Tag Archives: contracting

Dispute Avoidance & Resolution

One of the most combative industries world-wide is the building and engineering industry. Many legal systems have dedicated construction law courts and others have enacted legislation designed to specifically manage construction industry disputes. In Australia alone, it is estimated the construction industry could save AU$7 billion through better stakeholder and contract management processes that minimise or eliminate avoidable disputes.

Research in reducing theses excessive costs has resulted in the publication of The Guide to Leading Practice for Dispute Avoidance and Resolution. The Guide recommends management strategies to avoid contractual disputes between clients, contractors and other stakeholders, and where disputes cannot be avoided, to manage disputes effectively. Whilst this research was developed by the Australian building and construction industry it has a much wider application and is recommended reading for any manger involved in establishing or overseeing a major project.

The Guide was developed by the CRC for Construction Innovation prior to its closure in 2009. To achieve a balanced view, the CRC-CI engaged with a cross section of organisations in the built environment industry supply chain including the Association of Consulting Engineers Australia, Australian Constructors Association, Australian Procurement and Construction Council, Civil Contractors Federation, Queensland Dept. Transport and Main Roads and Main Roads Western Australia in the work leading to this report.

The CRC for Construction Innovation completed its work on the 31st December 2009 and has closed down. To keep these valuable reports in circulation we have created a repository on the Mosaic web site. The following publications and documents are available to download from the ‘Legal Papers section of the Mosaic site:
 – Guide to Leading Practice for Dispute Avoidance and Resolution
 –  Guide to Leading Practice for Dispute Avoidance and Resolution: An overview
 –  Dispute Avoidance and Resolution (literature review)
 –  Causal Ascription of Disputes (report)
 –  Strategies for Dispute Avoidance (report)
 –  An exploratory study of project dispute pathogens (journal article)
 –  Causal Modelling of Construction Disputes (refereed conference paper)

Download The Guide and associated reports

Learning from your Mistakes

I have had to confront a couple of different aspects of people getting things wrong recently. The experience triggered 2 or 3 thoughts……

The first was the advice given last century by (from memory) Fred Daly MP to a new member of parliament ‘always leave the back door unlocked’ – no matter how sure you are of the correctness of your position in an argument always have a way to back out gracefully.

Every one wants to employ experienced people but very few employers tolerate mistakes…. To quote Denis Waitley: “Mistakes are painful when they happen, but years later a collection of mistakes is what is called experience” and Franklin P. Jones “Experience is that marvellous thing that enables you to recognize a mistake when you make it again”. You cannot attempt something new without occasionally making mistakes – the skill is to use your experience to recognise a pending mistake early and short circuit the error.

Lesson’s Learned should be the repository of ‘other peoples’ mistakes that you can draw on to avoid repeating them yourself – as quoted in ‘The Knack’, “A smart person learns from his or her mistakes. A wise person learns from other people’s mistakes.”

And then there is the question of what to do about your mistakes. The generally accepted process for getting over a mistake is:

  • Acknowledge it (“my mistake”)
  • Make restitution if needed (eg apologise)
  • Learn from it
  • Move on, only people who have never made anything have never made a mistake.

In moving on though, make sure you take your enhanced experience with you.

One last thought from Helen Keller: “Life is either a daring adventure or nothing. Security does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than exposure.”  The same idea applies to making decisions; every decision you make may be wrong but in the long run no decisions are usually worse than wrong decisions and your decision may be correct (but it helps if you can leave the “back door unlocked”).

Surviving the credit crunch

Depending on where you are in the world your economy is either in recession or sinking towards recession, with only a few exceptions such as China where growth has merely slowed to a moderate rate of expansion.

However, after more than 20 years running SMEs (small to medium enterprises) I definitely feel the doom and gloom in the press is greatly exaggerated. To a very great extent, it’s when the going gets tough, the tough get going! Not to build empires, but to position themselves for the inevitable upswing.

This blog is written from the perspective of sole contractors and small professional consultancies and is very much what we are doing in Mosaic Project Services to win through yet another downturn. It’s rather long, but I hope you find it useful.

Unemployment

The first thing to consider is unemployment. In a recession unemployment tends to double and the number of people ‘not seeking work’ also increases. In Australia this means rising from the 2% to 3% range to maybe 4% to 6% an increase of some 4% at the maximum. Double this again for the number of people on the margins ‘not seeking work’ and you could say 8% of people who are likely to have a job in good times won’t have one in a recession. This suggests around 92% of people who are likely to have a job in ‘good times’ still have a job in bad times. Therefore as an individual contractor or small business your challenge is to make sure you are part of the 90% still working – looks at this way, the challenge is not so hard.

Cash Flow

The next issue is cash flow. In the good times we all ran up too much credit and the temptation is to eliminate debt. The bad news is that now is a bit too late! There are several challenges to consider in order:

  • The first issue is to minimise fixed outgoings (these are the real break points if your income stops for a period)
  • The second is to build up some cash reserves or liquid assets (essential to cover ‘fixed outgoings’ if you income stops for a period)
  • Only then should you consider major debt reductions. Remember, one of the good points in a recession is interest rates drop.

We are not in a position to offer financial advice but we have noticed it is much easier to re-engineer your finance if you still have a job and with proper advice there are a range of opportunities ‘out there’ because the banks and card companies are chasing business as well.

Maintaining an income is the other side of cash flow management. This requires a careful balancing act……

  • Most employers / clients are feeling the squeeze and will employ the ‘golden rule’ (He who has the gold makes the rules). Don’t let your pride stand in the way of negotiating a rate cut but at the same time make sure you are still being paid at the ‘right rate’ for today’s climate.
  • If you are between contracts make sure the rates you are asking for are consistent with ‘today’s market’. Yesterday has gone and tomorrows rates are likely to be lower still.

Keeping a Job

‘A bird in the hand is worth two in the bush’ – a moderately paying job now is worth more than the possibility of a higher paying job later. Consider this simple equation: if you turn down a job today at $650 because you feel you are worth $700 per day minimum and eventually after 4 weeks you are successful and win the $700 job you will have foregone 20 days at $650 = $13,000. This means you will be working for the first 260 days in the $700 job before you break even with the income you would have earned at $650 per day. This is 1 year’s work (52 weeks) and in a recession most contracts are for 6 months or less. To make matters worse, if at the end of the day you take a job at $650 or even $600 you never make up the lost income. Unfortunately, the business world will be well into recovery before contract rates start to rise significantly.

Marketing

Keep on marketing. The competition to keep your existing contracts or win new work in a recession is definitely more intense. To keep in front of the pack and minimise reductions in your contract rates you have to be offering a ‘better package’ to employers and really be out there selling your capabilities.

Most jobs go to people who know people they are never advertised, the approximate ratio in ‘normal times’ is 80% to 20%. The reason job ads drop so dramatically in a recession is the fact most businesses can easily fill most jobs by word of mouth and personal contacts. A certain proportion are obliged to advertise (eg, governments) but if there’s no policy in place mandating advertisements, businesses won’t wast money.

The answer to winning jobs before they go to market is networking. Attend meetings, attend workshops and conferences, catch up with old colleagues and be seen. There are two critical rules to networking.

  • Start before you need your network and keep networking
  • Add value to the network. You must contribute as well as take from the overall network; no one likes a sponge who soaks up everything for his/her self.

There are lots of websites with hints on networking – do your homework.

Developing a ‘better package’ for both individual contractors, and consultants running small businesses, has a range of facets:

  • Qualifications help. Organisations have to filter 100s of applicants for each job; the easiest first step is to discount ‘unqualified’ people. More importantly acquiring a relevant qualification shows a willingness to invest in your future. Many employers will read this as a strong positive indicator of your overall willingness to maintain a positive approach to your career.
  • Be seen as a useful expert. Useful experts contribute practical assistance to their peers and industry. Write papers, mentor colleagues, assist on committees, etc.
  • Be easy to find. People won’t ring back in a recession, email, telephone, social network sites, etc all help you to be easy to find and you distribute these contacts via every reasonable means.
  • Have a strong brand. People need to know who you are and what you (or your business) stand for. Reputation really matters.
  • Be flexible. Make sure your skills are transferable and within reason you are ‘transferable’ and can go where the work is. This may not be ideal but maintaining an income matters.

A last thought is to strap on your parachute on before you are asked to jump. Almost every item discussed above and particularly networking is easier if you are in a job. Certainly in my experience it is always easier to find another job when you have one. The challenge is to ethically manage your career and survival through the next few months; reputations matter in good times and bad.

The good news is if you manage all of this and come through the recession successfully, you will be ideally positioned to take advantage of the next growth phase and accelerate your career to new heights.

Good luck and good networking.