Keeping Good Project Records
Makes Sense
Contractors can take a variety of steps to minimize cost overruns, keep a
project on schedule and reduce the potential for litigation. One of the
most effective is to keep detailed and timely records that cover every
aspect of a project from start to finish. Here is an overview of the most
important records you should keep for every project.
Project History
Recording, classifying and saving all correspondence related to a project
will allow you to follow up on a project’s history from start to finish. Set
up separate files for correspondence to and from the owner, the architect,
subcontractors and so on. In addition, create separate files that relate to
any changes in the initial specifications and plans.
Do not neglect to date incoming correspondence and to sign, date and number
all outgoing correspondence related to requested changes.
The same goes for any correspondence sent by fax or e-mail. A comprehensive
paper trail like this can prove invaluable if any disputes should arise over
change orders or payment for change orders.
Project Schedule
Typically, as the contractor, you create and deliver a schedule that
outlines how your firm intends to accomplish its work within the contract
performance period. Sometimes an owner/developer creates the schedule.
Either way, you have to periodically update the schedule to show your
progress on the project.
A project schedule can also help you identify potential trouble spots well
before they impact your bottom line. In addition, you can use the schedule
to help with forecasting how best to allocate your employees and your
equipment.
Detailed Job Site Log
Require your project manager or superintendent to maintain detailed daily
records of the project’s progress as well as records of any specific
conditions that may have a bearing on the project’s planned performance.
Apart from their value as a project management tool, you can use these
records to identify problems that, if left unchecked, could threaten the
progress and profitability of future projects.
Change Order Log
This is another key piece of documentation you’ll need. Creating a paper
trail that is as comprehensive as possible will be helpful if any disputes
arise.
Records of Meetings
By scheduling regular meetings, phone calls and reports with your customers,
you’ll be able to minimize any confusion and potential disputes. You can use
this time with your customers to discuss:
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Project changes
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Change orders
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Subcontractor issues
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Zoning issues
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Environmental concerns
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Completion time frames
Minutes identify who attended a
meeting, when it took place and what was discussed or decided during the
meeting. Since minutes are an important method of documenting contract
performance, it’s in your interest to maintain them carefully.
Project Costs
You need a way to track project costs through every phase of the
construction process and identify where costs are running over budget. An
effective and efficient cost accounting system that allows you to track all
direct and indirect costs related to each project is the best way to achieve
this goal.
Some of the more common breakdowns of work activities include
trade/specialties, phases or activities noted in the project schedule.
Costs should be identified by type (materials, labor, equipment,
subcontracted labor, etc.). Keeping your accounting records up to date as a
project progresses will give you the financial information you need to make
decisions.
Somerset Can Help
If you would like some assistance in developing the systems and the
procedures that allow you to maximize your resources, please
contact us.
Work-In-Process is provided by
Somerset for our clients and other interested persons upon request.
Since technical information is presented in generalized fashion, no
final conclusion on these topics should be made without further review.
For additional information on the issues discussed,
please contact
Ken
Hedlund,
Jay Feller,
Steve George,
Chris
Mayfield or
Rebecca Ogle
of our
Construction & A/E Team.
This document is not intended or written to be used, and cannot be used,
for the purpose of avoiding tax penalties that may be imposed on the
taxpayer.
Somerset CPAs,
P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
www.IndianaConstructionCPAs.com
info@somersetcpas.com
