Construction Management m.Trudzinski 2003

Objectives Before you begin Discuss the contract —the team approach Discuss the contract Discuss types of construction packages Discuss options and when used

TEAM APPROACH TO SUCCESSFUL PROJECTS

Team Approach A system that brings together the project team during the early stages of design and through construction to provide balanced input from the user, designer and builder as necessary to insure quality, budgeting and scheduling requirement.

Components of a Successful Team Trust Responsibility Performance Communication Cooperation Commitment

Key Team Members Project Manager (owner) Facility Manager Architects Engineers General Contractor (subcontractors) Staff Physicians

The Right Drawings Types of Construction Drawings. The complete set of construction documents communicates in detail the requirements for the entire construction project. Civil Architectural Mechanical Plumbing Landscape Fire Protection Structural Electrical

Architects & Engineers Selection of your A & E firms must begin with experience in health care projects of similar scope, size and the “team approach” Excellent references, including: design of similar projects budget projections schedule communication

Continued: Excellent references, including: Design of similar projects budget projections schedule communication character integrity honesty

General & Subcontractors Experience in health care projects of comparable size, complexity and value. Very important

Continued: Integrity honesty project schedule warranty obligation (timeliness) ability to bond the project located within reasonable distance of the project minimum of 10 years in business

Continued: Experience in the “team approach” construction management (CM) negotiated bids Willingness to comply with contract provisions and documents without exception or conditions associated with the documents

Owner’s Representative Familiar with the operations of the facility Familiar with the building(s) Often the facility manager or a contracted project manager Team player Good communications

End Users Staff nurses doctors technicians environmental services engineering others

Keys To a Successful Project Team players good communication committed to the end product committed to the budget committed to the schedule ability to anticipate problems early think outside the box to solve problems

Construction Contract Documents Definition of a contract Elements of a valid contract

Definition of a Contract A contract is an agreement made in good faith between two or more capable parties to perform an act or acts.

Elements of a Valid Contract Mutual agreement Offer of acceptance Consideration (promised value of contract) Objective lawful & clearly stated Good faith on the part of the parties Parties must be capable of performing the tasks

The Contract Package The Contract The Specifications The Contract Drawings

The Contract A signed, formal agreement between the parties identifying the rights and responsibilities of each Review Specifications Insurance and Bonding Time of performance Signatures

Notice to Proceed Pre-construction conference As soon as the contract is signed, and all paperwork is in order, NTP is given Pre-con conference Topics include: power, water, parking, emergency preparations, access, security, location of contractor’s office etc…

Contract Administration Includes a wide range of activities, all of which are vital to the successful completion of the project

Activities Project inspection Change orders Allowance Shop drawings Payments Punch lists

Activities cont… Owner/operator training Maintenance and operations manuals Record drawings Warranties and guarantees Spare parts Test reports

Project acceptance and occupancy Mechanics liens Insurance Utilities Building security

Forms of Construction Contracts Unit price contract Lump sum contract (single-fixed price) Cost plus fixed fee contract Guaranteed maximum price contract

Unit Price Contract Contractor agrees to perform specific portions of work for predetermined unit prices Prices usually include direct, indirect cost, as well as overhead and profit Price of contract depends on actual quantities and units of work measured when job is complete

Unit Price Contract cont… May be used for heavy construction projects such as roads and highways Contractor negotiates on unit prices based on approximate quantities furnished by the owner

Lump Sum Contract Fixed-lump sum contracts are used on most competitively bid projects Binds the contractor Plans, specifications, and general conditions Main work by general contractor, other work subcontracted out to specialty contractors General contractor assumes responsibility for all work

Cost Plus Fixed Fee Contract Contractor agrees to perform the work and the owner agrees to pay the contractor for the direct field costs, plus a fee to cover the contractor’s home office costs and profit Fee is based on the size and complexity of the work

Cost Plus cont… Advantages: Disadvantages: Owner can change design or material during construction w/o change orders and may start the project before design is completed Disadvantages: Total cost of the project is unknown until the project is completed Contractor does not have an incentive to minimize field costs

Guaranteed Maximum Price Contract Contractor agrees to perform all the work necessary to complete the construction project for a price that will not exceed a pre-established maximum price. Any costs above the guaranteed price are absorbed by the contractor

Used primarily for negotiated contracts Maximum Price cont… If the contractor completes the project before the scheduled time, he may receive a bonus Incentive clause Used primarily for negotiated contracts

The Traditional Method Owner selects A/E to design the project within parameters When design is approved by owner, one General Contractor is selected to build the project General Contractor is selected through a competitive bid and reports directly to the owner

Traditional Method cont… General contractor performs part of the work and subcontracts the specialty work GC usually performs 15-40% of the work. On most public contracts GC is required to perform at least 25% Private contracts vary Method can be used on any of the four types of contracts already described

Traditional Method cont… Advantages: Owner deals with only one contractor Disadvantages: Adversarial relationship could develop with the owner in the middle between the GC and the A/E

Alternate Construction processes Construction Management Design-Build Fast Track Turn Key

Construction Management Method Prime Prime Prime Prime

Design-Build Saves time, therefore saves money One firm designs and constructs Construction begins as each segment is designed Design and construction phases overlap Controls cost-price of the contract is established early in the design process

Fast Track Compresses the time between start of design & construction completion Works well on relatively large projects Can be adapted for competitive bid or negotiated contracts

Fast Track continued… Segments of construction docs must be completed in sequence Separate contract is awarded for site excavation as soon as size, shape, and depth of the foundation is determined Excavation can begin before a detailed design is completed

Fast Track Continued… Requires careful estimating Assure funds are sufficient for the whole project Restricts the designers ability to incorporate desired changes into the project after the initial construction projects are awarded

Turn Key Differs form other construction methods in financing Contractor arranges for and obtains all necessary construction financing Upon completion of the project, the contractor exchanges the title of the building for either full payment or an agreement for future payments

Types of Costs Fixed Costs – do not change with variations in production output or volume, i.e. property insurance, real estate taxes, landscape maintenance, housekeeping, and salaries of department managers. Variable Costs – tend to change with output. Direct material, direct labor, and operating supplies are examples.

Types of Costs Direct Costs—are assigned or can be traced to a specific process, product, or project. Examples are materials or equipment that become part of an installation. Operating and project personnel assigned to a project or service may be considered as direct costs. Indirect Costs – are not directly assignable or cannot be clearly traced to the end product, project process, or service. Indirect costs may include certain types of insurance, property taxes, mortgages and lease costs, and maintenance.

Types of Costs Sunk Costs – are costs which are committed and cannot be recovered. Opportunity costs – represent the alternative investment opportunities that are foregone because available funds have been allocated to something else.

Risk Assessment Noise Vibrations Dust Utility Disruptions Infections

Pre-Construction Risk Assessment Effective January 1 2002, the JCAHO added the requirement to perform an infection control preconstruction risk assessment when planning projects that involve demolition, construction, or renovation.

Interim Life Safety Check SOC for Existing Life Safety Features Evaluate which features will be disrupted. Interior/Exterior Features Develop Interim Life Safety Plan Train Drill

ILSM Evaluation Unobstructed Exits Unobstructed access for emergency vehicles Ensure fire alarm, detection & suppression systems are in good working order Temporary construction partitions are smoke tight and built of noncombustible materials Additional fire drills Organization wide safety education programs to promote awareness of deficiencies, construction hazards, and ILSM.

ILSM Evaluation Additional fire extinguishers Prohibit smoking. Housekeeping Practice Hazard Surveillance Additional Training Additional fire drills Organization wide safety education programs to promote awareness of deficiencies, construction hazards, and ILSM.

Project Management “Wherever you see a successful business, someone once made a courageous decision.” --Peter F. Drucker

Summary To assure that a successful design is translated into a successful building, the facility manager must fully understand the legal requirements of a contract as well as the responsibility of contract administration. In general, the FM must be a storehouse of information about the total project