1. Construction Management
m.Trudzinski 2003

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

3. TEAM APPROACH TO SUCCESSFUL PROJECTS

4. 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.

5. Components of a Successful Team
Trust
Responsibility
Performance
Communication
Cooperation
Commitment

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

7. 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

8. 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

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

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

11. 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

12. 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

13. 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

14. End Users Staff nurses doctors technicians environmental services
engineering
others

15. 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

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

17. 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.

18. 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

19. The Contract Package
The Contract
The Specifications
The Contract Drawings

20. 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

21. 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…

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

23. Activities Project inspection Change orders Allowance Shop drawings
Payments
Punch lists

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

25. Project acceptance and occupancy
Mechanics liens
Insurance
Utilities
Building security

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

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

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

38. Construction Management Method
Prime
Prime
Prime
Prime

39. 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

40. 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

41. 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

42. 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

43. 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

44. 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.

45. 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.

46. 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.

47. Risk Assessment
Noise
Vibrations
Dust
Utility Disruptions
Infections

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

49. 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

50. 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.

51. 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.

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

53. 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