When it comes to construction costs and planning, my business partner Marty Sadlier is in a class of his own. The following details one of Marty’s favourite construction elements – Resource Loaded Programs.
It’s well known that prior planning prevents poor performance. That sentiment is backed up by research with a Deakin University study which showed around half of all building defects could have been eliminated in the planning stage.
An essential element of good planning is choosing the tools utilised for project management. Platforms such as Procore, Smartsheet or even Excel are used by construction managers every day.
But when it comes to home building, there is one essential utility which is consistently ignored by both owners and head contractors. It’s a report that adds an unmatched level of accuracy to the process, and can deliver incredible returns.
I’m talking about a Resource Loaded Program, or RLP.
Traditional project management sets out a timeline for a build, scheduling in what trades will be require. It includes the order of works and how long subcontractors will need to be on site. It should also include elements such as budgeted and actuals costs, variations and float times.
The RLP sets out the same elements as a normal project management schedule, but with the inclusion of details about the resources needed at each point of the build. In other words, the amount of materials and the required labour for each construction element are carefully documented.
For example, it doesn’t just say tiling will be done at a certain date and for a stated price. An RLP also tells you exactly what materials and quantities are needed. It also sets out how many labourers are required to complete their work within their allotted timeframe.
An RLP can be completed for a very reasonable fee by a quantity surveyor and delivers a raft of benefits to the builder and owner.
The cost of building materials has skyrocketed over the past 18 months with the prices of timber, steel and fit out all climbing by double digit percentages. Freightage and manufacturing slowdowns are to blame but owners are wearing the expense, and builders taking on inflationary risks when ordering.
But an RLP allows the builder to be more surgical in procuring materials. He can still factor in cost and wastage margins of course, but the RLP identifies when it will be most critical to deploy your materials. Perhaps you need to devote most of the timber to the framing stage with some minor joinery at the back end.
Rather than receiving your entire shipment of timber at the start, the builder might choose to stagger the delivery. This will keep cashflow more manageable and won’t slow down the project.
An RLP doesn’t just track quantities of materials, it also details the labour component.
Say an RLP identifies that completion of blockwork within a certain timeframe will require three bricklayers to be on site. When the day arrives, two of the tradies call in sick. The head contractors knows the job needs three to meet the timeline, so will source help from some other site he’s managing. The project stays on track with no delays.
The RLP allows the main builder to manage his labour in a way that holds him accountable to the timeline. This ensures no domino-effect delays from jobs not being completed on time.
Progress draws refer to the payments made to a builder at the completion of each predetermined stage of the construction. The builder will hit the base stage, frame stage, lockup, fit out and completion stages of the build. On completion of each stage, they will send a bill to the owner (or their bank) asking for payment to cover the work done and materials used.
The progress draw process can be a bit fluid. An established formula determining the percentage of the total contract cost being attributed to each stage is normal, but complex and interesting homes won’t fit the standard progress schedule.
With an RLP however, it’s easy to cross check the completed work against a precise cost. The RLP removers any guesswork. It means the builder is never out of pocket, nor will the client overpay on a progress payment.
Perhaps the most practical application of the RLP is the way it helps builders identify potential trouble spots in the schedule at the earliest stage. The contractor can see where problems may arise around timing and supply.
The RLP clearly lays out during planning what jobs must be completed before the next can be started. Those times where there’s a risk of a labour or materials shortfall become easy to spot. This allows for comprehensive pre-planning by the builder to alleviate any potential challenges before they have a chance to occur.
For just a few dollars more than a traditional project plan, an RLP can solve myriad problems. It’s an invaluable tool that far too few owners and builders are utilising. Those that do rarely go back to traditional planning programs.
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