Most projects don’t lose money because the building work was poor. They lose money because the contract wasn’t managed properly.
Once the contract is signed, you’re locked into the deal. From that point on, your result depends on how well you manage the risks and use the entitlements built into that contract.
That’s where profit is protected, or lost.
Start With the Commercial Reality
As soon as the contract is executed, someone needs to step back and look at the bigger picture.
Ask simple questions:
- What could realistically go wrong on this job?
- What does the contract say happens if it does?
- In a worst-case scenario, what costs could land with us?
- What events give us a right to more time or more money?
If these issues aren’t identified at the start, they’ll show up later, usually when there’s no easy fix.
Make Sure the Delivery Team Knows the Rules
A project is only as commercial as the people running it.
Your site team should clearly understand:
- Time bars and notice requirements
- Exposure to liquidated damages
- Latent condition risk
- Fitness for purpose obligations
- When they can claim a variation
- When they can claim an extension of time
- What needs to be notified immediately
If the team doesn’t know what triggers entitlement, they won’t protect it.
Commercial awareness on site is one of the biggest drivers of margin.
Don’t Absorb Change for Free
Profit isn’t just about building efficiently. It’s about recovering what the contract allows.
That includes:
- Variations
- Extensions of time
- Delay costs
The common mistake? Letting changes slide because they seem small, or because “we’ll sort it out later.”
As a rule of thumb:
Assume change is payable until proven otherwise.
Raise it early. Issue the notice. Price it properly. Document the instruction and its impact as it happens — not months down the track.
If it’s extra work, it should be extra money.
Extensions of Time vs Delay Costs
These are related, but they’re not the same thing.
An extension of time protects you from liquidated damages.
Delay costs protect your margin.
You can get extra time but still lose money if you don’t properly link the delay event to real cost impacts like:
- Extended preliminaries
- Labour inefficiencies
- Prolonged supervision
- Ongoing site costs
And remember, notices should go out early, even if you don’t yet know the full impact.
You can’t fix a missed notice later.
Document As You Go
Good records make recovery possible.
Bad records make arguments hard.
Instructions, delays, access issues, variations – document them as they happen.
Daily diaries. Dated photos. Meeting minutes. RFIs. Emails confirming directions.
But more importantly, document causation:
- What happened?
- Why did it happen?
- What did it change?
- What did it cost?
Contracts pay for consequences, not frustration.
Handle Commercial Conversations Properly
When projects get tight, conversations can get tense.
Tone matters.
Being aggressive doesn’t make you stronger. Staying silent doesn’t make you safer.
Raise issues early. Avoid surprises. Keep the discussion commercial, not emotional.
Not every issue needs to be escalated, but every issue needs to be handled deliberately.
Without-prejudice discussions can be useful. Used carelessly, they can create more problems than they solve.
Where Profit Really Leaks
Profit doesn’t disappear in one dramatic moment.
It leaks slowly through:
- Unclaimed variations
- Missed delay costs
- Rework
- Defects
- Scope creep
- Inefficiencies
- Preliminaries running longer than planned
You can price a job well and still underperform if commercial leakage isn’t controlled.
Sometimes recovering entitlements properly can completely change the final outcome of a project.
The Bottom Line
Contract management isn’t admin work – it’s commercial protection.
The deal you sign sets the boundaries, and how you manage it determines the result.
