The Road To Success Is Always Under Construction Strategies For Administering A Successful Capital Project

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By Bob Wright

Successful construction projects do not just happen; rather, success is the result of a team effort under the owner’s leadership, early strategic decisions, and proactive management.  When a healthcare executive (CEO) decides which capital projects will improve patient outcomes, generate revenue or reduce costs, the focus is on the program, cost, schedule and location. The executive then delegates the specifics of how the project will be accomplished to the Project Administrator.  The following strategies can assist the Project Administrator with critical decisions before the design and construction process begins.

PROJECT DELIVERY METHOD 

One of the first strategic decisions is to determine the optimal project delivery method.  The choice is based on careful consideration of cost, schedule, risk, financing and laws. The most common methods include:

(1) Design/Bid/Build

(2) Design/Build

(3) Design / Negotiate with a Construction Manager (CM)

(4) Integrated Project Delivery (IPD)

THE PROJECT TEAM

The composition of the project team is the single most important decision an owner makes after deciding to proceed with the project.

The designer is typically the first team member selected after close scrutiny of qualifications, experience, approach, and value (what do they bring to the table?).  Owners should inquire about the designer’s quality control program and track record involving changes resulting from errors and omissions.

After careful consideration select the internal or external Project Manager who will represent the owner throughout the design and construction process.  Does this person understand the contract documents? Does this person possess the management skills necessary to control critical aspects of the project and the technical expertise to ensure that the owner is receiving the best value?

Before choosing the third team member (the contractor) who will undertake considerable risk, all the bidders should be vetted.  Before being invited to bid, require a prequalification statement, a recent financial audit and a workers compensation experience rate modifier.  The apparent low bidder’s bid amount and anticipated construction timeframe should be scrutinized.  At the same time the contractor’s proposed manager and superintend should be interviewed with an emphasis on attitude and credentials consistent with the project goals.  Only then should the contractor be brought on board.

Even with the best teams, many owners understand that they do not always get what they pay for. (Consider the highly paid New York Yankees poor performance in  the recent Major League Baseball Playoffs.)  To ensure a successful outcome the project administrator must establish controls to monitor the team’s performance.  Interim controls can accurately measure performance so necessary adjustments can be made in the heat of battle.

CONTROLS

One key control is the master schedule that identifies critical path activities from the start of design through occupancy.  Just as budgets have contingencies so should schedules.  At each milestone; schematic design, design development and construction documents, the owner should affirm that the corresponding estimate and scope are in line.  The current best practice, known as Lean Design and Estimating, requires concurrent tradeoffs keeping the project scope within the budget.

Designers are obligated to provide a design that is consistent with the budget.  Caution, under delivery methods that require a guaranteed maximum price (GMP), construction managers tend to artificially inflate cost estimates as a financial safety cushion and as a potential reward for what may later be termed “effective cost management”.  Owners need to exert control over the construction manager so that the designer and owner will not have to prematurely cut vital components from the program based on artificial estimates.

Owners should verify that the designer has performed a quality control check and that the design has been approved by the authorities having jurisdiction.  The construction requirements should include either a mock-up, or a low-cost facsimile of repetitive or complex spaces. User groups should review the mock-up and give their functional approval prior to proceeding.  A mock-up can also clarify the owner’s and architect’s craftsmanship expectations.

Early in the design phase, careful consideration should be given to how the project will impact the owner’s daily operations.  Consideration should be given to an Operational Impact Assessment that pro-actively identifies maximizing construction productivity while minimizing disruptions to the owner’s ongoing operations.  This win / win strategy will give the users, and adjacent departments, a voice in the process reducing staff complaints and minimizing the risk of contractor initiated delay claims.

The owner should chair regularly-scheduled Construction Progress Meetings with an agenda to address timely responses to Request for Information, efficient processing of submittals, and resolution of issues.  Because designers are only on-site occasionally, the owner’s Project Manager needs to know the quality standards and actively participate in Pre-Installation Conferences. By reporting deficiencies early, in-writing, issues can be addressed in a timely and less expensive manner as opposed to waiting for the Punch List.  Close monitoring of cost changes, adjustments to the contingencies, and timely processing of applications for payment are critical tasks that must be diligently performed by the owner.

Successful projects do not just happen; rather success is the result of the owner’s leadership, strategic decisions and proactive management established before the design and construction process begins.

Bob Wright is a Senior Associate at Stantec Architecture and Engineering LLC. Bob works in the Stantec Butler, Pennsylvania Office and can be reached at bob.wright@stantec.com.