CMAdvisor Advancing Professional Construction and Program Management Worldwide September/October 2009 Volume XXVIII, No. 5 Where’s the Stimulus? New SOP Reflects New Realities U.S. Rep. Rosa DeLauro on Infrastructure Investment CMAA Announces 2010 Water Summit Also in This Issue: Interactive Guide to the 2009 CMAA Trade Show. Contents September/October 2009 Volume XXVIII, No. 5 6Where’s the Stimulus? Funds provided by the American Recovery and Reinvestment Act of 2009 have begun to flow. But are the right projects being funded? Is ARRA making a difference? Find out what CMs think. 8New SOP Reflects New Realities CMAA has published the first new edition of its Standards of Practice in six years. Find out what’s new and different, and how you can use the new SOP to improve your business. Features 10Industry Extends Embrace of CCM 12 The Next Chapter in Infrastructure Investment By the Hon. Rosa L. DeLauro Columns 5Chairman’s Report By Thomas W. Bishop, PE 27President’s Report By Bruce D’Agostino, CAE, FCMAA 14CMs Missing Leadership Opportunity in Departments 16 News Sustainable Design and Construction? By the CMAA Sustainability Committee 20Professional Practice Corner Also in This Issue: Interactive Guide to the 2009 CMAA Trade Show. 22 Legal Corner 23 Foundation 24 Member News 26 Chapter News Cover photo of Woodrow Wilson Bridge by EyeConstruction, Inc., courtesy of Potomac Crossing Consultants. 26Professional Development Calendar September/October 3 Top 100 Construction Management Firm CELEBRATING Experience quality through teamwork with the level of service you expect and deserve. CMAdvisor Chairman’s Report Chairman of the Board Thomas W. Bishop, PE URS Corporation New Realities = New Standards of Practice President and Chief Executive Officer Bruce D’Agostino, CAE, FCMAA By Thomas W. Bishop, PE URS Corporation Editor John McKeon Nearly two years’ effort will come to fruition this month with the publication of a new edition of CMAA Construction Management Standards of Practice (SOP). This is the first update of our SOP since 2003. The document will be available for purchase at the National Conference & Trade Show in Orlando, and I urge every member, whether attending the Conference or not, to become closely familiar with its contents. Contributing Writers Sarah Black Martha Montague Design TGD Communications OUR SERVICES Program Management Construc on Management Construc bility Review Construc on Inspec on Cost Es ma ng CPM Scheduling 1989 Contract Administra on Dispute Resolu on Project Closeout Commissioning Risk Management FHA/ADA Inspec on Training 2009 Named a Best Small Company to Work for in America 2008 WWW. MB PC E .C OM Dennis D. Dunne, FCMAA, Chief Facilities Consultant, California Department of Corrections and Rehabilitation Strategic Program Management, by Bob Prieto, senior VP of Fluor “The seminal work on this subject.” F. H. Griffis, PhD, Dean of Engineering, New York Polytechnic University “Excellent reading for all members of the management team.” James L. Lammie, Chairman, Parsons Brinckerhoff, Inc. “In short, a great work.” Henry M. Harris, Jr., CMC, President & Managing Director, FMI Inc. Two standard-setting explorations of a trend that’s changing the face of construction – read them together for a comprehensive look at Program Management! Order from the CMAA online bookstore, http://cmaanet.org/cmaa-bookstore. 4 CMAdvisor Three entirely new sections have been added to the SOP, addressing Risk Manage‑ ment, Sustainability and BIM. In addition, the section on Program Management has been significantly expanded and now contains much more detailed descriptions of exactly how the professional CM/PM functions most effectively in a program environment. This is a substantially new document, not just a new coat of paint on a familiar structure. It reflects the new realities of our industry and the continuing evolution of owner needs. I want to congratulate our incoming chair, Gary Cardamone of the Port of Long Beach, on this remarkable achievement. Over the past two years, scores of CMAA members volunteered their time and expertise for this effort. Ten working groups were formed, and their drafts went through numerous, meticulous reviews. It is a tribute to CMAA that our association can command such dedication and involvement. Our new SOP book demonstrates what great things can be accom‑ plished by active volunteers. Congratulations and thanks to everyone who took part! Program Management is changing how construction is delivered. CMAA leads the way in seizing the advantages of this fundamentally new strategy, with two vital books on PM by nationally respected experts: “It will become an instant classic and a must read…” Our Mission is to Promote and Enhance Leadership, Professionalism and Excellence in Managing the Development and Construction of Projects and Programs. CM Advisor, published bi­‑monthly by CMAA, reports on and follows the industry as a service to its members. Submission of articles, ideas and suggestions is appreciated and encouraged. CMAA Delivers – The Future of Program Management Program Management: Concepts and Strategies for Managing Capital Building Programs, by Chuck Thomsen, FAIA, FCMAA CMAA is a construction industry association of 5,500 firms and professionals who provide management services to owners who are planning, designing and constructing capital facilities and infrastructure projects. The SOP is the key tool by which we define the content of our professional practice. It is a distillation of best practices developed by thousands of CMs and PMs over many years, and as such it provides a reliable pathway for owners to follow to realize maximum value from their CM/PM services. 7926 Jones Branch Drive, Suite 800 McLean, Virginia 22102-3303 USA Phone: 703.356.2622 Fax: 703.356.6388 Email: info@cmaanet.org Web: www.cmaanet.org CMAA ©Copyright 2009, ISSN 1084-75327 Reproduction or redistribution in any form is forbidden without written permission of the publisher. CMAA members receive this newsletter as a member benefit. For advertising information, contact Tom Egly at tom.egly@tgdcom.com. Construction Management Association of America But this kind of multi-faceted endeavor also presents an enormous leadership chal‑ lenge. Keeping this effort on track, and driving it to such a successful outcome, must chiefly be credited to Gary. In addition, the CMAA staff contributed significantly to the editorial and publication dimensions of the project and special thanks go to John McKeon, Vice President of CMAA for his commitment and leadership in this area. The new SOPs not only provide us with a new foundation for our professional services, they also create an important and valuable marketing tool. Our SOP can be used whenever we face the question: Just what does the CM bring to the table? In particular, the SOP can provide owners with a detailed presentation of exactly what services they can expect from a CM/PM, and at what level of excellence. The SOP describes what we do, how we do it, how we interact with other professions in the construction industry, and how projects and owners benefit. I urge every CMAA member to obtain a copy of Construction Management Standards of Practice from the CMAA bookstore. Use it as a guide in delivering your services, and as a tool in marketing yourself and your firms to clients. Most of all, commit yourself anew to achieving and maintaining the excellence portrayed in the SOP. This commitment to excellence guided the development of this document and is a strong basis for our success in the years ahead. September/October 5 “The question is how to sustain transportation investments to create jobs and rebuild a system that hasn’t seen real national focus since the highway system was launched in 1956.” opportunity to hire new talent, particu‑ larly former construction contractor work force or cross training Construction Managers from a different construction industry (i.e. buildings to roads and bridges) that add valuable experience to our CM teams.” Where’s the Stimulus? Industry, Politicos Differ on Value of ARRA Funding By John J. McKeon “The stimulus package is just leaving the big projects behind,” says John Mica, (R-FL), the ranking minority member on the House of Representatives Committee on Transportation and Infrastructure, referring to the American Recovery and Reinvestment Act passed last February. Similarly, Engineering News-Record has editorialized that “instead of tossing incoherent projects into the feeding frenzy, the nation and the industry would be much better off focusing on, and embracing, long term stable funding.” Is ARRA putting too much money toward short-term, cosmetic work like pavement repairs while ignoring major infrastructure needs? From the professional CM perspective, the jury is still out. However, the highway department has been implementing many roadway projects that were on hold due to lack of funding and now are funded by stimulus funds.” Overall, Sleiman says, “the effect is positive. Some of the projects completed this year would have not been done until next year without the stimulus funds. The only impact is the added work load on the existing staff as we have a freeze on hiring due to the economy and we are down seven positions.” Milo E. Riverso, PhD, PE, President of STV, Inc. believes that “our industry is certainly benefiting. Projects are moving ahead that may otherwise have been cut due to the reduction in tax revenues.” CMAA members interviewed recently reported diverse experiences with ARRA, with some noting “no impact” while others identified significant opportunities being created by the stimulus effort. STV, Riverso reports, had projects already underway that have received additional funding through ARRA, including work on the NY MTA/Long Island Railroad East Wide Access project, the Tans-Hudson Express tunnel, and an extensive modernization of New York City Housing Authority projects. “Most of the projects funded are already in our capital program and are scheduled for this and next year,” says Sam Sleiman, PE, CCM, Director of Capital Programs and Environmental Affairs at Massachusetts Port AuthorityLogan International Airport. “I do not think these funds added major work that made a difference to the region. Thomas Zagorski, PE, Vice President of Michael Baker, Jr., Inc., says his firm is working on 16 stimulus-funded projects so far, including a $25 million Amtrak station rehab project in Wilmington, DE. “The stimulus has had a positive effect on our business,” he says. “It has allowed us to provide career advancement for our existing staff and offered an 6 CMAdvisor In contrast, Darrell Fernandez, Senior Operations Manager for Parsons, has observed “a modest effect at the moment. The government is just beginning to gain momentum to move from the planning phase to the implementation phase.” And Skip Berry, President, Louisville Division and Marketing at Wehr Constructors, reports that although “there has been much consideration and follow-up, we have not received any stimulus funded work.” Moving “shovel-ready” projects into construction has also helped free up the total job pipeline, says Steven Routon, PE, Senior VP and Chairman, Construction at HNTB Corpora‑ tion. “With ARRA getting shovel-ready projects complete, we’re seeing design efforts quickly move up the pipeline, and we are helping to ready those projects for implementation before ARRA timelines expire.” Zagorski agrees: “Stimulus funding became available for the “shovel ready” projects, thus freeing up previously programmed funds for other more critical projects. So, in retrospect, the right projects have been funded,” he says. To Christine Keville, FCMAA, President of Keville Enterprises, ARRA’s short-term focus is in itself a plus for CM providers. Keville’s firm is doing Program Management on ARRA projects for the Massachusetts Bay Commuter Rail agency. “Since construction of many ARRA-funded projects will be less than a year in duration, coverage of the work by CM consulting firms can be an effective solution for DOTs, rather than hiring temporary help and then laying them off when the work is complete.” Instead of boom-then-bust hiring, Keville suggests, “the expanded construction activities associated with the stimulus program are a good opportunity for state and local governments to use IDIQ contracts.” The stress on speed for ARRA projects raises some other issues. “Fast tracking design and construction always leads to prob‑ lems unless you have a CM/PM that can monitor the progress with an eye toward quality control and safety,” says Sleiman. ARRA’s extensive record-keeping and reporting requirements present another opportunity. “Many DOTs and other public owners can be overwhelmed with the transparency and certification requirements to select and let jobs,” says Riverso. “CMs can help them to perform these functions, prioritize projects, and plan and implement ARRA funding in a strategic way.” The increased requirements “have led several state and local authorities to look at revamping their Program Management structures,” says Routon. “Consequently, we are seeing increased requests for PM systems studies, as well as more traditional project controls services, budget forecasting, estimating, scheduling and risk assessment.” One key to the CM’s role in stimulus implementation may be keeping clients aware of how ARRA may evolve in the future. Fernandez observes that this job “would include keeping clients abreast as new developments unfold from follow-on legislation and funding mechanisms. Also, CMs/PMs can work toward positioning DOTs to take full advantage of funding and tax credits.” In the long run, the most important thing about ARRA may be that the stimulus is just the beginning. Certainly, ARRA provides only a “down payment” on long-overdue infrastructure improvements. “The projected transportation and infrastructure project needs require much more funding than what is available nationwide,” says Keville. “These federal stimulus funds will definitely help…but it is important that we carefully, logically and methodically prioritize our projects so that we get the biggest bang for our bucks.” Says Routon: “The question is how to sustain transportation investments to create jobs and rebuild a system that hasn’t seen real national focus since the highway system was launched in 1956.” “The U.S. transportation system is literally crumbling under the strain of overuse and old age, so you could argue that any improvement project is a good one,” Routon adds. “But while ARRA is a strong step forward, we must have a more comprehensive, sustainable plan for the future.” John J. McKeon is vice president of CMAA. He can be reached at jmckeon@cmaanet.org. September/October 7 New SOP Reflects New Realities “As an owner practitioner myself, I would expect every CM pursuing work with my agency to be well versed in all areas of the Standards of Practice.” Toward the conclusion of the process, the CMAA College of Fellows was recruited to review the documents and offer comments based on their extensive expertise. Finally, the finished document “The SOP describes what we do, how we do it, how we interact with other professions in the construction industry, and how projects and owners benefit.” For the first time in six years, CMAA has revised and expanded its Construction Management Standards of Practice, producing a document that is “not just a new coat of paint on a familiar structure,” according to CMAA Chair Tom Bishop. Instead, the new SOP responds con‑ cretely to major recent marketplace and technology changes. The new edition results from a twoyear effort that involved more than 60 professional Construction and Program Managers collaborating in ten topical working groups. The entire effort was chaired by Gary Cardamone, PE, Director of Construction Management for the Port of Long Beach, CA. 8 CMAdvisor CMAA’s SOP is “intended to establish industry standards of service and to serve as a guide to the range of services that constitute professional Construction Management,” says the book’s preface. The new document differs from the 2003 edition in several key ways: • Three entirely new sections have been added, describing best practices in Risk Management, Sustainability and implementation of Building Information Modeling. • The section on Program Management has been significantly expanded to reflect the growing interest in this highly productive strategy among sophisticated owners with ongoing building programs. CMAA Chair Tom Bishop of URS Corporation said of the new SOP: “This is a substantially new document, not just a new coat of paint on a familiar structure. It reflects the new realities of our industry and the continuing evolution of owner needs.” Bishop also noted that in addition to defining what can be expected of a professional CM/PM, the SOP serves a valuable marketing purpose by describing exactly what the CM/PM “brings to the table. Construction Management Standards of Practice The SOP collaborators worked through‑ out 2008 to identify areas in which the old document required updating, as well as vital topics not previously addressed. The group established an online wiki site to maintain version control and provide a convenient means of commenting and editing the evolving drafts. underwent a final edit and “polish.” CMAA staff also conducted a side-by-side comparison of the old and new SOPs to help alert such key players as the CMAA Professional Development department and the Construction Manager Certifi‑ cation Institute (CMCI) of SOP changes impacting their activities. 2010 Edition The process leading to the new edition of the SOP began in 2007 with the formation of a committee to plan and manage the job. A call for volunteers produced more than 60 active participants, who were then organized into working groups. “The SOP describes what we do, how we do it, how we interact with other professions in the construction industry, and how projects and owners benefit,” Bishop said. “Major owners frequently make specific reference to CMAA’s Standards of Practice in their RFPs to assure themselves of these benefits.” Construction Management Standards of Practice 2010 Edition Advancing Professional Construction/ Program Management Worldwide. 7926 Jones Branch Drive, Suite 800 McLean, VA 22102-3303 USA 703.356.2622 | 703.356.6388 fax www.cmaanet.org Advancing Professional Construction/ Program Management Worldwide. The new SOP is available in the CMAA bookstore. • An emphasis on sustainability and risk management has been woven throughout all 11 sections of the document. “We now have a set of standards that are much more comprehensive in addressing all the areas of expertise relevant to our industry and our prac‑ titioners,” said Cardamone. “Beyond setting standards of practice for all CM practitioners, this new document pro‑ vides owners with guidelines for what to expect from their service providers. It raises the bar for service providers in the construction industry. It can also be used by CM firms as well as individual practitioners as an indicator of where they need to focus their professional development resources.” Cardamone added, “As an owner practitioner myself, I would expect every CM pursuing work with my agency to be well versed in all areas of the Standards of Practice.” September/October 9 “I guarantee that if you go through the process and obtain your CCM, you will learn something of value about the industry and about yourself.” Industry Extends Embrace of CCM® Construction and Program Management companies looking for a shot at the General Services Administration’s new multi-year IDIQ contracts for CM/PM services recently got a plain and simple message from GSA: If you want part of this business, you’d better have Certified Construction Managers in your proposal. GSA recently published notice of intent to issue an RFP seeking consultants for up to ten nationwide Indefinite Delivery Indefi‑ nite Quantity (IDIQ) contracts supporting projects in all eleven GSA regions as well as the GSA Central Office. Each contract will consist of a base year and four additional one-year options to be issued at the discretion of the GSA contracting officer. “It does mean something to clients, to associates and importantly, to yourself.” The solicitation includes this statement: “A more favorable evaluation will be given to contractors demonstrating that their key personnel have been certified as Construction Managers through the Construction Man‑ agement Certification Institute sponsored by the CMAA.” Similarly, the Federal Acquisition Service has also published a Request for Quote on behalf of the Public Building Service, seeking to procure a full range of CM/PM services to support capital and non-capital construction and renovation pro‑ grams. This RFQ includes a statement that “it is desired that CM/PM firms provide staff certified as Construction Managers by the Construction Manager Certification Institute sponsored by the CMAA.” 10 CMAdvisor CCM vs. PMP? In both solicitations, GSA also sought to clarify a long-standing industry question concerning the equivalence or comparability of Certified Construction Manager (CCM) designation with other credentials. The IDIQ solicitation states that for bidders not offering CCM personnel, an acceptable alternative is “key personnel who have been certified through the Project Man‑ agement Institute (PMI) as Project Management Professionals (PMP) with 10 years Construction Management experience on construction projects valued $10,000,000 or greater.” The FAS solicitation also addressed this question, providing for the alternative of PMP certification “with a minimum 10 years Construction Management experience on construction projects valued $10 million or greater…These represent the Government’s desired qualifications. Contractors proposing lesser qualified individuals may be rated lower during the source selection process.” Bruce D’Agostino, president and CEO of CMAA, described these GSA provisions as “a resounding endorsement of CCM as the pre-eminent professional credential in the Construction and Program Management industry. GSA has zeroed in on precisely the factor that sets CCM apart, its emphasis on responsible-in-charge experience as the indispensable qualification for certification.” D’Agostino also noted the strong endorsement of CCM by the U.S. Army Corps of Engineers and commented, “Being a CCM is quickly becoming an absolute requirement for anyone who wants to do business with the federal government.” A Culture of Certification Across the country, a growing number of CM services firms are adopting a “culture of certification” – an organizationwide commitment that everyone who practices CM will be certified and that the organization will encourage, support and reward those who pursue and achieve the credential. “The push for certification is on throughout our firm because we realize the value of the profession and it is becoming more and more recognized as a legitimate set of skills for success in the business,” said Raymond Richards, CCM of Heery International. “Certification represents knowledge and it indicates that you strive for excellence in your profession. In your career, having this certification may give you an advantage over others who do not hold this credential; it may give you a bargaining edge when you negotiate your salary and it is great for your confidence.” Jim Ruddell, PE, CCM, of Parsons Brinckerhoff manages the huge Woodrow Wilson Bridge replacement project near Washington, DC. He recalls, “Nearly 30 years ago, I studied tenaciously and passed the PE exam. It was hard, it was meaningful and it was worth it. The PE license opened doors that were closed to those without it. As CMAA brought ANSI certification and broad industry acceptance to the CCM credential, CCMs began to enjoy many of the same benefits of a PE license. As an added benefit, I guarantee that if you go through the process and obtain your CCM, you will learn something of value about the industry and about yourself.” For Sanford C. Loy CCM, President/CEO of Construction Plus, Inc., the CCM “is an essential credential because it provides an owner with confidence that the professional they are entrusting is a reliable and standardized resource. It is another tool in the owner’s arsenal to assure them that they have selected the most qualified and the most professional people available in the industry today.” At Carollo Engineers, A. Eric Gilmore, CCM, comments: “I am managing a large, challenging project through the company I currently work for and I believe we were awarded this project, in part, due to my CMCI Certification. I believe that not only have I benefited by becoming a CCM, but the two companies I have worked for since my certification have also benefited.” “Being a CCM is quickly becoming an absolute requirement for anyone who wants to do business with the federal government.” Danny Kaye, a principal of Totum Consulting, lists an impressive array of initials after his name, including PMP and LEED AP. He particularly values the CCM. “I believe it is extremely important to get the appropriate credentials in your field of work,” Kaye said. “It does mean something to clients, to associates and importantly, to yourself. It lets you know you have made the best effort you can to be on top of your game.” Another CCM, Richard Moewe, offered this perspective: “In my own world of large public projects this CCM has a double advantage. Lately, in New York where I work, the public agencies have largely substituted a CCM for a PE. With this distinction we Construction Managers have a great advantage to earn the work we are most qualified to do.” CLICK HERE TO VIEW OUR LATEST CCMS September/October 11 These New Deal infrastructure investments did more than just put millions of people to work and help to stem the immediate economic suffering all around. They generated infrastructure capital that proved invaluable to the revitalization, growth, and continued prosperity of our nation. But today, in the midst of our worst economic downturn since the Depression, our infrastruc‑ ture is crumbling. According to the American Society of Civil Engineers, which recently gave our national infrastructure a grade of D, we need to invest $2.2 trillion in the next five years just to meet adequate conditions. Concurrently, we have recently seen the unem‑ ployment rate in construction leap to as high as 21%. The Recovery Act we passed in January is helping some, but we still need to consider the long-term health of both our infrastructure and the construction industry. For every $1 billion spent on transportation projects, 47,500 jobs that cannot be outsourced are created and $6.2 billion in economic activity is generated. The Next Chapter in Infrastructure Investment By the Hon. Rosa L. DeLauro, U.S. House of Representatives Over the course of our history, bold infrastructure policy has often played a key role in alleviating economic distress. For example, when the Great Depression put one-fourth of the nation out of work, President Franklin Roosevelt answered the challenge with then-unprecedented infrastructure investments. Roads, bridges, highways, tunnels, parks, and public buildings were constructed across America through the Works Progress Administration. The Tennessee Valley Authority built hydroelectric dams. The Rural Electrification Administration wired rural areas for electricity. 12 CMAdvisor That is one of the many reasons why I, along with Representatives Keith Ellison, Steve Israel and Anthony Weiner, introduced the National Infrastructure Development Bank Act. The bill establishes a development bank for America – a new independent entity that can objectively consider public works projects and provide financing for them, including through billions of dollars leveraged from the global capital market from central banks, pension funds, financial institutions, sovereign wealth funds and the like. This development bank would issue 30-plus year “public benefit” bonds and provide direct subsidies to infrastructure projects from amounts made available from the issuance of these bonds. Funding from the bank would supplement, not supplant, current financing mechanisms. And, capitalized with $250 billion – $25 billion through Congressional appropriations and the rest subject to the call of the Treasury Secretary – as well as a conservative leverage ratio of 2.5:1, the Bank could issue up to $625 billion in bonds, providing for an unprecedented level of infrastructure investment. Ultimately, the forming of a national infra‑ structure bank would depoliticize infrastructure investment and create new opportunities to fund projects of regional or national significance with clear economic, environmental and social benefits. This plan is modeled after the European Investment Bank, which for fifty years has raised private sector capital for investment in trans‑ portation, energy and telecommunications. It is working wonders for Europe, including an ambitious Trans-European Network now integrating the continent with high-speed rail. And it could work wonders for us. I am pleased that the bank has earned the endorsement and support of CMAA, because professional Construction and Program Man‑ agers will play a major role in rebuilding our infrastructure. The bank also enjoys the support of many in the business, labor and construction communities, as well as the National Governor’s Association, President Obama, and many in Congress. In fact, it has already been budgeted in both the President’s budget ($5 billion annually for five years) and the House budget ($2 billion in fiscal year 2009 and $5 billion in fiscal year 2010). “A national infrastructure bank would depoliticize infrastructure investment and create new opportunities to fund projects of regional or national significance.” As we combat this recession, we in Congress are also looking for ways to ensure the longterm growth and prosperity of our economy. Soon we will turn to surface transportation and the health of our national infrastructure – the development bank should and will be a key part of that effort. In terms of both alleviating our current recession and planning for long-term prosperity, infrastructure reinvestment under the purview of a development bank is absolutely the right thing to do. America’s economic vitality, especially during hard times, has always rested on the foundation of her infrastructure. The chapters of our American success story have always been written in stone and mortar, iron and steel, granite and fiber-optic cable. It is time now for us to write in bold strokes the next chapter in infrastructure investment for our nation – a new national infrastructure development bank. Rosa L. DeLauro (D) represents the Third District of Connecticut in the U.S. House of Representatives. She sits on the House Appropriations and Budget Committees. September/October 13 CMs Missing Opportunity to Lead in Sustainable Design and Construction? By the CMAA Sustainability Committee While the LEED® Green Building Rating System has led the way for sustainable buildings and sites, all projects will soon have sustainable aspects; whether it is through the International Green Construction Code currently being developed by the ICC, or by requirements stipulated by jurisdictions in order to secure permits. Yet, based on an informal review of credentials posted by CMAA members, only approximately two percent of our Certified CMs are also LEED Accredited Professionals under the U.S. Green Building Council’s program. The CMAA Sustainability Committee has observed that our professional peers have been slow, if not reluctant, to grasp the knowledge and skill sets needed to sustain their role as the program and project leader when it comes to sustainable design and construction. Often they turn to LEED consultants to supplement their knowledge, or abstain from any real contribution in this area by placing the sustainable portion of the program completely in the hands of the design team. Either option means limiting the CM’s positive impact on the project and depriving the owner and the project team of valuable input. Today’s owner is looking for a central manager of all aspects of their project. Without sufficient knowledge to manage a sustainable design and construction project, CMs are depriving themselves of an opportunity to offer comprehensive services with corresponding compensation, and they may be undermining the broad degree of expertise and competency expected from the program and project leaders 14 CMAdvisor with the CCM designation. Failing to become fully conversant in the area of sustainability is no more acceptable to an owner than the CM failing to understand value engineering, scheduling or cost estimating. Certainly, CMs can successfully oversee and manage areas of a project where we have limited knowledge and only tangential experience. But at the same time, all CMs typically have a depth of working knowledge in the underlying prin‑ ciples of nearly every aspect of the design and construction process. With such knowledge, we are equipped to address complex disciplines like structural and HVAC design, despite their highly technical nature. As CMs, have we demonstrated that same level of commitment and effort to equip ourselves to address sustainable principles? Many CMs have successfully delivered sustain‑ able projects with a modicum of knowledge, and this approach would be fine if sustainability were a rare occurrence or encountered on a once-ina-career project. The fact is that more knowledge and practical experience in this area would more than likely have made a significant impact on the project that was delivered. You could have helped the owner make better choices by apply‑ ing typical CM skills such as cost benefit analysis and life cycle costing to the LEED Check List quo‑ tient. And certainly having strong fundamentals in sustainable design and construction could ensure the right architect or engineer got the job because you would have been able to distinguish the difference between “green wash” and real skill and expertise in sustainable design. When we are CM as Agent, we are often charged with charting the process and managing the program for the owner. Fully understanding the integration of sustainable design into construction is requisite if we are to set objectives, schedules, and budgets for a program that has sustainable aspects. We cannot successfully procure design professionals, write scopes of work, and interpret performances if we fail to have a working knowledge that is bolstered by an investment in actual experience. “Failing to become fully conversant in the area of sustainability is no more acceptable to an owner than the CM failing to understand value engineering, scheduling or cost estimating.” When we are CM at Risk, more skill and knowledge about the product type has proven to mitigate risk for you and the owner; sustainability is no exception. It also means you are bringing greater value to the table as the construction partner to the owner, while at the same time making your firm more competitive from a credentials standpoint, and often from a pricing standpoint. Practicing CMs and LEED Accredited Professionals have an opportunity to be on the forefront of emerging trends and technology. Despite the rapid growth and popularity of LEED projects, the market has only scratched the surface when it comes to creative thinking and meaningful solutions for sustainable design and construction. Process management expertise and organizational knowledge is in its infancy and lacks the sophistication that CCMs apply to all other areas of the Program and Project Management process. Largely, the whole of the market is still “painting by numbers” when it comes to sustainability, and few real artists have yet established themselves either in architecture, engineering, or Construction Management. The CMAA Sustainability Committee encourages members to secure the necessary skills, knowledge, and experience in sustainable design and construction, and to become practicing LEED Accredited Professionals so that the Certified Construction Manager can remain the Project and Program Leader as sustainability further proliferates in the industry. * USGBC V 2.0 Reference Guides 2006 ** McGraw-Hill Construction, SmartMarket Trends Report 2008 This article was prepared by the CMAA Sustainability Committee and edited by Michael Catlett, CCM, LEED AP, GRP, Principal, Advanced Project Management, Inc. He can be reached at mcatlett@apm1.com. Consider the fact that buildings in the United States “consume roughly 30% of our total energy and 60% of our electricity annually, while consuming five billion gallons of potable water. We also generate more than 2.5 pounds of waste for each square foot of building we deliver.”* And perhaps the most impressive statistic: “It is projected that $60 billion will be spent on green buildings by 2013,” up from “$12 Billion in 2008.”** These statistics demand your attention, not as environmentalists, but as constructors and managers of resources. September/October 15 News Pre-Conference Seminars Previewed Signs Point to a Great National Conference! CMAA’s 2009 National Conference & Trade Show are approaching amid growing signs that it will be a highly successful and memorable event. “It’s clear that our industry is rapidly coming together to build the 2009 National Conference & Trade Show into another watershed event for CMAA,” said CEO Bruce D’Agostino. Advance registration closes October 9 and the event opens on Saturday, October 24 with two new pre-Conference seminars addressing LEED and scheduling issues. The Conference itself runs October 25–27, closing with the annual Industry Recognition Banquet. Among the appeals of the event is an education program that gives striking prominence to leading construction owners. Among the owners represented by speakers in Orlando will be Hilton Hotels, Miami Dade Aviation, New York City MTA Capital Construction, The Smithsonian Institution, the Los Angeles Unified School District, the Methodist Hospital System, the San Diego County Water Authority, and the City of Merced, CA, and others. Among the early harbingers of success: • The Exhibit Hall has sold out once again, despite the national economic slump of the past year. Enlarged by some 10 percent following a sold-out 2008 edition, the trade show will offer more exhibits than ever before. Complete information and registration are available online. • Advance registrations as of “press time” have been com‑ parable to those preceding the 2008 Conference in San Francisco, which set CMAA’s all-time attendance record. • Thanks to a record-shattering 141 entries in the Project Achievement Awards program (up from 101 last year), the judges opted to expand the number of awards and recognize honorable mentions in several categories. For Schools, Stimulus Funds May Be Just the Beginning The American Recovery and Reinvestment Act contains no funds specifically directed to school construction, despite the lobbying of CMAA and others to have such money included. However, the Act provides several important ways that states and school districts could fund new projects, and some of these mechanisms may outlive ARRA itself. “As costs skyrocket, budgets get tighter, as well as an increased level of public awareness and demand, it is clear that local districts will move in the direct of sustainability,” Edelstein says. Sustainable schools, he adds, “are healthier and more educationally friendly learning environments, and that’s the bottom line.” Those are the observations of Fritz Edelstein, a principal in the Public Private Action consulting group and the latest subject of a CMAA Radio interview. Construction Managers, both as professionals and as citizens, should become involved in helping their communities identify funding and use the money effectively, Edelstein argues. ARRA provides up to $11 billion per year for two years in authority for Qualified School Construction Bonds, along with separate funding for Qualified Zone Academy Bonds. “There are significant amounts of new funds now available to be accessed,” he explains. “If these programs can show great demand and they’ve only taken care of part of it, it may force the continuation of some of these programs or the creation of others. We’ve been fighting for a long time to get this funding. Having this initial breakthrough does not mean that groups will rest. We will continue to work on Congress and the administration for additional dollars in both the bonds area and the grants area. There is always going to be more money available in bonds and tax credits than in grants, that’s just the reality.” Several currently pending proposals will further expand funding for school construction and renovation, Edelstein says, and there’s money to be found in specific programs in several other Cabinet departments and agencies. Of particular interest is the emphasis on sustainable and “green” schools. 16 CMAdvisor In an interview with CMAA’s VP of Professional Develop‑ ment, Dennis Doran, Rocco Vespe, PE, of Trauner Consulting Services and Charlie Popeck, President & CEO of Green Ideas Environmental Building Consultants gave a preview of their respective seminars. Vespe described the way new innovations in scheduling analysis have evolved the role of the CM. “New innovations in scheduling analysis and schedule tracking allow the construction manager to actually track progress and identify delays on almost a daily basis. Having this powerful tool of understanding delays on a day to day basis puts the construction manager in a position to be able to proactively manage time related issues. We’re going to show how being able to access this information and understand delays on a daily basis can be a means for resolving delay related issues and delay related damages so that they don’t drag the project down, and ultimately impact the chances of the success of a project,” said Vespe. Popeck explained to Doran the relationship between the green associate pre-conference seminar and the USGBC’s LEED program. • Sponsorship support of the Conference has also exceeded the budget target by nearly 50 percent! A third bonding option, Edelstein says, may have the greatest potential. Build America Bonds “have no level of funding or state allocation and can be used for any type of public sector project including school construction. I believe this is the best of all the options and it will be continued after the stimulus package,” he explains. CMAA’s two new pre-conference seminars to be held prior to the National Conference & Trade Show in Orlando will offer expert insights on two topics of critical importance to CMs, scheduling and LEED. LISTEN NOW to Fritz Edelstein in CMAA Radio Interview “This course will teach the fundamentals of sustainability and green building under which all the LEED rating systems are built. Students in the course will learn to identify the key components of the LEED program such as water management energy impacts and acquisition, management of project materials, construction waste management, so that they can better understand the LEED certification process for commercial and residential buildings. And by understanding these core principles as well as the intent and associated concepts to each LEED credit category, that will enable the student to be successful in taking their Green Associates Exam which is the first step towards becoming a LEED accredited professional,” said Popeck. “Having this powerful tool puts the construction manager in a position to be able to proactively manage time related issues.” Attendees at this seminar will be ready to register for the Green Associate exam upon completion of the course. “There’s really no other place to get such personal access to an expert in the industry,” said Popeck. Learn more about these pre-conference seminars and register by visiting www.cmaanet.org/national-conference-2009. LISTEN NOW to Seminar Previews Lesson from a $30 Billion Program: Discipline Is Key “Budget, budget, budget,” is how Chris Ward, Executive Director of the Port Authority of New York and New Jersey, sums up what construction owners of all sizes can learn from how the Authority manages its immense portfolio. The Port Authority operates Kennedy, LaGuardia and Newark International Airports, the Port of Newark, five bridges linking New York and New Jersey, a major commuter railroad, and a variety of other facilities in addition to managing the redevelopment of the World Trade Center site in Lower Manhattan. Its planned capital investments through 2016 total nearly $30 billion. “You can’t bring enough discipline to the front end of the process, whether you are small, medium or large,” says Ward during his recent interview in the CMAA Radio series. “You need to really understand what your project is, how much is it going to cost, and how you are going to get it built for your budget. Never make the mistake that you think you can make up costs later, or there is enough give in a budget that you can cover expenses you didn’t think were going to occur. You need a lot of discipline at the front end of a project.” In particular, Ward notes that managing the redevelopment of the “Ground Zero” site in lower Manhattan has challenged the PA to innovate. That, in turn, has meant a major role for Construction and Program Management. “What we’re really looking for is schedule management, risk management and proactive problem solving. The downtown project is so complex, we’re building a train system, a train station, we’re building the sacred heart of downtown, the memorial, which will have the largest man made waterfall anywhere in the country, we are building streets, we are building three office towers, and all of those projects touch another part of the project. It’s like the game of pick-up sticks. If you touch one part, it affects another part. “We really need that CM team to be looking down the road at where there are going to be problems, where there are conflicts, opportunities to make up schedules, to make budget adjustments, to reduce costs. We need a very proactive team on the ground looking at how this whole project gets built in the fastest way possible,” Ward says. LISTEN NOW to Chris Ward interview in CMAA Radio Series September/October 17 News Webinar Explores Water Efficiency Second Water Summit Announced: Looks to Future of Critical Resource CMAA’s first Best Practices Summit on Water and Wastewater cast a bright spotlight on infrastructure issues that will only grow more critical in the future as population expands and water resources remain steady or even decline. Spurred by the success of the event, held in Las Vegas in July, CMAA has announced a new edition to be held in Kansas City, MO on July 12–13, 2010. Presentations at the Las Vegas summit emphasized that water issues will have a profound impact on economic growth and quality of life for many decades to come. For example, Peter Binney, PE of Black & Veatch warned that by 2050 the world’s population will reach 10 billion, with 70 percent of those people living in urban areas. In the United States, population will grow by 130 million in that time. “Multiply that by 150 gallons of water per person per day, plus 60 gallons of wastewater generated per person, per day,” Binney said. The greatest resulting stress will fall on states already impacted by water scarcity, including California, Florida and Texas. “In California, urban water use will increase by 67 percent by 2030,” Binney said. “Water demand is growing faster than population.” “If we’re spending too much money because we haven’t properly identified or managed the risks, huge projects may never get there,” Becker said. In contrast, effective risk management allows project managers to prioritize and rank risks, take a pro-active approach to planning their responses, and improve project-wide communications. Many state transportation departments, in particular, are implementing formal risk management programs that identify potential risks and assess both their likelihood of occurrence and the probable cost to the project should they occur. All of these issues, clearly, are “here to stay,” and will comprise a larger and larger portion of society’s required infrastructure investments. CMAA’s second Water Summit will help identify and promote the best strategies for these investments. In addition, more than a millennium of historical record sug‑ gests that the world today actually enjoys much more water than has been available in the past. This history suggests that “there will be lengthy and severe droughts in future. “It’s the population growth that’s going to overwhelm and cause the water bubble to burst, as opposed to climate change,” he concluded. In the face of severe water shortages, many communities are also dealing with obsolete and deteriorating infrastructure and need new approaches to modernization. Ken Kirk, executive director of the National Association of Clean Water Agencies, speaking at the Water Summit. Catherine Gerali, district manager of the Metro Wastewater Reclamation District in greater Denver, CO, told Water Summit attendees that her district, in preparing for a large capital investment over the next 20 years, has had to undergo a “culture change” and learn quickly about new ways of delivering projects. 18 CMAdvisor Regional considerations often drive the adoption of waterefficient practices. For example, the scarcity of water experienced in the Southern and Western United States has fueled a more rapid integration of these practices than the Midwest, which currently faces less scarcity, and, in turn, lower prices for water. “Even though there is hesitation to do something new with construction and building design, there is a recognition of the benefits that come from the green building element that transcends the fear of the additional first costs,” said Michele A. Russo, LEED AP, Director, Green Content & Research Com‑ munications at MHC. Russo presented the findings of MHC’s new Smart Market Report on Water Use in Buildings during a recent CMs TalkLive! webinar presented by CMAA. Data collected in the study showed virtually no industrywide effect of the down economy on the adoption of water efficiency practices, pointing again to the widely accepted critical nature of these innovations. Due to global population growth, natural disasters, and the rise in global temperatures, the implementation of water efficient practices is becoming increasingly critical as water supplies begin to diminish in many regions. MHC’s Smart Market Report predicts that water efficient practices are likely to become adopted increasingly over the next five years. • Operating costs reduction The built environment consumes 12 percent of the water in the US, and 20 percent of the water in the world. This large chunk of water use, and additional factors contributing to water scarcity have provided an environment for the green building market to grow and prosper. Water use efficiency is an important part of energy efficiency. As the industry accepts the strong correlation between saving water and saving energy, the sense of immediacy drives industry players to implement more water-efficient practices. 2010 CM Seoul Forum & Global CM Contest CMAA Supports Navy Seabee Museum The 2010 CM Seoul Forum & Global CM Contest will be held in Seoul, Korea on April 28–30, 2010. The event, organized by CMAA, the Construction Management Association of Korea, the Chartered Institute of Building, and the Construction Management Association of Japan, will consist of a CM Forum, case study presentations, and a prize ceremony. Registration for conference opens November 1. Conference organizers are also seeking submissions for the awards program. For full details, visit http://www.cmak.or.kr/eng/html/greeting.asp. “If ever we needed Program Management and cost control, we need it now,” Gerali said. “We are looking at spending $2 billion in the next 20 years, and for us that is huge. We do not have the expertise on board to be able to deal with the many issues we are going to be facing.” Among these issues is effective risk management, which often requires that owners, consultants and contractors adopt a new mindset. Dan Becker of HDR, Inc. prefaced a detailed discussion of risk evaluation and management techniques by noting that proper risk management may actually be the key to having major projects move forward rather than facing delays or cancellation. Despite the notion that owners tend to be more conservative than their industry counterparts when it comes to innovations that have up-front costs, a new study by McGraw-Hill Construction has found that owners are pushing water-efficient practices and methods more aggressively than AE firms and contractors. To learn more about this and other international events of interest to CMs, visit http://cmaanet.org/ cmaa-international-home. Business benefits serve as vital motivating factors for all involved in water-efficient practices. Major motivators include: • Energy use reduction • Water use reduction • Valuing the environment • Gaining LEED credits Learn more about CMAA’s CM TalkLive webinars at www.cmaanet.org/courses-and-events. Ideas for sessions can be submitted to Warren Corson at wcorson@cmaanet.org. When you already have a cool mascot and a seven decade record of service, what more do you need? Well, money – that is, if you’re the U.S. Navy Civil Engineer Corps (CEC) Seabee Historical Foundation and you’re working to launch a new museum to showcase the Seabees’ history of high performance in both peace and war. The Seabees’ mascot, a determined bee clutching both a machine gun and an assortment of wrenches and hammers, will soon stand guard over a new 30,000 square foot Navy Seabee Museum in Port Hueneme, CA. The museum project needs sponsors and donors, and CMAA encourages members to support this worthwhile endeavor. Additional information about the museum can be found online at www.seabeehf.org. Christopher Westhoff of the Los Angeles City Bureau of Engineering speaking at the Water Summit. September/October 19 Professional Practice Corner Addressing the Emerging Service Deficit In the Water and Wastewater Industry By Peter Binney, PE, Black & Veatch For many decades, the water and wastewater industry has largely fulfilled its primary missions of providing safe and reliable water supplies and sanitation of municipal and industrial wastes with increasing benefits to the environment. But some significant issues have subliminally developed in the industry and these internal and external forces will require significant changes in management and financing approaches if this level of service is to be maintained. The past performance of the water and wastewater industry has been achieved with substantial investment from the federal government. Past performance has also been subsi‑ dized by wetter hydrologic cycles, adequate reserve capacity in existing infrastructure, incremental expansions of service and deferrals of asset management programs or long term capital facilities. With increasing frequency, the capacity of the existing infrastructure is being exceeded by higher levels of demand, aging and increasingly vulnerable infrastructure, lower sources of supply because of drought or competition, more restrictive discharge and compliance conditions or institutional constraints such as those occurring in the Sacramento Delta or the Atlanta metropolitan area. Beyond federal funding programs, the majority of revenues have been derived through local user fees that have been maintained at relatively benign levels as incremental solutions are delivered or those federal funds have been leveraged. The adequacy of these funding sources resulted in some of the highest levels of public health protection and environmental benefits of any water and wastewater system, but that system will require increased spending and major improvements in its management practices if it is to continue providing those benefits. Past practices have resulted in artificially lower costs of service where the value provided is substantially larger than the price paid by customers. This under-pricing of water and wastewater services has been an artificial elixir to local service providers who may be called on to balance utility services and investments with the more visible public safety and transportation needs of a community. Water and wastewater systems are managed and operated within a complex and often internally conflicted natural resource policy framework that is subject to a wide array of laws, regulations, special interest advocacy and abstract decision processes. Our policies and utility management systems are increasingly challenged to effectively respond to the intricacies of these natural resource issues. It is therefore likely that significant reforms will be required in policies, utility management procedures, program delivery 20 CMAdvisor alternatives, pricing of water-related services and the interactions between divergent groups who will be required to find consensus approaches to the intractable issues that are increasingly compromising our ability to meet the objectives of water and wastewater providers. The catalyst for change may well come from the federal response to the ongoing economic crisis. The forecast increases in federal deficits will most likely limit the funds that will come from Washington, DC and the financing of operations and capital improvement programs will have to be increasingly developed from local sources. Local utilities will most likely have to adopt full-cost user fee based pricing with less reliance on tax-based sources and this will, in turn, dictate a stronger enterprise-based management structure. The Future Is Unlikely to Repeat History The water and wastewater industry has to respond to many emerging issues – growing populations, competition for available water resources, more variable water supply and environmental conditions in many parts of the country, aging infrastructure, regulatory requirements, organizational capacity, and deferred investments. It is projected that an additional 130,000,000 people will reside in the United States by the year 2050. About half that population growth will occur in water short areas of California, Texas and Florida. In addition to these growing demands for municipal water services, the needs of aging infrastructure including the Great Lakes states and northeastern United States will require substantial investments. This growing population and an increasingly urban-centric national economy will compete for water resources that are also required for energy and food production while being asked to protect and enhance environmental and riparian conditions. “This under-pricing of water and wastewater services has been an artificial elixir to local service providers.” The rebalancing of how our nation’s water resources are allocated from a primarily agrarian-based economy to an urban centric economy that also requires reliable food and energy resources will require evolutionary policies and sub‑ stantial investment from non-traditional sources. There is little doubt that society will also demand that environmental and cultural needs of water are satisfied while the urban and economic needs are being addressed – this will be a true test of our ability to meet the triple bottom line objectives of sustainable planning. The Financial Needs of the Water and Wastewater Industry The US Environmental Protection Agency (USEPA) completes a periodic report to Congress on the projected financial needs for maintaining adequate drinking water and sanitation services for municipal water and sanitation providers. The most recent reports (2007 Drinking Water Infrastructure Needs Survey and Assessment, US EPA, February 2009; Clean Watersheds Needs Survey 2004, US EPA, January 2008) contain details of the state by state distribution of anticipated capital and operating financial needs to address the identified needs of the various community water and sanitation systems. These reports identify a number of estimates that have been made for constructing the required infrastructure upgrades, expansion and rehabilitation with a median projection through Year 2020 of $324.9 billion. The needs of American Indian and Alaskan water systems and responding to pro‑ posed or recent regulations add another $9.9 billion over that same period. The needs of the clean water programs include capital needs of wastewater treatment plants, com‑ bined sewer and storm water management programs. The reported clean water needs as of January 2004 are $202.5 billion. Current capital spending for clean water programs is estimated to be $13 billion per year while drinking water programs spending is estimated to be $10.4 billion per year. While current funding sources will continue to support many of these programs, there is a substantial gap that will have to be met by increased pricing of services by utilities. From a capital projects standpoint, it is projected that at least a $10 billion per year deficit occurs in each of the drinking water and clean water programs. One scenario would suggest that the shortfall could be closed by increasing the costs of service by a compounding three to five percent per year above inflation rates. There are numerous examples where these annual increases are compressed into shorter and reactive time frames when cost increases are deferred and a utility must deliver deferred capital projects with substantial and sustained rate increases in a politically charged environment. Similarly, the 20-year gaps in operations and maintenance funding of municipal water and sanitation providers are estimated to be about $148 billion for drinking water systems and $161 billion for clean water systems under a no-revenue-growth scenario. Pathways to Respond to the Identified Deficits Without real growth above inflation rates in pricing in the costs of service, the projected needs of operating and constructing the expansions and upgrades of water and wastewater systems will fall further behind. The objective of continuing to provide high levels of service will most likely be met through increasingly higher local costs of service and more enterprise-based approaches to managing, operating and delivering services. Today’s electric industry is one likely model that may describe the water industry in the next several decades. Alternative project delivery methods, risk and reward sharing between owners and contractors, regionalized water systems to capture the purchasing power of larger service populations and reforms in policy and governance that reflect water and resource scarcity and need for sustainable solutions of tomorrow’s world are likely. There are a number of examples where leading edge water and sanitation utilities around the country are responding effectively to the stresses that are now confronting the industry. These locally-based initiatives are developing innovative approaches to uses of emerging technologies and programs such as demand management programs, desalination and planned indirect potable reclamation, groundwater recharge and advanced wastewater treatment. We will continue to develop programs that make more effective use of marginal quality waters and we will have to build surface storage reservoirs and trans-basin diversions to move water to where the needs are critical. More efficient use of water in the agricultural, municipal and industrial sectors will be driven by increasing demands and requirements to balance environmental needs with consumption needs. Utility managers in the future will deliver water and sanitation services in a more sustainable but continually reliable manner. This will most likely require higher costs of service, successfully addressing competing needs in a complex resource constrained world and operating these systems using organizational structures that are increasingly reflective of enterprise-based principles. This will be challenging but these are not your conventional plumbing systems any longer. Peter Binney, PE is vice president and director, Sustainable Water Planning at Black & Veatch. He can be reached at binneyp@bv.com. September/October 21 Legal Corner Foundation Contractual Indemnification Provisions and the Recovery of Attorneys’ Fees A Salute to URS for Foundation Leadership Thank You, Foundation Donors! Visionary: $5,000 per year Mentor: $500 per year CMAA’s Foundation focuses on supporting the needs of owners to successfully implement their capital programs nationwide. The funds raised by our Foundation are used to promote CM careers, student scholarships and CM research. Arcadis/PinnacleOne Bond Brothers, Inc. CH2M Hill CMAA NY/NJ Chapter Keville Enterprises, Inc. CMAA Mid-Atlantic Chapter Parsons Brinckerhoff DeMatteis International Group PBS&J Dick Corporation Christopher Reseigh, FCMAA GREYHAWK URS HDR Champion: $2,000 per year Jacobs Engineering Group Part Two: Contractual Indemnification Provisions By Willcox Dunn, Vandeventer Black LLP Part One of this article, in the previous issue of CM Advisor, focused on the “American Rule” and “prevailing party” provisions, also referred to as “attorneys’ fees” provisions. Prevailing party provisions shift the status quo under the American Rule, where each party is responsible for its own attorneys’ fees, to a loser-pays system similar to that under the British Rule. An express prevailing party provision is fairly easy to identify, allowing the parties to discuss and negoti‑ ate the terms and ultimately make an informed business decision to accept, modify or reject the provision. This is not always the case for broadly-worded indemnification provisions that appear to address only third-party liability, but that can be construed by courts as accomplishing more expansive results. Consider the following example of a typical, broadly-worded indemnification provision: To the fullest extent permitted by law, the Construction Manager (Indemnitor) shall indemnify and hold harmless the Owner (Indemnitee) from and against all claims, damages, losses and expenses, including, but not limited to, attorneys’ fees, arising out of or resulting from the Construction Manager’s performance of its services under this Agreement. The parties entering into such an indemnification agreement may have damages and costs arising from third-party claims in mind, but the above language does not expressly limit the scope of the indemnification obligation to third-party claims and damages. Some courts have interpreted broad language such as this to include not only damages and costs arising from third-party claims, but also those arising from claims made directly by the indemnitee against the indemnitor unrelated to third-party, pass-through claims and dam‑ ages. For example, armed with a provision such as the above example, an owner filing a breach of contract claim against its CM might seek recovery of its attorneys’ fees and costs from the target of its lawsuit, the CM. In addition to paying for its own costs of defense, the CM may end up funding the legal action against itself. To make matters worse, the owner might not even need to prevail to obtain recovery of its attorneys’ fees and costs since the indemnification provision says nothing about having to prevail in order to trigger the indemnification obligation. Adding insult to injury, the attorneys’ fees and costs related to the owner’s first-party claims against the CM likely do not represent damages for which the CM otherwise would be liable absent the indemnification agreement. The fees and costs, therefore, may be excluded by standard professional liability insurance policies as a contractual assumption of liability. 22 CMAdvisor From the CM’s perspective, the preferred solution is to delete such an indemnification provision in its entirety from the agreement. If the owner insists on an indemnification provision, the CM could consider limiting the scope of the provision to third-party damages resulting from the CM’s negligent performance of its services under the agreement. Negligence often is the trigger for professional liability insurance coverage, and with this type of insurance coverage trigger in place, it is important to include a matching negligence trigger for the indemnification obligation. The CM should delete terms and phrases like “claims,” “losses,” “expenses,” and “attorneys’ fees,” and leave only a reference to damages. An indemnification obligation limited to damages is more likely to track the coverage provided under the CM’s professional liability policy, and less likely to run afoul of a contractual liability exclusion. Often, a simple explanation that the original language represents an uninsured risk, and that the revised language is intended to increase the likelihood of coverage will convince an owner to agree to more reasonable terms. If the owner insists on language that includes attorneys’ fees and costs, the CM could consider limiting the scope of the provision to third-party damages resulting from the CM’s negligent performance of its services under the agreement, including reasonable attorneys’ fees and costs related to the litigation. Whether this approach is advisable and the third-party attorneys’ fees and costs will be covered by insurance may depend on the precise wording of the CM’s professional liability insurance policy and the applicable jurisdiction’s definition of “damages.” Indemnification provisions often seem harmless, but they can create tremendous liability exposure by shifting significant risks and responsibilities. Professional liability insurance brokers and carriers, and attorneys who practice design and construction law can be valuable resources for addressing proposed provisions and identifying their inherent risks. Once the risks have been identified, the CM will be in a better position to negotiate reasonable terms and make an informed business decision about these deceptively complicated provisions that involve the interplay of insurance coverage, applicable law and practical business concerns. Willcox Dunn is an attorney with Vandeventer Black LLP. He can be reached at wdunn@vanblk.com. This article is meant to bring awareness to this topic and is not intended to be used as legal advice. In each issue of CM Advisor, the Foundation Board wishes to recognize one of our premier Capital Campaign supporters. This issue, we recognize URS Corporation for their leadership in this regard. The Company recently expanded their support of CMAA and joined the campaign as a ‘Visionary’ member. URS has been a member of CMAA for many years and has always led by example. This has never been so evident as under the current direction of our Chairman, Tom Bishop, PE. Tom, URS’s Vice President, Strategy and Senior Vice President, URS Division, has been instrumental in CMAA’s growth over the past year and played a critical role in attracting new corporate sponsors to the Foundation. URS also steadfastly supports the growing CM Certification program, recognizing the need to enhance the CM profes‑ sion in the marketplace for the benefit of our owners. This is especially true now, as the federal government is allocating billions of dollars for construction and infrastructure projects to help revitalize the economy. With more than $130 billion of stimulus funding set aside for construction projects, federal and state agencies will increasingly turn to Construction Managers to ensure project accountability and the efficient use of public funds. The stimulus package set aggressive timelines for spending the money, as well as included detailed transparency and accountability guidelines. URS believes it is important for its CMs to complement their technical training with the business skills that allow them to successfully adapt to the industry’s ever-changing operating environment. Certified CMs have the expertise to effectively manage the various phases of these complex projects, ensure they are com‑ pleted within the specified timetable and meet the quality standards that our industry has set and our clients demand. URS recognizes the importance of the CMAA’s certification program and also encourages all of its CMs to get more involved in the organization and the CMAA Foundation. We want to thank URS for being a solid professional force in our complex marketplace, and a big supporter of CMAA’s Foundation goals. We also look forward to the continued growth of the Foundation mission and encourage all of you to visit the website and get involved as a supporter. Keep in mind that our Foundation is the only one in the country completely dedicated to enhancing the CM profession, something that will pay dividends to all of us. HNTB, Inc. Chuck Kluenker, FCMAA CMAA New England Regional Chapter CMAA South Central Texas Chapter McDonough Bolyard Peck Summit Associates Vanir Construction Management, Inc. Leader: $1,000 per year Mansour Aliabadi, FCMAA, CCM APSI Construction Management Brookwood Program Management CMAA Chicago Chapter CMAA San Diego Chapter CMAA Southern California Chapter Fred Kreitzberg, P.E. of the Kreitzberg Family Foundation D.J. Mason, P.E. Project Mediation Quintessential LLC RK&K Rockmore Contracting Corporation Swinerton Management & Consulting Friend: $50 per year Jim Ames Roderick Belcher Robert Bennett Joan Berry Craig Bohlen, CCM Luis Manuel Carrillo, Jr. Sawsan Dashti Kevin English, CCM John Furman, CCM Hazen & Sawyer Mark D. Guleserian Hill International David J. Kimmel, CCM Hoar Program Management Michael Kueny Joe McAtee, FCMAA Charles Kumi Michael J. Baker, Jr., Inc. George Lea, CCM Parsons Peter Mac Ewan PSOMAS Stephen Marshall, CCM Ken Rice Monique Miron, CCM Donald Russell, FCMAA, CCM Kristina B. Nelson SGI Construction Management Jim San Filippo STV Carl Sciple, CCM Urban Engineers, Inc. H. Rochelle Stachel Daniel Williams Kurt Yoshii Reminder – Career Video Library Available The CMAA Foundation’s library of four exciting, short videos promoting careers in CM is available for your use with prospective employees, students, and staff. Preview all of the videos on the Foundation’s website. September/October 23 Member News Balfour Beatty to Buy Parsons Brinckerhoff Turner Awarded Two CM Contracts Balfour Beatty, the international engineering, construction, investment and services group, has agreed to acquire Parsons Brinckerhoff for $626 million. Turner Construction Company has been awarded a $120 million contract to manage the construction of Harrah’s Cherokee Hotel Tower III in Cherokee, NC. Completion is scheduled for December 2010. Parsons Brinckerhoff is one of the world’s leading professional services companies. In their fiscal year ended October 31, 2008, the company had worldwide revenues of just over $2.3 billion. Employee-owned Parsons Brinck‑ erhoff is headquartered in New York, with a network of over 100 offices, and has approximately 12,650 employees. Prior to closing, the acquisition will need to be approved by the shareholders of both organizations. Baker to Provide Construction Services on 17 PA Highway and Bridge Projects Michael Baker Jr., Inc. has been selected by the Pennsylvania Department of Transportation to provide CM support and construction inspection services on 17 separate construction projects, under two separate agreements, with a total construction value of more than $77 million. Baker’s fee under the two-year agreements is $5 million. The projects range from pavement overlays and bridge rehabilitations to full bridge replacements and roadway reconstruction. “We are pleased to be able to partner with PennDOT District 8 on these proj‑ ects,” said Matthew Natale, PE, Baker’s Pennsylvania construction services manager. “By leveraging our significant PennDOT presence, we can assure the agency that we can deliver these projects on schedule and at budget.” 24 CMAdvisor The second contract was won for a medical office building in Kansas City for the The University of Kansas Hospital with a contract volume of $55 million. The project will seek LEED Certification from the United States Green Building Council upon completion in 2011. HDR to Provide CM for San Francisco PUC Peninsula Region HDR Engineering has been selected to perform CM services for San Francisco Public Utilities Commission (SFPUC) Water System Improvement Program (WSIP) Peninsula Region. Dave Conover, CCM, National Director of Construction Services for HDR’s Water Business Group said HDR’s collaboration with Shaw Environmental and Infra‑ structure enabled the two companies to combine their national water supply infrastructure construction manage‑ ment and environmental compliance experience. “The Peninsula Regional projects provide for unique challenges,” Conover said. “HDR-Shaw addressed these challenges by offering SFPUC proactive risk management solutions, responsive environmental regulatory compliance and monitoring, seamless staff integration, superior construction management leadership, and technical and environmental expertise.” The WSIP is one of the largest water infrastructure programs in the nation and the largest infrastructure program ever undertaken by the City and County of San Francisco. The WSIP is a $4.4 bil‑ lion program which comprises of more than 80 individual projects in several regions, including the Peninsula Region. PBS&J International to Manage Light Rail Transit Project in Qatar PBS&J International, Inc., in asso‑ ciation with Horizon Group Qatar and Lea+Elliott, has been awarded a contract by Qatari Diar to provide program and CM services for the Lusail Light Rail Tran‑ sit (LRT) project. The LRT network of 17.8 kilometers of double-track guideway serves as the backbone of the future city of Lusail’s transportation network, pro‑ viding a seamless connection between communities, and will contribute to the city’s world-class, modern appeal. Located north of Qatar’s capital city of Doha, Lusail is not only Qatar’s largest domestic real estate project, but also one of the largest and most elaborate devel‑ opments being undertaken worldwide. The development is planned to house approximately 200,000 people and will include residential, commercial, and retail opportunities, as well as schools, medical facilities, shopping centers, golf courses, and an entertainment district. The LRT system’s preliminary design consists of 4 tramway operating lines, with 29 passenger stations connect‑ ing Lusail’s 17 mixed-use districts. The PBS&J International team will oversee the design and construction of approxi‑ mately 35 kilometers of double and single track at-grade and underground; aboveground and underground stations in various configurations; a viaduct passing with an elevated interconnec‑ tion station; a depot; and an operations, maintenance, and storage facility. State Park Reopens with Assistance from Kwame Building Group Construction of the main day-use area at Johnson’s Shut-ins State Park in Reynolds County, Missouri, was completed in June while work continues on the visitors’ center and campgrounds. Kwame Building Group, Inc. of St. Louis is providing CM services to the Missouri Department of Natural Resources on the redevelopment of the state park, which was damaged by the breach of the Taum Sauk Reservoir in December 2005. Kwame is monitoring the recon‑ struction progress as well as providing ongoing reviews of the architectural, mechanical, electrical, plumbing, fire protection, and civil engineering draw‑ ings and specifications for compliance with contractual requirements. The redeveloped day-use area of the park opened to the public in June, with a new boardwalk to provide easy access for viewing and swimming in the popular rock-and-river formations of the shut-ins. The day-use area includes picnic sites, pedestrian trails, access to the East Fork of the Black River, several interpretive shelters and the park store. Bossardt Completes Minnesota Senior Center Chuck Thomsen Joins MOCA Systems Board project is in southeastern Tennessee, approximately 60 miles northeast of Chattanooga, and has a construction value of $15 million. Chuck Thomsen, FAIA, FCMAA has joined the MOCA Systems Board of Directors. Thomsen is well known for his leadership of 3D/International and his management of this 500 person design, management and construction company until its merger with Parsons Company in 2006. He is a Chairman of the Rice Building Institute, a Fellow with both the American Institute of Architects (AIA) and the Construction Management Association of America (CMAA), and the author of three books. He was elected to the National Academy of Construction in 2008. He has a master of Architecture from the Massachusetts Institute of Technology. Montoursville Area School Board Hires Reynolds CM Montoursville Area School Board Tuesday has hired Reynolds Construc‑ tion Management, Inc. to oversee the McCall Middle School renovation project at a cost of $595,000. Bossardt Corporation recently com‑ pleted construction for the new $4.2 million Hayes Community and Senior Center in Apple Valley, Minnesota. Designed by CNH Architects, this is the second building in the state of Minnesota to be certified with Two Green Globes awards by the Green Building Initiative. Features included use of regional materials such as lumber and concrete block; Energy Recovery Unit; and recycled construction debris. The green roof has plastic grids with native grass and flower plants, which can be removed for maintenance access. The Green Globes is a nationally recog‑ nized, third party verification and rating system for energy-efficient and environ‑ mentally sustainable building design. Montoursville Superintendent Dominic Cavallaro said Reynolds is a firm with a good reputation that has performed similar work for other school districts in the area. PM Firm Focuses on TASK at Hand in Coquitlam, BC How do you keep a busy community arena fully operational while rebuilding it? That is the greatest challenge, among many, that TASK Construction Manage‑ ment of Burnaby, British Columbia has been dealing with on an ongoing project in Coquitlam. The company is involved in a $62.4 million remake of the Coquitlam Sports Centre. Among other things, it will bring a cluster of buildings, identified by Sandwell Engineering as the worst five buildings in Coquitlam from a seismic point of view, up to current standards. The project involves constructing two new arenas, upgrading an existing arena and demolishing an existing arena annex and curling facility. One of the new arenas will be used for curling. Ralph Peterson, Former CH2M HILL CEO, Dies Ralph R. Peterson, longtime CEO, chair‑ man and leader of CH2M HILL, passed away on September 1, 2009, at home in Denver, after a long struggle with cancer. CEO since 1991, Peterson joined CH2M HILL in 1965. He was employee No. 148. The company now has more than 25,000 employees. He took the company from revenue of about $400 million to more than $6 billion in revenue today. KCI Wins Maryland, Tennessee Contracts The Maryland State Highway Administration has selected KCI for a $10 million open-end contract to provide construction inspection services for projects in MSHA’s District Six, which includes Garrett, Allegany and Washington Counties. KCI has also been awarded its first Tennessee Department of Transporta‑ tion project, providing construction engineering and surveying services for improvements to SR-30 (White Street) from Athens to east of County Road 609 in McMinn County. The 3.6 mile “Ralph loved our company and all of its employees very much,” said CH2M HILL CEO Lee McIntire. “His passion, dedication and leadership built CH2M HILL into the place that we are all so proud of today. I will miss his intellect, his ability to deal with complex issues and his desire to help others succeed. He was an industry icon. Our thoughts are with Betty, their family and many friends around the world.” September/October 25 Chapter News President’s Corner New England Chapter Southern Nevada Chapter In April, the Chapter held its 15th Annual Awards Program in Boston with more than 190 industry professionals, guests, and Construction Management students in attendance. Featured guest speaker, James A. Aloisi Jr., Commonwealth of Massachusetts Secretary of Transportation, addressed the gathering regarding pending transportation reform in Massachusetts, which will consolidate numerous agencies under a comprehensive transportation group. The Chapter held its second Past Presidents Scholarship Golf Tournament in April 2009 at Black Mountain Golf and Country Club in Henderson, Nevada. Four of the Chapter’s past presidents, Ray Brady, Adrian Clark, Jim Morris, and David Alexander organized the event with the help of a number of key volunteers. The tournament was very successful. A Distinguished Service Award was presented to long-time CMAA member and New England Past Chapter President Rich Martone. Rich was cited for his long, enthusiastic, and tireless service to both CMAA National and to the Chapter, including four years as president during which the Chapter grew and prospered. Sam Sleiman, CCM, PE, Director of Capital Programs and Environmental Affairs of the Massachusetts Port Authority (Massport), was presented the Person of the Year Award. This award recognized his commitment to CMAA including his support for Construction Management certification, sponsorship of a Standards of Practice Course, support for membership by committing Massport to a CMAA Owner Organization Membership, and promotion of the construction management philosophy. The Chapter has a longstanding scholarship program and 11 students from Northeastern University, Worcester Polytechnic Institute, Roger Williams University, and Wentworth Institute of Technology were recognized for their achievements with scholarships totaling $22,000. This year, $4,000 was given away in sponsorship money. The golf tournament raised more than $3,000 to be available for future scholarships. The chapter looks forward to providing much needed support to its local CM students and has already scheduled golf lessons to prepare for the 2010 Golf Tournament. Colorado State University (CSU) Student Chapter The Student Chapter volunteered for The National Center for Craftsmanship (NCC) Deconstruct Project in Fort Collins, Colorado. Members helped in the process of hand-dismantling three local buildings, a farm house and two barns, and prepar‑ ing the material for reuse and recycling. The NCC is a non-profit organization dedicated to the preservation, enhancement, and sustainability of quality craftsmanship. DeConstruct teaches construction skills while providing an alternative way to take down buildings. Youth and adults learn emerging deconstruction technology and LEED certification protocols. The students also participated in the annual site tour. The chapter toured the I-25 State Highway 119 to State Highway 66 project. The project consists of a 3.5-mile lane expansion from four to six lanes and the replacement of five bridges. Students met the resident engineer as well as inspectors from PBS&J and asked questions about the project and the role of an owner’s representative. The CSU Student Chapter would like to thank PBS&J for their time in setting up this site tour. Professional Development Calendar National Conference & Trade Show October 25–27 Orlando, FL Upcoming Webinars: Thursday, November 5 Documentation & Proof of Construction Delays Thursday, December 3 Forums for Resolving Construction Disputes Thursday, November 12 Ethics in CM Thursday, December 10 Beyond the Presentation – Effective Q & A and De-Briefing Defining a Federal Career in CM By Bruce D’Agostino, FCMAA, CAE In recent months, an impressive crosssection of the Construction Manage‑ ment industry, led by CMAA members, has come together in a concerted effort to establish CM as a profession recog‑ nized and supported throughout the U.S. government. The key to this effort is a proposal that the Office of Personnel Management, which administers all employment and benefits policies for the civilian sector of the federal government, create a new occupational series 0820, Construction Manager. CMAA, and in particular George Lea, CCM, of the Army Corps of Engineers, have taken the lead in advocating this new occupational series. We have been joined in our effort by a wide range of academic authorities and by such other industry organizations as the Associated General Contractors and the American Council for Construction Education. By recognizing the CM profession and providing a defined series of jobs through which individuals can advance, OPM would make it possible for federal CMs to obtain continuing education, attend job-related events, and join professionally relevant associations, among other benefits. As our coalition pointed out in a recent submission to OPM: “The federal government has evolved in their execution of construction, performing less in-house design and utilizing more public sector contracts. This demands a different skill set than current staff architects and engineers, the technical professionals, are trained for…However, the hiring process of the federal government has not followed this development and has now allowed a void to be developed in its personnel management criteria which do not require or recognize the need for or benefit from the professional Construction Man‑ ager. With this void, government offices have little chance to recruit, hire and employ this category of highly educated professionals who have developed a foundation in the skills, experience, critical decision-making ability, and respect for the various talents of the design-related professionals who together make up the construction team.” CMAA was one of the earliest supporters of the new occu‑ pational series, writing as early as April 2008 to call OPM’s attention to our Standards of Practice, Code of Ethics, and certification program. We have further pointed out to OPM that the Certified Construction Manager (CCM) credential has been strongly supported by such major players as the Corps of Engineers and the General Services Administration. GSA has also added a new item to its schedule of Professional Engineering Services, identifying CM as a distinct service that can be procured separately from other types of engineering. “Our joint initiative seeks to address a very serious problem confronting the government in its effort to manage construction more effectively.” This effort is an excellent example of what an effective association can do, as well as how vital it is to have dedicated and active members. George Lea has been a key player in strengthening the relationship between CMAA and the Corps, and has been indefatigable in his support of CM certification and professionalism. By taking the lead in this effort with OPM, he is helping to extend the benefits of our professionalism to the entire U.S. government. Linda Phillips, CCM, of GSA has also been actively involved and made major contributions to this initiative. Federal projects, programs, agencies, departments, and the taxpayers will all be the winners. As, of course, will CMAA. Professional CMs hired under this new occupational series will be natural candidates for CMAA membership and a prime audience for our Professional Development, publications, events and other services. CMAA will help them do their jobs better, which will enhance the profession’s standing and create still more opportunity. All of this happens as a result of leadership and individual commitment. We further noted: “Those with Construction Management degrees who are hired using non-professional position descriptions typically leave the government after a short tenure due to the lack of a career path or recognition for their education and abilities.” OPM’s decision is expected later this year. See the full schedule of future CMAA PD events. 26 CMAdvisor September/October 27