How to make money with your Gather Site Diary

‍Imagine this: It's a quarter past five on a Friday evening, and the IT director of a major construction firm rings you up. They're desperate to understand how a simple switch from their paper-based site diary system could significantly improve their bottom line. 

That's the power of Gather.

Here is how we do it…
There are three ways that construction software usually proves its worth:
‍1 - Increases value - It increases the top-line potential of a project.
‍2 - Reduces costs - We do things more efficiently and increase the bottom line as a result.
‍3 - Saves people's time - We do things more efficiently and also quicker.  Ultimately impacting 1 & 2.

This article will focus on numbers 1 and 2: how do we add value to a project, reduce costs and ultimately improve margins on a project? 

This would often be seen as taboo in construction, an industry famous for low margins where clients will often simply choose the lowest price but it really should not be.
By ensuring projects deliver the agreed-upon value, working efficiently, and achieving healthy profit margins, we create a win-win scenario. Clients receive high-quality projects on time and within budget, while contractors operate sustainably with predictable outcomes. This fosters a more reliable and successful construction industry for everyone involved.

The Scenario Project

For this example, we will use a typical 6-month infrastructure project using the NEC4 Contract - Option C.

‍*For illustration purposes we have assumed the fee is equal to the margin. The fee would normally include overhead costs and is not purely margin / profit.

How to add value using Gather:

1 - Never miss a change event

It seems simple and obvious but how many projects do you work on and you realise that you have missed something that you were entitled to? 

Probably more than you would like to admit.

Gather ensures that you have a high-quality contemporaneous record for each and every single shift. 

A detailed record comparing what you said you were going to do versus what actually happened on site. Categorised, tagged and easy to understand. 

How does this work in practice? 

• Last weekend, you mobilised to install four foundations at a level crossing. Weeks of planning, a coordinated supply chain, and £8k in equipment and £3k in labor were on the line.
• Disaster strikes! A 90-minute access delay cuts your work time in half. You manage to install one foundation, but an uncharted cable blocks the second. Time constraints force you to abandon work on foundations three and four.
• Traditionally, recovering costs would be a battle. Proving the delay and unforeseen obstacles weren't your fault requires meticulous records.

But with Gather, you have the evidence at your fingertips:

• Detailed, auditable records with clear timestamps show exactly what happened and the resources impacted.
• Access Delay: We track planned vs. actual timings, aligning them with client possession references. Lost working time metrics are automatically calculated.
• Uncharted Cables: Timestamped and geotagged photos document the issue, its location, and the affected resources.
• ShiftCost: Each record is automatically costed with labour, plant, and material costs, providing a clear picture of the financial impact.

‍The result? Within minutes of finishing your shift, you have all the substantiation you need for a £10k+ compensation, ready for review and association with the appropriate notice on CEMAR.

Gather a subscription for the project paid for! ✅

35% of rail infrastructure shifts are affected by access delay.
Let's assume that's 8 shifts on this project.
Total change substantiated 8 x £10k = £80k increase in the target cost. Fee % in addition.  

2 - Prospectively price additional scope

The NEC contract thrives on mutual trust and cooperation, especially when dealing with contractor applications for time extensions or price changes. However assessing these applications prospectively can be a challenge for project managers.

Clause 63.1 highlights the need for assessments at the time of instruction, when the contractor hasn't completed the affected work. 

All too often we resort to using rates or fall into the quite common misconception that if compensation event works have been carried out and the quotation not been agreed, that the quote should be assessed based upon actual cost.

Gather offers a better solution.

By capturing structured activity data aligned with your bill of quantities, Gather empowers you to use your own project data for prospective pricing. This eliminates guesswork and finger-pointing, allowing for:

• Data-Driven Decisions: Use actual production outputs, allocated resource information, and defined fee percentages to easily substansiate price changes.
• Fair Compensation: Secure fair price increases based on real-time production data and costs.
• Shared Benefits: If the contractor improves efficiency, both parties benefit through the NEC pain/gain mechanism.

This win-win approach ensures fair compensation for the contractor while maintaining project margins.

Let's say additional scope typically increases UK infrastructure projects by 21%.
Gather helps translate this into a £90k increase in the target cost, maintaining your 10% margin and ensuring project success.

3 - Reduce the risk of disallowed costs

Within options C, D,E & F of the NEC4 Engineering and Construction Contract (ECC), the Contractor is paid each period their Defined Cost plus fee. In simple terms, this is the actual cost they can prove they have spent (or will have spent prior to the next application date) plus their fee percentage (identified in contract data 2). (Source GMH)
‍11.2(26) Disallowed Cost is a cost which: is not justified by the Contractor’s accounts and records.
‍This is the biggest risk to most contractors when undertaking an Option C project, it provides a false sense of security as teams often think that all of their costs will get covered.
This is not the case.
There are numerous reasons for costs being viewed as disallowed ranging from correcting defects to not following procurement procedures.
The most common is not having the right records. If the Contractor cannot demonstrate that a cost has been incurred via their accounts and records then it will not be paid.
This is where Gather steps in to provide that detailed contemporaneous record of the people, plant, equipment and materials utilised and allocated to specific tasks.
An auditable record of the who, why, where and when of any projects.

Disallowed costs have a huge impact on projects.

‍A 2% reduction in costs on a project costing £620k is £12.4k.

A contractor would have to do an additional £124k of turnover to recover this! 

In summary, by implementing Gather on a typical £500k, 6-month project, contractors can unlock substantial value through three key strategies:

• Never Miss a Change Order: Gather ensures you capture every justified change event, potentially recovering up to £88k in compensation.
• Confident Scope Pricing: Prospectively price additional work based on real-time data, avoiding underestimates and potentially adding £99k in project value.
• Minimise Disallowed Costs: Gather's meticulous record-keeping significantly reduces the risk of rejected claims, saving you up to £12.4k (or even £124k on larger projects).

The Bottom Line:  A modest £6k investment in Gather can unlock nearly £200k in additional value on your projects.  That's a staggering 33x return on investment (ROI), maximizing your profitability and minimizing financial risk.

Interesting view from NEC Expert Glen Hide: Disallowed costs can be harder hitting to the Contractor under option E than option C. In theory, the common view would be that option E is the option of lowest risk to the Contractor, but the effect of disallowed costs has the potential to hit the Contractor even harder compared to an option C or D contract. For example, under option C, if the Contractor completed a £1mil project and had £50k disallowed costs, they would be paid £950k but then earn their share on the underspend. If their share percentage was 50%, they would be paid an overall £975k. For the same £1mil project but this time under option E, if the Contractor had the same £50k worth of disallowed costs, they would only be paid £950k overall.

How to reduce costs using Gather:

In construction, where margins are razor-thin and projects intricate, uncovering opportunities to control costs is absolutely paramount. Here's how Gather empowers you to achieve just that, not just by saving money, but by doubling down on your cost-saving efforts:

1 - Highlight cost efficiencies in real-time

Construction is often plagued by endless periodic reporting cycles. 

The real kicker though is the lag, it could be 4-6 weeks after an event that you know how much it costs meaning teams have often missed the boat when it comes to doing something about it. 

Gather seeks to address this by giving project teams immediate, crystal-clear visibility into project costs.

Gather meticulously tracks resources, labour, and materials used on every single activity, allowing you to identify and address inefficiencies the moment they appear. This proactive approach lets you nip cost overruns in the bud before they blossom into major problems.

Case Study: Transport for London (TfL) leveraged Gather to achieve a staggering 11% reduction in project costs. By gaining real-time insights, they were able to identify and address potential cost overruns proactively, saving a significant chunk of their budget.

Let's translate this to a hypothetical project. An 11% cost saving could represent a reduction of around £68k. Now, consider a typical 50/50 gain share model – this translates to an increase in your contractor's margin to 17.42%, or a profit boost to £96k.

Here's the real kicker: To achieve this additional £34k of profit through traditional methods (increased turnover), you'd need to generate an additional £340k in revenue! 

Gather empowers you to achieve significant margin improvements without chasing after extra work.

2 - Effective Communication: The Key to Mitigating Project Risk

The success of any construction project hinges on proactive risk management. While some risks are predictable, others can emerge unexpectedly.  Effective communication is crucial in managing and mitigating both known and unforeseen risks.

Traditionally, understanding project realities – the "who, what, why, and when" – often involves piecing together information from various sources. 

This can lead to delays, communication breakdowns, and even arguments over conflicting data.  Without a clear picture of what's happening on-site ("at the coalface"), teams struggle to proactively identify and address potential risks before they escalate.

Gather empowers teams to break free from siloed information and communication gaps.  It serves as a single source of truth, capturing and consolidating real-time data on personnel, resources, and activities. 

After all, it's 2024 we shouldn't be arguing about facts! 

This transparency allows for:

• Early Risk Identification: Gather's detailed activity logs allow teams to identify potential risks early on, enabling proactive mitigation strategies.
• Data-driven decision-making: Informed by accurate, real-time information, teams can make better decisions regarding risk management and project adjustments.
• Reduced Conflict: Eliminate disputes over facts with a central repository of verifiable data. This frees teams to focus on collaborative problem-solving and risk reduction.

By facilitating clear communication and real-time data sharing, Gather empowers project teams to effectively manage and mitigate risks. This translates to fewer delays, improved project outcomes, and ultimately, increased success for everyone involved.

In conclusion, the traditional construction scene, plagued by siloed information, delayed insights, and reactive risk management, is crying out for a change. Gather offers a compelling solution by providing a single source of truth and facilitating real-time data sharing.

As we've seen, Gather empowers you to not only avoid costly mistakes and missed opportunities but also unlock significant value through proactive change management, data-driven pricing, and meticulous record-keeping.

The numbers speak for themselves: By implementing Gather on a typical project, you can achieve a substantial return on investment, potentially exceeding 30 times your initial investment.

This translates to healthier margins, improved project outcomes, and ultimately, a more successful construction business.

Ready to transform your construction projects from cost centres to profit centres? 

Take control with Gather and experience the difference for yourself.  Contact us today to learn more about how Gather can empower your construction business to flourish.

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