101 Case Studies in Construction Management

Len Holm

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780815361985
• eBook ISBN: 9781351113618
• Edition: 1
• Topic: Architecture
• Subtopic: Architecture General

This book provides 101 real-life construction management case studies from an author with over 40 years' experience in the construction industry and as a lecturer in construction management. Over 14 chapters, Len Holm has included case studies from real jobsites that cover organization, procurement, estimating, scheduling, subcontractors, communications, quality and cost control, change orders, claims and disputes, safety, and close-outs. Other hot topics covered include BIM, sustainability, and lean.

Each case is written in straightforward language and designed to test the reader's independent and critical thinking skills to develop their real-world problem-solving ability. The cases are open to interpretation, and students will need to develop their own opinions of what's presented to them in order to reach a satisfactory solution.

The cases are ideal for use in the classroom or flipped classroom, for individual or group exercises, and to encourage research, writing, and presenting skills in all manner of applied construction management situations. Such a broad and useful selection of cases studies cannot be found anywhere else. While there is often no "right" answer, the author has provided model solutions to instructors through the online eResource.

1

CONSTRUCTION ORGANIZATIONS

Including personnel issues

Introduction

There are three primary organizations or companies involved in all construction projects: the project owner, the architect, and the general contractor (GC). On heavy-civil projects, the civil engineer or structural engineer will be the primary designer and possibly an architect will work for them. Several other design consultants are involved as well, including mechanical and electrical engineers, landscape architects, and others. There are many ways these companies can be organized, including a traditional GC organization, agency construction manager (CM) or construction manager at risk, and design-build (DB) organizations. Figure 1.1 is a simple traditional organization chart with the three primary participants represented. Other more advanced arrangements, but still including these three primary parties, are design-build-operate-maintain (DBOM), integrated project delivery (IPD), and public–private partnership (PPP).

FIGURE 1.1 Traditional organization chart

Every contractor structures the size and makeup of a specific project management organization or team depending on the size of the project, its complexity, and its location with respect to other projects or the contractor’s home office and contract influence. The two major participants in any jobsite organization include the project manager and superintendent. Even subcontractors have these same two participants, although they may have different titles such as account executive and foreman. The cost of the jobsite project management organization is considered project overhead, and must be kept economical to ensure the cost of the contractor’s construction operation is competitive with other contractors. The goal in developing a jobsite project management organization is to create the minimum organization needed to manage the project effectively. If the project is unusually complex, it may require more technical people than would be required for a simpler project. If the project is located near other projects or the contractor’s home office, technical personnel can be shared among projects or backup support can be provided from the home office. If the project is located far from other contractor activities, it must be self-sufficient.

General contractors employ subcontractors to perform 80–90% of the work and perform some carpenter and laborer scopes in-house, such as concrete, wood framing and trim, doors, door frames, and door hardware. Some GCs will also employ ironworkers to install rebar in concrete and erect structural and miscellaneous steel. The choice of project management organizational structure depends on the contractor’s approach to managing projects. A simple GC’s jobsite organization chart is shown in Figure 1.2. Some project owners will seek alternative methods to contract for design and construction services, including employing design engineers and construction subcontractors directly. The case studies in this chapter highlight some of the risks of these alternative organizations.

FIGURE 1.2 Gc’s jobsite organization chart

Case studies

Case studies in this chapter include:

1. Pass-through contractor

2. Owner’s contracts

3. Construction manager or general contractor?

4. Design-build joint ventures

5. Bait and switch

6. Multiple contracts

7. Ambitious project manager

8. Client expertise

9. Developer or general contractor?

10. Overworked project engineer

11. Self-performed failure

Most of these case studies overlap with other primary topics. Case studies 46, 47, 53, 61–64, 88, and 89 also involve organizations.

Toolbox quote

Just like construction management and construction manager, the terms project management and project manager can mean different things to different people.

Case 1: Pass-through contractor

A commercial construction firm that reports to be a design-build general contractor actually operates more as a pure construction manager. They sell their services as being an agent for the owner. This firm will procure all design and construction services, originate the contractual agreements, charge a fee on all hard and soft costs, but have the second-tier firms execute their contracts with the project owner directly. This method of procurement is referred to as a pass-through contract. The CM does not sign or initial any of the contract documents, pay requests, change orders, requests for information (RFIs), submittals, etc. The CM explains to owners the attractiveness of this contracting arrangement as a means of saving additional tax and insurance markups. The CM does not have problems convincing the subcontracting and supplying firms of the advantage of contracting directly with an owner, as these firms are now one step closer to the owner, and subsequently the bank. Several of this CM’s projects have had problems with second-tier contractors (such as foundation settlement, lack of sufficient air conditioning, window leakage, roof leakage, or dead landscaping). In each instance, the CM has stepped back, not protecting the owner, and forces the owner to resolve problems with subcontractors directly. On other projects, there have been problems with the owner not paying the contractors or designers, and again the CM has stepped back, not protecting the subcontractors. The second-tier firms have had to pursue resolution, through liens or other means of collection, with the owner directly. The pass-through CM receives a guaranteed lump sum fee for their services and jobsite general conditions are cost-reimbursable. What is wrong with this system? How can it be improved and still utilize the services of a construction management or owner’s representative firm or individual? How would a general contractor or CM at risk system improve this condition, if at all? Develop three organization charts (pass-through, owner’s rep, and CM at risk) and utilize them to answer these questions.

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Case 2: Owner’s contracts

a. On a very large, very complex remodeling and expansion project, an owner has contracted with numerous members of the design team independent of the architect. The architect does not have any second-tier design firms under their contract. The owner has also contracted with many different material suppliers and specialty subcontractors directly and not through the general contractor (GC). The owner is of the belief that they can save money avoiding multiple markups by doing business this way. The owner has, however, written into every contract that each firm is still responsible to “coordinate and communicate directly with the other independent designers and contractors as if they were contracted under the standard vertical method,” rather than this horizontal method. What risks has the owner assumed? What risks are the designers and contractors assuming through this system? Draw up organization charts depicting this condition and the “standard” condition.

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b. Assume the following costs for the case described above. What would the cost increases have been to the owner if they had contracted in a normal fashion? Does this also provide contracting opportunities for the contractors or designers? Explain why or why not.

• $50 million total construction cost.

• $30 million total construction cost of sub-consultant-designed work.

• Four percent total architectural fee on the architectural portion of the work, and they would receive an additional 10% markup on sub-consultants’ design fee if run through the architect’s books.

• The sub-consultants would receive 10% design fee of the construction cost of their portion of the design, either billed directly to the client or through the architect.

• Five percent general contractor fee on costs run through their books.

• The values for four sample subcontracting firms working directly for the owner are $550,000 for landscaping, $950,000 for a swimming pool vendor, $5 million for the electrical subcontractor, and $12 million for the mechanical subcontractor. Assume the subcontractor fees are included in these figures. The other subs traditionally work through the GC.

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Case 3: Construction manager or general contractor?

A client is ready to negotiate a contract with a construction firm for a $30 million shelled office building project. The design-development documents (DDs) are complete. The building permit has been applied for and is scheduled to be issued in two months. The architect has requested the owner now bring on a contractor to assist with the balance of preconstruction services, estimating, scheduling, constructability analysis, material selections, and value engineering (VE) during the construction document (CD) development phase. The client and the architect have received written proposals and conducted interviews, and have narrowed the short list down to two firms who have a completely different approach to contracting. Both appear to be equally qualified with respect to experience, references, availability, etc. Both firms have worked with the architect and the owner successfully on previous projects. Both firms are quoting a competitive 4% fee on top of the cost of the work. All other conditions are equal. The only difference between the two firms is that one is a pure construction manager and will subcontract 100% of the project except jobsite administration. The other is a typical general contractor. The GC is only interested in building the project if they are allowed to perform the work that they customarily self-perform, such as concrete, carpentry, reinforcement steel, structural steel, and miscellaneous specialty installation, which will account for 30% of the cost of the work on this shell.

a. Take the position of the CM. Why is it to the owner’s and the architect’s advantage to employ your firm during the preconstruction phase? What are the advantages of using a CM during the construction phase? Discuss all project control issues, including quality, safety, schedule, and cost. Is a CM at risk truly an owner’s representative? Why is it better for you that your firm is selected now and on board when the tenant improvement projects become available? Does the GC hide costs? Sell your position and be creative. Use the tools you have learned from this book, your classes, professional experience, and outside research to convince the owner that the CM procurement approach is more advantageous than the typical general contractor.

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b. Take the position of the GC. Cover the same issues as outlined in the CM position above, except with the opposite perspective. Does the GC have more control over cost, schedule, quality, and safety? Which firm can build it better, faster, and safer? Who is best at looking out for the client’s interests?

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Case 4: Design-build joint ventures

A client negotiated a design-build contract with a joint venture (JV) general contractor and architect for the design and construction of a $100 million chemical manufacturing facility. The project was constructed within a reasonable time frame and for a fair price. The quality of the work was acceptable and there were not any time-loss safety incidents. The architect’s and the contractor’s joint venture was dissolved immediately after substantial completion was achieved and they had received their retention. In only six months after completion, the owner had achieved 90% of potential production output and sales were higher than anticipated. About that time, several employees began feeling ill and several citizens living nearby and working outside the facility filed a claim due to unacceptable odors coming from the plant. The government shut the pl...

Table of contents

• Cover Page
• 101 Case Studies in Construction Management
• Title
• Copyright
• Contents
• List of Illustrations
• About the Author
• About the Illustrator
• Preface
• 1 Construction Organizations, Including Personnel Issues
• 2 Procurement, Including Pricing and Delivery Methods
• 3 Construction Contracts, Including Insurance and Bond Issues
• 4 Estimating
• 5 Schedules and Schedule Control
• 6 Subcontractors and Suppliers
• 7 Start-Up, Including Preconstruction, Mobilization, and Value Engineering
• 8 Communications, Including RFIs and Submittals
• 9 Pay Requests, Including Liens, Lien Releases, and Retention
• 10 Cost Control, Including Lean Construction
• 11 Quality and Safety Controls
• 12 Change Orders
• 13 Claims, Including Dispute Resolution Techniques
• 14 Advanced Topics, Including Close-Out, BIM, and Sustainability
• Appendix A: Abbreviations
• Appendix B: Glossary