By Thomas Schleifer at Simplar
We all know that construction is a risky business. Every new project presents unique risks to our bottom line. The question, however, always remains, “How risky is this project?” In the past, we were left with our instincts to measure risk. Experienced professionals could “feel” the risk inherent in working with a new owner or attempting a new type of construction or working with new subs in a new geographic area so, after many sleepless nights, we would go with our “gut feel” and make the “go/no-go” decision.
Beyond Gut Feel
Extensive research has confirmed that there are no bad projects, just bad matches between projects and construction firms. The probability of successful “go/no-go” decisions in project selection should no longer rely on our “gut feelings” but can be accurately measured in advance with the new revolutionary Project Selection Tool. Rather than relying on anecdotal evidence, the risk elements impacting successful project selection are statistically weighted to produce an accurate numeric scale of how well the prospective project matches the firm’s experience. Designed for general contractors, subcontractors, construction managers, estimators, and senior construction professionals, the Project Selection Tool is also effective for architects, engineers, and vendors and can even be utilized in the owner’s selection of a contractor. What was done by “feel” in the past can now be measured and weighted statistically to replace “gut feel” guesswork in project selection.
No More Sleepless Nights
The risk elements that pile up in a construction professional’s mind as he or she ponders a new project are the same elements our research analysis weighs in the Project Selection Tool. We picked them out of a typical contractor’s sleepless night.
A Construction Professional’s Dream (or Nightmare):
“I wonder if we should tackle a project this big. We’ve never done anything this size before… And this is a research facility. We’ve never built a laboratory. I wonder if there are technical surprises in store for us. And the subs in this county are very different from our local outfits. Those farm boys don’t play by the same rules…
I’m told this owner’s reputation is one of being a little hard-nosed. Can we handle this guy and his henchmen? I better double check to make sure they have the financing in place to build this high-tech structure. I mean, they should, but you never know…
Are my guys really clear on the costs? These new materials and unfamiliar suppliers make me a little nervous. I better check their numbers. And the schedule; how long does it take to source these exotic materials?
I have complete faith in my field supervision after all these years, but we better have another meeting on this laboratory since we’ve never built anything like it before. I wonder if they feel confident. This is a new geography for us. Have they checked the soil conditions? And what about all these curved walls and triple insulated -86°C freezers? I don’t know if they’re on top of this stuff…
And I don’t know how long it will take us to build this beast in an unfamiliar market with subs we’ve never used. Have we taken all of this into consideration when estimating costs and schedule?
Does anybody know where we can find the tradesmen, we need out there in the country? Has anybody out there ever worked on a medical research laboratory before? Are there enough workers?
I better reread that contract to make sure the retainage is reasonable for this risk. This unknown owner’s lawyers could really stiff us if we’re not careful and could put a terrible squeeze on our cash flow.”
These project attributes (dreams and worries) running through this contractor’s mind can be weighted, placed in a numeric formula, and produce an accurate measure of project risk. Every time a new project is being considered and worked up by the estimators and marketers, the boss can simply ask, “What’s the PST (Project Selection Tool) score on this project?” No more sleepless nights – that simple.
A Must-Try…The Project Selection Tool
You can find the Project Selection Tool on https://simplarfoundation.org/blog/ and clicking on: Dr. Schleifer’s Business of Construction Library.
The weighting of questions is derived from 40 years of measurement and experience and is based on statistical analysis which considers the likelihood that an event will occur and the severity if it does occur. It took three years of research. It works.
Answer the questions without overthinking them. Total possible scores range from 10% to 90%. The program is based on a firm’s experience and knowledge about a potential project. If nothing is known about a project, the probability of success is a “toss up” which in statistical language translates to 50/50 or a 50% probability. Therefore, the program score opens at 50% before adding knowledge about the project. As experience/knowledge is added, it raises or lowers the score. A higher score represents a higher potential for success and a lower score indicates reduced potential.
Indispensable