Another Brick in the Wall

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Another Brick in the Wall Understanding
Construction Management
By John Knox, Vice President The Chamberlain
Companies
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Presentation Process

• Explain the differences
• Discuss how these differences affect clients
• Examine the benefits/challenges of Construction
  Management
• 15-20 minutes for question/answer period at end
  of presentation

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Construction Management

• Construction Management is a concept which
  integrates the design and construction processes.
  It joins the Owner, Architect, and Builder into
  a team to produce a facility which best meets the
  functional requirements and aesthetic needs of
  the Owner within the authorized budget and
  occupancy schedule.

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Construction Management (CM)

• Not Project Management
• A contractual agreement for the construction of a
  project
• Unlike General Contracting and Design/Build, CM
  is an open book method
• GCs profit and overhead are included in his
  stipulated sum price
• Construction Manager paid a negotiated fixed fee
  or percentage of construction cost
• Team Approach - CM hired early in the process to
  develop schedule and cost estimates, and provide
  input during design process

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Stipulated Sum vs. Open Book

• Stipulated Sum
• Lump sum amount quoted for the construction of a
  project
• Examples are General Contracting and Design/Build
• Open Book
• All construction costs are disclosed openly to
  the Owner
• Transparent process with Owner actively involved
  in award of contracts

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Construction Divisions

• Div. 1 General Requirements (Site Super,
  Labour, Fencing, Insurance, etc.)
• Div. 2 Site Work
• Div. 3 Concrete
• Div, 4 Masonry
• Div. 5 Structural Steel
• Div. 6 Wood Plastics
• Div. 7 Thermal Moisture Protection
• Div. 8 Doors Windows

• Div. 9 Finishes
• Div. 10 Specialties
• Div. 11 Equipment
• Div. 12 Furnishings
• Div. 13 Special Construction
• Div. 14 Conveying Systems
• Div. 15 Mechanical
• Div. 16 - Electrical

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• So, While there is no difference in Construction
  Means and Methods

The difference lies in ..

• Philosophy
• Contract
• Control

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Philosophy - CM

• A portion of his fee is for pre-construction
  services during the design phase
• Questions architectural decisions along the way
  with the focus on value
• The Construction Manager Advisor during design
  stage and the Owners Representative during the
  construction stage
• Less chance of dispute with Owner or Architect as
  CM involved in design process, and does not
  profit from omissions or changes

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Philosophy - GC

• Design Bid Build Process. GC not involved
  until design process completed
• His only responsibility is to build what was
  tendered
• GC will price and produce exactly what is shown
  on drawings. Grey areas, omissions, or changes
  are all opportunities for profit
• Relationship between Owner, Architect, and GC can
  become confrontational when problems occur

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General Contracting

• Working drawings and specifications completed and
  all divisions tendered as one package to General
  Contractors
• Contract between Owner and General Contractor
• General Contractor has contracts with each of the
  Trade Contractors
• GCs Site Super manages Site and Trade Contractors

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Construction Management

• Divisions divided into tender packages, drawings
  specifications for each package completed, and
  tendered individually and sequentially
• Owner contracts directly with Trade Contractors
• CMs Site Super manages Site and Trade Contractors

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Construction Management by Architect
Chamberlain regularly performs both roles
Architect and Construction Manager
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Greatest Risks on aConstruction Project are

• Unknown conditions
• Facility not meeting expectations
• Bankruptcy of Constructor
• Exceeding the budget or schedule
• Inclement weather

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Client Concerns

• Risk Exposure
• Control over Site, Costs, and Schedule
• Flexibility
• Deal with unexpected situations
• Ability to make changes without paying a premium
• Image
• Value
• Cooperative Team Relationship

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Risk is Minimized by Maximizing Control and
Flexibility during the Construction Process
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Control

• Owner contracts and is dealing directly with the
  Trade Contractors
• He who pays the piper calls the tune

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Flexibility

• Possible to start construction before design
  finalized
• Owner has a longer time to determine specific
  requirements because packages sequentially
  tendered
• Good for fast tracking a project
• Establishes project cost early
• Owner doesnt pay a premium for changes
• Allows for continued operation during
  construction
• Allows for incorporation of donated
  materials/labour
• Allows for inclusion of local trades/suppliers

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Reality of Stipulated Sum Contracts

• Price is indicative of the opportunity at that
  moment in time
• Price only fixed if absolutely nothing changes
  during construction
• Generally, the GC is forced to use lowest
  trade/supplier prices to get the job
• 100 price driven

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The Bottom Line
The price shown on a Stipulated Sum Contract is
the least you are going to pay for your building
not the most.
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Value
Div
Sub Trades
GC 1
GC 2
GC 3
Lowest CM
1
GENERAL
132,318
133,400
132,600
132,318
2
SITE WORK
306,334
272,585
304,384
272,585
3
CONCRETE
37,508
42,775
26,594
26,594
4
MASONRY
44,261
42,000
41,099
41,099
5
METALS
72,522
77,049
107,099
72,522
6
WOOD PLASTICS
47,015
42,244
53,681
42,244
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THERMAL/MOISTURE
56,768
64,798
68,186
56,768
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DOORS/WINDOWS
88,275
88,905
85,462
85,462
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FINISHES
141,916
135,016
133,974
133,974
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SPECIALITIES
27,508
28,682
36,411
27,508
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CONVEYING
28,261
27,535
29,274
27,535
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MECHANICAL
176,606
215,959
188,847
176,606
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ELECTRICAL
173,394
177,699
180,811
173,394
TOTAL
1,332,686
1,348,647
1,388,422
1,268,609
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Savings Accrue to Owner
Item Budget Tender Savings
Site Work 300,000 276,000 24,000
Donated Material 5,000
Deleted Doors 2,000
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Challenges of Construction Management

• Owner more involved in construction process
• More paperwork construction draws to be
  approved under guidance of Construction Manager
• Upside complete paper trail for all monies
  spent on the project and an excellent opportunity
  to learn about the design and construction
  process

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Projects built under Construction Management
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Niagara-on-the-Lake Public Library
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Quinte West City Hall/ Public Library
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Other Projects
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To Re-cap
General Contracting Construction Management
Design Involvement None Involved early in planning budgeting
Building Team Structure Prime Contractor Advisor/Agent to Owner
Accounting Disclosure None Open Book
Paperwork Less More
Risk Exposure if Contractor(s) go broke High Very Low
Relationship with Owner Minimal interaction with Owner. Works through Architect Works closely with Owner
Site Control None Full
Flexibility to Make Changes Extra cost at full premium Actual cost
Savings Realized Go to GC Go to Owner
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Wrap Up

• Able to fast track, if necessary
• Early establishment of project costs
• Cooperative relationship less stressful for
  Owner
• Provides Owner with more Control and Flexibility
  during construction
• Realizes best Value for Owner

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Another Brick in the Wall Understanding
Construction Management
By John Knox, Vice President The Chamberlain
Companies