Delays, and ways to avoid them, are a topic of conversation that will forever be synonymous with those in the construction industry. Variations can commonly cause delays and disputes, quickly transforming a relatively straightforward project into one of unmanageable complexity.
In partnership with FIS, we held a webinar to discuss how variations affect the industry and ask if they are one of the most pressing risks we face. During the hour discussion hosted by our Head of Partnerships, Angus McAlpine, Iain McIlwee (CEO, FIS), Bill Bordill (Quantum Expert, Decipher), and Kevin P’ng (Commercial Director, BW Interiors) provided their thoughts on the topic and outline things to be mindful of in the future.
About FIS (Finishes & Interiors Sector)
Looking after the interests of 10,000 businesses and 260,000 employees working within the sector, FIS exists to support its members to improve safety, minimise risk, enhance productivity and drive innovation.
A long-term champion of fair payment in construction, FIS works to help end cash retentions, unreasonable contractual clauses, and unfair payment practices, leading to our partnership announcement in 2020.
The impact of variations
Speaking about risk in the construction industry, Iain McIlwee explained why it falls into four main areas: design, quality, time, and price. With variations able to be hit in any one of the four factors, you could make a strong case for it being the most pressing concern. But, what is a variation?
Bill Bordill outlined them as being ‘any change to the price, the quality or time allowed to carry out the contract works’, before going on to list common variations, such as:
- Instructions from the contract administrator, the architect, or the engineer
- Change to the drawings
- Changes in site or work management methods and procedures dictated by the employer
- An instruction to expend provisional sums
- A change in statutory requirements or regulations
- A discrepancy in or between contract documents
We asked our live audience for the most significant challenge associated with variations. 32% responded with ‘the time it takes to administrate’. However, 45% stated that the number one issue variations cause is inaccuracy and a subsequent lack of information.
The cost of variations
As outlined earlier, variations can often be a result of planning and drawing changes, or due to unclear instructions from contract administrators. Sometimes variations maybe unavoidable, happening because of issues relating to supply chains, materials, or labour. All this is creating an incredibly challenging trading environment for construction businesses.
But some common causes of variations are avoidable. Kevin pointed out that clients and end-users have the opportunity to play a part in helping to minimise variations: “More and more end-users are rushing to market and are keen to make a start for the sake of progress. However, if we give ourselves more time front-end to absorb and ratify changes or variations, it can help mitigate the volume of variations and the impact of them.”
This point was echoed by several attendees in the webinar’s chat function, with one attendee stating that, “Current experience is that a contractor wants to get into a contract with a subcontractor as early as possible in order to fix prices. This is often before spec and/or scope is agreed. Hence more variations are then required.”
This viewpoint was shared by Kevin from BW, adding; “As the main contractor I agree, and similarly the flow down from the employer, client or end-user is the same – if we all give ourselves time, that is key.”
Projects can only get off the ground if several parties work together to achieve a common goal. However, when variations occur, delays to the projects can happen- the scale of the severity of this issue is apparent in a recent post where we outlined how only 40% of projects are completed on time.
Speaking about the industry as a whole, Iain McIlwee said: “I think we’re still very much lost and immersed in this late payment issue, and I think late payments, fair payments, and variations all get tied up together.”
But how often do variations cause payment delays to people working in the industry? The results from our poll showed that 64% of the audience responded ‘very often’ or‘ often’, with only 1% of those claiming to have never experienced a payment delay from variations.
As variations are clearly a widespread issue throughout the sector, how can an organisation manage and mitigate them?
Managing and mitigating variations
Despite the threat of miscommunications and delays, storing information across multiple spreadsheets has been an industry-standard way of working when it comes to managing variations.
Only 10% of the audience admitted using construction software such as Payapps to manage variations- even though our solution is designed to standardise and automate the variation process.
One panelist, Kevin P’ng, can count himself as part of this 10%. Kevin and BW turned to Payapps during his time as commercial director at BW to help digitise payment claim processing and better manage variations.
Kevin was initially part of the 80% of the audience who said they use spreadsheets to manage variations and explained how prying himself and the contractors away from the ‘safety blanket of Excel’ was daunting at first.
However, Kevin outlined why this change was essential for BW, stating that, “In simple terms, Payapps has allowed us to communicate to our supply chain more efficiently. Not only is Payapps simple to use and monitor, but the huge benefit has been the visibility it has afforded us. At any one time, management can dive into projects and see important information very quickly, or we can see there is a red flag. In the past, this was stuck in emails or Excel documents.”
Can technology help?
A large part of our discussion revolved around visibility, transparency and collaboration as vital tools in the fight against variations. Positive changes and transformation can happen across the industry, and there are already signs of this occurring, but can technology speed the process up?
We asked our panel to share their thoughts on the topic – all three were in favour of technology.
Outlining his experiences, Bill Bordill stated, “We absolutely need greater use of technology, but I also think it depends what the results we’re trying to get are. What’s the end game?” Iain McIlwee followed on saying, “Everybody’s got different systems and different processes. If we could bring more consistency into the industry, that would help – technology is a key driver to doing this.”
Despite their acceptance, technology has still yet to be completely accepted across the sector. Several factors – such as an aging workforce or a skills shortage -could explain why, but the discussion led to the following insight from BW’s Kevin P’ng:
“A foundation for construction is people and their relationships. Perhaps that’s why we refrain from embracing technology wholeheartedly,”. Kevin continued, “But construction needs to look outside of our bubble and see how others have done it and steal some ideas for how we can work more efficiently and more effectively.”
One thing is clear – the construction industry can do better to avoid conflicts, delays and variations, and technology looks to be part of the solution even though 80%of participants admitted they still rely on spreadsheets to manage variations.
Nevertheless, when we asked our audience, ‘Does technology have a part to play in improving the management of variations?’ the responses were pretty unanimous – 99%responded ‘Yes’.
What can I do next?
The topic of variations is broad and different individuals may have different experiences. Perhaps your organisation is looking for innovative ways to stay on top of a process – solutions such as Payapps can help.
Get in touch with one of our consultants to arrange a free demo and see how we can:
· Streamline your processes
· Provide subcontractors the ability to easily upload of any project variations with line-by-line breakdowns as values, percentages or measurements
· Notify you of those variations, including any supporting evidence
· Reduce the threat of delays and disputes
To get detailed insights from the panel of experts:
Across the entire hour-long discussion, the panel of experts dives into some of the most pressing topics regarding variations, offering their opinion and expertise before answering questions live from the audience.