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

Another Brick in the Wall Understanding Construction Management

By: John Knox, Vice PresidentThe Chamberlain Companies

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

Construction Management Construction Management is a concept Construction Management is a concept

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

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• GC’s 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

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

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

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

The difference lies in ..The difference lies in ..

• PhilosophyPhilosophy• ContractContract• ControlControl

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 Owner’s 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

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

General Contracting

Control of the Site

CLIENT

ARCHITECT GENERALCONTRACTOR

ENGINEERS SUBTRADES

CONSULTANTS SUPPLIERS

Contract Control

• 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

• GC’s Site Super manages Site and Trade Contractors

Construction Management

Control of the Site

CLIENT

ARCHITECT CONSTRUCTION MANAGER

ENGINEERS

CONSULTANTS

SUBTRADES

SUPPLIERS

Contract Control

• Divisions divided into tender packages, drawings & specifications for each package completed, and tendered individually and sequentially

• Owner contracts directly with Trade Contractors

• CM’s Site Super manages Site and Trade Contractors

Construction Management by Architect

CLIENT

ARCHITECT CONSTRUCTION MANAGER

ENGINEERS

CONSULTANTS

SUBTRADES

SUPPLIERS

Contract Control

Chamberlain regularly performs both roles – Architect and Construction Manager

Greatest Risks on aConstruction Project are …

• Unknown conditions

• Facility not meeting expectations

• Bankruptcy of Constructor

• Exceeding the budget or schedule

• Inclement weather

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

Risk is Minimized by Risk is Minimized by Maximizing Maximizing ControlControl and and

FlexibilityFlexibility during the Construction during the Construction

ProcessProcess

Control

• Owner contracts and is dealing directly with the Trade Contractors

• He who pays the piper calls the tune

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 doesn’t 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

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

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.

Div Sub Trades GC #1 GC #2 GC #3 LowestCM

1 GENERAL 132,318 133,400 132,600 132,3182 SITE WORK 306,334 272,585 304,384 272,5853 CONCRETE 37,508 42,775 26,594 26,5944 MASONRY 44,261 42,000 41,099 41,0995 METALS 72,522 77,049 107,099 72,5226 WOOD & PLASTICS 47,015 42,244 53,681 42,2447 THERMAL/MOISTURE 56,768 64,798 68,186 56,7688 DOORS/WINDOWS 88,275 88,905 85,462 85,4629 FINISHES 141,916 135,016 133,974 133,974

10 SPECIALITIES 27,508 28,682 36,411 27,50814 CONVEYING 28,261 27,535 29,274 27,53515 MECHANICAL 176,606 215,959 188,847 176,60616 ELECTRICAL 173,394 177,699 180,811 173,394

TOTAL: 1,332,686 1,348,647 1,388,422 1,268,609

Value

Savings Accrue to Owner

Item Budget Tender Savings

Site Work $300,000 $276,000 $24,000

Donated Material $5,000

Deleted Doors $2,000

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

Projects built under Construction Management

Canadian Warplane Heritage Museum

Air Traffic Control Tower, Toronto Pearson Int’l Airport

Lincoln Public Library, Rittenhouse Branch

Shelburne Public Library Addition & Restoration

Niagara-on-the-LakePublic Library

Quinte WestCity Hall/Public Library

Other Projects

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

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

Another Brick in the Wall Understanding Construction Management

By: John Knox, Vice PresidentThe Chamberlain Companies