Building Success into your Next Construction Project
A Special presentation for NJSBA – September 2013 various locations
Introductions
• Rocco R. Vespe, P.E., F.CMAA, Vice President, Hill International
• 40 years of experience in the construction industry including
• 20 years as a contractor
• 20 years as a consultant on project management, construction management,
estimating, schedule analysis, dispute resolution, claims evaluation, delay and
damages, contractor and construction manager performance evaluations,
troubled project intervention, OSHA and safety evaluations, and provision of
expert testimony.
• Projects include education, transportation, municipal, hospital and medical,
manufacturing, hotel, gaming, roads and bridges, parking structures, shopping
centers, casinos, as well as commercial and residential buildings.
• Member of the College of Fellows – Construction Managers Association of
America
• School Board Member for over 25 years
Introductions
• Michael R. Kueny, Construction Manager, Hill International
• Over 23 years of construction management and inspection experience
• Skilled in CPM scheduling, project management, estimating and engineering.
• Mike has managed the construction of schools, automotive restoration
facilities, hospitals and courthouses.
• Mike has worked for School Districts, Pennsylvania Department of General
Services (PA DGS), and other private clients.
• Member of the Construction Management Association of America (CMAA).
Today’s Agenda
• Success
• Teamwork
• Common Problems
• Solutions
• Keys to Success
Mission Statement
• Careful selection and effective management of the
Construction Team will enhance the chances of success on
your next construction project.
Risky Business
• Differing views and objectives result in a risky environment
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for all parties
We must understand these views in order to select the right
team members
Project Team
• School District/Administration
• Architect/Consultants
• Contractor(s)
Success Factors
• Cost
• Time
• Scope (Needs)
• Quality
Perspectives of Project Team
• Each team member has a different view regarding the
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success factors
For example the contractor’s view of cost (PROFIT) vs the
District’s view (BUDGET)
The architect’s view of quality
Defining Success or Failure - The Perspectives of the Parties
• The District, Contractor, and Designer each have their
own objectives as they relate to the project
• These objectives fall into five general categories:
• Cost
• Time
• Need
• Quality
• Risk
Perspectives of the Parties - The District
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Cost
• On Budget
• Project Parameters versus Return on Investment
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Time
• On time versus educational needs
• Cost of late completion
• Cost of early completion
Perspectives of the Parties - The District
• Need
• Have these been properly defined?
• Are cost and time compromises appropriate?
• Quality
• Is industry standard acceptable?
• Are special quality requirements been properly spec’d?
• Risk
• Are cost and time contingencies adequate?
Perspectives of the Parties - The Contractor
• Cost
• Price versus Profit
• Profit versus Needs
• Cost of unknowns
• Cost of changes
• Design Issues
• Time
• Normal versus accelerated effort
• L/Ds (Liquidated Damages)
Perspectives of the Parties - The Contractor
• Need
• Workload
• Typical project versus new market or area (new risk)
• Quality
• Clarity of plans and specs
• Impact of specified higher standards
• Risk
• Cash flow
• Claims
Perspectives of the Parties - The Designer
• Cost
• On budget?
• Owner impact on cost
• Time
• How does job fit into other workload?
• What impact will a change in timing have?
• Need
• Prestige
• Client relationship
Perspectives of the Parties - The Designer
•
Quality
• Normal design versus increased complexity
• Staff expertise / standard of care
• Owner preferences versus budget
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Risk
• Unforeseen changes
• Design time versus bidding/construction dates
• Performance
• Reputation
Building the Team for Success
• Team Mission
• Team Members
Team Mission
• Team conductor
• Establish measurable goals
• Develop realistic schedule
• Monitor and measure performance & progress
• Take action early to stay on track
• Ignoring an issue is not acceptable
• Process to get issues to proper parties for quick
•
resolution – the construction clock is running
Document and communicate
School District/Administration
• Building/Property Committee
• Superintendent
• Business Official/Business Administrator
• Facilities/Maintenance
• Educators
Architect Selection
• Qualification Based Process
• Establish Criteria
• Experience
• Similar projects
• Individuals
• Scope of Services
Consultants
• A/E Team / Sub-consultants
• Independent Inspections
• Earthwork
• Foundations & Superstructures
• Mechanical, electrical and security systems
• Commissioning
• HVAC design review
• Testing and balancing
• Systems Commissioning
Local Code Officials
• Owner’s liaison
• One party from start to finish
• Buildings and grounds representative
• Get early involvement and keep no secrets
• The keys to the palace
Preparation of Design
• Establish consultant selection
procedures; this should include
consideration of past claims
history
• Perform an adequate
evaluation of existing
conditions
• Manage the administration and
scheduling of the design
consultant contract
• Commission a design review by
qualified third parties
• Commission a constructability
review by qualified third parties
• Consultants should be required
to provide professional liability
insurance
• Consider the use of a
commissioning agent
• If a construction manager is to
be hired, bring the CM on early
Contractor Documents
• Clear, concise, fair contract documents
• Disclose existing conditions/As-builts
• Changes clauses
• Allowable costs
• Overhead and profit
• Time-management clauses
• Scheduling, delays, time extensions
• Define substantial completion
Preparation of Contract Documents
• Read the contract documents in their entirety,
including General Conditions, Standard
Specifications, Supplemental Provisions, Special
Provisions, plans, referenced documents, etc., and
address the following:
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Conflicts
Omissions
Ambiguities
Preparation of Contract Documents
• Understand how the contract allocates risk
among the stakeholders.
• Be careful of exculpatory language that may
be difficult or impossible to enforce.
• Lessons learned on one project should be
incorporated into the contract documents of
future projects.
Preparation of Contract Documents
• Read the contract as if everything has gone wrong and
you are in the middle of litigation, then answer the
following question:
“Does this contract provide adequate
protection from risk?”
• Make the necessary revisions until your answer to this
question is “Yes.”
• Do not ignore the contract or defer its preparation to
the last minute. The contract spells out the rules of the
game and is your most important tool in claims
mitigation.
The New Team Member – The Contractor
• Change of focus for some team members
• Who builds your project?
• How does contractor view success factors?
• Project construction schedule
• Open communication
Adding the Contractor to the Team
• The Low Bid Process - Luck of the draw
• Prequalification
• Communication
Pre-Bid Meetings
•
Schedule meetings so that contractors have time to prepare;
but well before the bid date to allow time to answer
questions.
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Prepare and issue meeting minutes as an addendum.
•
Answer pre-bid questions promptly and in writing. Issue
answers as addenda.
•
Provide full disclosure to bidders. This includes borings and
other subsurface investigation results, as-built drawings, etc.
Consider making attendance mandatory and coordinating
the meeting with a site visit or “showing.”
The Bidding and Award Process
• Understand the project timing
• Understand the scope and budget
• Use alternates
• Limit addenda
• Award to lowest qualified bidder
Common Problems
• Delays
• Change orders
• Disputes/Claims
Delay
What is delay?
• Things don’t go as planned
• Critical versus non-critical delay
• Critical – delays to an activity on the longest path
• Non – Critical – activity has float – not on longest path
• Measured in the context of the most current schedule
Change Order Management
• Entitlement
• Impacts
• Costs
• Not all change orders have a guilty party
• Not all change orders are bad
• Indicative of working RFI process
• Scope clarification
Definition of a Claim
•
A claim is an unresolved change. It is a demand for money,
time, or some other adjustment in the contract terms. A
claim can exist when:
• A contractor believes a change exists, but the owner
disagrees, or
• Both parties agree that a change exists, but cannot
agree on the impacts or costs of the change.
• Based on this definition of a claim, the essence of claims
avoidance is reducing potential changes and providing
dispute resolution mechanisms.
Claims Avoidance
• A claims avoidance system should be thought of as a
system or collection of actions working in concert to
reduce the number of claims filed on a project and
enhance the chances of quick resolution of disputes.
•
Successful claims avoidance systems foster a culture of
issue resolution. The roots of these systems are anchored
in the design, the contract, and project administration.
Components of a Disputes Avoidance System
1. Careful preparation of design documents
2. Careful preparation of contract documents
3. Pre-bid meetings
4. Open and effective communications
5. Maintenance of proper project
documentation
6. Effective, project-level dispute resolution
procedures
Project Documentation
• Maintaining proper project documents plays an important
role in every claims avoidance system. A lack of proper
documentation makes it harder to resolve a dispute.
• Remember: If it wasn’t written down, it didn’t happen.
• Maintain a copy of all bid documents for future reference.
This includes the contractor’s estimate, assumptions,
schedules, take-offs, and calculations. Consider escrowing
bid documents.
Project Documentation
• Take jobsite photographs and videotapes and record the
dates taken. Written descriptions should accompany the
photographs and videotapes as well. These should be
carefully archived to prevent damage. Consult with legal
counsel regarding the admissibility of photographs and
videotapes as evidence.
Daily Reports
• Reports should be dated and signed.
Daily Reports
• Establish guidelines for daily reports that standardize
both format and content.
• Uniform report format helps organize data among
multiple projects.
• Ensures that all categories of information are included or
considered.
What goes in a Daily Report?
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Headcount by trade and level
Areas of work and crew size,
including subcontractor work
Quantities of work performed
Hours expended
Supervisory personnel
Material deliveries
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Equipment mobilized or
demobilized to site; note owned
or rented, operating or idle, and
record serial numbers
Work area access restraints
Lack or loss of power or utilities
Weather
Project Schedules
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Maintain all pre-bid and
project schedule submissions
and updates, including
computer files.
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Document when specific
schedule items of work begin
and when they are
completed.
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The schedule should include a
narrative report describing
what occurred during the
update period.
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Note any situations that have
occurred that might be
construed as a change.
•
Make sure any changes in
logic or sequence, and the
reasons for these revisions,
are fully explained and
understood.
Project Correspondence
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Every letter or e-mail needs a
prompt and complete reply
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Be professional; remember
you wear the “white hat”
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Avoid letter-writing wars
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Address each issue raised
directly
A letter should follow all oral
direction
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Use references when
responding
Insist on timely notice and
timely action
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Keep correspondence
impersonal
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Let the facts and the contract
speak for themselves
Project Correspondence
• Carefully draft all project documentation; remember your
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audience
Preserve original documents
Some documents, usually only those you write to your
attorney, are privileged, which means that the document
does not have to be turned over as part of the discovery
process. Keep these documents separate.
Remember that deleted electronic documents are
recoverable from computer hard drives
Good correspondence is essential to effective disputes
avoidance.
Other Important Documentation
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Cost and payroll records
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Change orders, including all back-up information
Pay requisitions and supporting information
Submittals, test results, and other miscellaneous QA/QC
reports
Requests for Information
Weather data
Daily reports and job diaries
Approach to Problem Resolution
• Define the problem
• Review the contract
• Review the facts
• Identify liabilities
• Identify solutions
Maintain Team Approach
• Changes will occur
• Disputes will occur
• Remember the parties perspectives
• Manage changes
• Manage disputes
• Get independent evaluation
Keys to Success
• Careful selection of team members
• Include all parties, ie facilities/maintenance
• Clear concise contract documents
• Manage changes and disputes
• Realistic Project schedule
• Maintain team approach
• Get advice
Questions
Presenters
Rocco Vespe, P.E., F.CMAA
Vice President – Hill International
Michael Kueny,
Construction Manager – Hill International
Hill International Inc.
303 Lippincott Centre
Marlton, NJ 08053
Tel: 856-810-6262
Fax: 856-810-0485
roccovespe@hillintl.com
mikekueny@hillintl.com