Regardless of the type of construction project you’re working on, every job follows the same general phases. In project planning, there are five construction phases: initiation, planning, execution, monitoring, and closing.
This article will show how this applies to construction projects, and what contractors and suppliers working on the job need to know to get it done — and get paid.
Table of Contents
Phase 1: Initiation – Project Design
Every construction project begins with a concept. Whether it’s a need for a new building or changes to an existing space, the owner starts with what they need and want from the project. The owner usually contacts an architect or other designer to help lead them through the design process. The architect listens to the owner’s ideas and adds their knowledge and expertise to develop the project concept.
Not every project is worthwhile, however. There can be many constraints that make a project not a good idea. The design team and owner work together to determine if the project is feasible, which means will it suit the owner’s needs for budgeting, scheduling, and purpose. They also need to ensure the site is suited for the project, and they do this by conducting surveys and geotechnical research.
Budget is usually a major concern for the owner, so the architect provides them with an initial budget. Relying on standard square footage pricing or their experience on similar projects, the architect gives the owner a price range so they know what to expect and can budget accordingly. The owner may have to apply for financing, a long process that can be started once the project is given the go-ahead.
Phase 2: Planning – Preconstruction
Once it’s determined that the project is feasible, the next of the construction phases begins: Proper planning. The design team works together to put together the construction documents, which include drawings, specifications, and other reports. These documents are used by contractors to bid on the work. The documents are sent to selected bidders or published publicly so that anyone can bid on them. The bidding process can take up to a couple of months, depending on the timeline for the project.
The construction documents also need to be submitted to the local jurisdiction for review and permitting. The city or county reviews the documents to make sure they meet local codes and regulations, and then issues permits for the work.
Permitting can take several months, depending on the jurisdiction’s workload. Often the design team has to make changes based on feedback received during the permit review process. These changes are implemented into the construction documents before construction begins.
Phase 3: Implementation – Construction
Once a general contractor has been selected for the project and the contracts are in place, it’s time to begin construction. The contractor moves into the site with their equipment and other infrastructure needed for the project.
Most general contractors hire trade subcontractors to perform the work. Skilled craftsmen provide the necessary knowledge and experience to provide quality work.
Learn more: 20 Types of Contractor in Construction
Before starting work on a project, contractors and material suppliers often send preliminary notices to the general contractor and project owner to let them know that they are working on the project and help ensure they get paid. In some states these notices are required to retain mechanics lien rights. In states where they are not required, preliminary notices are still encouraged, as they generally speed up the payment process.
The general contractor develops an overall schedule for the work and monitors it regularly so it can be updated as the project progresses. Subcontractors and suppliers have input into the schedule, as often material deliveries and labor scheduling affect the speed of completing the project.
Having so many contractors and suppliers on-site requires a lot of coordination and communication. The general contractor is usually responsible for leading the team and ensuring that the work is performed safely and correctly. Collaboration and teamwork are highly valued during a project.
Phase 4: Performance and monitoring – Applications for payment
As the work progresses, documents are exchanged, including RFIs, submittals, contracts, purchase orders, revised drawings, and other correspondence.
Some of the most important documents are progress payment applications. Subcontractors submit payment applications to the general contractor each month for the work that has been completed. The general contractor in turn submits a payment application to the project owner. Based on this application, the owner pays the general contractor, who pays each of the subs.
Payment applications involve the exchange of lien waivers, which are similar to a receipt for payment. The exchange of lien waivers is necessary because the general contractor has to prove that they have paid everyone before they receive their next payment. The waivers protect everyone’s lien rights and help document that everyone’s been paid.
Changes to the scope of work happen all the time. There may be unknown conditions on-site, or the owner may decide to add more work. It’s important to document these changes as they happen and get approval from the owner and general contractor before starting additional work. Unpaid change orders create conflict and are the basis for many payment disputes.
If the work is not of a high enough quality, or a subcontractor damages another contractor’s work, they can be charged for repairing or replacing it. This is done through what is called a back charge, which means that the contractor gets charged for the repair or replacement caused by their work. Contractors need to communicate about any potential back charges before processing them, so they don’t result in a claim later.
Phase 5: Closing – Project closeout and Post-construction
When the work has been completed enough that the owner can move into the space, the last of the major construction phases is achieved: substantial completion. At this point, the owner takes responsibility for the building or project area. The date of substantial completion is important because it starts the warranty, and the time that contractors and suppliers have to file a lien if they don’t get paid.
After substantial completion, the design team and owner do a walk-through on the project noting any corrections that need to be made. This list of corrections is called a punch list, and once it’s completed, the project is finished.
Throughout the project, a small percentage of money is held back from the general contractor and subcontractors. This retainage is held to ensure that all the work will be completed to the quality established in the design documents. The funds are released only after the project is finished and the punch list has been completed. On some projects, this can take a long time.
After the punch list work has been completed, final payments can be made to the general contractor and subcontractors. Everyone is usually asked to sign a final lien waiver stating that they’ve been paid in full for all costs on the project. These waivers help ensure the owner that no one will file a lien after the project is complete and all payments have been made.
Contractors are required to provide warranties on the work they perform and the materials they furnish, usually for one year after substantial completion. If issues come up during the warranty period, the owner contacts the general contractor, who assigns the appropriate subcontractor to complete the work at no charge. Often general contractors will schedule a project walk-through just before the one-year warranty expires. This allows the owner to point out any issues that have come up over the year and have the contractors take care of them before the warranty expires.
Track your documents through all construction phases
All construction projects, no matter how complex, go through these five construction phases.
Each phase relies on teamwork and collaboration from several parties, and there are a lot of documents being exchanged. Tracking those documents and ensuring that they are sent when they need to be, is important for protecting contractors from claims and ensuring timely payment.