorney actually specializing in drafting and/or reviewing the all-important Subcontractor Agreement that you require. The attorney you are speaking to has drafted many of these types of agreements over the years.
But, has your attorney ever cross-examined a witness in a deposition or on the witness stand about the meaning and interpretation of this type of agreement?
Has the attorney had to sit through a deposition where he or she is defending a witness being cross-examined about the Subcontractor Agreement?
It is that last level of experience – actual litigation – that is invaluable. It is one thing to know all of the various statutes and laws, but it is another to have the practical experience of poking holes in the stories of many witnesses over the meaning of a single word or phrase. Litigators can use this experience to help you avoid future mistakes.
If you are not using a litigator, then try to have an attorney specializing in litigation review the document you are having drafted for you. It likely will not cost much, and can save you many thousands of dollars down the road.
5. Get a Budget Up Front
As attorneys, we do not like to be surprised with our clients’ stories, or with a client’s sudden inability to pay for the services rendered by attorneys. Likewise, it is not fair for a client to be unnecessarily surprised for a bill sent by an attorney. Do not just ask for the attorneys’ hourly rates. Find out how many hours are likely involved to complete a task. Ask for an approximate budget. Or, ask about an alternate arrangement such as a flat rate plan where you pay X dollars for the attorney to complete a specific task. In that case, if the attorney takes longer than expected to do the job, then you are not penalized.
There is no Perfect Plan. But, if you take these five factors into consideration, then more often than not, you will save significant money for yourself and your business in the long run.
Robert Wolf is a senior associate with The Beckham Group in Dallas, Texas. The Beckham Group has extensive experience with, and specializes in, business litigation both as a Plaintiff and a Defendant. The firm drafts and prosecutes/defends civil cases involving numerous types of contracts.
Vince – the blogger’s Reality Bite: In addition to the points that Robert makes, help yourself out by providing your attorneys well-thought-out and organized documentation with which to represent you. Don’t be the person that gives his/her tax account a shoebox full of receipts. Somebody is going to have to wade through the information, and if your attorneys have to do it, they are probably going to be more expensive than some of the lower paid individuals on your staff.
The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2014 TMV, LLC (Triune). Any and all rights reserved.
The WIP Report
What it Is, How To Use it, and Why it Matters
By Wesley Middleton
A Work in Process schedule, or a WIP schedule, is a vital document to bankers, bonding agents, and surety underwriters. This is the yardstick they use to measure your success or failure as a contractor. Not only do they look to it as an important metric of your success, but they also would like you to understand what it is and why they use it.
Despite its importance, the WIP schedule can be one of the most confusing schedules to understand. Read on to learn a CPA’s take on what the WIP schedule is, how to understand it, and why it’s important.
The Basic Premise of the WIP Schedule
Although you may look at how much you have billed your client, subtract the costs associated with that contract and think that is your profit or loss, surprisingly, it is not! CPAs determine your profitability with the WIP schedule utilizing the Percentage of Completion Method (PCM) of accounting.
PCM: by the Numbers
Step One:
So how does the PCM work? We’ll first look at your estimated costs. This affects the entire process, so it is important that this estimate be as accurate as possible. Next, look at the costs you have incurred to date on the contract. If you divide the costs incurred by the estimated costs, this will give you the percentage of the estimated costs that you have incurred.
For example, let’s assume you have a contract for $500,000 and you estimate that your costs to do this job are $300,000. During the year, your bonding agent calls and wants to know how much of the contract is complete. You take a look at your costs incurred on the contract to date, and you see that you have incurred $60,000. With this method, the job is 20% complete ($60,000/$300,000).
Step Two:
We’ve determined how much of the contract you have completed. Now we apply that percentage to the contract price. (Note that this next statement is not the absolute, correct accounting answer, but in the eyes of the surety, this amount is how much you SHOULD have billed on the contract.) Using our example above, 20% x $500,000 is $100,000. So if you have incurred 20% of the costs, you should have billed 20% of the contract, or $100,000. This is exactly how the underwriter reads the WIP schedule. In reality, this is not the case: you have usually billed more or less than you should have.
That is where we get these two new confusing terms: over-billings and under-billings. You may see these written as “Billings in Excess of Costs” (over-billings) and “Costs in Excess of Billings” (under-billings).
What It Means: The Implications of Your WIP Schedule
Continuing our example, let’s assume you have only billed $50,000 of the contract. On this WIP schedule, you will be under-billed by $50,000. You “should” have billed $100,000 but you only billed $50,000. What does that say to your surety? This leads them to believe you may have weak project-management controls, and it points to potential future cash flow problems.
Even worse, a consistent under-billed situation leads them to question your ability to estimate your jobs. As the underwriter loses confidence in your WIP schedule, the bonding capacity gets tighter. As you can see, the WIP schedule is crucial to your credibility.
In our example, if you had actually billed $125,000 on the contract, this would mean that you billed more than you “should” have. You are over-billed. Bonding agents love this! It demonstrates that you have anticipated the future needs of the contract, and, assuming your client pays you on time, you have a much better chance of completing the job without a cash flow problem. It shows that you understand what it means to be ahead of the contract.
What Can You Do To Understand and Have a Better WIP Schedule?
1. Adjust your contract price and cost estimate for change orders.
2. Make sure all of your invoices from vendors and subs are recorded in the proper month. If the invoice was for work in January, make sure that it is recorded in January.
3. When you prepare your invoice to your client in February for the January work, make sure you date it and record it in January. Even though you may not actually prepare it until February 5th, record it on January 31st so that it is in the proper period.
4. Let your CPA review it before you send it to the underwriter.
Not sure if you’re on the right track? Try sending your WIP schedule to a CPA (link: http://www.middletonraines.com/) before passing it on to the bonding agent.
Don’t have a good WIP template? You can download a free template from MiddletonRaines+Zapata here (link: http://www.middletonraines.com/wip-schedule-template-download)
“Wesley Middleton is the Managing Partner at MiddletonRaines+Zapata, LLP, a leading Houston-based CPA firm offering a full suite of accounting, tax, audit, and consulting services to the small and middle markets.” wmiddleton@middletonraines.com
The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2014 TMV, LLC (Triune). Any and all rights reserved.
10 Tips to Write a Governmental Proposal Effectively
How to respond an ITB, RFP, RFQ, and XYZ
By Christina Martinez
When the solicitation you are responding to is an Invitation to Bid (ITB), writing your proposal will basically consist of completing forms that the government provides. The key here is to make sure that you diligently complete the forms as instructed. Many a dollar has been squandered by individuals failing to follow instructions and being tossed out of consideration.
When the solicitation is a Request for Proposal (RFP) or Request for Qualifications (RFQ), a formal proposal is required. An RFP is a negotiated solicitation or bid document that outlines the contract and project requirements and asks companies to respond with a proposal.
Therefore, in addition to completing forms, you now have to create your own proposal explaining a plan for meeting the customer’s needs. You may be required to work up drawings, biographies of personnel, management plans, and other types of information that demonstrate the capability of your company to fulfill the requirements. At the same time, the proposal must be straightforward, concise, complete, organized, and reader friendly.
An RFP can take a significant amount of time, effort, and money. So before you even start, take time to evaluate whether the investment is in your company’s best interest. To make your efforts worthwhile, the proposal should present a legitimate opportunity for you to be successful.
At the same time, your proposal to a RFP should adequately address the customer’s requirements, be clearly written, and be persuasive. Here are some pointers:
1. Write Your Proposal As A Sales Document
Your proposal must sell your company’s ability to meet the customer’s requirements and to deliver on time. Be specific but direct, because being vague will only demonstrate that you do not understand what is required and will create questions in the minds of the evaluators. Validate your promises and assertions with facts and details. Your goal is to persuade evaluators that your capabilities are superior to those of competing companies and to prove that your company can do the job.
2. Demonstrate A Complete Understanding
This can be challenging at times. While in some cases the customer will know exactly what it needs, in other cases, it may not know or may make conflicting or vague statements. In either case, it is your responsibility to demonstrate your understanding of the requirements. If your proposal does not respond to the stated requirements or responds to only some of the requirements, it will be considered non-responsive and will not be considered for a contract award.
3. Establish That You Are Qualified
This means that not only must you demonstrate your understanding of the requirements, but you must also demonstrate your ability to meet them. Include the qualifications of staff and relevant facilities, as well as any other qualifications that are specific to the project you are bidding on. Your proposal should communicate clearly your ability to perform the contract successfully. Documentation of successful past performance will help prove your point.
4. Highlight Your Past Performance
Give examples of stellar performance on past contracts. This will show experience in related areas. If you are looking at a project that is much larger than you have ever completed before, show how you will manage it, what you are going to do, who you will be working with (in the case of a joint venture), how you will work together, and who is responsible for what.
5. Respond To The Stated Evaluation Criteria
The solicitation will identify the factors that the customer will look for when evaluating your proposal. Cost is but one factor. If your proposal does not respond to the criteria identified, it will be judged to be technically unacceptable and will not be considered for award.
6. Follow The Required Proposal Format
The solicitation will specify which topics should be covered in your proposal as well as the order in which they should be presented. If you do not follow the required content format and organization, you risk neglecting or omitting important information, which may result in a rejection of your proposal.
7. Use A Consistent Writing Style
Do not get wordy or long-winded. Stay on topic and to the point. Read the evaluation factors and use them to make the reader’s job easy. If there are areas in which you may be deficient, do not try to hide them. Rather, highlight them and show how you will solve the problem. Use graphics and only include a point that needs to be made. Use bullets and headlines that will help keep you on topic.
8. Proofread and Critique Your Proposal
Writing an effective proposal requires time and patience. Be prepared to write, evaluate, and rewrite as necessary. Rewriting gives you the chance to improve the quality and responsiveness of your proposal. Pay close attention to detail. Good grammar and spelling count. Ask another person with those skills to proofread the final draft for you.
9. Provide Clear Explanations
If you use abbreviations, acronyms, or in-house terms, make sure that you spell them out and define them, at least the first time they are mentioned. You cannot assume that all those reading your proposal know what you mean, because they may not. It could then end up costing you some points because you were not clear on what you were trying to say.
10. Keep A Database Of All Your Project Proposals
This can end up saving you time and money. The next time you have to write a proposal, you can go back and perhaps use all or part of a proposal that you did in the past.
Christina Martinez is Triune’s Director of Marketing and Business Development. Christina brings over 10 years of high level marketing experience to Triune. Triune is a leading integrated design-build General Contractor founded in 1997. Triune is headquartered in Dallas, TX – www.tmvllc.us
The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2014 TMV, LLC (Triune). Any and all rights reserved.
Creating A Culture Of Well Being
Why the health of your employees can improve your bottom line.
By Marc Pieroni
As a benefits consultant, I am often asked by small-business owners how to cut the cost of health care premiums. One of the best and most effective ways is to create a culture of well-being in the workplace. The cost of health care is rising and it is projected to continue to rise if businesses and individuals continue on the same path.
Employers are spending more today than ever before on the poor health of their employees. A majority of this spending is on diseases and illnesses caused by modifiable behaviors that affect health-plan costs. The way to lower these costs is to slow the deterioration of health in your workplace by reducing the risks and helping the higher-risk employees manage their conditions.
By proactively developing health and wellness programs, a culture of well-being evolves in the workplace and employers will begin to see an improvement in the overall health of employees, which leads to greater productivity and improved revenue.
How do you change this course for your business?
Well, it takes a little more than posting a copy of the food pyramid in your break room. It’s a commitment and a plan that needs to be developed and shared by the entire organization.
A few places to start would be the following:
- Identify your employees’ health status and help your employees know their own risks through biometric screenings and health assessments.
- Focus on getting high participation and engagement for the programs.
- Make a plan and set goals. Evaluate progress and adjust as needed to get results.
- Create an incentive program to encourage participation.
Employers who foster a culture of well-being are likely to have a healthy workforce with more productivity and less absenteeism.
A recent study showed that implementing a culture of wellness gets results:
- 11% higher revenue per employee
- 28% higher shareholder return
- 18-28% lower medical costs per employee
- 37% higher sales
- 31% higher productivity
- 3 x higher creativity
Seeing the cost benefits of a healthier workforce, the Affordable Care Act provides that on January 1, 2014, the maximum reward to employers using health contingent wellness programs will increase from 20% to 30% of the cost of health coverage. Additionally, the maximum reward for programs designed to prevent or reduce tobacco use will be as much as 50%.
A few more statistics show the effect of absenteeism on the employer:
- Unhealthy workers’ absenteeism costs employers more than $153 billion in lost productivity each year.
- Every day an employee calls in sick, it costs the average employer $341 per missed day.
- 38% of all absences are related to health issues.
Where do you focus? Well, part of developing a culture of wellness begins with helping your employees improve modifiable lifestyle habits. There are 8 behaviors that create 15 conditions which are responsible for 80% of all chronic illness costs:
Modifiable Behaviors
| Smoking Physical inactivity Poor diet Alcohol consumption levels |
Poor standard of care compliance Poor stress management Insufficient sleep Lack of health screening |
Conditions
| Diabetes Coronary Artery Disease Hypertension Dyslipidemia Obesity |
Cancer Asthma Arthritis Allergies Sinusitis |
Heart failure COPD Chronic kidney disease Depression Back pain |
The return on investment (ROI) is clear!
Studies have shown that $5.50 is saved in absenteeism and
medical costs for every $1 spent on health improvement initiatives.
The bottom line is when a business promotes an environment that focuses on health and well-being, it will protect profits and present a healthy image for its customers.
Marc Pieroni is the Managing Partner of BenefitCorp, a commercial insurance consulting agency founded in 1995. Marc is dedicated to helping businesses implement, administer and communicate all lines of insurance and financial products. Please call Marc at 972-480-0109. www.benefitcorp.com
Vince Fudzie – the blogger’s Reality Bite: It has been my experience that significant absenteeism for an employee causes a lack of productivity from that employee but also has viral consequences in that it affects the productivity and morale of others in the company.
Basically, other employees may see the often-absent employees as benefiting from additional time off, so why should they work harder?
The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2013 TMV, LLC (Triune). Any and all rights reserved.
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