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The PROFESSIONAL CONSTRUCTOR JOU R NAL OF THE A M E R I C AN INST IT UT E OF CONST RUCT OR S AP RI L 2013 | VOL UME 3 7 | NUMBE R 0 1

in this issue Development of a Prediction Model for Construction Time of Educational Projects in Texas Proportional Economic Analysis of Pipe Costs at a Water Utility The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study Identifying Causes of Cost-Overruns in Public Projects Ranking of Key Competencies Needed to be an Effective Project Manager in the U.S. Commercial Construction Industry


Journal of the American Institute of Constructors PURPOSE The purpose of the American Institute of Constructors is to promote individual excellence throughout the related fields of construction.

MISSION Our mission is to provide: A qualifying body to serve the individual in construction, the Constructor, who has achieved a recognized level of professional competence; Opportunities for the individual constructor to participate in the process of developing quality standards of practice and to exchange ideas;

AIC 2012/2013 Officers & Directors

Leadership in establishing and maintaining high ethical standards; Support for construction education and research;

PRESIDENT

Encouragement of equitable and professional relationships between the professional constructor and other entities in the construction process; and

Tanya C Matthews, FAIC DBIA TMG Construction Corporation PO Box 2099 Purcellville, VA 20134 Work Phone: 540-751-4465 Fax: 540-338-9518 tmatthews@tmgworld.net

An environment to enhance the overall standing of the construction profession.

AIC PAST PRESIDENTS

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AIC 2012/2013 Board of Directors

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THE PROFESSIONAL CONSTRUCTOR Volume 37, Number 01

APRIL 2013

Articles Development of a Prediction Model for Construction Time of Educational Projects in Texas.....................................................................................5 Ifte Choudhury, Ph.D. Proportional Economic Analysis of Pipe Costs at a Water Utility..................................10 Amarjit Singh, Professor,

Stacy Adachi, Engineer

The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study.................................................................19 Aiyin Jiang, Ph.D., CPC

John Dryden, Ph.D.

Identifying Causes of Cost-Overruns in Public Projects...............................................26 Michael A. Morton, MS CM, PMP

Khalid M. Siddiqi, Ph.D.

Ranking of Key Competencies Needed to be an Effective Project Manager in the U.S. Commercial Construction Industry .......................................................................32 R. Casey Cline, Assistant Professor

Kenneth F. Robson, Director & Professor

The Professional Constructor (ISSN 0146-7557) is the official publication of the American Institute of Constructors (AIC), 700 N. Fairfax St. Suite 510 Alexandria, VA 22314. Telephone 703.683.4999, Fax 703.683.5480, www.professionalconstructor.org. This publication or any part thereof may not be reproduced in any form without written permission from AIC. AIC assumes no responsibility for statements or opinions advanced by the contributors to its publications. Views expressed by them or the editor do not represent the official position of the The American Professional Constructor, its staff, or the AIC. The Professional Constructor is a refereed journal. All papers must be written and submitted in accordance with AIC journal guidelines available from AIC. All papers are reviewed by at least three experts in the field.

EDITOR Jason D. Lucas, Ph.D., Assistant Professor, Clemson University CO-EDITOR Dennis C. Bausman, FAIC, CPC, LEED A.P., Professor and CSM Endowed Faculty Chair, Clemson University


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Development of a Prediction Model for Construction Time of Educational Projects in Texas Ifte Choudhury, Ph.D. Department of Construction Science Texas A&M University College Station, Texas 77845 Email: i-choudhury@tamu.edu Phone: (979) 845-7000 ABSTRACT: Studies indicate that there is a relationship between project cost and construction time for different construction markets. The purpose of this study is to validate the time-cost relationship model developed by Bromilow et al. (1980) in context with educational construction projects in Texas. The model was extended to include the magnitude of the projects in terms of gross floor area and project delivery methods to determine whether these variables also have an effect on project duration. Data related to 39 educational projects was obtained for the study. SPSS® program was for analysis of the data. The statistical technique used for the analysis was stepwise linear regression. The results indicate that when gross floor area is also used an independent variable, construction cost does not have any relationship with construction time for educational projects in Texas. However, the results show a statistically significant relationship between construction time and magnitude of the project, measured by gross floor area, at the level of significance (p-value) of <0.0001. A prediction model of construction time has been developed based on the results of the study. This model will be useful to students taking courses related to cost estimating and construction project scheduling and also to professionals involved with construction industry. Keywords: Construction time, Construction Cost, Gross Floor Area, Educational Buildings.  

INTRODUCTION Construction Time and Construction Cost   Time and cost have been typically used as important criteria for determining project performance globally. Project cost has been identified as a correlate of construction time in many regions of the world (Choudhury & Rajan, 2008; Bromilow et al., 1980). In the construction industry, contractors usually use previous experiences to estimate the project duration and cost of a new project. In general, the more time it takes to complete an activity, the more human resources have to be engaged for the task, resulting in a higher project cost.

A relationship between completed construction cost and the time taken to complete a construction project was first mathematically established by Bromilow et al. (1980). For the updated model, the authors analyzed the time-cost data for a total of 419 building projects in Australia. The equation describing the mean construction time as a function of project cost was found to be:

T = K*CB

(1)

Where T = duration of construction period from the date of possession of site to substantial completion, in working days C = completed cost of project in millions of Australian dollars, adjusted to constant labor and material prices K = a constant indicating the general level of time performance per million Australian dollar

Ifte Choudhury is an Associate Professor in the Department of Construction Science at Texas A&M University and has extensive experience as a consulting architect working on projects funded by the World Bank. His areas of emphasis include housing, alternative technology, issues related to international construction, and construction education. He is also a Fulbright scholar.

APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


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Development of a Prediction Model for Construction Time of Educational Projects in Texas

B = a constant describing how the time performance is affected by the size of the construction project measured by its cost. The model indicates that the duration of project time of a construction project is basically a function of its total cost. It provided a basis for all parties concerned with the construction process to establish a fairly accurate probable duration of a project in days, given the estimated cost of the project. The authors also analyzed the overruns on cost and time that provided a measure on the accuracy of the industry’s time and cost prediction. The model also indicates that relationship between duration of a construction project and time required to complete it is non-linear. In order to perform data analysis using a linear model, the variables need to be transformed into their natural logarithms. Several other studies have been performed around the world to make similar predictions for either a specific sector of construction or construction industries, in general. Ireland (1985) replicated the study to predict construction time for high-rise buildings in Australia; Kaka & Price (1991) conducted a similar survey both for buildings and road works in the United Kingdom; Chan (1999) investigated the effect of construction cost on time with particular reference to Hong Kong; and Choudhury & Rajan (2008) conducted a study on residential construction projects in Texas. Hoffman et al. (2007) used Bromilow et al.’s (1980) time-cost model to analyze data collected for 856 facility projects. They, however, included certain other variables such as project location, building type, and delivery method in the model. All these studies found that the mathematical model developed by Bromilow et al. (1980) holds good for prediction of construction time when the cost of construction is known.

Construction Time and Gross Floor Area Some studies suggest that building size is a better predictor of construction time performance than project cost. One of the first proponents of using building size as a predictor of construction time is Walker (1995). He suggests including gross floor area (which is a measure of building size or magnitude) as an independent variable in the model to predict construction time performance.

Love et al.’s (2005) study takes a similar view. They argue that construction cost, when decomposed, consists primarily of labor and material costs. They contend that while labor cost is a function of time, material cost of a building is a function of gross floor area. The time taken for construction, they claim, increases with an increase in the overall quantity of materials used. Therefore, the authors conclude that construction cost is not a “good” predictor of construction time performance. Instead, they advocate an importance of floor area as a viable alternative. Given these considerations, gross floor area seems to be a promising factor for forecasting construction time of building projects. It may be worthwhile to find out whether this particular variable is a more reliable predictor of project completion time than cost with reference to educational projects in Texas.

Construction Time and Project Delivery Method Construction procurement is the process of obtaining services and supplies for efficient and timely delivery of the end product. The major project delivery methods include (1) Design-Bid-Build, (2) Design-Build, and (3) Construction Management at Risk. Studies indicate that project performance is affected by project delivery method (Choudhury & Pitkar, 2007); Ling et al., 2004; Chan et al., 2002). The trend in the use of project delivery system is changing rapidly. Project delivery system has evolved over the years. The medieval master builder was hired by an owner to design, engineer, and construct an entire facility. This system was common until the early 20th century. With changing technologies, it was necessary to change the type of delivery system that gave way to the Design-Bid-Build method. As the specialization of services increased, it was found that the interaction during design phase was extremely poor which resulted in inefficient designs, increased errors and disputes, higher costs, and ultimately longer schedule. This led to the Construction Management at Risk delivery system to improve the interaction among parties concerned and to overlap the design and the construction phases. Eventually, it was found necessary for owners to resort to a single source DesignBuild contracting (El-Wardani et al., 2006). There is an increasing trend toward the use of the Design-Build

APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


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Development of a Prediction Model for Construction Time of Educational Projects in Texas

delivery method in the public sector (Choudhury & Pitkar, 2007; Tulacz, 2006; Yakowenko, 2004). It is thus possible that project delivery method could play a role in construction performance time. The likelihood of an impact of delivery method on construction time of educational buildings was ascertained by including it in the time-cost relationship model.

Hypothesis From a review of literature, it is hypothesized that the actual construction time of educational projects in Texas is affected by: • Actual construction cost • Gross floor area of construction • Project Delivery Method  

METHODOLOGY Data Collection Procedure and Sample Size   Data for 39 educational construction projects were obtained from three Independent School Districts in Texas. It was collected in Spring 2009. Superintendents of these school districts were contacted by email. After making appointment, personal interviews were conducted with all three of them and data was collected. The sample consisted of data covering three methods of project delivery: Design-Bid-Build, Design-Build, and Construction Management at Risk. The sample size covered 13 schools for each project delivery method. All the schools were constructed between 2003 and 2008.  

Variables and their Operationalization   Actual Construction Time (TIME): It is the actual time measured for the completion of an educational construction project. It was measured in months. This variable was labeled as LNTIME after being transformed into its natural logarithm.   Actual Project Cost (COST): It is the total cost of construction works of an educational construction project. It was measured in US Dollars. This variable was labeled as LNCOST after being transformed into its natural logarithm.

Gross Floor Area (GFA): It is the gross constructed area of an educational construction project. It was measured in square feet. This variable was labeled as LNGFA after being transformed into its natural logarithm. Delivery (DELIVERY): It is the type of project delivery system used for delivering an educational construction project. This was a class variable consisting of three categories: (1) Construction Management at Risk (CMR), (2) Design-Build (DB), and (3) Design-BidBuild (DBB). Two dummy variables were created from this class variable: (1) Construction Management at Risk (CMR) and (2) Design-Build (DB). These variables were labeled as LNCMR and LNDB after being transformed into its natural logarithms. Table 1 shows the process of creating the dummy variables and assigning values to them. DELIVERY CMR DB DBB

LNCMR 1 0 0

LNDB 0 1 0

Table 1. Dummy Variables for DELIVERY

RESULTS Analysis   The time-cost relationship model developed by Bromilow et al. (1980) defines only the relationship between construction time and cost. Since the present study hypothesizes a relationship to exist also between (1) construction time and gross floor area and (2) construction time and project delivery method along with construction cost, the model had to be modified. Following model encompasses all the variables that may have an effect on construction time performance:   TIME = K*COSTB1*GFAB2*CMRB3*DBB4 (2) A stepwise linear regression analysis was used to perform the first step of analysis (see eqn. 3). It is a semiautomated process of building a model by successively adding or removing variables based on the t-statistics of their estimated coefficients. Therefore, the variables had to be transformed into their natural logarithms. LNTIME=LNK+β1LNCOST+β2LNGFA+β3LNCMR+β4LNDB+ε (3)

APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


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Development of a Prediction Model for Construction Time of Educational Projects in Texas

Where LNK = natural logarithm of K, β1, β2, β3, etc. = regression coefficients, and ε = error term. The results of the analysis are shown in Table 2. Table 2. Stepwise Linear Regression Analysis for LNTIME

Interpretations  

Figure 1. Relationship between LNTIME and LNGFA

The F-value of the model used for multiple regression analysis was found to be statistically significant at less than the 0.0001 level. This provides evidence that a relationship exists between construction time and at least one of the independent variables used in the model. The results, however, indicate only gross floor area is correlated to construction time at a very high level of significance with a p-value of less than 0.0001. None of the other variables, including construction cost, were found to be significant at level of significance of 0.05; hence, they were automatically excluded by the statistical package from the model. An important aspect of a statistical procedure that derives model from empirical data is to indicate how well the model predicts results. A widely used measure the predictive efficacy of a model is its coefficient of determination, or R2 value. If there is a perfect relation between the dependent and independent variables, R2 is 1. In case of no relationship between the dependent and independent variables, R2 is 0. Predictive efficacy of this particular model was found to be moderately high with an R2 of 0.74, and an adjusted R2 of 0.73. It means that at least 73 percent of the variances in construction time of educational projects are explained by gross floor area alone. In order to have a visual understanding of the relationship between construction time and gross floor area, a scatter plot diagram was produced (Figure 1). The diagram confirmed the results obtained by stepwise linear regression analysis. A residual plot indicated a good fit of the sample data (Figure 2).

Figure 2. Residual plot

The prediction model for construction time of educational buildings was developed using results of the analysis. Bromilow et al.’s (1980) model was modified by replacing construction cost by gross floor area. The value of LNK was required to be transformed to K, using an exponential function [exp(LNK)], for expressing the model in its original form (Equation 4). The value was found to be 0.067. The model may be expressed as follows: TIME

=

0 . 0 6 7 * G F A 0.454

(4)

This model can be used to predict the construction time for an educational project in Texas when the gross floor area in known. For example, if the gross area of a school building is, say 50,000 sft., the predicted construction time for the project would be about 9 months.

APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


Development of a Prediction Model for Construction Time of Educational Projects in Texas

CONCLUSIONS   The results of the statistical analysis indicate that for an educational construction project in Texas, an increase in gross floor area results in an increase in total construction time. They also indicate that construction cost does not have to be included in the production model when gross floor area is available. It can, thus, be assumed that gross floor area is a better predictor of construction time for educational buildings in Texas. Project delivery method does not play any role in predicting construction for educational projects. The model will be useful for students of construction science, taking courses in estimating and construction project scheduling. The students are often required to participate in hypothetical bidding for construction projects. This model could be used as an effective tool for estimating project construction time based on estimated construction area for educational projects. This study has been conducted using data for construction of educational buildings in Texas. The model developed provides an alternative and logical method for estimating construction time to supplement the prevailing practice of estimation predominantly based on individual experience. The construction industry can benefit from the results of the study by applying the model in predicting construction time for similar projects. Such models may be developed by collecting historical data either from the owners or the constructors. However, the model documented in this study applies only for educational buildings in Texas and cannot be generalized beyond the sample size. The study will hopefully generate enough interest to do further research for deriving models to predict construction time for projects in other sectors.  

REFERENCES

  Bromilow, F. J., Hinds, M. F. & Moody, N. F. (1980). AIQS survey of building contract time performance. Building Economist, 19(2), 79-82. Chan, A. P. C. (1999). Modeling building durations in Hong Kong. Construction Management and Economics, 17(2), 189-196.

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Chan, A. P. C., Scott, D. and Lam, E. W. M. (2002). Framework of design criteria for design-build projects. Journal of Management in Engineering, 18(3), 12-128. Choudhury, I. & Rajan, S. S. (2008). Time-cost relationship for residential construction in Texas. The American Professional Constructor, 32(2), 28-32. Choudhury, I. & Pitkar, M. (2007). An analysis of project delivery systems in commercial construction. The American Professional Constructor, 31(1), 23-27. El-Wardani, M. A., Messner, J. I., & Horman, M. J. (2006). Comparing procurement methods for designbuild projects. Journal of Construction Engineering and Management, 132(3), 230-238. Hoffman, G. J. et al. (2007). Estimating performance time for construction projects. Journal of Management Engineering, 23(4), 193-199. Ireland, V. B. E. (1985). The role of managerial actions in the cost, time, and quality performance of high-rise commercial building projects. Construction Management and Economics, 3(1), 59-87. Kaka, A. & Price, A. D. F. (1991). Relationship between value and duration of construction projects. Construction Management and Economics, 9(4), 383-400. Ling, F. Y. Y. et al. (2004). Predicting performance of design-build and design-bid-build projects. Journal of Construction Engineering and Management, 130(1), 75-83. Love, P. E. D., Tse, R. Y. C., & Edwards, D. J. (2005). Timecost relationships in Australian construction projects. Journal of Construction Engineering and Management, 131(2), 187-193. Tulacz, G. (2006). Design-build continues to grow despite weariness and price concerns. ENR, 256(23), 38. Walker, D. H. T. (1995). An investigation into construction time performance. Construction Management and Economics, 13(3), 263-274. Yakowenko, G. (2004). Megaproject procurement: Breaking from tradition. Public Roads, 68(1), 48-53.

APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


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Proportional Economic Analysis of Pipe Costs at a Water Utility

Proportional Economic Analysis of Pipe Costs at a Water Utility Amarjit Singh, Professor, University of Hawaii at Manoa asingh@hawaii.edu Stacy Adachi, Engineer, Austin Tsutsumi & Associates, Inc. stacyadachi@gmail.com ABSTRACT: An economic analysis of pipe types—concrete cylinder, ductile iron, and PVC types—installed for a water utility was undertaken for data spanning 15 years. The major cost components considered were installation and repair and maintenance (R&M) costs, which, in themselves, cover all costs of pipe construction and operation. Actual costs were converted to constant 2002 dollars at a derived inflation rate, and the real dollar value subsequently calculated. The analysis was conducted on a per mile basis to ensure that costs are evaluated on a proportional basis; for installation costs, the length was the installed length each year, while for R&M costs the length was the length in ground. It was observed that installation costs were significantly higher than repair and maintenance costs, even though only a small percentage of new pipes are installed each year, while repair and maintenance involved one pipe break per day on average. The final results in real dollars revealed that concrete cylinder pipes are far more expensive to install and operate on a proportional basis than ductile iron or PVC. In addition, PVC was the least expensive to operate while fulfilling all necessary functions. This information is important for the water utility that is cost conscious and has a mandate to provide water to its residents and visitors at no profit. Hence it was recommended that new pipes installed should definitely exclude concrete cylinder, and preferably focus only on PVC pipes. Keywords: Water Supply, Piping systems, Repair and maintenance, Concrete pipe, Life cycle cost analysis

INTRODUCTION Public water supply utilities typically operate and maintain thousands of miles of water supply pipes. For example, the Honolulu Board of Water Supply (HBWS) maintains over 2,000 miles of water supply pipes. The installation and maintenance (I&M) of such a large network consumes considerable costs that can easily reach into the tens of millions of dollars annually. Since the funds for I&M come from water rates charged to consumers, the goal of public utilities is to operate as efficiently as possible, charge the least amount necessary for all operations, especially because water is considered a necessary resource to which all

individuals have natural rights (USEPA, 2002). Thus, the HBWS goal is to provide safe and dependable drinking water service at a reasonable cost (HBWS, 2001). Therefore, the minimum operational cost of a water supply system is an issue of public welfare and interest. The expense of operating a water supply piping systems consists of two components – (i) the cost of installation (I), which includes labor, material, and equipment, and (ii) the cost of maintenance (M). For a pipe system, the only maintenance cost is typically the cost of repairing main breaks (Deb et al., 2002). Together, these two costs, referred to as I&M, ensure that the piping system is available and functional. The pumping of water was not considered here because it is not a cost focused on piping functionality. Thus,

Amarjit Singh is a professor in the Department of Civil Engineering, University of Hawaii at Manoa, Honolulu. He has international construction work experience in India, Nepal, and Canada; he served as visiting professor/scholar at Cornell University, Reading University, University of New South Wales, and City University of Hong Kong; some of his research activities have been undertaken in Finland, Japan, India, and countries of Southern Polynesia. He is active in shared governance activities at the University of Hawaii System, and is presently co-chair of the All Campus Council of Faculty Senate Chairs.

Stacy Adachi earned her Master of Science degree from the University of Hawaii at Manoa. She currently works as an Engineer for Austin Tsutsumi & Associates, Hilo, Hawaii.

APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


Proportional Economic Analysis of Pipe Costs at a Water Utility

the focus of this investigation was only on engineering economic analysis, as the availability of funds dictates whether pipes can be replaced or rehabilitated when required. It follows that economic decisions are a direct measure of technological performance and thus weigh heavily on decision-making. The life of pipe systems at HBWS varies, and can span to over one hundred years. Therefore, the total life cycle cost for the I&M of the pipe system was analyzed to compare the annual expense of the system based on the different pipe material types. Three pipe types were considered – ductile iron, polyvinyl chloride (PVC), and concrete cylinder – as these three pipe types comprised 99% of the length of all pipes installed for the 15 years between fiscal year (FY) 1988-2002, as shown in Fig. 1; the other 1% was asbestos concrete and galvanized iron. Although cast iron pipes made up approximately 47% of the total length of all pipes in FY 2008 at HBWS, the installation of cast iron pipes were discontinued in 1979, and thus not included in this analysis Concrete Cylinder 7%

Other 1%

PVC 31%

Ductile Iron 61%

Figure 1: Total length of pipe installed by material type (FY 1988-2002)

Various studies have looked at the cost of piping systems with different perspectives. Geehman (1999) suggested investigation into an economic index that is part of decision criteria to rehabilitate water mains. One of the features of UTILNETS is to determine the correct rehabilitation budget for the utility based on projecting failure rates to create a future rehabilitation budget

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(Hadzilacos et al., 2000). The PARMS-PRIORITY system by Moglia et al. (2006) focuses on risk analysis where several options are available based on the probability of failure; a lower probability of failure results in lowered costs that are applied for determining the future costs of installation and maintenance. Loganathan et al. (2002) look at regression and failure probability models to combine a reliability model with cost data analysis that determines the optimum replacement time. Dridi et al. (2009) have a model for a management strategy to choose a replacement schedule that assumes a predefined budget for replacement expenditures. The approach by Giustolisi and Berardi (2009) introduces an economic rationale to produce a pipewise prioritization scheme. The study in this article undertakes a purely engineering economic analysis with an aim at discovering the optimal pipe material type considering the proportional costs of installation and maintenance per unit mile.

BACKGROUND HBWS spent an average of $27 million per year in actualdollars since FY 1988 for the installation of ductile iron, PVC, and concrete cylinder pipes, as shown in Fig. 2. The cost of maintenance (also called ‘repair cost’) averaged another $109,000 per year in actual-dollars since FY 1988 for the installation of ductile iron, PVC, and concrete cylinder pipes, as illustrated in Fig. 3 (MBreak, 2009). It was observed that the expenditure per mile of each pipe type differed from year to year. Greater lengths of inexpensive pipes can be purchased than of expensive pipes. Also, more expensive pipes, such as concrete cylinder, are more costly to maintain. Fig. 4 gives a breakdown of the total actual cost of installed pipes and the length installed for each pipe type for the 15 years between FY 1988-2002. Fig. 5 shows the total length of pipes installed for each year by pipe type. From Fig. 6, it was seen that the trend of the installation cost per length of pipe installed in the ground varied considerably from the total installation cost alone (Fig. 2) or total installed miles alone (Fig. 5). However, these costs are actual-dollars, and raw data obtained from HBWS must be converted to real (constant) dollars for appropriate decision-making to determine the most economical and uneconomical pipe types.

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Proportional Economic Analysis of Pipe Costs at a Water Utility

Figure 2: Installation cost (in actual-dollars) by material type (FY 1988-2002)

Figure 3: Maintenance cost (in actual-dollars) by material type (FY 1988-2002)

Figure 5: Length installed by material type (FY 1988-2002)

Figure 6: Installation cost per length installed by material type (FY 1988-2002)

SCOPE AND OBJECTIVES

Figure 4: Total installation cost (in actual-dollars) and length installed (miles) by material type (FY 1988-2002)

The objective was to conduct an economic analysis to determine which pipe material type – ductile iron, PVC, or concrete cylinder – was the most economical based on the installation cost per mile and the repair cost per length of pipe in the ground (LIG). The purpose was to determine which pipe type should be recommended for future installations at HBWS to economize on the effort without losing functionality. The objectives of this investigation were: 1. Determine the net future worth and the equal annual worth of I&M costs for ductile iron, PVC, and concrete cylinder pipes between FY 1988 2002.

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Proportional Economic Analysis of Pipe Costs at a Water Utility

2. Evaluate worth under conditions of inflation, and obtain an inflation-adjusted value for annual I&M costs 3. Undertake a comparison of the real annual costs for the three pipe types to determine the most economic type.

Table 1: $Ia/mile and $Ra/LIG (in actual-dollars) for ductile iron pipes by year

METHODOLOGY The flow chart, illustrated in Fig. 7, describes the methodology adopted to determine the most economical pipe material type in terms of the installation cost per installed mile and the repair cost per length of pipe in the ground. The analysis was performed on a proportional basis, where actual-dollars per unit length was taken for the installation cost and the repair cost proportionality. This normalization evened out the high and low costs of installation and maintenance per year for the different pipe types.

Table 2: $Ia/mile and $Ra/LIG (in actual-dollars) for PVC pipes by year

Installation Cost The installation cost per mile ($I/mile) included the cost for materials and labor, and is equivalent to the cost of replacing that pipe. The $I/mile was taken from HBWS annual reports and statistical summaries (HBWS, 1988-2002) for each year, from FY 1988-2002, by material type. Column (2) of Tables 1 through 3 summarizes the average $I/mile for each pipe type by year. Table 3: $Ia/mile and $Ra/LIG (in actual-dollars) for concrete cylinder pipes by year

Figure 7: Flow chart adopted for proportional economic analysis

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Proportional Economic Analysis of Pipe Costs at a Water Utility

Repair Cost The repair cost per length of pipe in the ground ($R/ LIG) was the product of the repair cost per break and the number of breaks per length of pipe, in miles, in the ground (LIG), thus reflecting the rate of breakage and the cost of repair. The repair cost per break, which included the cost for crew, equipment, and a temporary repaving, was extracted from HBWS mainbreak database (MBreak, 2009) for each year, from FY 1988-2002, by material type. The number of breaks per LIG was obtained from HBWS main-break database and from annual reports and statistical summaries (MBreak, 2009; HBWS, 1988-2002) for each year, from FY 1988-2002, by pipe type. The lengths of each pipe type varied by year due to continuous installation of new pipe lengths and removal of old pipe lengths. The number of breaks per LIG illustrated the severity of the pipe system, as a high break rate signified the system was operating poorly as opposed to a low break rate. Columns (3) and (4) of Tables 1 through 3 summarizes the average repair cost per break and the number of breaks per LIG for each year by material type. For example, the $R/LIG for ductile iron pipes in FY 2002 was $220.71 per mile, where the repair cost per break was $4,066 and the number of breaks per LIG was 0.054. The average $R/LIG for each year is summarized in column (5) of Tables 1 through 3 by pipe type. Comparing the actual-dollar $Ia/mile and $Ra/LIG by pipe type, it was observed that concrete cylinder pipes were the most costly. However, actual-dollar analysis is misleading, and so constant-dollar values need to be calculated. For this, a reasonable estimate of inflation is required.

distribution main system, the CPI contributed 25% of the cost, due to labor costs; whereas the PPI contributed 75% of the cost, as a result of equipment and materials that generally cost more. The CPI and PPI were calculated using the equations developed in Gautam (2009), where the base year for calculating CPI was 1982 and the base year for PPI was 1986. The equations for the CPI and PPI derived there are: (1)

(2)

Where, CPI = consumer price index PPI = producer price index X = year

Thus, the values for the CPI and PPI in FY 1988 and 2002, based on equations 1 and 2 were: (3) (4) (5) (6)

Since 25% and 75% of the cost was due to the CPI and PPI, respectively, the 1988 and 2002 index values to find the inflation rate were: (7) (8)

In order to calculate the inflation rate per year from FY 1988, with the base year in FY 2002, the following equation was used: (9)

Using CPI and PPI to Find Inflation Rate The inflation rate was found using the consumer price index (CPI) and the producer price index (PPI). Because the $Ia/mile and the $Ra/LIG were extracted only up to FY 2002 (the installation cost is not readily available for years after FY 2002 at HBWS), the base year to find the inflation rate per year was FY 2002. The CPI is a measure of the cost of goods and labor in the general market at the consumer level; the PPI measures the price change of materials at the producerâ&#x20AC;&#x2122;s level. It was assumed that for the water

Where, f = inflation rate; X = starting year =1988 in this case Applying equation (9), the inflation rate used for this application to the pipe system, between FY 1988 and FY 2002, was calculated at 2.469%. The inflation rate varied each year as a result of the different index values each year. Applying equations (1), (2), and (9) to each year, the inflation rate per year is summarized in column (5) of Table 4.

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Proportional Economic Analysis of Pipe Costs at a Water Utility Table 4: Inflation rate per year based on CPI and PPI (base year = 2002)

Comparison Between $Rc/LIG and $Ic/mile Comparing the $Ic/mile with the $Rc/LIG for each pipe type (Figs. 8 through 10), it was observed that the $Ic/mile is much larger than the $Rc/LIG. In fact, the $Ic/mile was on average approximately 6000 times larger than the $Rc/LIG for ductile iron and concrete cylinder pipes, and 2500 times larger than the $Rc/ LIG for PVC pipes. This illustrated the importance of installation over maintenance in the economies of the pipe types. In fact, it was evident that maintenance costs are miniscule in comparison to installation costs. Hence, the utility will benefit more by assigning greater priority to installation materials and methods rather than for repair and maintenance.

Conversion of Actual-Dollars to Constant-Dollars Using the inflation rate found in the previous section, the $Ia/mile and $Ra/LIG converted to constant-dollars by: (10)

Where, $C = constant-dollars $A = actual-dollars f = inflation rate X = year

Figure 8: $Ic/mile and $Rc/LIG for ductile iron pipes (FY 1988-2002)

As an example, the computation for the constant-dollar $Ic/mile and $Rc/LIG for ductile iron pipes in FY 1988 are shown below. Table 5 summarizes the $Ic/mile and $Rc/LIG for each pipe type by year. (11) (12) Table 5: $Ic/mile and $Rc/LIG (in 2002 constant-dollars) by material type Figure 9: $Ic/mile and $Rc/LIG for PVC pipes (FY 1988-2002)

Figure 10: $Ic/mile and $Rc/LIG for concrete cylinder pipes (FY 1988-2002) APRIL 2013 â&#x20AC;&#x201D; Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


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Proportional Economic Analysis of Pipe Costs at a Water Utility

Net Future Worth In order to make a future worth comparison of the $Ic/mile and $Rc/LIG for the different material types under analysis, the net future worth (NFW) of the pipe system, in terms of 2002 dollars, was computed. This was done by first calculating the inflation-free interest rate (also called growth rate). The inflation-free interest rate represents the earning power of money with the effects of inflation removed. It was calculated from the well known formula involving market interest rate and general inflation rate (Thuesen and Fabrycky, 1989):

(13)

Where, i' = inflation-free interest rate i = market interest rate f = inflation rate

Table 5, and i' =0.518%, as calculated above, and given in column (6) of Table 4). Since k = 1, the FW of ductile iron pipes in FY 1988 was: (15) Table 6 summarizes the FW for each pipe type, from FY 1988-2002. The NFW is the sum of the FW from each year, and is computed in the last row of Table 6. The total I&M cost, in constant-dollars, for the ductile iron, PVC, and concrete cylinder pipes between FY 1988-2002 was $15,995,135, $15,894,073, and $61,071,524, respectively. This showed that the I&M cost for concrete cylinder pipes was the highest. In fact, the I&M cost of the concrete cylinder pipe was almost 4 times that of the ductile iron and PVC pipes. Table 6: Net future worth by material type

In this analysis, the long-term market interest rate was assumed to be 3%. This is not a number that can be determined precisely, but is a function of market returns in various risk-free investments. Since the inflation rate varies each year, so does the inflationfree interest rate, as shown in column (6) of Table 4. Correspondingly, the inflation-free interest rate in FY 1988 was calculated to be 0.518%, where f = 2.469% from above. Applying this inflation-free interest rate to the constant-dollar cash flow for the $Ic/mile and $Rc/ LIG, the NFW of the pipe system (Find F/P at i’%) was computed using the basic equation:

(14)

Where, NFW = net future worth k = no. of years for “j” years X = year P = sum of $Ic/mile and $Rc/LIG in constant-dollars for year X i' = inflation-free interest rate As an example, the future worth (FW) of ductile iron pipes in FY 1988 is computed below. (The $Ic/mile and the $Rc/LIG for ductile iron pipes are given in

Equal Annual Worth Comparing the NFW itself was not adequate. As HBWS must set aside funds each year for capital improvements, finding the I&M cost for each year is not only necessary, but also crucial. Therefore, the equal annual-payment series in constant-dollars must also be computed (find A/F). This was done using the standard equation (16) below. (16)

Where, A’ = annual payment series NFW = net future worth i' = inflation-free interest rate X = year

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Proportional Economic Analysis of Pipe Costs at a Water Utility

As an example, the computation for the A’ for ductile iron pipes from FY 1988-2002 is calculated below, where NFW = $15,995,135 (from Table 6) and i' = 0.518% (from Table 4).

Table 7: Equal annual worth by material type

(17)

This showed that, for the period between FY 19882002, it cost $1,104,529 per year for the I&M of ductile iron pipe. Similarly, this analysis can be made for each period from FY 1989-2002, FY 1990-2002, FY 1991-2002, and so on, for each pipe material type, thus showing the I&M cost per year given the number of years the utility wants to consider. The equal annual worth for each material type is summarized in Table 7 for the years concerned. Because the total analysis was for the period FY 1988-2002, the A’ value for FY 1988-2002 is probably the most valuable from a decision-making perspective.

DIAMETERS OF PIPES It is generally observed from this study that concrete cylinder pipes are uneconomic. Concrete cylinder pipes are generally used in large diameters (12” to 42”) at HBWS. So the next question is whether there are adequate replacements for these large diameter pipes. It was seen that ductile iron pipes are also used in those diameters, as well as in lower diameters (4”to 12”); PVC pipes are used from 4” to 24”, but larger diameters are also manufactured. In discussions with the head of the capital projects division at HBWS, it was discovered there is no technical or procurement reason for HBWS to continue installing concrete cylinder pipes, and there is also no reason why PVC and DI cannot be used in lieu of the CC pipes (Takaki, 2009). Additional discussions with the head of the maintenance division confirmed that they would be happy to do away with concrete cylinder pipes because it takes such a long time to repair them, not to mention the nuisance that accompanies that repair (Fuke, 2009). In this regard, it is a surprise why HBWS has continued installing CC pipes, but it is expected that the scientific analysis and results of this study will inform HBWS in their future decision making.

SUMMARY AND CONCLUSIONS When real-dollars were evaluated, the high A’ value for concrete cylinder pipes showed that they are the least economic in terms of installation and maintenance (I&M) costs, as compared to ductile iron and PVC pipes. In fact, the real cost of concrete cylinder pipes was almost 4 times greater than the real cost of ductile iron and PVC pipes. As such, it is recommended that HBWS stop installing concrete cylinder pipes because of their higher cost to install and maintain. It was discovered that there is no technical reason to continue using concrete cylinder pipes, and that both PVC and ductile iron pipes can replace the concrete cylinder pipes. Although PVC pipes averaged the highest break rate in comparison to the other pipe types considered here, the overall cost of I&M per mile was the lowest. Because all technological performance characteristics, quality characteristics, and operational costs are intrinsically covered in this economic analysis, it can be concluded from a practical perspective that concrete cylinder pipes should not be used wherever possible. It can be further understood that if only one type of pipe was used by the whole system, such as the PVC pipes because they are functionally the least expensive over the life cycle, I&M operations would be streamlined, and so there would be fewer inventory types, procurement would be simplified, and I&M operations might further be made more efficient.

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Proportional Economic Analysis of Pipe Costs at a Water Utility

NOMENCLATURE A’ – equal annual worth CPI – consumer price index FW – future worth HBWS – Honolulu Boardof Water Supply $I/mile – installation cost per mile $Ia/mile – installation cost per mile (actual-dollars) $Ic/mile – installation cost per mile (constant-dollars) I&M – installation and maintenance LIG – length in ground NFW – net future worth PPI – producer price index PVC – polyvinyl chloride R&M – repair and maintenance $R/LIG – repair cost per length in ground $Ra/LIG – repair cost per length in ground (actual-dollars) $Rc/LIG – repair cost per length in ground (constant-dollars)

Acknowledgments The authors acknowledge with thanks Grant No. 6HQGR0081, MOD 4 of the United States Geological Survey, Department of the Interior.

REFERENCES Deb, A. K., Grablutz, F. M., Hasit, Y. J., and Snyder, J. K. (2002). Prioritizing Water Main Replacement and Rehabilitation. AWWA Research Foundation, Denver, CO. Dridi, L., Mailhot, A., Parizeau, M., and Villeneuve, J. (2009). Multiobjective Approach for Pipe Replacement Based on Bayesian Inference of Break Model Parameters. J. of Water Resources Planning and Management, Vol. 135(5), September, pp. 344-354. Fuke, M. (2009). Personnel Communication, Chief of Repair and Maintenance Division, Board of Water Supply, Honolulu, Nov. Gautam, K. (2009). Life Cycle Cost Analysis of Home Ownership, PhD Thesis, University of Hawaii, May.

Geehman, C. (1999). Prioritising Water Main Renewals. South East Water Limited, Melbourne, Australia. Giustolisi, O., and Berardi, L. (2009). Prioritizing Pipe Replacement: From Multiobjective Genetic Algorithms to Operational Decision Support. J. of Water Resources Planning and Management, Vol. 135(6), November, pp. 484-492. Hadzilacos, T., Kalles, D., Preston, N., Melbourne, P., Camarinopoulos L., Eimermacher, M., Kallidromitis, V., Frondistou-Yannas, S., and Saegrov, S. (2000). UTILNETS: A water mains rehabilitation decision support system. Urban Knowledge Engineering 24, 215-232. HBWS. (2001). Annual Report and Statistical Summary. Honolulu Board of Water Supply. HBWS. (1988-2002). Annual Report and Statistical Summary. Honolulu Board of Water Supply. Loganathan, G. V., Park, S., and Sherali, H. D. (2002). Threshold Break Rate for Pipeline Replacement in Water Distribution Systems. J. of Water Resources Planning and Management, Vol. 128(4), July, pp. 271-279. MBreak. (2009). Excel data. Honolulu Board of Water Supply. Moglia, M., Stewart, B., and Meddings, S. (2006). Decision Support System for Water Pipeline Renewal Prioritisation. ITcon Vol. 11, 237-256. Takaki, J. (2010), Personal communication, Capital Projects Division, Board of Water Supply, Honolulu, March. Thuesen, G. J. and Fabrycky, W. J. (1989). Engineering Economy. Prentice Hall, Inc., Englewood Cliffs, N.J. USEPA. (2002). The Clean Water and Drinking Water Infrastructure Gap Analysis. United States Environmental Protection Agency, Office of Water, Washington, D.C.

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The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study

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The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study Aiyin Jiang, Ph.D., CPC University of North Florida, Jacksonville, Florida a.jiang@unf.edu John Dryden, Ph.D. University of North Florida, Jacksonville, Florida j.dryden@unf.edu ABSTRACT: Steel stud framing is an excellent alternative to wood stud framing in residential construction. Steel framing is structurally sound, sustainable, and resistant to mold and insect infestation. However, the use of steel framing in the residential market remains low, due in large part to concerns on the thermal performance of steel. Over the past several years, engineers and constructors have increased the thermal resistance of steel stud walls through various wall assembly improvements, the impact of these components on energy efficiency is unclear. This study applies computer software to simulate the performance of various steel stud wall system assemblies. This paper also devises an E-R ratio as an index to measure the energy efficiency of various wall systems. The E-R ratios found in this study indicate that the use of either slit web metal studs or angle top tracks achieves greater energy performance than additional wall cavity insulation. This case study concludes that the most energy-efficient steel stud wall system design is achieved through the use of slit web metal studs, angle top tracks, increased cavity insulation, and optimal building orientation via sensitivity analysis. Further research needs to be conducted on steel stud assemblies and novel insulation materials to prove the economic viability of residential steel stud framing. Keywords: simulation, steel stud wall, energy efficiency

BACKGROUND Compared to wood stud framing, steel stud framing offers some advantages for its fundamental characteristics (ThermalSteel Corporation, 2011): • Steel framing has proven performance in high wind load and seismic zones. • Steel is resistant to rot, mold, termite and insect infestation. • Steel does not emit volatile organic compounds, promoting good indoor air quality. • Steel is “Green” because it contains a minimum of 25% recycled steel and is 100% recyclable.

In addition, the ecosystem disruption by steel production for residential steel studs is less than one percent of equivalent wood stud production (Crawford 2002). This difference of ecosystem disruption demonstrates steel’s contribution to sustainable construction for future generations. Despite the above mentioned advantages and availability of cold-formed steel framing, basic barriers impede the residential market’s adoption of this framing. One of the barriers is how the thermal conductivity of steel stud frame affects energy performance in homes (NAHB Research Center, 2002). Steel studs form thermal bridges, causing a higher rate of heat transfer by conduction through the wall framing, leading to lower thermal resistance of steel

Aiyin Jiang, Assistant Professor in the Department of Building Construction Management at University of North Florida. Her

research interests include sustainable construction materials and renewable energy application in infrastructure and buildings.

John Dryden, Dr. John Dryden received his Ph.D. from the M.E. Rinker School of Building Construction at the University of Florida.  Currently, he serves as an assistant professor of construction management at the University of North Florida (UNF), where he teaches estimating, scheduling, capstone, and other courses, and performs research in construction materials, building water systems, and financial risk management of construction commodities.

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The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study

stud wall systems. Most designers and builders use one or more of the following construction methods to create a thermally efficient steel stud wall system (AISI, 2003): • Increase the fiberglass batt insulation in the wall cavity • Increase the spacing between the steel studs • Use an angle top track • Use slit (slotted) web steel studs • Add thicker rigid foam insulation to the exterior

INTRODUCTION TO THE CASE STUDY Wood Wall Frame House The house used in the modeling is a one-story, slabon-grade, wood frame, single-family residence. This house has 2,016 square feet of living space with three bedrooms, one family room, one dining room, and a two-car garage. The average ceiling height is 10 feet, and the overall window-to-exterior wall ratio is 10%. The floor plan of the house is shown in Figure 1.

Adding thicker rigid foam can increase the exterior insulation thickness by as much as 2 inches, which is costly and hinders siding installation.. Furthermore, several studies (Energy Design Update, 1999; Manufactured Housing Research Alliance, 2002) suggest that some of the options listed above may not be adequate to overcome the thermal bridging that steel creates in a framed wall. Therefore, it is essential that engineers and builders appropriately use the options to reduce the thermal bridging effect. However, given improvements in the technology over the past few years, the relative energy efficiency of various steel stud wall components and systems versus typical wood stud framing has remained unclear. The objective of this study is to analyze the impact of various steel frame wall components – cavity insulation, slit web steel stud vs. solid web steel stud, angle top track vs. solid top plate – on house energy performance and find the most effective and optimal method to improve energy efficiency. A wood stud wall framed house located in Jacksonville, Florida, is selected as a case study. This research applies computer software to simulate the energy performance of the house. The simulation model is assessed by comparing the generated data to the actual energy consumption. Then the viable model is used to simulate steel stud wall framed houses with various wall component combinations. The findings from the study serve as reference for construction professionals and homeowners when assessing the use of steel stud frame in residential construction in Florida and other states in U.S. with similar climate characteristics.

Figure 1. Floor plan of case study house in Jacksonville, Florida.

The roofs are framed using ceiling joists and rafters, decked with ½ inch nominal oriented-strand-board (OSB), and covered with asphalt fiberglass roofing shingles over felt underlayment. Wall studs are spaced at 16 inches on-center with load bearing studs located directly in line with roof rafters. All structural wood studs are 2x6 spruce pine fir cut to length. Nonstructural wood studs are 2x4 spruce pine fir cut to length. Exterior walls are sheathed with 7/16 inch OSB, and finished with wood siding applied over the OSB sheathing. The details of the wall and roof frames and floor systems are listed in Table 1. The ceiling and walls are insulated with R-33 and R-13 fiberglass batt insulation, respectively. Electricity is the only utility used for cooking, heating, cooling, and other house energy demands.

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The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis â&#x20AC;&#x201C; Case Study Table 1 Building Envelope Details of Wood Stud Wall Frame House

Steel Wall Frame House

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where, rE-R: ratio of saved energy (%) to thermal resistance difference (%) between two different wall; systems (wall system 1 and wall system 2); E1: Energy consumption of wall system 1; E2: Energy consumption of wall system 2; R1: Thermal resistance of wall system 1; R2: Thermal resistance of wall system 2; Table 2 Types of Steel and Wood Stud Wall Frames

This study examines the impact of wall components and their thermal resistance by simulating the energy performance of various steel stud wall frame designs in homes with identical floor and roofing layouts. In the simulation, all structural steel studs are 350S16233 mil (2x4x33 mil), and non-structural steel studs are 350S162-27 (2x4x27 mil). All metal wall studs are spaced at 24 inches on center (o.c.). Exterior walls are sheathed with 7/16 inch OSB, and wood siding is applied over OSB. Table 2 lists five types of metal stud wall frames with varying studs, top track/plate, and cavity insulation, as well as a typical wood framed wall. The five types of steel stud wall frames are extracted from the results of experiments conducted by American Iron and Steel Institute (AISI) in 2003. The R-values in Table 2 indicate the thermal resistances of the walls excluding wood siding. Table 2 shows that application of higher cavity insulation (comparing type III to type V), or slit web metal stud (comparing type I to type III, or type II to type IV), or angles as top track (comparing type I to II, or type III to IV) incurs higher thermal resistance of wall systems. The authors of this paper introduce an index called E-R ratio to assess how various wall components improve energy efficiency: (Equation 1)

METHODOLOGY This section will discuss the methodology applied in this study, including collection of house geometric data, construction material data, energy operation data, house modeling, model assessment, and construction data.

Geometric Modeling Computer-based simulation is accepted by many studies (Al-Homound, 2001; Lai, 2011; Waltz, 2000; and Zhu, 2006) as a tool for evaluating building energy and has been adopted in this study. There are many energy simulation programs, such as eQuest and DOE-2. The study chooses EnergyPlus as simulation tool for the following features. EnergyPlus is an energy analysis and thermal load simulation program (http://apps1.eere.energy.gov/buildings/energyplus/). While it is based on the most popular features and capabilities of eQuest and DOE-2, EnergyPlus is plugged into the Google Sketchup 3D environment through OpenStudio. OpenStudio adds EnergyPlus functionality to the Google SketchUp 3D environment, allowing users to create building geometry from

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The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study

scratch, run EnergyPlus, and view the results without leaving user-friendly 3D Sketchup drawing interface.

Table 3 Construction Materials and Thermal Feature Modeling of Wood Frame House

In order to create a building model in Sketchup for the energy performance simulation, a geometric model of the house is created and then the characteristics of each modeled space (see Figure 2) are specified accordingly. The layout of the geometric model is based on the architectural plan. The geometry model of the house is first created based on the world coordinates of the house and then the model is rotated 40º clockwise according to the azimuth angle of the actual house.

Table 4 Construction Materials and Thermal Features of Metal Stud Wall Frames

Figure 2. Sketchup 3D house model.

Construction Material and Thermal Feature Modeling The thermal characteristics of the physical partitions of the rooms are modeled. The exterior and interior walls of the house are modeled as structural and nonstructural wall frames. Both wood frame and steel frame houses have identical roofing system, floor system, and window features for the purpose of comparison. Table 3 displays the component (wood wall frame, ceiling, and roof systems) details on the thickness, thermal conductivity, and thermal resistance. Table 4 displays the thermal conductivity and resistance of components in five metal stud wall systems.

Internal Loads The types of internal loads considered in the model include human occupants, lighting, appliances, and HVAC systems. The data is collected via owner interview. Differing weekday and weekend lighting and equipment schedules are applied to the model. Lighting appliances and other electrical appliances are simulated as lighting level parameter. The lighting level is 400 W according to the zone activity schedule and appliance power. Heating set point is 21°C (69.8°F), and the cooling set point is 24°C (75.2°F) with no setback. Ground temperature is set from 20.3°C to 23°C (68.4°F to 73.5°F).

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The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study

Model Assessment The authors compared the simulated monthly energy consumption with actual monthly energy consumption to assess the validity of the model. The actual energy consumption is collected from the homeowner for a typical year. Two sets of data are displayed in Table 5.

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statistics (Table 8) also show that the means for the two data sets are very similar. The statistics analysis indicates that the model has generated viable data. Table 6 Paired-samples t-test of actual versus simulated data of model house energy consumption

Table 5 Actual Energy Consumption vs. Simulated Energy Consumption

 Table 7 Paired-samples correlations of actual versus simulated data of model house energy consumption

Table 8 Paired-samples statistics of actual versus simulated data of model house energy consumption

When plotted on a graph (Figure 3), the patterns of actual versus simulated energy consumption are very similar, with slight differences occurring in the data for May, August, and September.

Figure 3. Actual energy consumption vs. simulated energy consumption of model house.

A statistical analysis of the data was performed using SPSS software. The results of this statistical analysis are shown in Tables 6, 7, and 8. The probability value, 0.545, labeled as “Significance (2-tailed)” in Table 6 indicates that there is no significant difference between the two data sets at the significance level of 0.0001. Meanwhile, the correlation analysis shows that these two data sets are significantly correlated (Table 7). The

ENERGY PERFORMANCE ANALYSIS Table 9 displays the results from simulation models for various wall systems. It shows the wood stud wall frame has the least energy consumption and it can save annual energy consumption 0.7% - 8.0%. The solid web steel stud wall system with R-9.4 consumes the most electricity. The wood stud wall frame can save up to 873kWh or $114 on an electricity bill compared to the other wall systems. Heating, ventilation, and air conditioning (HVAC) consumes over 55% of total electricity in all cases. Cooling is one of the most energy consuming categories in HVAC systems, consuming 30% of total electricity in various frame types. Table 9 Energy Performance for Various Wall Systems of simulated model house energy consumption

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The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study

A regression analysis of the simulation data shown in Table 9 was performed using Microsoft Excel software. The resultant trend-line and formula of this analysis is shown in Table 9. This regression formula can be used in further studies to predict the energy performance of other wall systems with known thermal resistances and similar architectural features.

Sensitivity analysis is conducted to minimize energy consumption by rotating the house to different angles at 30 degree increments starting from the North-South. Table 10 and Figure 5 show that the house at 180 degree from the north is the most energy-efficient. The metal stud framed house (wall thermal resistance =12.7) at this optimal angle consumes 10,225 kWh. It saves 569 kWh electricity and $74 compared to the energy consumption of the wood stud framed house at its actual azimuth angle. Table 10 Sensitivity analysis on the wood framed house at various azimuth angles

Figure 4. Energy Performance Trend-line in terms of R-value of model house total energy consumption.

Several observations are made from the simulation data: • By comparing type I to III wall systems, the data shows slit web metal stud can save 4% energy while the thermal resistance difference between the two wall systems is 16%. The observation also applies to the type II and IV. Type IV saves 4% energy while its R-value is 18% higher than type II. The E-R ratios for the two sets of comparison are between 0.22-0.25. • By comparing type I to II, the data indicates angle top track can save 2% energy while the thermal resistance difference between the two wall systems is 7%. This observation also applies to type III and IV. Type IV saves 2% energy while its R-value is 9% higher than type III. The E-R ratios for the two sets of comparison are between 0.22-0.28. • By comparing type III to V, the data shows that higher cavity insulation saves 3% energy while R-value of type V is 17% higher than type III. The E-R ratio is 0.17. • By comparing E-R ratios, the data indicates that improving cavity insulation does not save as much energy as applying angle top track or slit web metal stud. • The optimal wall system is to apply higher cavity insulation, angle top track, and slit web metal stud.

Figure 5. Total energy consumption sensitivity analysis of the wood framed house.

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The Impact of Various Steel Stud Wall Frame Components on Energy Efficiency Analysis – Case Study

CONCLUSION The study has indicated that computer-based simulation is a valuable technique to assist researchers and engineers in analyzing energy performance for various wall framing systems and material thermal features. The study models the energy consumption of a wood framed house located in Jacksonville, Florida. After assessing the validity of the model, the study uses the model to simulate various steel stud wall systems. The generated data from the simulation shows that a house built with steel stud wall frame consumes 0.7% - 8.0% more electricity than a wood stud wall frame house. Based on the data set from simulation, a trend line plotting energy consumption vs. thermal resistance is devised for this case study. The trend line predicts energy consumption of the house with known thermal resistance of walls. However, since the trend line is compiled from data of a specific house, it may limit the application to other houses without the similar architectural features. The research devises E-R ratio as an index to measure the energy efficiency of various wall system components. E-R ratios indicate that improving cavity insulation does not save as much energy as applying angle top track or slit web metal stud. The E-R ratio method is a useful index to measure other building component energy efficiency. The ways to achieve the most energy-efficient building design and construction through wall systems is to apply higher cavity insulation, use angle top tracks, slit web metal studs, and optimal orientation of the building. In terms of construction cost, our previous study shows that a house built with steel wall frame costs 53% more than a wood wall frame house (Jiang and Zhu, 2011). Wood stud wall frame costs $14,288 compared to steel stud wall frame which costs $21,870 (Jiang and Zhu, 2011). Therefore, providing both thermally efficient and economically viable steel stud wall is a challenge for engineers and construction contractors. Although steel stud is a more structurally sound and sustainable material, construction cost has to be reduced to make the material more competitive and affordable. This research provides alternatives to achieve energy efficient steel stud wall design and construction, but further research should be conducted to study the impact on energy performance and construction costs by modifying steel stud spacing, new insulation materials, and new construction techniques.

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REFERENCES Al-Homoud, M. S. (2001), Computer-aided building energy analysis techniques, Building and Environment, 36, 421–433. American Iron and Steel Institute (AISI) (2003), Development of Cost-Effective, Energy-Efficient Steel Framing, American Iron and Steel Institute (AISI) Technology Roadmap Program Office Crawford, G.L. (2002), Comparing sustainability of steel and wood studs through life-cycle stressor-effects assessment (LCSEA), International Iron and Steel Institute Energy Design Update, Weighing Thermal Design Strategies for Steel-Framed Homes (Part 1), Volume 19, No. 12. Surry NH. December 1999 Jiang, A. and Zhu, Y. (2011), Energy Consumption Simulation and Construction Cost Analysis for Wood and Steel Framing System in Florida Residential Housing – Case Study, 2011 International Conference on Construction and Real Estate Management, Nov. 18-20, 2011, Guangzhou University, Guangzhou, Guangdong, China Lai, C. M. and Wang, Y. H. (2011), Energy-Saving potential of building envelope designs in residential houses in Taiwan, Energies, 4(11), 2061-2076 Manufactured Housing Research Alliance (2002), Design for a Cold-Formed Steel Framed Manufactured Home: Technical Support Document, U.S. Department of Housing and Urban Development NAHB Research Center, Inc. (2002), Steel vs. Wood Cost Comparison-Beaufort Demonstration Homes, January 2002. U.S. Department of Housing and Urban Development Office of Policy Development and Research ThermalSteel Corp. (2011) To steel or not t o s te e l : a c om p ar i s on of s te e l v er s u s w o o d , http://www.thermasteelcorp.com/wood.pdf Waltz, P. J. (2000), Computerized Building Energy Simulation Handbook; Marcel Dekker: New York, NY, USA, Zhu, Y., (2006), Applying computer-based simulation to energy auditing: A case study, Energy and Building, 38, 421-428

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Identifying Causes of Cost-Overruns in Public Projects

Identifying Causes of Cost-Overruns in Public Projects Michael A. Morton, MS CM, PMP Senior Project Manager, Georgia State Financing & Investment Commission michael.morton@gsfic.ga.gov Khalid M. Siddiqi, Ph.D. Professor and Chair, Construction Management Department, Southern Polytechnic State University ksiddiqi@spsu.edu ABSTRACT: This study focuses on the sources of cost-overruns for public construction projects. This paper aims at identifying patterns among delivery methods used for certain types of construction projects for public buildings. The objective of this study was to identify the leading sources of cost-overruns between DBB and CM/GC construction projects for public building projects within the State of Georgia. The study was used to illustrate pattern of relationship between types of cost overruns for each delivery method used. The intended audience is government or public owners and agencies of projects financed through the state funds. The study included comparable projects completed by the above mentioned contractual methods within a five-year span period. The results from the study provide patterns of over-spending on public building projects. The projects analyzed in this study were similar in terms of type, use and scope of work. The study concluded that the owners were the prime cause of most cost-overruns in public buildings. The results also indicated that cost overruns were also caused by the lack of coordination or inadequate program planning.

Key Words: Cost-overrun, CM @ Risk, Design-BidBuild, public projects, change orders

INTRODUCTION In the State of Georgia, most vertical construction in the public sector is financed through General Obligation Bonds (GOB). The design and construction of these projects is managed through the Georgia State Financing & Investment Commission (GSFIC). Construction is mainly performed by two contractual methods, design-bid-build (DBB) and construction manager at-risk (CM/GC). The study of time and cost overruns in construction projects realization has great significance (Radujkovic 1999). Analysis of overruns raises the level of quality of preparation and control of projects, provides more realistic project goals, and influences the level of coordination between

project team members. Therefore, the outcomes of past project investigations are important both for decreasing the chances of overrun occurrence and the level of combined negative consequences (Radujkovic 1996). The change orders that resulted during the performance of institutional projects are the basis of conclusions and recommendations drawn from this study. Preventing and/or reducing the amount of change orders in a project is the key to reducing the overall construction costs. This is true for any economy and has become particularly critical for the current economic environment. The Construction Division of the Georgia State Financing and Investment Commission (GSFIC) is charged with the task of constructing projects financed by General Obligated Bonds. GSFIC serves a number of clients including The University System

Dr. Khalid Siddiqi is professor and chair of the Construction Management Department at the Southern Polytechnic State University. His research and publications are mainly in Value Engineering Environmental Construction, Construction Failures, Research Methods in Construction, Distance Education in Construction, Safety and Benchmarking in the Construction Industry.

Michael Morton MS CM is a Senior Project Manager in the Construction Division of Georgia State Financing and Investment Commission. He has a vast experience of project management of public sector educational and dormitory buildings.

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Identifying Causes of Cost-Overruns in Public Projects

of Georgia (USG) and The Technical College System of Georgia (TCSG), the two largest state agencies that invest in construction projects. The agencies served are considered the Owner/End User, although GSFIC may administer and hold the contract during the design and construction process. Administrators unanimously agree that fewer change orders is a win for the State of Georgia. Change orders, in general, have the negative effect of driving up building costs and producing expensive project delays that often interfere with the operations and schedules for the end user (Foreman 2009). Time is a very critical component for most of the end users, especially when they are depending on a building to begin teaching an expected larger class of students. Sometimes, change orders are necessary and initiated by the owner. These costs are minimal compared to document errors and inconsistencies that go undetected until construction is underway (Foreman 2009). Any error that results in a change order is a loss for the end user due to the premium charged to fix the error. Most of GSFIC’s construction contracts allow for up to a 20% subcontractor and 7.5% general contractor mark-up for overhead and profit. GSFIC officials are witness to the harsh reality in terms of cost change caused by change orders, as well as their frequency. Most of these error-driven change orders occur too often. Some of the errors found within construction drawings could be identified prior to bidding. In the case of Construction Manager at Risk (CM/GC) and Design Bid Build (DBB) contracts, the general contractor is held responsible for errors prior to the awarding of the project. There may be a notion that contractors may not reveal that they have noticed errors or missing details prior to submitting their bid, because they can charge a premium for the discovery of error, down the road, to claim cost growth. The design and engineering professionals should constantly police their designs for errors and inaccuracies.

BACKGROUND The Georgia State Financing and Investment Commission, created by Constitutional Amendment in 1972, are responsible for the proper application of proceeds from general obligation debt and the issuance of all public debt by the State. No agency or authority

can incur debt or employ other financial or investment advisory council, without Commission approval. The Commission consists of the Financing and Investment Division and the Construction Division (GSFIC 2010). The Financing and Investment Division is responsible for the planning, scheduling, selling, and delivery of General Obligation Bonds and the investment and accounting of all proceeds from the issuance of such bonds or from other amounts appropriated by the Legislature for capital outlay purposes. Other important duties include preparing the Debt Management Plan and Debt Affordability Study, monitoring agencies’ expenditures of bond proceeds for compliance with federal tax regulations, and the early retirement of state debt (GSFIC 2010). The Construction Division provides all the support services to the Commission and is responsible for disbursing bond proceeds and for managing all capital outlay projects funded, all or in part, with bond proceeds. The Construction Division provides the following services for State Agencies: The State American Disabilities Act (ADA) Coordinator’s Office, Procurement and Construction Services. At any one time within a fiscal year, GSFIC is in charge of up to one billion dollars of capital outlay projects. This in itself would generate a multitude of cost overruns. One of GSFIC’s 2011 strategic goals was to reduce the amount of change orders by 25% over a two-year period. This could have a savings impact of ten to twenty million dollars per year. The savings alone is enough to fund multiple smaller capital projects or retire GOB debt used to finance these projects. GSFIC is also reviewing alternative methods of design to reduce these costs. This entails creating new contractual language to produce new projects using Building Information Modeling or BIM. Through BIM application, during pre-construction phase, GSFIC anticipates to serve the end user better by providing a more realistic view of the end product.

METHODOLOGY All of the records for the projects, considered in the study, were obtained from the GSFIC records library and/or the Database. The Database is an informative tool used by Project Managers to update and record

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Identifying Causes of Cost-Overruns in Public Projects

project specific information (GSFIC 2010). The majority of the projects where built and completed within the last five years. This study focused on classifications of buildings as recorded with the Office of Planning and Budget (OPB) for the State of Georgia. These classifications are classroom, health, science/labs, and dormitory. The majority of these projects are all similar in construction. The structure is made of a concrete shell with elevated concrete slabs. Masonry and light-gage steel framing encompasses the exterior walls with a brick or stone facade. The roofing package is normally a heavy-gauged steel framed roof with metal panels used as decking. The remaining interior infrastructure depends on the type and use of the building. Table I: Summary of Projects Analyzed

The majority of the buildings are at least two stories and some house a mechanical penthouse. The buildings are cooled mostly by chilled water with some campuses providing chilled water through a central plant. Table 1 has the breakdown of the projects by type and other project demographics. The principal source of data was from the GSFIC database (GSFIC 2010). Project managers assign one of five codes to each Incumbrance Record (IR). These codes include Typeâ&#x20AC;&#x201C;1, government changes, Type-2, errors & omissions, Type-3, unforeseen conditions, Type-4, Post Bid Addendum (PBA) and Type-5, Guaranteed Maximum Price (GMP) Process. This report will focus on Type1 through Type-4 classifications. Type-1 and Type-4 will be compiled together as owner requested changes and collectively shown as a Type-1 change. GSFIC currently has strategic goals to reduce these costs. Type-5 changes include the Guaranteed Maximum Price (GMP), which is the actual cost of the scope of the work. Type-5 changes are not cost-overruns and will not be addressed in this study. Table 1 reflects the breakdown of projects between the two delivery methods. A total cost of close to a billion dollars was used for analysis in this report. The

number of CM/GC projects is double the number of DBB projects, but the cost is not as proportional. Project costs for CM/GC delivery method makes up 85% of the total number of projects analyzed in this report at roughly $22.4 million dollars per project. The DBB average is about 65% less at $7.7 million dollars per project. Most of the specialized classroom and lab space projects were executed through the CM/GC method of project delivery. This allows the end user to choose a construction manager based off of qualifications in lieu of the lowest bid.

RESULTS AND INFERENCES Based on the quantitative evaluation of contracts completed by this agency, certain patterns were revealed from repetitive change order costs. These costs were predominantly identified as Type-1 costs (owner requested). Tables 3 through 7 identify the different types of cost overruns as they relate to various project types and delivery methods. This table further compares the impact of each Type of change order and reports the total number of changes per type classification for projects constructed with DBB versus CM/GC project-delivery systems. Type-1 and Type-3 projects represented 81% of extraneous cost for DBB projects. A difference of 13% separates the two classification types. Furthermore, with CM/GC projects, the majority of cost overruns lie with Type1 and Type-3 classifications. The separation is more profound among the two at 57% and 28% respectively. The data further indicates an increase of 87% and 80% for Type-1 and Type-2 classifications respectfully. Table II: Comparisons of Change Orders to Delivery Methods

Tables 3 through 7 represent a more detailed approach at the types and classifications for cost overruns. The data indicates that there are significant differences between the causes of changes. It further shows that there are significantly fewer Type-2 changes versus Type-1 or Type-3 changes. Type -3 changes mostly represent the unforeseen site conditions that occasionally occur on project sites. As indicated there

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Identifying Causes of Cost-Overruns in Public Projects

were more Type-1 requests than both of the Type-2 and Type-3 requests combined. These Type-1 requests are prevalent within the CM/GC project delivery method. These changes were more expensive and represent the greatest amount of costs among the projects as reported on Table 2.

Table III: Total Classroom Change Orders

With most of the structural aspects of each building being equal, there were no significant differences among the classification of building projects. Table 2 also indicates that the CM/GC project delivery method produces more change orders with a larger magnitude than the DBB project delivery method. Both project delivery methods had significant increases in the Type-1 and Type-3 change order classification. The total amount of change order cost ($87.3M) is approximately 9% of the total amount of project cost. This also represents an increase of $18.8 million dollars in fees resulting from the changes. These fees could fund on average two DBB projects or 85% of a CM/ GC project.

ANALYSIS OF RESULTS Each building project is uniquely different with its own intricate details. The optimum result is a product that the end user accepts and utilizes for multiple years. These projects depend on the effort displayed by individual project managers, the project specific characteristics, the support of management, and events beyond the projectâ&#x20AC;&#x2122;s control. This report assembled a large number of projects of similar classification in order to produce a general idea of problems associated with cost overruns. These projects were not separated by means of new construction versus renovation, completion year of design, year of bidding, ability of design or construction professional, year of completed project, or the economy.

The above table represents the majority of changes were owner requested with a total number of 13. Unforeseen conditions won a second majority with a total eleven projects. Most requests were from the CM/GC type delivery method.

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Identifying Causes of Cost-Overruns in Public Projects Table IV: Total Health Change Orders

Table VI: Total Other Change Orders

The above table represents the majority of changes were unforeseen conditions with a total number of four. The majority of requests were from the CM/GC delivery method. Table VII: Total Dormitory Change Orders

The above table represents the majority of changes, which were owner-requested with a total number of 6. Unforeseen conditions were a second majority with a total of four projects. Most requests were from the CM/GC delivery method. Table V: Total Lab Change Orders

The above table represents the majority of changes were split at one each between owner requested and unforeseen conditions. The data also reflects the smaller project received the greater percentage of cost overage. Both projects were from the CM/GC delivery method.

CONCLUSION

The above table represents the majority of changes were owner requested with a total number of 7. The CM/GC method was the only project delivery method of choice for Lab Buildings.

This paper focused on the construction cost overruns of Georgia State capital buildings over the last five years. More specifically the study was limited to higher education classroom buildings built and managed by the Georgia Finance and Investment Commission, and built within the State of Georgia. The results show that there is a significant increase in cost from design changes initiated by the End User/Owner. For CM/GC projects, most of the changes are the result of project construction contingency funds returned to the owner as the ownerâ&#x20AC;&#x2122;s contingency. Most of the time the end user will incorporate these funds back into the project with additional scope. The resulting action produces a post bid addendum to the contract documents and increases the amount of construction fees paid within the project. For DBB projects, again the owner initiated

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Identifying Causes of Cost-Overruns in Public Projects

the majority of cost overruns. However, Design Professionals were responsible for 25% of errors. The data indicated, on a few projects, that the Design Professional incurred an exceptionally higher percentage error than other designers for similar work. Other costs were directly related to the end user asking for more than what was originally designed. This could be contributed to the agency’s misconception of 2D drawings versus what is actually being built in front of their eyes. Another conclusion could be attributed to the change in campus programs from the time the project is completed through all phases of design and construction. These programs are presented to the State Legislature years in advance of actual approval of financing and receiving the funds from the sale of GOB’s. The second most reason of cost overruns is site conditions. This cost could be avoided with a more conclusive subsurface report. Additional site borings under the building pad and site utility areas will enhance the civil engineer’s drawings greatly. The engineer may choose to shift (if possible) the site to avoid rock or trash discovered under the soil.

RECOMMENDATIONS FOR FUTURE STUDIES The following are recommendations from this report. 1. Review this study with end users instrumental in conducting their own design firm selection process. Type – 2, errors and omissions changes could be a determining factor in the selection of Design Professionals. The exact types of errors could be further cataloged, analyzed, and reviewed with the end user and design professional. This could make the both parties aware of the errors and provide for better document control from a design professional. 2. Review this study with the construction community through open discussion. Coordinate efforts with construction professionals between the classification types of changes to determine their root causes. Determine how these costs could be avoided. Produce surveys for construction and design professional to determine the level of coordination that occurs between the two professions on projects listed in this report.

3. Implementing new design methods for end users could offset the Type – 1 changes that occur from scope inserted back into the project. The end user could track cost- overruns of new projects designed by alternative methods. BIM is essential for GSFIC and the agencies it serves. This useful tool will allow the end users to make recommendations during the design process in lieu of changes during construction. It will also give them a deliverable at the end of the project that they can use in their facility management department. 4. Change orders should continue to be tracked as costs associated with the four types discussed in this report. This will verify whether any cost saving measures were implemented with success.

ACKNOWLEDGMENTS The authors would like to acknowledge the support of the Georgia State Financing and Investment Commission for providing data and other insightful information required for this study.

REFERENCES Foreman, Phillip 2009. Cost Control. Construction Management, Facilities Upgrade & Retrofit July 2009: 28 – 30. Georgia State Financing & Investment Commission, 2010. Database, Construction Division, Atlanta, Georgia. Radujkovic, M.1999. The Causes of Time and Cost Overruns in Construction Projects. CIB W55 & W65 Joint Triennial Symposium September 1999. Radujkovic M. 1996. Risk Management: Maintaining Programmed Construction Time, The Organization and Management of Construction vol. 2. - Managing the Construction Project and Managing Risk, E & FN Spon, London 1996. p. 811-819.

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Ranking of Key Competencies Needed to be an Effective Project Manager in the U.S. Commercial Construction Industry

Ranking of Key Competencies Needed to be an Effective Project Manager in the U.S. Commercial Construction Industry R. Casey Cline, Assistant Professor Department of Construction Management, Boise State University ccline@boisestate.edu Kenneth F. Robson, Director & Professor Haskell & Irene Lemon Construction Science Division, University of Oklahoma krobson@ou.edu ABSTRACT: A study was conducted to determine the ranking of key competencies needed to be an effective project manager in the U.S. commercial construction industry. Quantitative data concerning the ranking of key competencies was gathered from commercial construction project managers using a Likert scale research instrument. The mean scores of each competency were calculated and with the resulting data a ranking of competencies from the most significant to least significant was determined. In addition, demographic data was gathered to determine the gender of the study participants. The study is significant because by gaining a greater understanding of the ranking of key competencies needed to be an effective project manager in the U.S. commercial construction industry, more effective educational and training methods can be developed to facilitate the instruction of key competencies, and improve the effectiveness of future project managers in the commercial construction industry. Keywords: Construction Management, Project Management, Competencies

INTRODUCTION The construction industry is one of the largest industries in the United States and contributes significantly to the economic base of the country. Construction project disciplines include residential, commercial, industrial, and civil projects, and the scope of construction projects vary widely in scale, complexity, and duration. A variety of project delivery methods are used to deliver construction projects, including design-bidbuild, Construction Management (CM) Agency, CM at risk, design-build and integrated project delivery (IPD). Regardless of the discipline, scope, or delivery method, to effectively manage construction projects the

Project Manager (PM) must have a definable set of key competencies that facilitate his/her ability to effectively lead administrative personnel, supervisors, foremen, skilled and non-skilled labor, subcontractors, and suppliers by applying their learned skills, knowledge, values, ethics, and characteristics (Gharehbaghi & McManus 2003a).

LITERATURE REVIEW Traditional management is characterized by a complex “matrix” structure where many departments execute a project at the same time, the goal being the more efficient use of common resources (Bent 1996). Traditional management principles and methods work well for classical functioning organizations comprised of multiple managers that have responsibility for work,

R. Casey Cline – Boise State University Department of Construction Management. Dr. Cline is an Assistant Professor in the Construc-

tion Management Department within the College of Engineering at Boise State University. He earned a BS in Business Administration from Oklahoma State University, an MS in Construction Science from the University of Oklahoma, and a Ph.D. in Education (Adult Development Organizational Learning) from The University of Idaho. His educational research interests are focused on improving construction management processes to facilitate the efficient management of construction projects. His over 25 years of construction industry experience includes work in commercial, industrial, petrochemical, light commercial, and residential construction.

Kenneth F. Robson – Oklahoma University Division of Construction Science. Ken Robson received his BS in Environmental Design (1978)

and in Building Construction (1978) from Texas A & M University, and an MS of Industrial Science in Construction Management (1993) from Colorado State University. He worked in the construction industry from 1978 until 1992 in a variety of capacities. Ken was a Visiting Assistant Professor at Arizona State University and is currently the Director and a Professor at the University of Oklahoma. APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


Ranking of Key Competencies Needed to be an Effective Project Manager in the U.S. Commercial Construction Industry

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and for organizations involved in ongoing, repetitive operations. However, traditional, “matrix” structure management methods are not effective when used in the management of construction projects because projects are temporary endeavors with finite durations. Projects are comprised of diverse tasks that cut across traditional functional organizational lines, requiring greater decision-making authority than that allowed in the traditional management structure (Archibald 2004). Thus, the project management discipline developed in response to a need to manage complex projects.

competency can be a hard skill, where a technical ability or proficiency is needed, or a soft skill that focuses on the interpersonal relationships and workplace productivity (Rigolosi 2001). Latham (1994) found that it is paramount for construction personnel to possess the “right” skills and knowledge base if they are to be efficient and productive, but it is the merging of skills and knowledge with proper personal behaviors and characteristics that allows individuals to be successful in the performance of their jobs (Abraham, Karns, Shaw, & Mena 2001).

Construction projects differ from projects in other industries in that the life span of most projects are not exceptionally long, are characterized by high cost and high risk, usually include multiple entities both large and small, and require significant information handling needs (Goodman & Chinowsky 2000). The management process is a composite activity of multiple dimensions that requires the assessment of complex variables, and involves dealing with a certain degree of uncertainty (El-Choum 2000). Thus a project can be well conceived and adequately financed, and the project participants may be highly experienced; but if the efforts of all the participants are not skillfully coordinated and managed, the project may fail to be successful (Udo & Koppensteiner 2004).

In a study undertaken to determine the key competencies needed by construction project managers, Souder and Gier (2006) found that effective project managers must possess fundamental construction management skills, project administration skills, business writing and communication skills, and soft skills, such as negotiation, leadership, and teamwork. Specifically, they found that the most significant skills were:

The construction project manager (PM), while responsible to upper management, organizes and manages the construction project team. The PM is responsible for completing a project to an owner’s required parameters and standards while at the same time implementing time, schedule, cost, quality, and safety to ensure a profit for the construction company (Mincks & Johnston 2003). Project managers must be good planners, motivators, communicators, and business people (Bent 1996). A construction project manager’s ability to effectively manage a construction project is dependent upon their leadership qualities, in combination with technical knowledge and expertise. However, the identification of these leadership qualities, technical knowledge, and expertise, which are collectively known as key competencies, is particularly problematic (Dainty, Cheng, & Moore 2005). A key competency is the knowledge, trait, skill, motive, attitude, value or other personal characteristic essential in performing a job (Bratton 1998). A key

1. Negotiation 2. Ethics 3. Leadership 4. Business Writing 5. Management Organization Similar in focus, the study was not an exact replication of the study by Souder and Gear that focused exclusively on entities in the state of California, and did not exclusively focus on commercial construction entities. To pre-validate a list of “Hard Skill” and “Soft Skill” key competencies needed to be an effective project manager, a pilot study was conducted using a Likert scale survey instrument. A list of hard skill competencies was developed from a list of skills developed by the previous mentioned Souder and Gier study undertaken in 2006. A list of soft skill competencies was developed from competency-based skills set developed by the Improvement Performance Technology center at Boise State University (Competency-Based Learning Goals 2012). The list of competencies was sent to fifteen senior project management personnel of pre-selected commercial construction companies that had agreed to participate in the pilot study portion of the study. The senior project management personnel were asked to evaluate the competencies included in the survey

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Ranking of Key Competencies Needed to be an Effective Project Manager in the U.S. Commercial Construction Industry

instrument, identifying those that might be considered significant, insignificant, and to list additional key competencies that may be considered significant. The pilot study responses were evaluated and, accordingly, changes were made to the pilot survey instrument. A list of 44 key competencies needed for a construction project manager to be effective in the U.S. construction industry was included in the survey. Thirty-two of the competencies in the study were listed as “Hard Skill Competencies” and twelve were listed as “Soft Skill Competencies.” The breakdown of the “Hard Skill” and “Soft Skill” competencies were as follow:

Hard Skill Competencies 1. Building Code 2. Building Systems 3. Business Skills 4. Business Writing 5. Computer Skills 6. Construction Materials 7. Construction Management Process 8. Construction Methods 9. Construction Safety 10. Construction Surveying 11. Contract Administration 12. Contract Documents 13. Contract Law 14. Cost Accounting 15. Utilization 16. Estimating 17. Graphics 18. Human Resources 19. Job Site Layout 20. Labor Relations 21. Managerial Accounting 22. Marketing 23. Negotiation 24. Organizational Management 25. Plan Reading 26. Procurement 27. Productivity Analysis 28. Public Speaking 29. Quality Control 30. Scheduling 31. Structural Analysis 32. Temporary Structure

Soft Skill Competencies 1. Analytic Thinking 2. Buy-In and Advocacy 3. Coaching 4. Coping 5. Delegation 6. Facilitation 7. Leadership 8. Professional and Ethical Judgment 9. Social Awareness 10. Systematic Problem-Solving 11. Vision and Goal-Setting 12. Working in Partnership Clients

METHODOLOGY Statement of The Problem Commercial construction project managers in the U.S. construction industry are charged with the task of completing construction projects on time and on budget. This task is required even though construction projects vary greatly from project to project, and the personnel they are required to lead have diverse education, skill, and knowledge levels. Towards this end, the commercial construction project manager must possess key competencies that enable him/ her to effectively lead a complex mix of personnel in accomplishing the set goals of the construction project. At question is the ranking of key competencies needed to be an effective project manager in the U.S. commercial construction industry.

Research Questions 1. Which key competencies needed to be an effective project manager in the U.S. commercial construction industry rank as most significant? 2. What is the gender segmentation of construction project managers that, within the parameters setforth by the study are deemed to be effective.

Research Methods The quantitative design study included the development and use of a defined response Likert scale research instrument to determine the ranking of key competencies needed to be an effective project

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manager in the U.S. commercial construction industry. In addition, demographic data was gathered to determine the gender of the study participants. The survey was sent to current commercial construction project managers to determine a ranking of key competencies needed to be an effective project manager in the U.S. commercial construction industry.

Assumptions Assumptions for the study were as follows: 1. The participants in the quantitative portion of the study were effective because of their position of authority in companies ranked within the ENR Top 400 companies by revenue. 2. The quantitative sample was a representative sample of the population and that the survey responses by participants were honest and accurate. 3. Cohort effects were not likely to have affected the study because the survey was completed by individuals employed at multiple entities located in geographically diverse locations conducted at multiple locations. 4. The Likert-scale survey instrument data was to be considered an interval level of measurement.

Data Collection Senior project management personnel of fifteen pre-selected construction companies that met the parameters of the study were contacted via telephone and e-mail to solicit their participation in the study. All of the companies participating in the study agreed to assist in the survey process by ensuring that construction project managers at their companies completed and returned the survey in a timely manner. An e-mail containing the web-link was sent to the individual senior project management personnel that had agreed to assist in the collection of data. The weblink was then forwarded to project managers at their companies. Project managers took the on-line survey and submitted the completed instrument electronically.

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Population Sampling The participants in the quantitative portion of the study were a representative convenience sample of commercial construction project managers employed by commercial construction entities located within the West Coast and Pacific Northwest regions of the United States. The construction entities were in the top 400 U.S. construction entities ranked by construction revenue by the Engineering News Record. No minimum sample size was required because non-parametric analysis methods were to be performed. However, to increase the validity of the findings the researcher made an attempt to obtain as large a number of responses as possible; thus the senior project managers that participated in the survey reported that approximately 224 individuals participated in the survey.

FINDINGS Data Analysis Completed surveys were accepted for a 45-day period, with no unanticipated problems. Out of the 224 surveys distributed, 132 (59%) of the project managers completed the survey. Analysis of the demographic data revealed that the total population of females in the study was small, approximately 12%. It is not known if the population size of women that participated in the study is indicative of the commercial construction industry in its entirety, or is indicative of the population surveyed. Surveys were tabulated and data was analyzed to determine which key competencies needed to be an effective project manager in the U.S. commercial construction industry ranked as most significant. Calculations performed included the totaling or tallying of the Likert scale survey instrument numerical responses for each of the competencies to determine the competencies with the highest mean response. The numerical responses for each competency ranged from one to five, 1 representing a competency that was selected “Most Important” and 5 representing a competency that was selected “Least Important”. The mean score of each of competency type is presented in Appendix I.

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Analysis of the competency data revealed that the ten competencies ranked as “Most Significant” and had the highest mean results were: 1. Leadership – 1.4167 2. Construction Management (Management of Construction Process) – 1.4545 3. Professional and Ethical Judgment – 1.5000 4. Contract Documents – 1.5682 5. Plan Reading – 1.5682 6. Negotiations – 1.5758 7. Systematic Problem Solving – 1.6364 8. Working in Partnership with Clients – 1.7121 9. Analytical Thinking – 1.7273 10. Scheduling – 1.7348 The five competencies with the lowest mean results ranked from highest to lowest were: 1. Human Resources – 3.0530 2. Temporary Structures – 3.0909 3. Structural Analysis – 3.2197 4. Construction Surveying – 3.2424 5. Graphics – 3.5530 Leadership competency was rated by 75% of the survey participants as a 1 (Most Important) and 17.4% of the survey participants selected it as a 2 on a 5 point scale, with an overall mean rate of 1.4167. Construction Management competency (Management of the construction process) was rated by 70.5% of the survey participants as a 1 (Most Important) and 22% of the survey participants selected it as a 2 on a 5-point scale, with an overall mean rate of 1.4545. Professional and Ethical Judgment competency was rated by 70.5% of the survey participants as a 1 (Most Important) and 19.7% of the survey participants selected as 2 on a 5-point scale, with and overall mean rate of 1.5000. Contract Documents competency was rated by 70.5% of the survey participants as a 1 (Most Important) and 19.7% of the survey participants selected as 2 on a 5-point scale, with an overall mean rate of 1.5682. Plan Reading competency was rated by 36.4% of the survey participants as a 1 (Most Important) and 37.1% of the survey participants selected as 2 on a 5-point scale, with an overall mean rate of 1.5682. Negotiation competency was rated by 36.4% of the

survey participants as a 1 (Most Important) and 34.8% of the survey participants selected as 2 on a 5-point scale, with an overall mean rate of 1.5758. Systematic Problem Solving competency was rated by 53% of the survey participants as a 1 (Most Important) and 39.4% of the survey participants selected as 2 on a 5-point scale, with an overall mean rate of 1.6364. Working in Partnership with Clients competency was rated by 49.2% of the survey participants as a 1 (Most Important) and 38.6% of the survey participants selected as 2 on a 5-point scale, with an overall mean rate of 1.7121. Analytical Thinking competency was rated by 4.5% of the survey participants as a 1 (Most Important) and 47.0% of the survey participants selected as 2 on a 5-point scale, with an overall mean rate of 1.7273. Scheduling competency was rated by 23.5% of the survey participants as a 1 (Most Important) and 47.0% of the survey participants selected as 2 on a 5-point scale and had an overall mean rate of 1.7348. Human Resource competency was rated by 3.8% of the survey participants as a 1 (Most Important) and 28.8% of the survey participants selected as 2 on a 5-point scale and had an overall mean rate of 3.0530. Temporary Structures competency was rated by 4.5% of the survey participants as a 1 (Most Important) and 18.2% of the survey participants selected as 2 on a 5-point scale and had an overall mean rate of 3.0909. Structural Analysis competency was rated by 2.3% of the survey participants as a 1 (Most Important) and 21.2% of the survey participants selected as 2 on a 5-point scale and had an overall mean rate of 3.2197. Construction Surveying Competency was rated by 4.5% of the survey participants as a 1 (Most Important) and 13.6% of the survey participants selected as 2 on a 5-point scale and had an overall mean rate of 3.2424. Graphics Competency was rated by 2.3% of the survey participants as a 1 (Most Important) and 12.1% of the survey participants selected as 2 on a 5-point scale and had an overall mean rate of 3.5530. A Mann-Whitney nonparametric test was performed on the competency data to assess whether the competencies identified by gender resulted in the same distribution. Analysis of the competency data revealed

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that the competencies with the mean highest scores were ordered differently between men and women, and that three of the top ten competencies with the highest mean result were “soft skill competencies”; professional and ethical judgment, systematic problem solving, and working in partnership with clients. The “soft skill”, “analytical thinking” ranked number eleven and number twelve by men and women respectively. Analysis further revealed that that there were statistically significant differences in two of the ten competencies. “Negotiations” ranked the most important competency for women, but ranked the sixth most important competency for men, and had a “p” value of .025. “Building Systems” ranked the fifth most important competency for women, but was ranked the nineteenth most important competency for men, and had a “p” value of “.015”. Analysis of the competency data revealed that the ten competencies ranked by Gender as “Most Significant” and had the highest mean results were: Male Ranking 1 Leadership 2 Construction Management 3 Professional and Ethical Judgment 4 Contract Documents 5 Plan Reading 6 Negotiations 7 Problem Solving 8 Working in Partnership with Clients 9 Analytical Thinking 10 Scheduling

1.4167 1.4545 1.5000 1.5682 1.5682 1.5758 1.6364 1.7121 1.7273 1.7348

Female Ranking 1 Negotiation 2 Construction Management 3 Plan Reading 4 Leadership 5 Building Systems 6 Professional Ethical Judgment 7 Systematic Problem Solving 8 Business Skills 9 Contract Documents 10 Working In Partnership With Clients

1.3125 1.3750 1.4375 1.4375 1.5000 1.5000 1.5000 1.5625 1.5625 1.5625

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Limitations The interpretations of the results of the study are not without limitations. First, the results indicated a ranking of specific key competencies needed to be an effective construction project manager in the U.S. construction industry, but the key competencies list was developed by the researcher after a thorough review of previous studies of key competencies. The range of key competencies limited the selection and thus may have skewed the results of the study. Second, participants in the study were construction project managers employed by commercial construction entities that are statistically in the top 400 grossing U.S. construction entities; thus the findings may not be indicative of the ranking of key competencies needed by smaller commercial construction entities.

CONCLUSIONS AND RECOMMENDATIONS The result of the study is a ranking of key competencies needed to be an effective project manager in the U.S. commercial construction industry. It was found that both hard skill competencies requiring technical ability and/or proficiency, and soft skill competencies that focus on the interpersonal relationships and workplace productivity are ranked highly. In total, six hard skill competencies were ranked as the most significant to be an effective construction project manager, and leadership was ranked as the overall most significant competency needed to be an effective project manager. Analysis of the competency data revealed that four of the top ten competencies with the highest mean result were “soft skill competencies”, professional and ethical judgment, systematic problem solving, working in partnership with clients, and analytical thinking. Additional research needs to be conducted into this area to determine if soft skills need to become a greater focus in construction education, continuing education and/or training. The findings of this portion of the study are significant in that the four competencies selected with the lowest mean scores were; “Human Resource”, “Structural Analysis”, “Construction Surveying” and “Graphic”. This result is significant because three of these competencies are required curricula for construction management schools accredited by the American Council for Construction Education. A reassessment of the curricula requirements for accredited construction

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management schools may be needed to ensure that the curricula and the needs of industry are congruent. Significant findings with respect to gender were that the ten competencies with the highest mean results for men were not congruent with those identified by women, that several of the competencies that were identified by both genders were not ranked in the same order, and the mean result of two of the competencies, “negotiations” and “building systems” were found to be statistically significant. Further research is needed to determine if gender specific construction education is indicated. Lastly, it is recommended that further research be undertaken to determine if the ranking of key competencies are similar in other U.S. geographic areas. It is also recommended that industrial, utility, highway, and residential construction industries be studied to determine if the ranking of key competencies identified in the commercial construction industry are similar in all construction disciplines.

REFERENCES Abraham, S., Karns, L., Shaw, K., & Mena, M. (2001). Managerial competencies and the managerial performance appraisal process, Journal of Management Development, 20(10), 842-852.

Goodman, R. E., & Chinowsky, P. S. (2000). Taxonomy of knowledge requirements for construction executives Journal of Management in Engineering, 16(1), 80-89. Latham, M. (1994). Constructing the team: Final report of the government / industry review of procurement and contractual arrangements in the UK construction industry. London: HMSO. Mincks, W., & Johnston, H. (2003). Construction jobsite management (2nd ed.). Florence: Thomson-Delmar. Rigolosi, S. A. (2001). Tools for success; Soft skills for the construction industry. Upper Saddle River, NJ.: Prentice Hall. Souder, C., & Gier, D. (2006). What does the construction industry expect from recent construction management graduates? Paper presented at the 42nd Annual Conference of the Associated Schools of Construction. Udo, N., & Koppensteiner, S. (2004, April 18, 2006). What are the core competencies of a successful project manager? Paper presented at the 2004 PMI Global Congress, Prague, Hungary.

Appendix I Mean Competency Response Results

Archibald, R. D. (2004). Part 1 - Project management within organizations. Paper presented at the Project Management Symposium on PM: Project Manager Role Evolution, Rome. Bent, J. A. (1996). Effective project management through applied cost and schedule control. New York: Marcel Dekker Bratton, D. A. (1998). Develop a framework of core competencies. Credit Union Magazine, 64, pp.17-18. Competency-Based Learning Goals. (2012). Retrieved November 27, 2012, from http://ipt.boisestate.edu/ about-ipt/competency-based. Dainty, A. R. J., Cheng, M. I., & Moore, D. R. (2005). Competency-based model for predicting construction project managers’ performance. Journal of Management in Engineering, 21(1), 2-9. El-Choum, M. K. (2000). An integrated cost control model. Paper presented at the 2000 AACE International Transactions, Morgantown, WV. Gharehbaghi, K., & McManus, K. (2003a). The construction manager as a leader. Leadership and Management in Engineering, 3(1), 56-58. APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


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General Interest Articles from The AGC James L. Allhands Essay Competition Each year the Associated General Contractors Education and Research Foundation (AGCERF) sponsors the James L. Allhands Essay Competition. The competition is named for (and funded by) the late James L. Allhands, a founding member of the AGC who spent his career as a prolific writer of construction related books. The essay competition is open to any senior level student in a four or five year ABET or ACCE accredited university construction management or construction related engineering program. This year’s topic, ‘Setting the Standard for Ethical Behavior and Legal Compliance’, generated submissions from across the nation. Judging was conducted by AGCERF board members who are among the most esteemed leaders in the industry. The first place selection was Jacob Kleiman of Marquette University, the second place selection was Todd Rapoport of Clemson University, and tied for third were Matthew Dunk and Sean O’Shea, both from Texas A&M. All essays can be found on the AGC Foundation web site, http://www.agc.org/cs/about/ foundation/award_recipients. The 2014 competition will open in July, 2013 and essays are due in November. First place winners and their faculty sponsors are awarded cash prizes of $1,000 and $500, respectively, and will be invited as guests (all expenses paid) of the AGC Foundation to the March, 2014 convention. The second place winner is awarded $500 and third place, $300. The topic for the 2013/2014 competition is “Using Virtual Construction Tools for Pre-Project Planning.” For more information on submission guidelines please see www.agcfoundation.org. With AGC’s permission, this issue of The Professional Constructor is featuring the 1st and 2nd place essays for 2013 in our general interest category. We trust that our readership will enjoy reviewing the work of two top performers who will soon be graduating and starting their construction careers.

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Placing the Ethical Cornerstone Jacob Kleiman Marquette University 15 November 2012 ABSTRACT: Setting standards for ethical behavior and legal compliance is a pivotal issue in the construction industry today. Contractors are actively changing the construction scene by teaching project managers to lead by example, characterizing the ethical expectations that positively reflect their company and industry as a whole. Communicating through open channels that advocate respected behavior, loyal relationships are forming, creating reliable trustworthy reputations for contractors. With a blueprint to shape new ethics and business conduct programs, contractors are beginning to commit to the comprehensive changes necessary for advancing ethical and compliance practices, infusing creditable values that become engrained into their company. It is 5:23 a.m. The morning has begun with grey skies and a slight drizzle, leaving the air blanketed with a cool misty haze. The early commute to the jobsite is saturated with the thoughts of the upcoming day, and based upon the gloomy weather outside; it might be a long one. Upon your arrival at 5:54 a.m., you park your truck and meander across the muddy terrain to the job trailer. As you enter the job trailer your phone rings, it is your boss. He is calling to remind you that the project owner is coming to the site later today for a meeting regarding the recent bulletin changes and impending change orders from the project subcontractors. After discussing the particulars with your boss you feel confident about the upcoming owner’s meeting. That feeling lasts until you receive an email from your decorative metal subcontractor at 7:24 a.m., who has sent you his recent change order request. It is fifty thousand dollars over budget, and it does not reflect the scope changes highlighted in the bulletin. You’ve heard rumors about this subcontractor’s corrupt nature in the past, but have never experienced their business practices personally.

Setting the standard for ethical behavior and legal compliance is a pivotal issue in the construction industry today. Standards for ethical behavior and legal compliance set forth a plan to correct the dishonest and improper practices within the construction industry. Practices such as bid shopping, payment issues, asset misappropriation, fraud, change order games, and bribery have infected the industry for years, and construction professionals are finding new ways cure the disease of unethical behavior (“Make Ethics a Cornerstone”). Through internal compliance and ethics programs, contractors are teaching project managers to lead by example, to delegate solutions to ethical problems in a way that reflects the quality and sound reputation of the company, and to define a construction culture that adheres to the standards of professionalism and integrity. By educating through these programs and methods, individuals can actively portray the standards expected for ethical and legal compliance, shedding a new light on construction practices.

Now you are caught between a rock and a hard place as this is the only subcontractor capable of doing this type of work in the area. With the owner’s meeting looming on the horizon and an approaching change order storm forecasted, this ethical and compliance debacle is heading toward a heavy downpour. How will you, the project manager, handle this ethical dilemma? The answer lies in the foundation of your character and the context of your actions.

For contractors to get out of the shadows and into the light, it is vital to characterize the ethical roles and expectations. The initial practices of ethics must start at the top of the company, where the values of the CEO can trickle down to the people in the office and to the field personnel on the jobsite. When you are the project manager on a job with a demanding owner, setting the standards for ethical and legal compliance starts with you. The project manager is the leader of the

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construction site, and should lead by example using the qualities of honesty, loyalty, and responsibility. Your role as project manager is not only to carry out the project on time, within budget, and with upmost quality, but to implement the ethical and legal compliance standards that define your character and your employer. It is your responsibility to ensure that you and others practice these standards, leading your associates, various tradesmen, and other subcontractors in the right direction. By characterizing what is ethically expected of project individuals, problems that raise ethical or compliance concerns can be avoided, strengthening the overall integrity of the company. To instill standards of ethical and legal compliance on a jobsite, you need to openly define the standards required, providing a clear vision that allows for complete understanding. This clear vision of understanding starts by refuting the thought that a common wrong action makes it a right action. Stating the ideas, principles, and attitudes that are seen as “right or wrong,” gives people some direction on how to act properly, especially in the situations that are not clearly black and white (Scalza 2008). It is the grey areas of uncertainty where moral guidance and understanding is needed most and by openly communicating how the ethical mindset can be applied, decisions with positive consequences will result. Project managers are the directors of practicing solid moral judgment on jobsites, representing and enforcing the ethical values through an unclouded frame of reference. By leading field personnel to see how each ethical trait can be applied to contentious situations, increased cohesion among the multitude of trades can increase project productivity and overall company profits. Through a vision that encourages the practice of positive ethical standards and legal compliance, a company can build quality and genuine relationships with other contactors and owners, setting the tone for being a respected and creditable contractor to work with. When owners and subcontractors experience numerous instances of policies that uphold ethical values, relationships of trust and loyalty form. A company’s ability to acquire and maintain clients is directly related to how those clients see the company’s

ethical standards from both upper management and employees (Scalza 2008). A construction company that treats everyone in a fair and reasonable manner is likely to be successful, attracting the top employee talent and strengthening the bottom line. “According to the New York City based Ethisphere Institute, a think tank for ethical business practices, the firms on its World’s Most Ethical Companies list for 2011 outperformed the S&P 500 last year by returning 45% (income plus capital gains) compared with the 10% for the S&P index” (Moore 2012). By operating ethically and excelling past the static line of the ethical contentment that is prevalent in construction, companies are more likely to increase productivity, assess risk management, and positively fulfill contractual obligations with clients. The truthful character that encompasses a successful company is represented through these client relationships, and is shown by the personal and business ethics throughout the company. Noteworthy ethical and legal compliance programs that exist on projects create a quality reputation for a company, and are built on personal and business values that align seamlessly. Maintaining personal and business ethics goes hand and hand in applying concrete building practices. In an article in Electrical Construction and Maintenance, James Gill, Jr. a professor of construction law and ethics at Louisiana State University in Baton Rouge says, “Personal ethics tells us that if we are going to get along with one another, we shouldn’t lie, steal, and cheat. In business, the same thing is true. Business ethics is based upon a willingness to live up our word and provide all the necessary information that the other party can fill their obligations to us” (Parson 2005). Gill vividly illustrates the importance of the parallel values that should exist in the individual and the corporate culture, promoting both a universal trust in the employees and the company. This reinforces the good standing reputation of a contractor, ensuring that when you shake a client’s hand, the job is going to get done correctly with quality craftsmanship and personal integrity. Lending a helping hand that is reliable and dependable rewards both businesses and the entire construction industry. The construction industry is full of good, down-toearth, honest people, but it also bears the reputation for unethical monetary dealings and adverse

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relationships among various team members (Smith 2010). In a 2004 survey by FMI market manager, according to the responses of 270 owners, architects, engineers, consultants, construction managers, contractors, and subcontractors, 84% of respondents had “experienced, encountered, or observed construction industryrelated acts or transactions that they would consider unethical in the past year,” and 34% indicated they had experienced unethical acts “many times” (Parson 2005). The construction industry is tainted by the rampant trend of illegal acts, stamping a degrading impression that has carried on for years. Today, there are bigger incentives to do the right thing and harsher punishments for doing wrong. For example, in 2010, the median loss incurred by a contractor for fraud was $330,000 per incident, an overwhelming statistic that advocates for a change in ethical and compliance policies industry wide (“Make Ethics a Cornerstone”). The documented negative occurrences that run throughout the industry are all that is needed for contractors to develop a strong ethics policy and change the long held corrupt image. Changing the mentality throughout the industry may prove daunting and painful for some companies, but by the example of strong ethically operated companies giving a gentle push to advocate reform, the entire industry will gain the steam needed for positive change. Facilitating ethical and legal compliance changes will prove to be the most difficult challenge. For a project manager on the jobsite, techniques that promote ethical and compliance initiatives include training standards that enforce responsibility, integrity, and accountability, along with monitoring programs that ensure proper procedures are taking place. Through the use of training from the top down, jobsite team members will gain knowledge on various scenarios that require the reflection of consequences. In the inevitable grey areas that parade each day in construction decision making, communicating actively and productively with all team members will help generate possible strategies to overcome ethical dilemmas. Collaborating effectively is essential to the understanding of the ethical and compliance issues that exist on the project daily. Along with active communication come concrete ethical rules and monitoring programs. They should be used to indicate the levels of warning for questionable behavior, and grounds for termination if people

do not meet the standards of the company (Parson 2005). Ethical conduct on site should be discussed at project meetings and subcontractor negotiations, explaining that everyone working on the project will act in conjunction to the companywide ethics and legal compliance policy. With constant reinforcement, the ideas and values of ethical and legal compliance programs can be monitored to ensure that no violations occur. Earnestly enforcing ethical and compliance training and rules is a critical step for jobsite reform, providing a mode for practicing strong ethics and code of conduct policies. Tactics that are useful in beginning a strong ethics policy could be formed from the ethical blueprint explained by The Construction Industry Ethics & Compliance Program (“Blueprint for Creating” 2008). A contractor that is in the infancy stages of developing an ethics and business conduct program should perform the following steps: 1. Determine your company’s values that will be the foundation of your ethics and business conduct program. 2. Conduct a comprehensive risk assessment by looking closely at your particular business to determine areas of business and legal risk. 3. Include a written policy on ethics and business conduct in your company’s policies and procedures. 4. Establish a place for your employees, suppliers, customers and others who do business with your company to ask questions or raise areas of concern. 5. Continue to communicate your company’s commitment to ethics to your employees through ethic awareness initiatives such as ethics training or incorporating ethics discussion into regular staff meetings. 6. Develop a comprehensive communication plan for your ethics and business conduct program that allows you to manage the task of communicating your program’s elements to your employees. 7. Conduct regular program assessments and evaluations to help measure the effectiveness of your program. 8. Ensure that leaders show commitment to the program, as leaders set the tone and culture of an organization, including its attitude about ethics.

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These steps summarize the essential features that are the cornerstone of ethical and legal compliance programs in the construction industry. As an onsite project manager of a difficult job, these steps should be clearly identified in the jobsite trailer, visually displaying what is expected of the project management team and field tradesmen, identifying the proper steps for exercising moral principles and legal compliance. These revered ethical and moral principles have been infused into my heart and soul through my childhood upbringing and my education. Growing up in a small Wisconsin lakeshore town, I learned from an early age the importance of respecting others through the qualities of fairness, honesty, and integrity. I learned that the most paramount values in life have nothing to do with material wealth, but rather the temperament of one’s character. This temperament of my demeanor was strengthened when I came to Marquette University. Marquette is built on the pillars of service, excellence, leadership, and faith, pillars that resound a deeper meaning that echo down to my core. These pillars have led me on a journey that intertwines every aspect of my wellbeing and personality. Learning through a lens that focuses on engineering theory, business theory, spiritual theory, and ethical theory, all of my experiences at Marquette have fastened me with preparedness to bring knowledge and wisdom into the construction industry. My education has given me the ability to use this knowledge to uphold the moral foundations that are found within me, allowing me to implement fair judgment in circumstances that require a stable composed mind. In the construction industry, having these traits will allow me to construct relationships that translate into respect, respect into loyalty, and loyalty into trust, constantly building the content of my character. Designating the standard for ethical behavior and legal compliance will continue to transcend the industry, bringing a sea of change that reflects the ethical roles and character of construction managers. Through the professional example of project managers and the clearly defined ethical expectations, a complex project with numerous facets will be encompassed with moral integrity, enhancing the overall project quality and contractor reputation. The struggle will continue as countless construction companies try to overcome

poor ethical behavior and immoral practices. With the assistance of the Construction Industry Ethics & Compliance Initiative and the comprehensive learning of all project managers, standards for ethical behavior and legal compliance will persevere and become a mainstay industry wide. Remember, “the easiest way to keep people from discovering something for which you are ashamed is to avoid doing things for which you should be ashamed in the first place” (Smith 2010). By adhering to the cornerstones that define your character, every moral and ethical decision will represent the stature and the context in which you believe, giving you the ability to withstand any ethical downpour.

Works Cited “Blueprint for Creating and Maintaining an Effective Ethics & Business Conduct Program.” Construction Industry Ethics & Compliance Initiative. n.d. 3 November 2012. “Make Ethics a Cornerstone of Your Construction Practice.” Contractors Center Point. McKonly and Asbury. 6 September 2012. Web. 3 November 2012. Moore, Paula. “More Firms Adopt Ethics Programs.” Engineering News-Record. Engineering News-Record, 19 September 2012. Web. 4 November 2012. Parson, Ellen. “The Construction Industry’s Ethical Dilemma.” Electrical Construction and Maintenance. Electrical Construction and Maintenance, 1 August 2005. Web. 3 November 2012. Scalza, Alfred. “Teaching Students Ethics in this 21st Century Global Market” Ethics in the Construction Industry. 2008. Print. Smith, Jason. Construction Management: Understanding and Leading and Ethical Project Team. Santa Monica: Construction Analysis and Planning, LLC, 2010. Print. 10

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Setting the Standard for Ethical Behavior and Legal Compliance

Setting the Standard for Ethical Behavior and Legal Compliance Todd Rapoport 11/15/2012 ABSTRACT: The central figure to ethics in construction is the Project Manager because they interact with all parties involved in construction. The relationship that a Project Manager builds on a job with those parties is crucial to their personal success, the success of their employer, and reputation of the construction industry. For a PM to be successful in all these platforms, integrity and trust must be at the center of all decisions. If a Project Manager can keep these two ideals central to their decision making then ethical actions will follow. When one compares the construction industry and the concept of ethics, there are many red flags that immediately come to mind. Maybe it is the fact that the construction industry is a highly litigious sector. Rather, could it be the thought that significant portions of the industry lack a degree and formal ethical training that comes along with it? Or could it just be that the work is a far cry from the traditional office setting? While all of these statements are true, the main reason behind this view is a general lack of trust in the business. In the commercial construction industry, the focal point of this trust between the client and the construction company is the Project Manager (PM). The PM is given the responsibility of managing the owner’s project like it were his/her own, except they are spending the owner’s money. If the PM delivers a project successfully, they will have maintained the owner’s trust and have created a relationship. The construction industry is a relationship based industry, so if a PM can maintain a positive relationship with an owner, they are going to be very attractive to that owner and everyone in that owner’s network of friends. The formation of a positive reputation is when a PM starts to show their true value. Acquiring a positive relationship is no easy feat, for it evolves slowly over time and is quite difficult to reverse. PM’s have to make the correct choices on a job. “What am I making of myself – what will I become if I do this?” (Wueste) This is the driving question a PM must answer daily.

decisions on a daily basis seemed like a natural place to start. The first individual, Steve Foushee, is a PM out of Greenville, South Carolina. When Steve is involved in the preconstruction phase of a project, he is an integral part of setting the ethical standards of a project that hasn’t started. Steve stated that, “the ethical standards of a project manager on a specific job start when he takes the first bid on the first piece of subcontracted work,” (Foushee) the construction industry consists of a very tight knit group and if word get’s out that bids are being shopped, then a project’s pricing is going to be adjusted significantly. So as you can see, one’s reputation is a fundamental aspect of ethics in construction. The reputation that you establish doesn’t end with one project; if you change companies, more often then not, you will be working with many of the R same subs. An ethical reputation is developed over a long period of time; from the first day that you step foot on a job and are responsible for a sector of work.

Project Manager’s Role In order to put this conversation in context, learning about the perspectives of different individuals who are out in the field of construction and encounter ethical APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


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The topic of conversation when discussing a PM’s reputation boils down to trust and integrity. While there is a firm understanding of why trust is important to one’s reputation, integrity is a bit more complex. Integrity has different definitions depending on who you are discussing it with, but this definition hits the nail right on the head: “Integrity is an achievement, but it’ s not an achievement in the same way that getting one’ s diploma or winning a trophy is an achievement. These achievements involve closure – we’re done; the diploma goes on the wall, the trophy goes in the case. Integrity is an achievement without closure – it’ s the project of a lifetime.” (Wueste) What is so clear about the way Dr. Wueste describes integrity is that integrity is not about one event, but rather it is about a collection of those very events over the lifetime of an individual. This is such a sensitive subject because if one conducts themselves with a high degree of integrity in 99 of 100 scenarios, that 1 scenario with a lapse in judgment can significantly damage years of ethical decision making. The moment a new hire enters the industry, he/she is immediately going to be put into situations where their ethical standards will be called into question. At 22, this is a daunting scenario to approach, especially with the understanding that a poor decision making will stick with you. While the individual (in the case the PM) is key player in ethics externally, it is vital to have internal reinforcement. These tough decisions can become less of an issue if one has an employer enforcing ethical behavior and standing behind employees – an employer not willing to sacrifice ethics for the bottom line. Let’s shift things to the employer now, and take a look at management’s role in ethical decision making.

Why is this important to the reputation of your Employer? When the topic of an employer’s reputation comes up, one will be hard-pressed to find an individual or a company that doesn’t take this subject seriously. The reason being is that no matter what position you currently hold, that company name is a brand that reflects on you. It is a source of great pride for many individuals, and a result of years of hard

work and dedication. Employers are tasked with providing the ethical foundation for their company; setting the standard for employee’s conduct in the internal and external environments. Since the PM is an integral piece in project delivery, they are the key outward extension of an employer’s ethical culture. Employer’s reputations depend primarily on the PM, thus significant resources must be allocated to a) the communication of employer principles and b) making sure the principles are being implemented.

The aspects of a successful employer’s ethical foundation are honesty, responsibility, and relationship driven decision making. These concepts are meant to guide employee’s decision making so that they are never put in a position where they don’t know how to react. Responsibility was a tenant which Steve spoke about stating, “...industry stakeholders need to know that I (Steve) am going to uphold a very high ethical standard, and a crucial aspect of upholding this standard is being responsible on the job.” (Foushee) PM responsibility is a vital part of establishing an ethical reputation for one’s project. This statement is especially relevant because of the design-build nature of Steve’s experience, and the amount of unknowns which bidders must account for. One must be cognizant of the nature of work, and understand that just because something is technically ethical, doesn’t mean it is the responsible decision to make. This is a prime example of a code of ethics only reaching so far, and then the PM stepping in and making the ‘right” call. Making a responsible decision might cost a firm a few thousand dollars in profit, but one can’t quantify the continual development of a strong employee and employer’s reputation in the construction industry.

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Setting the Standard for Ethical Behavior and Legal Compliance

Construction Industry Image As stated in the introduction, the construction industry is by no means the model of ethics in our world today. However, there have been many positive steps taken to improve the ethical image of the industry. The PM in particular is the individual on which so much scrutiny is placed, not only in construction, but during interaction with clients and owners. It is these relationships established during project delivery that truly set the standard for how outsiders view our industry. In discussions with Steve, he provided an excellent analogy. He stated that, “there are two ways in which clients view our industry and the people working in it. First, some people will view it as a commodity like toilet paper – a necessity but they want it for the cheapest possible price. Others will view people of the construction industry as partners – people whom are professionals in their role and bring knowledge to the table that is not readily available else where.” (Foushee) The PM’s role is to make them believe the latter, and to understand that the construction industry is one which years of experience and training is a necessity not an option. With the development of more design build work, the introduction of LEED, and the usage of Building Information Modeling (BIM), young professionals are entering the construction industry at a time when more technology is being used then it ever has before. In the past four years, it’s been very encouraging to watch the progression of the industry and recognize the bright future which lies ahead.

To clearly tie all the concepts together, a President of a local construction company once said, “strive to continually meet the expectations of your current client, not the construction industry standards,” (Workman). If one can do this effectively they will have a lot of success with clients and positively impact the construction industry’s ethical reputation.

Techniques Implemented to Develop Ethical Culture I had the privilege of speaking with Neil Workman, President of Trehel Construction. Neil brings approximately 30 years of experience in the construction industry to the table and has had a great deal of success in regards to design-build construction work. When discussing techniques that Neil has implemented over the years, he stated that he tries to keep things relatively simple under his watch. The technique that Neil claims has been the most successful is simply through demonstration – “if you make a mistake, admit it, and fix it,”(Workman). It is really as simple as that when it comes to most errors in the construction industry. Think about all the times when individuals have tried to cover up a mistake – more often than not – it ends poorly for all parties involved. It is so much more beneficial to be proactive then reactive in these situations, and having an industry leader make that statement is very comforting.

From an ethical standpoint, the use of technology and other new additions to the industry only enhance the image of the industry. For example, BIM is an important tool that can be used for clash detection. From the owner’s perspective, if that clash had not been detected prior to construction, he/ she most likely would have viewed it as a PM’s error and possibly felt like his/her trust in the PM was being taken advantage of. However, with the use of technology, potential problems can be identified and solved in the preconstruction phase. The blame-game and finger-pointing are not even relevant because the contractor leveraged his tools and his experience. Ethically it is a contractor’s responsibility to implement technology to ensure that the construction project is as successful and efficient as possible. This example strengthens the importance of ethics in maintaining the reputation of an employer. APRIL 2013 — Volume 37, Number 01 The American Institute of Constructors | 700 N. Fairfax St., Suite 510 | Alexandria, VA 22314 | Tel: 703.683.4999 | www.professionalconstructor.org


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While the statement that Neil made was very simple at first glance, it really needs to be broken down into a few complex ideals to grasp the concept. The first being communication; Neil stressed the importance of communication with clients, especially those who lack construction experience. “As the center of attention in a company (President/Project Manager), all eyes are going to be on you and how you conduct yourself in tough situations.”(Workman) Taking advantage of a client just because they can’t tell if a door is out of plumb, is not a practice that is going to lead to long term success for yourself or your company. While levels of communication between contractors and different owners are going to vary according to project, standards of quality should never change. Ethical situations usually don’t arise when everything is going as planned and there are no discrepancies between the client and the contractor. However, when there are differences or problems, this is when ethical situations become an issue. This is the point in time when companies must rely on the backbone of their organization, their values. Values, or standards, are a top-down ideal – they start with management and trickle down the organizational chart to entry-level positions. Having strong values is a very important foundation that companies leverage in ethical situations. PMs must play a role in setting these values for their company because without strong values, a leader will more times then not fail. So take the time to focus on values, and be intentional when discussing them. They are a standard of your company, not an option!

Education Experience Impact Academically, there has been significant preparation in regards to learning and understanding how to establish and practice ethical standards in construction. In CSM’s curriculum, ethics has been a topic which was addressed and related to the particular subject being studied. For example, in estimating, the class discussed at great length about bid-shopping and how this is truly a serious issue in the construction industry. However, there is still a feeling of anxiety and lack of preparation because ethics has been discussed in class but never been an issue faced in real life. Unless you are out on a job site and put in the position where you must make an ethical decision, you really can’t be fully prepared for this in a class room setting.

It was interesting speaking about ethics education as it relates to construction with Neil Workman. While he is the President of a successful construction company, he didn’t study construction, instead he studied economics. Therefore, his opinion on ethics education and its impact on how he runs Trehel Construction is unique because he didn’t study construction ethics. Rather, when Neil did start working in construction, he decided that the traditional hard-bid contracting method was very inefficient and lacked the sense of a project “team”. The industry as a whole is moving towards a team approach, and one can make the assumption that ethics training in construction is developing differently now to reflect this project team approach. “...no longer were the construction issues a matter of who’s fault is it and who is going to pay for it, instead it is a team-driven effort to find the best possible solution.”(Workman) When this “team” attitude is adopted by an organization, it completely alters the way the architect, project manager, and client approach a project. Discussing ethical situations in hard-bid situations is yesterdays education, today we need to be discussing the ethical issues of design-build work.

Conclusion Ethical issues are very common in the construction industry and the individual who is central to ethics and establishes construction standards for the project is the Project Manager. The PM has the opportunity to adopt an ethical approach that fosters project success and owner satisfaction. The PM is the focal point of communication, they form their personal and professional reputations, and they gain the clients trust when the project is successfully run. Integrity is at the heart of ethics, and each and every day a PM steps onto a job site they have an opportunity to improve, or severely damage, the reputation of themselves, their employers, and the entire construction industry. Are you ready to be a project manager?

Works Cited Daniel E. Wueste, “Ethics as a Practice, AToolbox Approach.” 2011 Robert J. Rutland Institute For Ethics, pp. 1-7 Workman, Neil. “Ethics in the Construction Industry.” Telephone interview. 12 Oct. 2012. Foushee, Steve. “Ethics in the Construction Industry.” Telephone interview. 1 Oct. 2012.

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Constructor Certification Constructor Certification gives you formal recognition of the education and experience that defines you as a professional. Becoming certified will set you apart in a highly competitive industry as an individidual who has committed to a higher set of professional and ethical standards. Upcoming Examinations: November 2, 2013 – Register online at www.professionalconstructor.org. Benefits to the Constructor: • Provides an internationally recognized certification of construction management skills and knowledge. • Provides an analysis of individual strengths and weaknesses in the subject areas tested. • Enhances the Constructor image as a professional to their employer, their clients, and the public. • Provides a marketable credential that sets you apart. Benefits to the Employer: • Provides an independent assessment of an employee’s skills and knowledge, based on a comprehensive national standard. • Provides a recognized credentialing within your company that improves marketability to clients. • Provides assurance that employee will continue to hone their skills, through the required Continuing Professional Development program. Benefits to the Owner: • An increased level of assurance that their projects will be managed more effectively. • Could use the qualification as a means to pre-qualify contractors • Knowledge that their contractor management team will be more professional. Learn more online at www.professionalconstructor.org.


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Reviewer/Publication Interest Survey The Professional Constructor is a refereed journal published two times a year by the American Institute of Constructors (AIC). Each author’s manuscript submission is given a blind review by three AIC members. to evaluate the content and style, and appropriateness as either a general interest or scholarly publication. Based upon the decision of the reviewers, each article is accepted or rejected for publication. Acceptance can be predicated upon incorporation of reviewer comments. Approximately 10-15 articles are published annually in The Professional Constructor. To maintain our high standards of publication, AIC requires the support of competent and committed reviewers. We would like to express our deep gratitude to the following reviewers of the articles published in the Journal’s Spring and Fall 2012 Issues: Tariq Abdelhamid, Adam Alexander, Robert Aniol, Heber Arch, Bernard Ashyk, Conrad Benitez, David Bierlein, S. Narayan Bodapati, Richard Boser, Curtis Bradford, Stephen Byrne, James Caldwell, Matthew Conrad, Bruce Demeter, Mark Federle, Mike Golden, Frederick Gould, Thomas Hullen, Roger Liska, Tanya Matthews, David Mattson, Hoyt Monroe, George Morcous, Jens Pohl, Kyle Potts, Randy Rapp, Wayne Reiter, Ihab Saad, M.G. Syal, Kenneth Tiss, James Tramel, Andy Wasiniak, Mike Whittaker, Tony Wintz and Ronald Worth. We are always looking for additional industry professionals that are interested in serving on our review board. To help ensure reviewers continue to be selected based upon competency and interest, we ask that prospective reviewers take a few minutes to complete the survey below. The reviewer survey and manuscripts for publication consideration should be submitted to: Jason Lucas, PhD Assistant Professor Department of Construction Science and Management Clemson University 2-136 Lee Hall Clemson, SC 29634-0507 jlucas2@clemson.edu (864) 656-6959 Please place a mark beside each keyword that is a topic area indicating your expertise or interest. Thank you, in advance, for serving as a reviewer for The Professional Constructor. Name: ______________________________________________________ Member No.: __________________________________ E-Mail: ______________________________________________________ Phone No.: ___________________________________ Address: __________________________________________________________________________________________________ ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________

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American institute of Constructors Constructor Code of Ethics The Construction Profession is based upon a system of technical competence, management excellence and fair dealing in undertaking complex works to serve the public safety, efficiency, and economy. The members of the American Institute of Constructor are committed to the following standards of professional conduct: I. A Constructor shall have full regard to the public interest in fulfilling his or her responsibilities to the employer or client. II. A Constructor shall not engage in any deceptive practice, or in any practice which creates an unfair advantage for the Constructor or another. III. A Constructor shall not maliciously or recklessly injure or attempt to injure, whether directly or indirectly, the professional reputation of others. IV. A Constructor shall ensure that when providing a service which includes advice, such advice shall be fair and unbiased. V. A Constructor shall not divulge to any person, firm, or company, information of a confidential nature acquired during the course of professional activities. VI. A Constructor shall carry out responsibilities in accordance with current professional practice, so far as it lies within his or her power. VII. A Constructor shall keep informed of new thought and development in the construction process appropriate to the type and level of his or her responsibilities and shall support research and the educational processes associated with the construction

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