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Wasatch Front Focus, January 2010

Walking the tightrope with your new construction project?
Let’s face it, walking a tightrope with- blame for most bank failures. Whether you out a safety net can be messy. It is uncon- are a bank, a private individual, a large scionable for a steel erector or exterior skin corporation or a small corporation looking installer to do their work without the at a new construction project, you need to proper tie-offs and safety procedures. An make sure that your safety net is in place owner does not face the same physical by either: (1) hiring full time staff with danger as the contractors working in the experience and time who are dedicated to field, but the owner does inherit great getting in the details of managing your financial and market risk when project or (2) procuring they venture out on a new conan independent project/ struction project. In general, ownconstruction manager ers choose to walk the tightrope that has experience in on their projects with few to no representing you as the safety nets. Contractors and owner. designers are skilled and knowlTraditionally, owners edgeable in their respective areas. will turn their manageThey know how to limit their ment over to the archirisks by shifting those risks to tect, engineer or contracRyan Johnson someone else as much as possitor. When a project ble. Owners are usually not as enters that “trouble familiar with how they can conphase,” it is usually trol their risks, and will often turn their because a member of the team is not perproject management over to those that may forming. If that “nonperforming” entity is not have the time, experience or their best the architect, engineer or contractor, then interest in mind. the owner is in trouble. It is not likely that The failure in the financial market is a the owner will get the protection that he is good example of what happens when own- looking for, if the people who are holding ers do not pay attention to the details by the safety net are part of the problem. This providing the proper safety nets. The own- is certainly a recipe for failure. This is not ers in the financial market (banks) relied to say that these entities are unethical or upon less-than-quality management proce- dishonest, but it certainly puts players of dures to protect themselves and their inves- your team in an uncomfortable and contors. As more banks go under, it’s useful to flicting situation. It is important for an take a look at some of the FDIC Inspector owner to provide for his own safety net by General’s post-mortem reports of recently having someone whose sole concern is to failed institutions (www.fdicoig.gov/MLR. represent the owner’s interest. You do not shtml). These “material loss reviews” want someone dropping their corner of the underscore how poor management is to safety net if they see that they will be harmed by protecting you. A few years ago a homeowner’s association ventured out on a worthy project to upgrade their condominiums. The association (owner) relied upon the traditional approach and hired an architect and a contractor to assist their in the development process. After much dispute, cost overruns and schedule delays, the owner decided to retain staff that was experienced and able to bring control back to their project. Prior to this, they were at the whim and mercy of the architect and the contractor. Once the association took back the control of their project, they were able to successfully finish the work within budget. They were also able to avoid a costly lawsuit. The following are a few “safety nets” owners need to implement in order to limit risk: • Cost controls — Accurate Third Party Cost Estimates (no conflicts of interest) – Owners that turn cost estimating over to their design and construction team will often miss critical details that affect their bottom line. The owner needs to procure an objective estimate, whether that be with in-house experienced staff or an outside, objective third party firm. • Schedule controls — Accurate and Complete “Master Schedule” (covering owner’s interests) – When the owner develops and maintains a critical path schedule, they ensure the schedule incorporates owner issues and is used as a tool throughout the design and construction process. Too often the schedule is not used to manage the project, but becomes a document that is pretty to look at and tells the owner what he wants to hear. Owners need the “hard facts” so they are able to participate in the solution instead of inheriting problems that they most likely did not create. Again, the owner needs to retain someone who has the skills to develop and maintain the schedule, whether that be with inhouse experienced staff or an outside, objective third party firm. • Procurement controls — Competitive/Qualified Procurement and Contract Development – Owners will often rely upon design and construction relationships to buy-out their projects. If your representatives are not fostering a competitive procurement process that also includes an objective pre-qualification procedure, then significant dollars and quality are being compromised on your project. • Change order controls — Claims Management and Change Order Review/ Control – The owner’s staff needs to dedicate the appropriate resources to review all claims. The traditional approach will often have the design team review costs for approval. This is certainly appropriate, since they are the author of the contract documents. However, the design team typically does not have the time or the fee to spend in reviewing and sometimes haggling with the contractor regarding costs. Furthermore, the contractor and designer may also be contracted based upon a persee TIGHTROPE page 17

Wasatch Front Focus, January 2010

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TIGHTROPE
from page 6 cent of the final construction cost, which leaves them little motivation to reduce the cost for the owner, since they will also be reducing their fee. • Accountability controls — Commitment and Accountability Control (owner’s perspective) – Meeting minute documentation is critical to the success of a project. Owners need to dedicate their resources to retain experienced representatives to conduct and document regular owner/designer/contractor coordination meetings. Countless commitments are made during these meetings. If these commitments are not documented and followed up on, then obligations are often not met. The task of meeting minutes is frequently turned over to the construction or design firm; this could be a major mistake since the owner is now relying upon these firms to hold themselves accountable for commitments made. Yet again, you are asking someone to hold the “safety net” that might be part of the problem. It is not likely that they will protect the owner’s interests, if it puts them at risk. We live in a litigious society. It is essential that accurate minutes are taken and cover the owners’ issues. Once more, it is vital that the owner makes sure that he is protected with competent personnel who will represent his interests. The

Construction Management Association of America has the following counsel when it comes to retaining professional help: “a professional construction manager (CM) acts as an extension of the owner and manages the entire project with … management expertise that can assure the best possible project outcome no matter what type of project delivery method used. A construction manager is NOT a general contractor. Few owners maintain the staff resources necessary to pay close, continuing attention to every detail – yet these details can make or break a project.” If you are contemplating a new construction project, don’t go down the slippery slope without proper safety nets and controls in place. Ben Franklin said, “An ounce of prevention is worth a pound of cure.” Owners that shore up their staff with expert managers are on stable ground and will amplify their return on investment. Don’t allow your project to be the next casualty in the construction market; the time is now to prevent the project pitfalls and shore up your project management arm.
Ryan Johnson, is vice president and project director at Project Control Inc., a Salt Lake City-based project management, estimating, scheduling, bank oversight and construction consulting firm. He can be reached at (801) 262-9315 or rjohnson@projectcontrol-inc.com.

BIM

from page 11

It should be noted that BIM is not without its difficulties. To be successful in utilizing BIM tools and creating accurate models, the BIM architect/engineer/contractor has to have the following key characteristics: • A knowledgeable and experienced engineer/designer/architect. • Contractor-level, detailed experience with the means and methods of construction. • A high level of computer technical expertise. Like a three-legged stool with one leg missing, a BIM user will not be able to stand if they are lacking in one of these areas. For example, an experienced engineer who is computer savvy but lacks in hands-on electrical construction techniques may find that he or she is unable to correctly model how electrical conduit is to be installed. In the same way, an experienced CAD operator, who may have installation experience but has no design experience, may fall short in understanding the calculations required for a successful design. A successful BIM user understands and recognizes their weaknesses and teams with others to achieve success. In addition, project owners should understand that this level of expertise and experience can require an increased upfront cost, as it may require more design time and more expensive hardware and software to create a BIM model versus traditional 2D project drawings. When it is done correctly, though, it has been proven

that this increased up-front cost can be recouped multiple times in reduced construction schedule, reduced construction waste and the large reduction of costly mistakes that can slow down or even derail the project. For many reasons, the design-build procurement method for projects is advantageously suited for BIM. There remains some disconnect between the designers and constructors of BIM projects. With design-build, the designer and constructor are under the same roof, and what is to be placed in the model can be more accurately represented in the BIM model earlier in the overall process. BIM is the now and the future of modern building design and construction. It is the now because it currently holds many advantages and can greatly enhance the success of any project, big and small. It is still in the growing stages, and all parties involved should recognize both the advantages and pitfalls of BIM. It is also the future. As BIM becomes more adopted and the software tools become more powerful, the changes will continue to occur and the process will continue to improve for years to come.
Darrin Sanders is a licensed professional engineer with Hunt Electric, a full-service, designbuild electrical contractor based in Salt Lake City. He has worked as both an independent engineering consultant and currently as an inhouse engineer. His 15 years of experience in the electrical construction industry includes health care, K-12 and higher education, resort/ hospitality, telecommunications, industrial, renewable energy and BIM projects throughout the Intermountain region.

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