A job that loses money rarely loses it all in one place. It leaks. A little at tender, a little more before you get on site, then a steady drip through variations until the final account lands and the margin you priced has gone. Looking at the construction project phases one at a time is the easiest way to see where that happens on your own jobs.
Every phase has its own way of letting cost slip. The fix at each one is roughly the same: keep the price current and keep a record of why it moved.
Pricing at tender stage
The first place a job can go wrong is before you have even won it. A price built in a hurry, with quantities rushed and rates copied from the last job, sets the budget for everything that follows. If the number is wrong here, every stage after it inherits the problem.
The usual culprits are familiar. A take-off done at speed off an incomplete set of drawings. Preliminaries guessed rather than priced against a programme. Subcontract packages that never came back, filled with an allowance that nobody wrote down as an allowance. Each of those is a small hole. Together they decide whether the job can make money at all.
Of all the construction project phases, this is the one where fixing a mistake costs least. An hour spent checking a quantity before submission is nothing next to the weeks spent arguing about it later. The catch is that tender stage is also when time is shortest, which is exactly why the checks get skipped.
The gap between winning the job and starting on site
Between being awarded a job and getting on site, drawings change, subcontractor quotes come back different to what was allowed, and the programme shifts. This is the moment to go back through the original price and check it still holds before you are committed to it on site. Leave it and you find out the hard way once work has started.
A practical way to do it:
- Compare drawing revisions. Check the construction issue against the tender set and list every change, however small it looks.
- Replace allowances with firm quotes. Any package priced as an allowance at tender should now have a real number behind it.
- Re-read the programme. If the duration has moved, your preliminaries have moved with it.
- Record the differences. Write down what changed, by how much, and whether it is recoverable from the client or yours to absorb.
Construction project phases on site: duties and cost control
Once work starts, your responsibilities widen. Under CDM 2015 a contractor has to plan, manage and monitor its own work so it is carried out safely, and on a job with more than one contractor the principal contractor also coordinates the construction phase. Those are real duties on site, and they come with real cost: supervision, welfare, temporary works, time spent coordinating other trades. If the tender price did not allow for them properly, you pay for them anyway.
Alongside that, the original price becomes a moving target. Variations come in, quantities change once you open things up, and material costs move. A control estimate, set up from the tender breakdown and updated as the job progresses, is what keeps you ahead of where the money actually is. It is the same discipline as proper cost planning services, just applied while the job is live rather than before it starts.
The price you win the job with is a starting point. If it is never updated after award, you only learn what the job cost when it is too late to do anything about it.
Variations: the phase inside every phase
Variations do not wait for a particular stage. They arrive from the first week to the last. The ones that hurt are the ones that get agreed on site with a nod and priced weeks later from memory. By then the work is covered up, the argument is about what was said, and your rate carries no weight because nobody can see where it came from.
A breakdown that traces back to measured quantities and known rates makes this far easier. You price the change against the same base as the original, you record it at the time, and the client's QS can follow it. There is more on this in keeping a job's cost under control once you are on site.
Handover and the final reckoning
By the time you get to handover, the final account should already reflect everything that happened on site, not come as a surprise to either side. If variations were recorded and priced as they happened, the final account is mostly a matter of adding them up and agreeing the last few. If they were not, it becomes a reconstruction exercise, and those tend to end in compromise figures that favour whoever kept better records.
Retention, snagging and defects all sit at this end of the job too. None of them are a reason to stop tracking cost. The money is not in until the account is agreed and paid.
It is also worth a short look back once the account is settled. Compare what the job cost, element by element, against what you priced. That comparison is the best information you will ever have for pricing the next similar job, and it is usually thrown away the day the last payment clears.
One question to ask at every stage
At each phase, ask: if the client's QS asked me today what this job will cost and why, could I answer from the paperwork? If the answer is yes, the cost side is under control. If you would need to rebuild the answer from memory, that is the phase where money is leaking, and it is cheaper to fix it now than at final account.