Do We Need CPM to keep “Teeth” in our Trade Contracts?

After getting a copy of our suggested trade contract language on using The Last Planner System® in upcoming projects, a client asked about how to incorporate CPM and the Last Planner System in the schedule and the contract and hold trades “legally accountable”.

His Questions:

  1. Have any other contractors you work with taken out the CPM schedule for the contract?

  2. How receptive are the trade contractors to that language if they have never heard of or performed on a Lean project?

  3. How are GC’s holding trade contractors accountable for not making schedule if the CPM schedule is not used and schedule is extended?

He finished with, “Our standard schedule contract language is obviously heavily weighted to our side and has some real teeth in it that we have had to use before.”

Our Answers

  1. No CPM?! We do have contractor clients who are able to move away from CPM schedules if the owner is open to it.  In that case they utilize the Milestone Pull Plan with some added dates for contractually required completion (substantial as well as interim).  However, most of the owners are still wedded to CPM because it’s all they know.  You are unique in that you are both owner and contractor so in theory you can give yourself permission to use a non-CPM as the “construction schedule”.

    That said, because not all your projects are yet using Last Planner®, and because you’re fairly early in transitioning to it, I would recommend you continue using a CPM (you are using MS Project, others use P6) which maintains staff comfort and easily accommodates early planning, but work to keep it at a high level (what some would call the “roll up” level) which only looks at sequence and overall duration of trade work plus all the Milestones.  I would add trade Milestones (both start and finish for each segment, eg. rough electrical start, rough electrical finish, electrical trim start, electrical trim finish, etc.).  But – again if it were me – I would add a line in the subcontract that says “[company name] construction schedule” in your Scheduling Exhibit K is subject to adjustment when the trades participate in Milestone and Phase Pull Planning.  And I would update the CPM to reflect the agreed-upon durations after the trades have pull planned the work.  That way your Master schedule stays real (not just the initial projection of a couple of people long ago) and agreed upon by the trades.

  2. Trade Contractors Understand. General contractors tell us when they use the trade contract language we supply, trades who are unfamiliar with Last Planner (LPS®) ask about it and they explain it. We also have handouts as well as online descriptions for this.  Those they continually work with are already familiar with it.  They point out that it’s their opportunity to make durations real, so long as they still meet the contract completion date.  And the mention of Daily Huddles to keep everyone in the know, tends to add a comfort level (although sometimes the trade wonders if that takes time away from the work, but once they experience the benefit, they understand it). Ultimately, most repeat trades on subsequent projects will give you a lower estimate knowing you’re using LPS, just like they will when they know their favorite superintendent will be running the job.

  3. Holding the trades accountable.  Your existing “teeth” in the contract language works regardless of the type of schedule used. It refers to “[your company’s] construction schedule” and Exhibit K, into which you place a copy of “the schedule”.  So if you’re transitioning to a high-level Milestone Schedule (in CPM for now) that is adjusted/modified/updated with the team’s pull plans, your trades are no less accountable than they are now, PLUS they are looking at daily and weekly accountability, which rarely happens in CPM-only environments.

What is your experience with trade accountability in non-CPM contracts?
We’d love your feedback!

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