Advisor 2013 Summer

8/10/2019 Advisor 2013 Summer

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SUMMER

2013

The Journal of Professional CM/PM PracticeVOLUME II, NO. 2

Woodrow Wilson High School,

Washington DC


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mwhglobal.com

At MWH Constructors, we have

earned our reputation as a

trustworthy contractor. Our level

of honesty, professionalism,ethical behavior and integrity

demonstrate how much we value

our clients and staff.

S T R A T E G I C S E R V I C E S :

CONSTRUCTIO N MANAGER-AT-RISK

PROGRESSIVE DESIGN-BUILD

CONSTRUCTION MANAGEMENT

HONEST.Work
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TABLE OF CONTENTS

6

10

16

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KNOWLEDGE MANAGEMENTIN THE AEC INDUSTRY

Research shows most organizations have no structuredKM program. But who can afford to let a seasoned managerleave without trying to capture all of that employees knowledgeand experience? Heres a guide to launching KM inyourorganization.

ENHANCING INNOVATION IN THE EPC INDUSTRYThe Construction Industry Institute has studiedbarriers to innovation, and the study leader,Prof. Paul Chinowski of the University of Colorado,discusses some of the results here. Learn what

deters real innovation and what attitudes haveto change to open the way to improvement.

COMBATTING WASTE, FRAUDAND ABUSE IN CONSTRUCTIONDetailed contract documents, careful oversight, third partytesting and review of all paperwork are among the keys tocombatting these enemies of your project budget.

INNOVATIONBrains have become more important than brawnto successful construction, and the best brains focuson innovation. How can we make innovation a truecompetitive edge for our organizations and anasset to our clients?

DEPARTMENTS

5 FROM THE CHAIR

9 LEGAL CORNER

14 TOOLS OF THE TRADE

24FINAL WALKTHRU

ON THE COVER: WOODROW WILSONHIGH SCHOOL, WASHINGTON, DC

PHOTOS BY ROBERT CREAMER


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EDWARD BOND, JR., CCM, FCMAAEdward Bond, Jr., is CEO of Bond Brothers, Inc., in Everett,

MA. He is a fellow of CMAA and the Society for MarketingProfessional Services, as well as past president of SMPS,past chair of the Construction Manager CertificationInstitute, and current chair of the CMAA Foundation.

CONTRIBUTORS

Chairman of the BoardMike Potter, PE, CCM

President and Chief Executive OfficerBruce DAgostino, CAE, FCMAA

EditorJohn McKeon

Associate EditorKenzie Mahla

Design and MarketingTGD Communications, Inc.

Advertising SalesAlex PerroyTGD Communications, [email protected]

CMAA is a construction industryassociation of 11,000-plus firmsand professionals who providemanagement services to ownerswho are planning, designing, andconstructing capital facilitiesand infrastructure projects.

The Mission of CMAA is to promotethe profession of ConstructionManagement and the use ofqualified Construction Managerson all capital projects and programs.

Advisor, published bi-monthlyby CMAA, reports on and followsthe industry as a service toits members. Submission ofarticles, ideas, and suggestionsis appreciated and encouraged.

7926 Jones Branch Drive, Suite 800McLean, Virginia 22102-3303 USAPhone: 703.356.2622Fax: 703.356.6388

Email: [email protected]: www.cmaanet.org

CMAA Copyright 2013,ISSN 1084-75327

Reproduction or redistributionin any form is forbidden withoutwritten permission of the publisher.

CMAA members receive thisnewsletter as a member benefit.For advertising information,contact TGD Communicationsat [email protected]

ROBERT BALDWIN, CCMRobert Baldwin, CCM, Assoc. DBIA, is an associate withJacobs Associates providing claims and dispute resolutionconsulting services to the greater construction industry.He has 15 years of project management experience in largeand small construction organizations, and has worked fordevelopers, contractors, and a large public owner.

PAUL S. CHINOWSKYPaul S. Chinowsky is Mortenson Professor of Sustainable

Development in the Department of Civil, Environmentaland Architectural Engineering, University of Colorado.

DOUGLAS SCHNEIDERDouglas Schneider is deputy inspector general for the

City of New York. He regularly reviews contractor andConstruction Management projects, change orders andcost estimates for validity and cost correctness, in aneffort to eliminate waste, fraud and abuse.

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AdvisorSummer2013
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WHOM DOES CMAA REPRESENT?

It seems a simple question, but the answer has major ramifications for the

Associations future. The Executive Committee has discussed this, and it wasthe subject of the full Boards annual strategic planning exercise at the recentLeadership Forum in New Orleans, led by Bill Heitz, CCM, of Heery International.

The fact is, Construction Management today is being practiced very well by anever-wider range of professionals in increasingly diverse settings. Acceleratingthis trend is the increased use of alternative project delivery methods, includingthe growing acceptance of Integrated Project Delivery.

CMAAs current membership represents most every type of CM provider, Agency CM,CM-at-Risk, general contractors and others. It was not always so. In the early years,CMAA membership consisted largely of general contractors. The Associated General

Contractors and the American Institute of Architects, in fact, were among the primemovers in CMAAs founding. These members began to drift away later on, as CMAAincreased its stress on CM as a separate professional discipline and to promote theAgency CM business model.

Today, we need to identify and communicate the benefits of professional CM forall stakeholders in the modern, multi-party project environment. What does theCM offer the owner? The designer? The general contractor? The financiers? Andhow are these values realized in a design-build setting, or CM-at-Risk, or IPD?

Weve always been delivery system neutral, and weve always believed thatowners should have maximum flexibility in choosing the right system. The

Board of Governors of the Construction Manager Certification Institute (CMCI)has taken pains to maintain that in qualifying for the CCM, Responsible-in-Chargeexperience can be gained while employed by a general contractor, as long as theCCM candidate worked in the best interest of the owner and project.

The crux of the whole matter remains our Standards of Practice andCode of Ethics.Professionals who apply these two guides should be part of CMAA. But to realizethe growth potential represented by this definitionin membership numbers,programs and impactwe have to work even harder at maintaining our relevanceand reaching out to these audiences.

CMs, and CMAA, can be leaders in implementing Integrated Project Delivery. We

can take the lead in helping owners and contractors make wise, appropriate useof technology. We can guide large projects through complexity and help assurethat even modest projects are executed with high efficiency and quality.

Society needs big improvements in the design, construction, and operation ofcapital projects of all kinds. To respond to this challenge, we need to learn fromthe market, maintain an open mindand tell our story, loudly and confidently,at every opportunity.

FROM THE CHAIR

MIKE POTTER, PE, CCM

Mike Potter is in charge of RK&KsConstruction Management and

Inspection division. RK&K has

led large CM teams in managing

multi-billion dollar programs,

and Mr. Potter has taken the

lead in substantially expanding

RK&Ks reach into new geographic

markets and new services. His

CMAA experience includes serving

as chapter president, contributor

to CMAA publications, teaching

Professional ConstructionManagement courses, and

chairing/contributing to various

Board committees.


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TABLE OF CON

Knowledge Management

in the AEC Industry:Whats the Holdup?

The recent state of the economy put many organizations ina position of lost revenue, layoffs, and an uncertain future.During these trying times, construction organizations need

to find every competitive advantage possible. Constructionis no longer only about tools that are only used topre-plan tasks and develop detailed schedules; employeesneed to become knowledge workers. In order to make thistransition, AEC organizations need to take the managementof their knowledge assets seriously and develop a morestructured approach.

Organizations cannot afford to let a project managerwith 10 or 15 years of experience walk out the dooror retire without first having somehow captured all ofthe valuable experience and knowledge that employee

gained on the job. However, research conducted withinthe AEC industry in the United States shows that mostorganizations are not actively pursuing a structuredKnowledge Management (KM) program. The processinvolved in creating and actively managing a KMprogram is more than can be examined in this shortarticle. However, this introduction to KM looks at itsbenefits and briefly discusses some keys to overcomingcommon barriers to getting started on the successfulimplementation of a KM program.

What is KM?The definitions of KM are vast, but a general definition

states that KM is any process or practice of creating,acquiring, capturing, sharing, and using knowledge,where it resides, to enhance learning and performancein organizations. Simplified, KM is the process of creatingvalue from an organizations intellectual capital.

Within KM there are two main components of knowledge:tacit and explicit. Tacit knowledge, the information thatis stored in peoples minds, is difficult to see, share, copy,and manage. Think of trying to explain to someone inwriting how to ride a bicycle. Explicit knowledge, on theother hand, is easily codified and appears as company

policy, procedures, and processes that are easilydocumented and communicated to end users.

The benefits of a successful KM program include reducedproject time and cost, increased safety, improved quality,competitive advantage, and employee development.Such a program also allows the capture of tacit knowledgeassets of employees before they have left the companyand provides a framework for creativity and continuousimprovement. KM is a resource available to everyconstruction company, regardless of size, and is critical

By Robert Baldwin, CCM

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TABLE OF CON

for carrying out projects successfully, choosing theright projects, and preparing an organizations nextgeneration of leaders.

With benefits such as these, it doesnt make sense fora construction organization not to actively manage itsknowledge assets. However, much of the research fromthe past 10 to 15 years suggests that mainstream UnitedStates construction organizations are slow to embrace KM.Those that do will differentiate themselves from their peersand lead the industry into and beyond the 21st century.

Barriers and Strategies toGetting Started with KMWhile estimates vary, most KM systems implementedin practice fail to achieve their original goals. Thus, properlyrolling out KM to an organization is critical. A companylooking to implement this system should first evaluatethe current state of its organization and structure. Beforeit begins to go down the path of KM, the company culturemust be prepared to accept and operate a KM system inorder for it to succeed. Culture has been frequently citedas the number one barrier to KM; without a culture basedon continuous learning and personal advancement atevery level, KM will fail. Unfortunately, the construction

industry has always struggled to foster a culture builton sharing knowledge. This may be predominantly dueto many in the industry seeing knowledge as power.

They are therefore reluctant to share that knowledge.Also, it could be due to the nomadic nature of projectteams. Regardless, an evaluation of the maturity of anorganizations current learning culture must be conductedto establish a baseline understanding of where to start.From there, the organizations maturity can be looked atas a progression. The first phase of this progression reflectsthe need for leadership to champion the KM initiativewithin the organization.

Thus, lack of leadership is frequently cited as another majorbarrier to KM. Without executive support, implementation

will go nowhere. Once leadership is established, processcan be developed, communication enhanced, educationprograms introduced, and finally, a culture established.The failure to follow this path could lead an organizationto expend significant resources without putting in place theproper foundation on which to build the KM organization.

Establishing a KM organization does not happen overnight,and how mature the organization is in its current statewill help determine the next steps moving forward in thecreation of a KM organization.


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TABLE OF CON

Once a culture accepting of KM is established, a

determination of what knowledge is important to theorganization must be made. Goals of a KM system shouldbe directly tied to a companys business goals, and thedetermination of what knowledge must be obtained ispart of creating a strategy for implementation. For mostorganizations, the challenge is not a shortage of knowledge(for most of us there is too much knowledge out there,leading to analysis paralysis), but streamlining whatknowledge is most vital to the organizations businessgoals and how easily accesible it is. KM strategies aremuch more likely to be successful if implemented whenthere are explicit interactions between KM initiatives

and specific business goals.

The AEC industry wants to see the data that supportdecisions and has been historically slow to adopt tonew technologies or new ways of thinking. KM has beenrecognized as a high priority by upper management;however, prior to committing resources to a project,management wants to see what benefits the companywill recoup from the investment. Early adopters havemoved forward with KM based on good faiththeyknow that KM is relevant to their long-term enhancement.Also, there are numerous benefits that may not be directly

correlated to specific cost or time savings. These earlyadopters are the pioneers who will reap dramatic benefits,and it will take their competitors considerable time to catchup. In order for KM to be accepted as a viable methodology,a mental shift needs to occur in the industry to recognizethat this is a people business and that we are selling (orfor owners, buying) professional services. To be successful,organizations must demonstate to their clients theadded value their people bring to the table. KM can helpaccomplish this.

Knowledge ManagerThere are different methods of managing a KM programand they have different names. However, they areall trying to accomplish the same goal: Create anorganizational culture of learning, trust, and sharing.

A highly recommended option for overseeing a KMinitiative is the assignment of a dedicated KnowledgeManager. A Knowledge Manager may be part of theProject Management Office (PMO) or a standaloneresource, depending on the size of the organization.

PMOs are established within organizations to manageprocesses for the handling of projects, training, andcompetence development within project management.Their existence is a sticking point for many AECorganizations because PMOs require dedicated overheadresources, something our industry is highly averse to

allocating. Knowledge Managers run into similar sorts ofresistance. The cry frequently heard in the industry is Weneed our people to be billable! However, forward-thinkingorganizations with a well-functioning PMO are shown toexperience half the cost and time overruns of those withoutone. To ensure this success, the Knowledge Manager shouldrepresent senior project management experience andenjoy respect throughout the organization. The KnowledgeManager would act as a control, or clearinghouse, for theentire organization, ensuring that procedures and processesrelated to KM are followed, and most importantly, that theknowledge being captured is accurate and relevant. Having

the wrong knowledge is worse than not having any at all.

SummaryExecuting a KM program is no small task, and establishinga culture of learning appears to be paramount prior toattempting to implement a KM program. For some, thiscould be a slow, five-year transformation. A companyculture that is supportive of KM can only be obtainedwith strong leadership that not only asks for KM, butsupports it through investment of company resources.Companies must look at their employees and look beyond

the traditional perspective of project management thatis focused extensively on creating schedules, budgets andmanaging project controls. Rather, they need to determinehow to make that shift to developing employees intoknowledge workers who are in the business of sellingtheir intellectual capital to their clients. That is whatclients value most and are willing to pay for.

Robert Baldwin can be reached at [email protected].

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AdvisorSummer2013
mailto:baldwin%40jacobssf.com?subject=mailto:baldwin%40jacobssf.com?subject=


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TABLE OF CON

BRIAN G. LUSTBADER, ESQ.Mazur Carp & Rubin, P.C.

Protection of Neighboring Property during Construction

LEGAL CORNER

The Golden Ruleto love ones neighbor as oneselfapplies directly in construction. Whether building newor renovating, the law requires that the party engagingin that construction see to it that all adjacent structuresare not damaged by that construction; in effect, to treatit as if it were ones own. Toward that end, all municipal

jurisdictions have rules and regulations requiring variousforms of protection.

In the urban setting, such protection almost alwaysrequires entry onto the neighboring property to performmany functions; for example, to underpin adjacentstructure(s), to probe and reinforce party walls, or tocover over and thereby protect roof structures such aschimneys or skylights. No matter how meritorious thepurpose, however, entering onto someone elses propertyconstitutes a trespass. Therefore, unless the neighborgrants the builder a license to enter upon the neighbors

property, the builder simply may not do so.

When this need for protection arises, the ConstructionManager or the developer employing that CM mustenter into a formal agreement with the neighboringproperty owner for the requisite license to enter onto theneighbors property. If the effort to reach agreement fails,then the developer or CM must apply to court to obtainthat license. Because adjacent neighbors often use thissituation as an opportunity to exact exorbitant funds,figuring that they can hold up an entire development, it isimportant to understand the underlying legal principles to

assess what might occur if negotiations fail and a court isasked to intervene.

Underlying Legal PrinciplesCompeting Property Rights

The adjacent neighbors rights include the ability to usehis or her property without interference, that is, free fromtrespass, and also free from damage caused by others. Thebuilders rights are equally meritorious. The other propertyowner, the builder, is entitled to develop and build on itas he or she sees fit, subject only to non-interference withneighbors. The courts balance those competing rights,

for example, requiring the neighbor to grant access, butlimiting the time period and the physical intrusion andrequiring the builder to pay for or remedy all damagescaused by its work. In some cases, the courts will requirethe builder to pay for the neighbors engineers and otherprofessionals, obtain insurance coverage, and, in addition,

post a bond, and/or pay a license fee to the neighbor for theperiod the protection is in place. The latter payment wouldbe to compensate the neighbor for the extent of its loss ofuse of its property, whether complete or partial, over thetime period required for construction.

Terms to Include in License Agreements

Based on these principles, terms that are usually includedin the license agreement between the builder and theneighbor include at least the following:

1. Builder to provide the neighbor with its plans both for theprotection work and the construction generally, togetherwith a schedule of the work to be performed;

2. Builder to pay the neighbor a license fee, often with apenalty if the protection work runs later than set forthin the schedule;

3. Detailed contact information for both parties, forroutine needs as well as emergencies;

4. Builders agreement to repair all damages, plusappropriate insurance and indemnification; and

5. Confidentiality, as the builder usually will not wantother neighbors to know the terms agreed upon.

Despite the thorny issues involved, with persistentnegotiation and, if necessary, recourse to court, acompromise license agreement should be reachedthat is reasonably fair to both sides.

BRIAN G. LUSTBADERBrian Lustbader is an attorney at the firm of Mazur Carp& Rubin, PC. He is a practical transactional negotiator anddraftsman specializing in construction contract draftingand negotiation; alternative dispute resolution, includingmediation and arbitration; and litigation. Brian Lustbader

can be reached at [email protected].
mailto:blustbader%40mazurcarp.com?subject=mailto:blustbader%40mazurcarp.com?subject=


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TABLE OF CON

By Paul S. Chinowsky

INNOVATIONin theEPC Industry

ENHANCING

To stay competitive, engineering, procurement, and construction

(EPC) organizations must approach innovation with a focus on internal

investment and cross-industry adoption. To motivate the EPC industry

to move robustly in this direction, the industry must challenge the

tradition-bound elements of the industry culture and manage itsadoption of innovation.

Recent research by the Construction Industry Institute, the Charles

Pankow Foundation and others provides evidence that a significant gap

exists between an effective approach to innovation and the industrys

current approacheven that of the most progressive EPC-based firms.

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Enablers of InnovationThe research team analyzed theresults of the literature review andthe data from a survey to determine

the main enablers of and barriers toinnovation. This analysis provided thefollowing findings, among others:

Innovation is a foundation ofthe organization culture. Anorganization cannot be innovativewithout having a culture ofinnovation. Specifically, this meansthat the value of innovation mustbe acknowledged throughout theorganization. Additionally, cultural

norms must be in place in theorganization that encourageand facilitate innovation.

Budget allocations must be madein support of innovation. Innovationrequires organizational support.Integral to this support is the regulardedication of budget resources toinnovation pursuits; such budgetallocations should be more thansimply added contingency onindividual projects.

Staff allocations must be made insupport of innovation. Along withbudget allocations, appropriateallocations of staff are crucialto innovation. Specifically,organizations should make apriority of tasking individualswith identifying opportunitiesfor innovation on their projects.

Processes should be put in placeto support innovation. A key

element of innovation successis the presence of repeatableprocesses that are understoodby each individual. Withoutsuch ready-to-deploy processes,employees will be too busyachieving traditional projectand departmental goals topursue innovation.

A new risk perspective should beadopted. To innovate successfully,EPC organizations must changetheir risk perspectives. Specifically,it is crucial for companies tounderstand that successfulinnovation implementationinvolves an additional level ofrisk. Understanding and managingthis risk requires a change inperspective from risk aversion torisk management. EPC firms tendto focus risk on a single project or asingle business unit in an attemptto isolate the entire firm from risk.The net effect of each firm trying

to isolate itself is to hinder themitigation of risk across the entiresystem. Innovation risk can bemanaged when the focus is changedfrom individual projects to multipleprojects. This change of perspectiveis the first step to increasinginnovation within the organization.

Current PerspectiveFrom the project managers

perspective, the current structureof construction project implementa-tion does not support innovationinvestment. The traditional view isthat the probability of a negativeresult outweighs the potential forpositive gain for an individual projectmanager; the worst case, althoughunlikely, is catastrophic; innovationis challenging because it requireslearning and multiple iterations;

and the project bears all of therisk and cost, while others standto capture the gains.

The Economic ModelThe decision maker is generally facedwith certain probabilities of achievingobjectives and a certain range ofpossible outcomes. (See Figure.)A project can start with a knownprobability of achieving an objective(represented by the height of thecurve on the y axis) and a knownrange of potential project outcomes(represented by the width of the curve

along the x axis). The ideal situationfor all project managers is to have avery high probability of meeting theirobjectives with very little variance inpotential outcomes (represented bya tall, narrow curve).

Figure 5 illustrates that, before theimplementation of an innovation, aproject has a known probability ofmeeting a cost objective with somevariability in potential outcomes.

The figure further shows that in thefirst year of implementation, theinnovation lowers a projects averagecost; at the same time, it shows thatbecause of the uncertainties andpotential problems that come withany new technologythe risk of largecost overruns increases in that firstyear. This early risk potential is usuallythe wall that blocks organizationsfrom investing in innovation.

EPC FIRMS tend to focus risk on asingle project or a single business unit in an attempt

to isolate the entire firm from risk.


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TABLE OF CON

However, the figure further showsthat, once the initial learning periodis past and the innovation is usedin a second iteration, the variabilityof the cost is greatly reduced and

the risk of large cost overrunsactually falls below pre-innovationlevels. This combination of greaterpredictability and lower expected costis the desired outcome, but it takesseveral generations of implementinginnovations on projects to achieve.

The models suggest that projectmanagerscaught up in the currentindustry practice of consideringinnovation one project at a time

have no economic incentive toinnovate, since their risk of failurewill actually go up if they adoptan innovation. Indeed, for them,implementing an innovation on asingle project is the equivalent ofone spin of the roulette wheel. Werethey able to, however, these sameproject managers would adopt theinnovation in the second generation,when the benefit would be apparent.

In contrast, because businessunit leaders think in terms of themany projects their groups plan toconstruct, it might be economical forthem to invest in innovation if they

can innovate over a large number ofprojects. Entire firms see the manyprojects that all of their businessunits will construct, and can lookahead to the future. Their inherentlylong-term perspective shouldmotivate firm leaders to continuallyinnovate; because the benefit shouldbe realized over the many projectson the company horizon, they candistribute short-term losses toharvest long-term gains.

Moreover, in the team environmentthat is generated from this widerview of innovation, project managersare not left to function as individualgamblers. Rather, the entire firm,functioning as an innovative team,absorbs the increased investment,risk, and uncertainty in exchange forgreater benefits over the longer term.

Changing the PerspectiveFor an organization to successfullymove from a focus on project-orientedrisk to an emphasis on long-termrisk distribution, management andindividual project managers alikemust commit to the shift. This changerequires the following key elements:

Shift away from single-eventthinking. Moving away from asingle-project focus toward aproject portfolio approach is thefoundation of the economic model.

Indemnify project managersby creating a syndicate. Thefundamental difficulty with

investment in innovation is projectmanagers concern that the risk offailure is worse than any potentialreward an innovation mightbring. To change this perspective,the organization should focuson establishing a collaborativeenvironment in which projectmanagers understand that singleinstances of underperformance

Orig

Yr1

Yr2

0.30

0.25

0.20

0.15

0.10

0.05

0.00

2.00 7.00 12.00

Millions

FIGURE:An economic model of innovation investmentand benefit over multiple generations.

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Experiment frequently and

learn continuously. By cultivatingan atmosphere that encouragescuriosity, experimentation,and learning, organizationscan slowly alter their riskperspective and enhance theiropportunities for successfulinvestments in innovation.

Work for owners who valueinnovation. Owners or otheremployers who demandcompliance to unilaterally

defined requirements seriouslyinhibit innovation within theirorganizations. Progressiveowners and contractors couldcollaboratively spread riskfor the benefit of the entiresystem, rather than try toisolate themselves from riskthrough contractual language.Owners could also demandinnovation on projectsmuchin the way they have demanded

safetyand then support thosedemands by establishing aninnovation-friendly culture,just as they have done tocreate injury-free workplaces.

PROJECT MANAGERScaught up in the currentindustry practice of considering innovation one project at a timehave no

economic incentive to innovate, since their risk of failure will actually go up

if they adopt an innovation. Indeed, for them, implementing an innovationon a single project is the equivalent of one spin of the roulette wheel.

Although these elements are notthe only ones that will contributeto a change in the industrys riskperspective, they are the buildingblocks on which constructionorganizations can increase theirrisk tolerance and reap greater

benefits from innovation.

This article is excerpted and adapted

from Enhancing innovation in

the EPC Industry, published by the

Construction Industry Institute.

Paul S. Chinowsky can be reached at

[email protected] .
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TOOLS OF THE TRADE

A half century after it was a major battlefield,Tulagi in the Solomon Islands is now home toa new school built with the help of retired U.S.Marine Raiders and the latest electronic andcommunications technologies. And, a CMITplayed a key role in the project!

How do you build in a place where termites are eatingaway existing public infrastructure? This is the challengefor James Lloyd, a carpenter from the UK, who was sent tothe Solomon Islands to build a two-story school buildingfor the children of Tulagi Island. James is a volunteer projectmanager for Construction for Change (CfC), a Seattle-

based non-profit organization that provides ConstructionManagement services to organizations working to endpoverty worldwide. He will stay in the Solomon Islandsas long as it takes to complete the project.

Tulagi residents and the U.S. Marine Raiders Foundation(USMRF) spearheaded the construction of the school.Construction Manager-in-Training Zach Archer ofWashington State Department of Transportation is partof a team advising James and supporting the projectfrom a distance using a variety of technology tools.

The USMRF is an organization dedicated to sharing thelegacy of the Marine Raiders, the first special operationsunit in the U.S. Military. The new school is a way for the

USMRF to honor the citizens of Tulagi, who fought bravelyalongside the Marine Raiders in WWII and ultimatelyhelped to defeat the Japanese in the Pacific Islands. TheUSMRF is fully funding the project, but has contracted outall Construction Management services to Constructionfor Change and its project manager, James Lloyd.

James arrived on the islands in February and it quicklybecame clear that the wood and concrete structure thatUSMRF and CfC were planning to build would not last morethan 15 years due to termite damage. As evidence, Jamesrelayed the story of the Tulagi hospital that was built by

AusAID, the Australian governments overseas aid program.While it is a beautiful and functional facility, the hospitalhas been so ravaged by termites that AusAID now has torehabilitate it, just over a decade after its construction.

As a way to get around the termite problem, James startedexploring advanced building technologies and othermaterials available on the island. He soon learned about theTongs Corporation located in Honiara, the capital city. Abouta two-hour boat ride from Tulagi, Tongs is a Chinese-ownedbuilding supply store that started manufacturing pre-fabricated steel structures a few years ago. Tongs innovative

structures are ideal in places with chronic termite problemsand are slowly gaining popularity in the capital city. Untilnow, there has been nothing like it on Tulagi Island.

Pre-fabricated steel means that the new school buildingwill now be substantially stronger and last three timeslonger than any existing structure on the island. It is alsomuch more eco-friendly than the original wood and cementdesign and will therefore generate less waste. Moreover,steel is easier to keep level and plumb relative to bowedtimbers; and it is much faster to build with less need forpower tools, which are not readily available on Tulagi.

Technology is playing a major role in the construction of thisschool in other aspects as well. While James is a skilled andcompetent project manager, he cannot do it alone. Back inSeattle, James has a team of architecture, engineering andconstruction (AEC) experts who are guiding him through theprocess. Among them is Dan Wachtler and Andy Marshall,former CfC project managers, who have helped to finalizethe design, estimate costs and draft the project budget,and now serve as mentors to James. Also critical to thisteam is CMAA member Zach Archer, CMIT, then with Turner

Engineering Hope inthe Solomon Islands

14

AdvisorSummer2013


15/25

TABLE OF CON

Construction and now with Washington State DOT. He istaking a major role in advising James based on his broadrange of experience in the construction industry. Jamescommunicates with his team of construction consultantsprimarily via email and Skypehe has fairly reliable internet

service on the island using his personal laptop.

With respect to design modifications, James is doing it theold-fashioned wayhe is redlining a hard paper copy ofthe blueprints, construction documents and renderingsdesigned in CAD. To ensure these documents are notdestroyed due to travel and weather, everything wasprinted on all-weather paper produced by Rite in theRain, a Tacoma-based company and paper supplier forthe U.S. military. Still, Construction for Change is in theprocess of streamlining the design process and eventuallywill go paperless. Earlier this year, Bluebeam Software

generously donated Bluebeam Revu, an AEC inspiredplatform that allows for PDF creation, mark-up and editingfor a paperless workflow. It will revolutionize the wayConstruction for Change manages its projects.

James is on track to finish the construction of the 32m x 8m,two-story school building by mid-June. The new steel designhas eliminated the so-called termite problem and added30+ years to the buildings life. As a one-of-a-kind structureon Tulagi, the building process will teach local constructionworkers how to assemble pre-fabricated steel structures

and potentially serve as a model for future building projectson the island. This last point was very important to theMarine Raiders. In their words, The Marine Raiders are allabout firststhey were the first to use Navajo code talkers,they were the first to use war dogs, and now, they are the

first on Tulagi Island to build with steel.

In addition to steel, the use of internet, Skype, waterproofpaper, Bluebeam and other technologies means that Jamesis now able to leverage the U.S. based AEC consultantscombined experience to troubleshoot any potentialproblems. Without these technologies, mistakes are harderto catch, potentially setting the construction team backmonths and wasting limited resources in the process. Ona larger scale, it allows CfC project managers to travel tosome of the most rural, isolated places around the worldto build schools, hospitals and other needed facilities. The

need is large, but Construction for Change will continueto empower communities like Tulagi to reduce povertyby creating quality, sustainable infrastructure.

Construction for Change (www.constructionforchange.org)partners with local organizations to build schools, medicalfacilities and other critical infrastructure where it is neededmost. In doing so, CfC empowers rural communities tocreate opportunities and break the cycle of poverty.

Tulagi, in the Solomon Islands: A remotelocation? Not so remote, thanks to theportfolio of technology tools applied inbuilding a new school for young islanders.PH

OTOS:JASONKOENIG,

J.KOEPHOTOGRAPHY.

HTTP://JKOEPHOTO.C

OM.
http://www.constructionforchange.org/http://www.constructionforchange.org/


16/25

TABLE OF CON

COMBATING

By Douglas Schneider

WASTE,

FRAUDABUSEIN CONSTRUCTION

&

16

AdvisorSummer2013


17/25

TABLE OF CON

Much has been written about the means and methodsof constructionhow to carry it out and make a profit.However, also of great importance to the constructioncommunity is ensuring that work is carried out honestly.This article will explore the basics of how an owner canfight waste, fraud and abuse.

Construction is as old as civilization itself. Shelter isa vital part of human existence; therefore, housingand buildings are necessary. These buildings can rangefrom very simple small structures to large, extremelysophisticated buildings. Either way, materials and laborare the two major ingredients. The process of combiningmaterials and labor resources employs thousands of peopleand can be a very satisfying and profitable profession.

Many people make a decent, honest living from theconstruction industry. However, there are those that may

seek to cheat and exploit, and there are numerous opportu-nities in construction for bad actors to deceive others.

One of the most common techniques for bad actors isthe old bait and switch. This is where a contractor tellsan owner that they will use the type of material specified inthe contract documents, but they actually install a cheapertype of material and pocket the difference between the twotypes of material. The good news is that this type of tacticcan be effectively combated by:

Ensuring that the designer uses very specific languageto describe the type of material in the specifications.This specificity will eliminate ambiguity and set thestage for ensuring that the owners exact level ofquality of materials for the structure is adhered to;

Diligent monitoring of the work during installation;

Engaging a third party testing company to assist theowners representative in overseeing the installationof the work; and

Critically reviewing all paperwork associated withthe project.

As an example, lets look at the installation of a wood

flooring system. The specifications should not state:Install a tan colored, strip wood floor.

Rather, the specifications should instead state: Install a tancolored, strip wood floor that is inch thick, has randomlength boards that are 4 inches wide, is kiln dried to 6 8%,is made up of quarter sawn white oak, is stamped by theForest Stewardship Council, has tongue and grooves on allsides of the boards, has shallow, full length dadoes cut intothe bottom of the boards for air circulation, is nailed off withnails that are installed every 6 inches along the tongue at a

45 degree angle with 2 inch barbed cut nails, is laid overa 2 mill thick red rosin paper stapled to the subfloor, has athree coat polyurethane finish and has inch of air spacearound the field of the floor (for expansion and contractionmovement) where the floor meets up with any solid object.

This level of detail establishes a baseline of exactly whatthe owner intends to pay for and what the owner wantsinstalled in the building. The lack of ambiguity reduces thechance of fraud by giving the contractor very detailed andspecific drawings and language to follow. However, evenwith detailed drawings and specifications, there remainsa risk of fraud during installation.

MONITORING THE PROCESSMonitoring of the construction process is critical andmust be undertaken by experienced and perceptiveindividuals, often called owners representatives. The abilityto understand how material systems are combined andinstalled is an important part of construction monitoring.There are countless variations of material types, colors,sizes and shapes that can be installed. As such, a personmonitoring construction operations must be well versedin different materials such as metals, concrete, wood, glass,ceramic, fabrics and plastics. An owners representativemust also be extremely perceptive in recognizing whatthe material is and what the material should be.

As an example, if the specification states, Pour a 4 inchthick 3,500 psi concrete slab with #4 re-bars installedevery 10 inches over a 6 mill vapor barrier,the ownersrepresentative can employ various tactics to ensure that thecontractor is delivering what he / she is supposed to deliver.

First, the owners representative can measure the thicknessof the slab during and after it is poured. Second, the ownersrepresentative can ensure that the concrete is tested byeither a testing company or themselves, in order to ensurethat the specified psi of concrete has been attained. Third,the owners representative can inspect and measure thediameter and spacing of the re-bar to ensure that thecorrect size, type and spacing of re-bar are being installed.Lastly, the owners representative can ensure that thecorrect thickness and type of vapor barrier is being installed.

The lack of ambiguity reducesthe chance of fraud by giving thecontractor very detailed and specificdrawings and language to follow.


18/25

TABLE OF CON

All of these activities require the owners representativeto be constantly on-site overseeing the constructionoperations while they are taking place, from beginning toend. The level of trust that the owners representative haswith the contractor will dictate how much time needs tobe spent directly overseeing the construction operations. If

an owners representative knows the contractor is trying tocheat, then he or she must be on-site literally every minutethat the contractor is working. If the owners representativehas some level of trust with the contractor, then the ownersrepresentative can stop in occasionally to check the progressof the work. Either way, on-site monitoring of constructionoperations is the single most important way of combatingwaste, fraud and abuse in the actual material installation.

When an owners representative does witness workthat is deficient, it is imperative to document this finding.This documentation should be done with time-stamped

photographs (with a scale reference included in thephotograph such as a coin or tape measure), a verbaldiscussion with the contractors representative and awritten email or memo documenting the entire episodefrom start to finisha description of the deficient work,what happened, how the deficiency was discovered, whythe work was deficient, who carried out the deficientwork, when and where the deficient work was installed.

Some owners will, and should, require testing companiesto assist in monitoring the construction work. Testingcompanies can provide valuable assistance by being

able to carry out specific scientific tests in accordancewith well-established industry standards. It is importantto have the procedure for material testing identified inthe contract documents at the outset of the project, sothat the contractors and subcontractors will be awareof exactly what is required of them.

MANAGING PAYMENTSOnce the work is installed, contractors will then submitpayment requisitions. It is important that the contractorcertify and notarize their payment requisition upon

submission to the owner. The payment requisition shouldbe based on a pre-established schedule of values (SOV) thatis agreed to by all parties before the work starts. This SOVwill delineate, line by line, each of the major materials usedin the construction project. It is important that each of themajor material items also have a corresponding labor costassociated with each material cost. This breakdown of laborand material cost for each item will help all parties ensurean exact cost for each major work item.

Additionally, the SOV can be used as a guideline for unit priceitems and be used should there be change orders associated

with the project. The SOV is an important tool to be used inmanaging the project and ensuring that the contractor onlygets paid for work that is actually put in place.

An owner should be aware of a common technique used bycontractors called frontloading, wherein the contractor

inflates the cost associated with items that will be installedearly in the project. By doing so, the contractor is able to getmore money up front than they are actually entitled to, andcreate a positive cash flow. The owner must be sure to onlyapprove a SOV that has realistic costs associated with eachand every item.

Along with the SOV, contractors should provide lien waiverswith their payment requisition submission. A lien waivershould be submitted by the contractor for each of thecontractors material suppliers and sub-contractors. Thelien waiver states that the material suppliers and sub-

contractors waive their right to put a lien on the projectbecause they have been paid in full. This is an importantprotection tool for owners, helping to ensure that thecontractor will pay its material suppliers and subcontractors.

Many projects have change orders. The owners require-ments can change, field conditions may arise, unexpectedsubsurface conditions may be encountered or regulatoryrequirements may change. Change orders are simply achange to the original contract documents and they shouldbe treated by the owner with the same scrutiny as theoriginal contract. A change order package submitted by a

contractor should be complete and specific, and the ownersrepresentative should monitor the change order work andits accompanying documentation just as they wouldmonitor the original contract work and documentation.

Further, the owners representative should alwaysconduct a constructibility review to ensure that allof the plans, specifications and conditions within thecontract documents coincide with each other and thereare no mistakes within the documents. The constructibilityreview ensures that what the designer envisions canactually be constructed and it can reduce the amount

of waste associated with the project.

In conclusion, detailed and correct contract documents,vigilant oversight of the installation of the constructionwork, third party testing where required and critical reviewof all paperwork can help the owner eliminate, or at leastreduce, the amount of waste, fraud and abuse associatedwith any construction project.

Douglas Schneider is deputy inspector general for the Cityof New York. He can be reached at [email protected].

18

AdvisorSummer2013
mailto:dougbuild%40aol.com?subject=mailto:dougbuild%40aol.com?subject=


19/25

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20/25

TABLE OF CON

I

nno

vation

By Edward Bond, Jr., CCM, FCMAA

20

AdvisorSummer2013


21/25

TABLE OF CON

Is innovation the enemy of success or the enabler?Some companies eat, sleep, and breathe ways to bemore innovative in their practices and projects. If weview innovation as a cumulative process, then certainlythe Construction Management industry has madesignificant strides in its 50-year lifespan.

Innovation can be defined as a product or service thatallows us to do something better or something we couldntdo before. This applies to processes, technologies, or both.

An outcome of innovation we hope to see is an increasedeffectiveness and efficiency in:

1. Making better decisions.

2. Improving the productivity of an existing process.

3. Accelerating the delivery cycle of projects.

CMswhats our purpose?Construction Management (CM) is delivery neutral; itsboth a management process anda service business. Yettheres still a gap in how clients engage in and perceivethe value of CMs. Whats the actual value propositionthat CMs bring to the table?

Over the years, clients have been engaging CMs asadvocates for their projects. Theyve realized its nolonger the brawnof the construction firm that makesa project successful but the CMs brain.And that brain

is focused on innovation.

The CM is a fairly new player in the construction industry,having arrived in the 1960s. Since that time, a CMs rolehas advanced to become a provider of numerous deliverymodels. As professional managers, we create the sparksthat uncover solutions to new problems and challenges.We innovate.

Innovation surrounds usIn a 2010 McKinsey Global Survey, 84 percent of executives

said innovation is extremely or very important to theircompanys growth strategy. Just as the professional fieldof management has developed hundreds of differentmodels to help in better-informed decision-making,our built environment has responded with innovativedelivery models.

A sample of them include:

1. Construction Management at Risk (CMAR)

2. Best- Value Contracting

3. Build-Operate-Transfer

4. Cost plus Time Contracting

5. Design-Build

a. Bridging

b. P3

6. Incentive/Disincentive Contracting

7. Integrated Project Delivery (IPD)

8. Indefinite Delivery/Indefinite Quantity Contracting

9. Job Order Contracting

10. Lane Rental

11. Multi-Parameter Contract

12. Partnering

13. Performance Contracting

14. Warranty Contracting

15. No Excuse Bonus

16. Lean Construction

Looking at how these delivery systems have advanced overthe years, its amazing the speed with which they haveprovided better and faster solutions to fill our clients needs.

As part of the collaborative process in developing newdelivery models, we can reach back into the history ofthe American Institute of Architects. One of their chargesin 1857 was to promote the scientific and practicalperfection of its members. That involved a cumulativeprocess of 13 architects dedicated to elevating the

professions standing. And today, collaboration is theway we work among the disciplines to continue thatindividual empowerment and zest for innovation.

Its the message, not themedium, that mattersFor CMs, adopting the status quo would be likeautomobile pioneer Henry Ford saying, If Id haveasked my customers what they wanted, they wouldhave told me a faster horse. Yes, sometimes we haveto lead our clients to innovative opportunities by making

them aware of improvements. Therefore a vital role aCM plays is providing clients with the bestsolutions,having the bestimpact, for the bestvalue. Accomplishingthis requires using the right resources and mindset.

Remember this: No one person builds our buildings. Noone person makes all the decisions. No one person hasall the answers. Its a collaborative process that involvesincreasingly more professionals, especially as the complexityof projects increases.


22/25

TABLE OF CON

With high levels of uncertainty and complexity facingour clients, we know traditional delivery models cantbe static. Creating new models and improved tools will

not only enhance decision-making but also improve theproductivity of existing processesandaccelerate thedelivery of projects.

Whats under the hood?As CMs, where can we find opportunities that might providea platform for pushing the envelope of innovation? We canlook to our industry associations, clients organizations,universities, venture capitalists, software developers,manufacturers, and more.

And of course, right within our own CMAA is the initiativefrom the CMAA Foundation . Along with prominentowners of capital construction programs, it recentlybrought together leading executives from CM and ProgramManagement firms to discuss what the future might bring.

Common themes running through the discussion were:

A new business model for Construction Managementis emerging and will become the norm over the nextfive years;

Clients are more focused on outcomes than output, onlifecycle than first cost, and on the triple bottom lineof business, environment, and social impacts;

The academic community needs to do a better jobpreparing students for this field.

Participants also reviewed the productivity indexhighlighting the vast differences between non-farmlabor and field environment construction, whereconstruction productivity continues to decline.(See Figure 1) Manufacturing is task trained andoften stationary, while construction is craft trainedand requires teams. Weather conditions and projectuniqueness are strong influencing factors.

Possible solutions to the challenges include:Moving construction away from site-based,

craft-dominated processes and toward a moretypical manufacturing environment.

Relying more on automation and technologies like BIM4D/5D modeling, GPS, and radio frequency tagging

Demanding more comprehensive constructabilityreviews and risk management practices.

1964

250.00%

Index

Construction & Non-Farm Labor Productivity Index (1964 2003)

Constant $ of contracts/workhours of hourly workersSources: US Dept. of Commerce, Bureau of Labor Statistics

200.00%

150.00%

100.00%

50.00%

0.00%

1968 1972 1976 1980 1984 1988 1992 1996

Construction ProductivityIndex (1964 = 100%)

Non-Farm ProductivityIndex (1964 = 100%)

2000

Figure 1 Construction & Non-Farm Labor Productivity

22

AdvisorSummer2013


23/25

TABLE OF CON

Chuck Thomsen, FAIA, FCMAA, offered an innovativeperspective. He stated two issues were confronted withto bring in better results as service providers: (1) gettingthe right information from all sources into the process;and (2) getting the manufacturers and subcontractorsinto the design process early.

Of course, laden within these two issues is a plethoraof others dealing with best value, cost/benefit, provenresults, no surprises, and more. These representdilemmas that arent easily resolved. As CMs, westruggle with these issues each day for our clientsand within our own firms.

Yet, how we look at innovation likely determines ourresults as a firm. As Sir Winston Churchill once said,The pessimist sees difficulty in every opportunity,while the optimist sees opportunity in every difficulty.

How do we build off our past?A familiar theme is: Clients want it faster, cheaper,better! The good news is that for those interested inpushing the pedal on innovation, we do have existingmodels to use. We also have clients interested inexploring new and improved ways.

But just as we develop a business case, we can use thesame process to help uncover options for our clients.These might include:

Outlining the opportunity and benefits ofaddressing the issue;

Identifying the outcomes were seeking forstakeholders;

Listing the pros/cons within each alternative;

Outlining the risks and the assumptionsbeing made;

Reviewing the expected results.

What are signs that opportunities even exist to bring ina fresh perspective or a new approach? Several include:

Past failed projects

Clients who are seeking alternatives

Hampered projects in which options are invited

Risk factors that impact a clients project

Sudden market changes

Regulatory changes

New competitors

Tight economies that are more accepting ofcreative options

Make an impact with strong marketing, branding and website

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Throughoutthe work onthis$3,500,000project,Minkoff paid specialattentionto restoringall partsof the building,

whichwasbuiltin1912.Asa resultof the roof fireand water damage, alldrywall insulationandwiringwasreplaced.Stripped downto itsmasonry shell, withonlythe floor joistsinplace,the buildinginteriorswereremoved and all 49unitswere rebuilt. Many unitswere actually improved,asthe condominiumboard opted to finance

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Management frameworkAs we assist our clients in making better decisions, itshelpful to keep in mind these decision-making questions:

What is the objective were trying to accomplish?

What are the alternatives?

What are the risks?

What are the rewards?

Just as BIM offers clash detection, its important to be intune with whats working for our firm. What lessons arebeing learned on each project that can strengthen thefirm? How can we be more innovative than ever?

Certainly, the buildings themselves are getting smarter.But are the people who build them?

Edward Bond, Jr. can be reached [email protected].
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TABLE OF CON

FINAL WALKTHRU

WOODROW WILSON HIGH SCHOOL

WASHINGTON, D.C.

Owner:District of Columbia Departmentof General Services

PM:

DCPEP Joint Venture, McKissack &McKissack/Brailsford & Dunlavey

Design Build Team:GCS-SIGALcox graae + spack architectswith Fanning Howey

PHOTOSBYROBERTCREAM

ER

24

AdvisorSummer2013


25/25

TABLE OF CON

The modernization of WoodrowWilson High School, built in 1935

and accorded historic landmarkstatus during the projects DesignPhase, combined renovation andadaptive reuse of 305,286 squarefeet of existing space plus 71,221square feet of new construction.With a final construction contractvalue of $97.593 million, the14-month project was completedin time for the 201112 school yearand 75th anniversary celebration.

Management of the ownerscontingency budget resulted ina balance of $600,000. Majorrenovations included conversions ofthe existing gym into a performingarts center, and of the existingauditorium into a new athletic centerwith tunnel stadium access, new mainentrance, floor-to-ceiling renovationof classroom spaces in the core four-story academic building, and creativeexpansion of the schools footprint.

Project scope included constructionof a central atrium with dramaticskylight roof, seating, and landscapingthat transformed an unused outdoorcourtyard into a focal point forstudents and faculty en route to arenovated cafeteria. For the new 850-seat visual and performing arts center,original wood auditorium seats wererestored and reinstalled, and theater,music, dance and art spaces added.

Sustainability features include agreen roof, rainwater harvestingsystem to supply water for irrigationand toilets, permeable paving andhigh-performance HVAC and lightingsystems. Six new elevators madethe facility fully ADA accessible; newcampus-wide instruction and securitytechnology are state-of-the-art.

A dramatic central atrium and a rainwater harvesting systemto support irrigation are among the features of the recentlymodernized Woodrow Wilson High School in Washington, DC.

Documents

Advisor 2013 Summer