Market Insight: Guest Articles
Six Steps Toward Controlling the Construction Process
Summarized and edited by Gary Wells of DCI Construction
September 2013
In an earlier publication of “Today’s Facility Manager,” Aarno Nurminen, President of NJ based Nurminen Construction Corp., summarized six construction steps to be cognizant of as an end-user of office space, a landlord, a broker, a design professional or a project manager. Because the author hit the nail on the head with his concept of the process, I’d like to share the article in a “Clift’s Note version” if you will.
Step 1. Realistic Schedules
Most real estate professionals use the completion date in a typical construction schedule to determine the chain of events that follow in their effort to organize the logistics of occupying or utilizing the constructed area. And why not, that’s what “completion date” means. However, whatever the expectations for a large project build-out, you may want to consider padding that schedule by up to 20% to take into account unforeseen conditions, additions or changes. Moreover, the completion date of construction does not necessarily translate to project completion. Most of the significant tenant improvement projects require an additional period of time for installation and commissioning of the furniture, fixtures and equipment (FF&E). This “schedule contingency” will save dollars, grief and hard feelings. It is common for facilities professionals, real estate brokers, and related personnel to underestimate the multiple time factors involved in delivering a finished product. Some contractors may be equally at fault because they may submit, or agree to, schedules that are not realistic in their effort to appease the prospective client. Expediting the return-on-investment maximizes value; but, if common sense regarding the daily business decisions is taking a time-out, no one benefits!
Collectively review schedules amongst all parties and verify the feasibility of those schedules
Step 2. Top Management Pre-Design Meetings
In my humble opinion, which is based on my experience in real estate brokerage and property and asset management, this step—Top Management Pre-Design Meetings—is the single most critical aspect for a smooth, successful project; one without extraordinary change orders and costly delays.
Frequently, as senior corporate management or other logistically important personnel of a company reviews the final plans, or worse yet, walks the project or facility that is nearing completion, they determine that the finishes are inadequate or that the layout does not flow from department to department. Changes in a project, particularly those that are late in the process, are most often quite costly in both time and money; something most parties, even the contractor, want to avoid.
Senior management must be involved from conception and design through construction and commissioning of FF&E. Participating senior management members should make their preferences, tastes and other important details known before designs are developed and approved.
Initiate early and frequent communication at the top to minimize costly surprises
Step 3. Thorough Document Coordination
Once the general contractor (GC) has been given the green light to commence construction, the GC mobilizes all trades in accordance with the project schedule’s critical path. Frequently, the time -frames within the schedule are reviewed by all parties and all concur that the project has little or no room for delays. Therefore, to avoid delays, it is critical that everyone involved with the design and construction conduct a complete review of the construction documents prior to the start date. Many change orders (estimates range between 15% & 35%, according to Mr. Nurminen) can be traced to unresolved drawings coordination issues. With today’s computer aided design (CADD) and Modeling drafting systems, it’s much easier to coordinate, collaborate and clarify drawings remotely than it was a decade ago. The cost overruns created by trades’ people duplicating efforts or awaiting correct drawings while on the jobsite can be minimized by each of the relevant parties appropriately investing their respective time to thoroughly review the project documentation.
Invest the time to scrutinize the details of the documentation prior to construction
Step 4. Realistic Comparisons
This particular section cannot be stated any more effectively than its published version (“Today’s Facility Manager,” February 2001). Therefore, I’ll quote the author verbatim:
“People in the board room too often accept a low bid (especially one where the cost difference between the low bid and the second-low bidder is 17%, 22%, or more). They see this as a gift from Heaven instead of a warning sign. When a discrepancy like this occurs, [real estate professionals] should ensure that everyone is interpreting the plans in the same manner. When bid proposals are received, the building team should meet with a few of the low bidders to verify that everyone’s bid proposal is comparable. This should be done before the contract is awarded. Sophisticated, construction-savvy [CRE professionals] know that accepting a low bid that plays “loose and easy” with their plans and specifications, is really not in their best interest. All too often, when bid proposals are checked and validated, considerable degrees of interpretation begin to surface, frequently closing the gap between low bidders.”
Ensure that the low bidder has correctly interpreted, clarified and included all specifications in its pricing
Step 5. Confirm Exclusions
All too often, as a bid is submitted, the GC has not taken the time to identify the exclusions in detail or may have only vaguely stated them, and therefore, the real estate professional assumes that the pricing is all inclusive of that same professional’s vision of the finished product. We are all aware of the ramifications of making assumptions, so it is suggested that the real estate professional demand that contractors itemize their exclusions, and if none are shown, it should be understood that the language in the contract documents will be adhered to by all.
Demand that all clarifications and exclusions be itemized
Step 6. The Pre-Construction Meeting
I think we’ve all heard the cliché that “Failing to Plan is Planning to Fail,” and although some would say that all of the planning should have been accomplished in the pre-design meeting, it is still vitally important to kick off construction with a pre-construction meeting. It is critical for the contractors to understand the end user’s goals and needs. In the same breath, the top management as well as all of the other parties to the transaction should know what the concerns and questions are of the contractor. It should be noted that, since the initial publishing of this article, the trend has grown toward pre-construction periods where the parties to the contract invest more time collaboratively, addressing the goals of the project as a team. This important step is still difficult to accomplish through the hard bid delivery method, thereby resulting in less collaboration and more change orders.
The pre-bid and pre-construction meetings are the best place for any issues to arise, as the further into the project the team ventures without addressing potential issues, the riskier each day becomes with the potential cost overruns and schedule delays looming largely. The project team will live together from start to finish and should have mutual respect for one another throughout the process.
With all parties understanding each other’s goals and objectives, where all concerns and issues are addressed openly, there will be greater harmony and a higher probability of success from start to finish. And, as Aarno Nurminen concisely stated, “At the conclusion of a well-planned project, all parties should look forward to working together again on a future undertaking.”
Clarify that all team members have a clear understanding of the game plan prior to game time.
6 Essential Steps to Ensure Success in the Construction Process
- Collectively review schedules amongst all parties and verify the feasibility of those schedules.
- Initiate early and frequent communication at the top to minimize costly surprises.
- Invest the time to scrutinize the details of the documentation prior to construction.
- Ensure that the low bidder has correctly interpreted and included all specifications in its pricing.
- Demand that all clarifications and exclusions be itemized.
- Clarify that all team members have a clear understanding of the game plan prior to game time.
