Spring 2018
The Journal of Professional CM/PM Practice
TABLE OF CONTENTS Board Chair Chris Payne, PE, CCM MBP President/CEO Andrea S. Rutledge, CAE
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The Disruption of Capital Projects 6
Non-Contractual Liability of Construction Managers For Injury of Third Parties
8
The Stryker Center:
Editor Danelle Prezioso Associate Editor Jacob Sanford CMAA Advisor, published quarterly by CMAA, reports on and follows the industry as a service to its members. Submission of articles, ideas, and suggestions to communications@cmaanet.org is appreciated and encouraged.
Managing Risk Through Private Sector P3 Experience 10
Coming Soon: A Newly Designed Website Exhibit at the 2018 National Conference & Trade Show
The Vision of CMAA is that all owners will realize capital project and program success by using professionally qualified Construction Managers.
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CMAA Copyright 2017 ISSN 1084-75327 Reproduction or redistribution in any form is forbidden without written permission of the publisher. Advertising opportunities are available. Contact Mark Gedris at mgedris@cmaanet.org for details.
CMAA News Rick Panos Appointed CMAA's First Visiting Certified Construction Manager
The Mission of CMAA is to promote the profession of Construction Management and the use of qualified Construction Managers on all capital projects and programs.
7926 Jones Branch Drive, Suite 800 McLean, Virginia 22102-3303 USA Phone: 703-356-2622 Fax: 703-356-6388 Email: info@cmaanet.org Website: www.cmaanet.org
Navigating The Digital Future:
Keville Scholarship Applications Now Being Accepted 12
The Need for Applying Project Management Strategies to Facility Closures
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2018 Project Achievement Awards Call for Submissions
FROM THE CHAIR TO LEAD OR NOT TO LEAD
While reviewing the educational program for the upcoming Capital Projects Symposium, I was impressed by the number of sessions that address leadership. Our membership clearly realizes the skills gap we are facing today, as it’s apparent through the sheer number of speaker proposals we received for this year’s Symposium. Topics to include soft skills, emotional intelligence, negotiations, communication, and collaboration will provide timely training needed beyond the technical books we studied in school. This emphasis is consistent with CMAA’s strategic discussions, as our Board of Directors has identified collaboration and leadership training as a priority for our industry. As we grapple with how to realize predictable outcomes, alternative delivery methods have developed. Over the past 20 years, the focus of alternative delivery methods has shifted from contract risk allocation to hybrid delivery methods with a priority on increasing collaboration. This is the key to success on projects and is often lacking. The fuel driving collaboration is leadership, starting with the owner. One reason many owners join CMAA is because they recognize the importance and value of good project management. Increasingly, our owner members recognize that they need enlightened management and bold leadership to move the industry forward. Like many CMs, I have spent most of my career focused on ensuring compliance of contractors and subcontractors—in other words, making sure they do the job they are contracted to do. But we as CMs can do better too, when we appreciate that we ARE leaders (or should be). Compliance and processes to facilitate execution of construction tasks are just the beginning. As CMs, our job is to give our owners the tools and information they need to make timely decisions. And owners can provide better leadership when they receive these from their CMs. How do we drive toward better leadership skills? There are no simple answers but, I hope you are planning to join us in Denver to get actively involved in collaborating and communicating with the CMAA leadership. If advancing leadership skills is your objective for 2018, I’ll see you in Denver.
Chris Payne, PE, CCM Mr. Payne is Executive Vice President/ Chief Operating Officer with MBP. He has more than 30 years of experience in construction management and design, performing a wide variety of services such as construction project management, inspection, CPM scheduling, and cost estimating. He has specialized experience in the resolution of construction disputes to include analysis of delays and expert testimony. He began his career as a structural engineer performing bridge design and consults on a variety of building and transportation programs, providing direct client coordination and strategic counsel.
BACK COVER 7926 Jones Branch Drive, Suite 800 McLean, Va 22102-3303 USA
INSIDE: Navigating the Digital Future: The Disruption of Capital Projects - P. 4 Non-Contractual Liability of Construction Managers For Injury of Third Parties - P. 6 The Stryker Center: Managing Risk Through Private Sector P3 Experience - P. 8
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Atlantic Yards B2, Brooklyn, NY 2017 Project Achievement Award Residential/Mixed Use: Construction Value Greater than $50 Million Owner: Forest City Ratner Companies CM: Turner Construction
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The Journal of Professional CM/PM Practice
The Cardwell Collaborative Building, El Paso, TX 2017 Project Achievement Award Healthcare: Construction Value Less than $50 Million Owner: Medical Center of the Americas Foundation CM: The Broaddus Companies
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Spring 2018
ON THE COVER
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NAVIGATING THE . THE DISRUPTION OF DIGITAL FUTURE . CAPITAL PROJECTS By: Steffen Fuchs, Tim McManus, James Nowicke, and Gernot Strube
With great value at stake, companies must transform rapidly.
roductivity in the construction sector has stagnated for decades, with the average capital project reaching completion 20 months behind schedule and 80% over budget. Some overruns result from increased project complexity and scale, but another factor also looms large: stakeholders in the capital projects ecosystem—project owners, contractors, and subcontractors—have resisted or been slow to adopt digital tools and platforms. These include advanced analytics, automation, robotics, 5-D building information modeling (BIM), and online document-management or datacollection systems. Meanwhile, companies in sectors ranging from government to manufacturing have significantly reduced costs and schedules by aggressively pursuing digital solutions.
A recent McKinsey analysis suggests that existing digital technologies, when applied comprehensively and efficiently, can reduce overall project costs by as much as 45%. Although this will not entirely eliminate construction’s productivity gap with other industries, digital solutions will produce more improvement than will any other lever. For E&C companies, the stakes are particularly high, since these cost reductions will soon determine whether they capture solid margins or experience financial struggles as competition intensifies. For owners, digital cost savings will be essential to completing projects more rapidly and within or below budget. For incumbents in the E&C industry, rapid transformation is critical to stay ahead. These firms are facing increased competition from technology companies, both established ones and start-ups, that have recently expressed interest in infrastructure projects, viewing them as ripe for disruption and a logical extension of their existing portfolios. Although incumbents have the advantages of market share and brand recognition, they could lose ground to digital natives.
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The situation is rapidly changing, however, since construction-technology firms have garnered $10 billion in investment funding from 2011 through early 2017, according to our research at McKinsey & Company. This surge has stimulated development of a wealth of tools and solutions for all project phases, from preconstruction through operations. The cost and productivity benefits that these innovations can offer are too large to ignore. While digital tools are not the only improvement lever available to construction stakeholders, and while they will not solve all productivity issues, they will spur the greatest performance improvement.
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in other “ Experience industries shows that companies that have
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Construction has the benefit of learning from many other industries that have undergone significant digital transformations over the past five years. Experience in other industries shows that companies that have been quick to embrace emerging technologies and develop new platforms—the first movers—have gained a strong competitive advantage. We expect the construction sector will follow a similar pattern, giving industry stakeholders an imperative to launch digital transformations now.
been quick to embrace emerging technologies and develop new platforms—the first movers—have gained a strong competitive advantage.
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Digital innovation within capital projects can take many forms. With change inevitable, stakeholders should focus on capturing value from digitization and the extent of their possible gains. Although capital-projects leaders may be tempted to implement any tool that appears promising, this blanket approach falls short because each company has unique needs. A better and more systematic method for
determining the right solutions involves first identifying a company’s most acute pain points, as well as the opportunities it would like to pursue. Managers can then evaluate which digital tools will help them achieve their objectives. We recommend an approach that classifies tools at two levels:
1. 2.
Clusters – The setting in which the tool adds value, such as on-site execution, back-office and digital collaboration. Tasks – Specific improvements that the tools can facilitate. Within on-site execution, for example, most tools assist either execution in the field or with tasks related to contractor management or supply-chain management. This two-step categorization can help companies identify the right tools to address long-standing problems and estimate potential savings. For instance, tools within on-site execution may help increase productivity, eliminate cost overruns, and create more transparency about performance. An analysis of construction projects across industries shows that these tools can produce savings of up to 20%, but the gains may be much higher. With information like this, companies can make informed decisions about the investments that will bring the greatest business value, allowing them to build a portfolio of solutions that can be integrated seamlessly into their operating models. Some digital solutions provide universal benefits. Although owners and E&C companies face unique challenges that will influence tool selection, certain ideas and solutions benefit virtually all organizations. We have identified five basic areas where all companies must add solid digital capabilities to catch up to industry leaders: •
Digital-project controls and workfront management. Companies
•
Capital-portfolio management. Construction stakeholders, particularly project owners, often struggle to manage diversified capital portfolios. Many widely available software programs can help, including those that track total portfolio expenditures, monitor progress, and flag potential issues that could raise costs or extend timelines.
•
Next generation 5-D building information modeling (BIM). Contractor management is difficult because documentation and project data tend to be scattered among different sources. 5-D BIM—the combination of 3-D physical models of buildings with cost, design, and scheduling data—can improve execution. While this technology is still developing, it is now sophisticated enough to be applied to most projects.
•
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Advanced analytics. Using machine learning, data-ingestion engines, and innovative pattern recognition, managers can now rapidly sort through millions of data points. With this capability, companies can compare the impact of hundreds of performance drivers on project or business outcomes. They can also identify the obstacles that raise costs and timelines. Next-generation surveying and prefabrication analysis. Virtual-reality tools help users view designs and prototypes, allowing them to interact with them as if they had already been constructed. That means they can see the exact size of various components before physical assets are fabricated. Similarly, advanced surveying tools help users understand as-built conditions and compare them with designs.
Capital-planning stakeholders must take action now to become digital leaders. With potential cost reductions of up to 45% on each project, both owners and E&C companies must now build a clear business case for digital investments by implementing top-down initiatives to identify opportunities, measure progress, and share successes.
reach all business units and levels within a company—are difficult to launch and maintain across project teams, which tend to have different processes and goals. To generate value without disrupting the core business, companies should consider establishing a “Newco”—a business unit with the specific skills and resources to facilitate digital change across multiple projects. Capital-projects leaders can avoid losing momentum in their digital initiatives by creating new organizational structures and processes that promote innovation— either within a Newco or within the existing business. Leaders should assign responsibility for developing and coordinating execution of the digital strategy to specific groups or individuals. In tandem, they must shift performance management and capability-building processes to place more emphasis on digital skills.
A review of past digital initiatives suggests that many fail because project leaders in the field are reluctant to implement new technologies, believing that they will increase costs and risks while conveying few benefits. To counter this perception, a company’s CEO and board members must take ownership of the digital transformation from the outset, focusing on three building blocks:
1.
Strategic direction and control: As a first step, CEOs and board members should create a comprehensive strategy, communicate it throughout the organization and develop a transformation road map with tangible objectives. They should prioritize investments based on their ability to address the company’s greatest needs and realistically assess the company’s digital capabilities.
2.
Project enablement: Companies should include a limited number of projects in the first wave of implementation, using clear selection criteria. Managers should also define and manage the scope of each digital initiative, noting the exact areas where it should generate improvement.
3.
Enterprise transformation: Comprehensive digital transformations—those that
Although digital tools will not eliminate all productivity issues, they represent the greatest improvement lever available. Companies that are slow to digitize, or that lack a bold, well-structured transformation plan, will lose ground. To make the big shifts that digitization requires, leaders must become less risk averse and adopt an aspirational mindset. While each organization may pursue different digital priorities, they must all share a commitment to large-scale change to succeed—and that means altering business and operational models to support innovation. Bold leaders and fast movers who aggressively support digital programs will likely reap the greatest rewards. The full report from McKinsey & Company, Navigating the Digital Future: The Disruption of Capital Projects, is available at McKinsey.com. Steffen Fuchs is a partner in McKinsey’s Dallas office, Tim McManus is a vice president in McKinsey’s Boston office, James Nowicke is an associate partner in the Houston office, and Gernot Strube is a senior partner in the Munich office. Steffen, Tim, James and Gernot are all leaders in McKinsey’s Capital Projects & Infrastructure Practice.
Advisor Spring 2018
may experience delays and cost overruns because stakeholders look at different data sources when monitoring performance, resulting in conflicting progress reports. A cloud control tower helps eliminate these issues by providing real-time information about critical activities in a central database that all employees can access.
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LEGAL CORNER
By: Henry L. Goldberg, Esq.
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onstruction managers’ (CM) legal exposure to an owner of a project are too numerous to discuss within the limited space of this article. CMs are often correct to feel that there is a risk looming around every corner of the construction site. By way of example only, such risks can range from the “bust” of cost and schedule controls to QC/QA failures, from endless punch list and closeout controversies to the inadequate “delegation of risk,” from adherence to environmental regulations to faulty geotechnical investigations, and from the challenges of “managing” design professionals to the resolution of changes, delays and other claims. Need I go on?
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CM liability to third parties on a project, on the other hand, is not as often encountered or considered. As the CM community is well aware, trade contractors in a typical “construction manager-agency” arrangement are in direct privity of contract, not with the CM, but with the owner and/or developer. This has long been the legal basis for shielding CMs from breach of contract suits brought by trade contractors for matters such as breach of contract for failure to suitably coordinate or properly and adequately supervise the work. As such, contract-based suits could not be sustained against a party with whom the trade contractors do not have a contract. However, while the lack of contractual privity with subcontractors or trade contractors protects construction managers from commercial contract liability, the nature of a CM’s particular
See generally, Lamar v. Hill Intl., Inc., 153 A.D.3d 685, 685, 59 N.Y.S.3d 756, 757 (2d Dept. 2017). 2 As with many states that have endeavored to provide enhanced 1
NON-CONTRACTUAL LIABILITY OF CONSTRUCTION MANAGERS FOR INJURY OF THIRD PARTIES relationship with the owner could open the door to liability of a different kind (i.e. tort), thereby exposing a CM to claims by a third party. An appellate case in New York recently restated the rule which would allow for the limiting, and even eliminating, the legal exposure to third party claims for negligence resulting in the bodily injury of a third party. Only minor modification or clarification of the CM’s duties and authority set forth in the CM’s contract could affect such protection. In Lamar v. Hill Intl., Inc., the New York appellate court has highlighted the liability to which CMs may be exposed (in this particular case, tort liability arising from New York Labor Law §§240(1) and 241(6). 1These Labor Law sections state the following in relevant part: §240(1): All contractors and owners and their agents…in the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure shall furnish or erect, or cause to be furnished or erected for the performance of such labor, scaffolding, hoists, stays, ladders, slings, hangers, blocks, pulleys, braces, irons, ropes, and other devices which shall be so constructed, placed and operated as to give proper protection to a person so employed…. §241(6). All areas in which construction, excavation or demolition work is being performed shall be so constructed, shored, equipped, guarded, arranged, operated and conducted as to provide reasonable and adequate protection and safety to the persons employed therein or
protection for hazardous work on construction sites, New York Labor Law §240 (known as the “Scaffold Law”) affords protection to construction site workers who are exposed to the risks of
lawfully frequenting such places. The commissioner may make rules to carry into effect the provisions of this subdivision, and the owners and contractors and their agents for such work… shall comply therewith. The pertinent question here, as in the appellate court’s decision, revolves around the legal concept of “agency.” When examined in a legal context, the term “agency” is an impressive term that can have varying definitions and reflect countless arrangements. For this reason, in the context of Labor Law §240, we must examine both what qualifies a CM as being an agent of the owner or the general contractor (“GC”), and whether the agency relationship, if one exists, exposes the CM to liability for the personal injury of a third party with whom it is not in privity of contract. If a CM has a contractual relationship with the owner, but not with the trade subcontractors, was it operating as a fully “empowered” agent of the owner during the course of the project? Or was the CM merely a contracted party tasked with completing prescribed assignments, with limited authority and control of field operations. The Lamar court dealt with these issues directly, and in explicit terms. The case was initiated by Willie Lamar, an employee of a joint venture tradecontractor that was hired by New York City’s Metropolitan Transportation Authority (“MTA”) on a subway extension project on Manhattan’s West Side. Mr. Lamar was, unfortunately, injured on the job as a result of a fall from a stack of blasting mats, which exceeded ten feet in height. In its decision, the Court denied an application by Mr. Lamar
working at elevated heights. The statute was designed to prevent gravity related accidents by imposing strict liability upon owners, contractors and their agents.
for summary judgment on the issue of liability on the part of the project’s CM on causes of action alleging violations of the aforementioned Labor Law Section 240(1) and 241(6). (These are typically won by injured construction worker-plaintiffs, since Labor Law 240 establishes a “strict liability” standard, which greatly exposes defendants to liability in such cases.) However, whether the suit involves an ordinary “negligence” claim or a “strict liability” claim under a statute, such as the Scaffold Law,2 the rules as to CM liability are basically the same. In the subject case, the court not only denied plaintiff-Lamar’s motion for summary judgment against the CM, it granted the CM’s cross motion, fully dismissing the complaint against it.
In light of the legal standard for liability set forth above, it is integral for our discussion to include the reasons the Lamar court felt that the CM was not (“sufficiently”) an agent of the owner or the GC. In the Lamar matter, the performance prescribed in the construction management services contract entered into between the defendant CM and MTA was essentially limited to the coordination of work done by trade contractors by way of communicating with the subcontractors to ensure that the project would be completed in accordance with cost, time, safety, and the reporting and quality control requirements set forth by the MTA.7
The Lamar court held that liability for a violation of Labor Law 240 (or simple negligence for that matter) can be imposed on a CM only where the injured plaintiff shows that the defendant construction manager “had the authority to exercise supervision and control over the work that brought about the injury so as to enable the defendant to avoid or correct an unsafe condition.”3
In this instance, “the contract did not confer upon [the construction manager] the authority to control the methods used by the contractors, including the plaintiff’s employer, to complete their work.”8 What the contract did not provide the defendant CM, however, was the authority to control methods used by the trade contractors to complete their performance under their respective subcontracts. The defendant CM, therefore, was only authorized to: (1) review and monitor safety programs and requirements; (2) make recommendations thereon; (3) provide direction to subcontractors regarding ways in which to correct detected unsafe conditions; and (4) to stop work only in the event of an emergency.9
Note that this rule is far from exculpatory for CMs, as a CM is often provided the ability to control the activities which bring about work place injuries. For instance, a CM will be considered to be an agent of the owner (or GC working at the pleasure of the owner), and thus liable to a third party for injury, when it has “supervisory control and authority over the work being done where and when a plaintiff is injured.”5 Expanding upon this premise, when a CM is unambiguously operating as an “empowered” agent of the owner, exhibiting supervisory control and authority over the scope and conduct of work being performed, liability will be limited “to those areas and activities within the scope of the work and authority delegated or, in other words, to the particular agency created.”6
153 A.D.3d at 685. See Walls v. Turner Constr. Co., 4 N.Y.3d 861, 863-64, 798 N.Y.S.2d 351 (2005); see also Lamar, 153 A.D.3d at 685. 5 Linkowski v. City of New York, 33 A.D.3d 3 4
This sounds like an easy remedy: insulate yourself by simply limiting your supervisory authority and control. But isn’t that very “control and supervisory authority” precisely what the CM’s client, the project owner or developer, expects from the CM? Doesn’t it compensate the CM for its valuable skill and expertise? Does the value of such skill and expertise not become greatly diminished if the CM is not granted sufficient control and authority?
failure to carefully “ The negotiate can,
Specifically, the Lamar court referred to the fact that the defendant CM “did not have control or a supervisory role over the plaintiff’s day-to-day work and that they did not assume responsibility for the manner in which that work was conducted.”10 This lack of authority by the CM over the subcontractors’ course of performance applied to the case brought by the plaintiff, as its employer was one of said subcontractors. Without the requisite control and/or supervisory authority over the trade contractors’ work, a construction manager is not equipped to prevent or correct any unsafe conditions, and, thus, cannot be liable for the accident.
971, 974-75, 824 N.Y.S.2d 109 (2d Dept. 2006); see also Walls, 4 N.Y.3d at 863-64. 6 Russin v. Louis N. Picciano & Son, 54 N.Y.2d 311, 318, 445 N.Y.S.2d 127 (1981). 7 See Lamar, 153 A.D.3d at 686.
however, draw the CM into territories it need not have traveled.
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It comes down to a balancing act, as is so often the case in contract negotiations. Better to invest in legal advice in contract negotiations, than for a legal defense in a personal injury action. As a skilled contract negotiator, the CM can, in fact, eliminate avoidable risks. The failure to carefully negotiate can, however, draw the CM into territories it need not have traveled.
Henry Goldberg, Esq. is a partner with Morrit Hock & Hamroff in Garden City, New York. This article was written with the assistance of Andreas M. Koudellou, an associate with Moritt Hock & Hamroff LLP’s Construction Law Group.
Id. (emphasis added). See id. 10 Id. 8 9
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As a rule, a CM is generally not responsible for the personal injuries of third parties on a work site, unless it (1) serves the role of, and functions as, an agent of the project owner or general contractor, and (2) it possesses the requisite authority and control4 on the site.
Commentary
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THE STRYKER CENTER:
MANAGING RISK THROUGH PRIVATE SECTOR P3 EXPERIENCE By: Don Young, PE, CCM
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n 2013, the City Council of Williamsburg, Virginia, was faced with a dilemma: deciding what the future held for the City’s 50-year-old Stryker Building, a landmark structure centrally located in the Williamsburg City Square. As with all aging facilities, the building had developed some significant issues including mold, poor ventilation, and not fully meeting Americans with Disabilities Act (ADA) accessibility standards. In 2002, an engineering survey recommended that the building, home to the City’s Council Chambers and several City departments, be demolished and replaced.
Advisor Spring 2018
Around this time, the nearby Williamsburg Library was running out of adequate space to accommodate its growing number of programs and classes and needed to significantly improve and update technology to meet the library’s future demands.
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As the City Council began considering options for the future Stryker Building, they were presented with information on the Public-Private Educational Facilities and Infrastructure Act (PPEA) of 2002. Put simply, the PPEA would allow the City to concurrently address the needed funding for the Stryker Building with the space and technology needs of the Williamsburg Library. The PPEA approach would allow the City to combine private resources to City funding for the development of the new Stryker Center. In addition, the new building’s prominent location in the City Square would provide a stronger sense of community for the City, making the new, revitalized building an ideal candidate for the PPEA process based on its site, its occupants, and the City’s needs.
After much deliberation and discussion in public forums, the City decided to enter into an agreement with the Williamsburg Regional Library Foundation to finance the Stryker Center using the PPEA approach. The City’s new facility would solve spacing needs by housing library administration staff, providing new meeting space, and serving as the home to the City Council Chambers. Why Public-Private Partnerships? Public-Private Partnerships have become more common in recent years, and for good reason. Also known as PPPs or P3s, Public-Private Partnerships have been utilized in many countries for decades, and just began gaining wide acceptance in the United States in the early 1990s. PPPs help to move developments forward by providing an alternative method to financing public capital improvement projects during times when public debt is rapidly increasing. PPPs are typically utilized in transportation, utility infrastructure, and educational facility projects, where there are strong tieins to the surrounding community. In the Commonwealth of Virginia, the PPEA was established to bring needed private sector expertise to public projects. The process is structured to save time and money by providing an alternative approach to
the typical public sector design-bid-build project delivery method. It has allowed private entities to “acquire, design, construct, improve, renovate, expand, equip, maintain, or operate qualifying projects,” as per the Code of Virginia, and encourages innovative approaches to financing construction and renovation. Over the past decade, the P3 approach has created the needed resources to build a comprehensive range of projects across the country including schools, wastewater treatment plants, and telecommunications. PPEA provides government entities with an option to build or expand public facilities at a more accelerated pace than if the public agency would solicit bids and award contracts through more traditional procurement methods. It is important for owner representative firms evaluating PPEA proposals to understand all the components required to achieve a successful construction program – one that is completed safely on time, within budget, and provides quality functional requirements. There are many advantages to PublicPrivate Partnerships: •
They utilize the advancements in private sector technology and building practices for application in the public sector.
A design-build approach helps to minimize change orders and normally shortens the overall project schedule.
•
The project is overseen by a single, integrated entity, which eliminates common discrepancies between the designer and general contractor.
•
The merging of public and private entities helps to strengthen the surrounding community.
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Alternative financing helps to reduce government debt and makes government funds more readily available for other services and programs.
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Selection in PPEA delivery is based on qualifications and best value – not lowest bid price.
•
The PPEA approach is a two-step submittal and review process with public presentations and hearings inter-mixed along the timeline.
•
The public entity has an “off ramp” (to cancel the PPEA solicitation) all the way up to signing the comprehensive agreement with the design-build team.
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Fosters an open exchange of ideas between the public and private sectors.
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Enhances transparency and public access to the PPEA proposals and contracts.
Owner rep firms need to provide proven and systematic PPEA support services to achieve public owner requirements for quality, function, cost, and timely delivery, while reducing and mitigating risk. PPEA evaluation services need to integrate all facets of the process – from project inception, programming, planning and design, to construction, commissioning, and occupancy – to provide an effective and cost-efficient form of risk management for these types of clients. For the Stryker Center, the owner representative assisted the City through the selection process and later assisted with developing the comprehensive agreement for the design-build team. There were five separate PPEA proposals that were evaluated and then assistance was provided with the shortlist interviews which led to the interim and comprehensive agreements under the
PPEA process.Additionally, independent commissioning agent services and owner representative construction management services during the construction phase of the project outlined “cradle-to-grave” support to the City for this key PPEA delivery. Like all PPEA projects, there are many stakeholder parties to coordinate with, which results in multiple clients. The owner rep assisted with guiding the City and Library by ensuring program requirements for both were coordinated and met regarding design intent and quality, allocation of funds for owner/ end user change, and with resolution of changes and differences. Partnering was very important amongst all stakeholders, as the overarching goal was to build the new Stryker Center in a cost-effective, safe manner, and to provide both end users with a high-quality, highly-visible project that would serve as a proud beacon to the community.
in critical path activities. The owner representative worked with the general contractor to develop options to allow the subcontractors to continue with the progression of work. The solution was to reduce the size of the work area to allow the tasks to be completed in a shorter amount of time which minimized the potential overall impact to the schedule.
2.
The slow response of public utility companies to install the underground telecommunication service lines could have created a delay in scheduling the final inspections with the City Codes Official and occupancy. The project team worked out a feasible solution based on the contractor’s detailed critical path method schedule of work. The owner representative worked with the contractor to verify that its baseline schedule and monthly updates were complete, realistic with respect to sequencing, and fully represented the work in the construction documents. Thus, progress on the Stryker project continued with non-critical path activities until the utility work was complete. The Result
Project Challenges As with all construction, there will be challenges that the project team will need to work through in order to achieve successful project delivery. At times, some of the normal project challenges can be amplified if the design-build team has not previously worked multiple projects together. This should be a key criteria for selection consideration during the procurement phase. Here are two examples of challenges that the Stryker project team successfully solved:
1.
The project started in the early Winter, which impacted the installation of the building foundation due to extremely cold temperatures and winter precipitation resulting in a 22-calendar-day delay
The original Stryker building was demolished, redesigned, rebuilt, and transformed to a single-story, 17,000-square-foot building that provided a larger, state-of-the-art facility that could house both the City Council and the Williamsburg Regional Library. Through the PPEA process, the City chose the designbuild team to best meet their requirements on this important project. The original design-build contract was $5,730,350 with less than 0.76% in change orders resulting in a final cost of $5,773,823. There were no claims with this project and zero recordable or lost time due to accidents. Lastly, the project was built to LEED standards. In summary, P3 delivery is a proven success method for governmental entities to use for their capital improvement projects. Risk is mitigated for the public agency by using the design-build approach within the P3 delivery. Owner representative firms can provide key value-added services to reduce risk, enhance quality, and successfully deliver projects for public owners from the conceptual start of a P3 project through project closeout. Don Young, PE, CCM is a Senior VP, Regional Manager at MBP. He can be reached at dyoung@mbpce.com.
Advisor Spring 2018
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CMAA NEWS
Exhibit at the 2018 National Conference & Trade Show
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ore than 1,300 of the construction industry's most influential leaders will want to meet you this Fall during the National Conference & Trade Show, October 14 - 16. Whether you offer hardware, software, procurement systems, tax and financial planning, marketing, consulting, CM services, equipment, insurance, human resources, legal services, recruiting, A/E services, publishing, forensic auditing, or business development, this is the year’s best opportunity to reach the construction/program management industry. You’ll meet and interact with construction managers from more than 400 firms like AECOM, Jacobs, CBRE/Heery, Parsons, HDR, Inc., Hill International, ARCADIS, HNTB
Articles Wanted!
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MAA invites you to submit an article for consideration to be published in a future issue of the Advisor. Publishing an article in the Advisor will help to establish you as an expert in your subject area and enable communication with your colleagues. The Advisor provides industry news and professional development to those in the construction industry and is published quarterly. Articles must be relevant, timely, and of interest to readers. Articles must be in Word, no more than 1500 words, and emailed to communications@cmaanet.org.
Corporation, Whiting-Turner, and Gilbane Construction. In addition, the conference draws leading owners from both the public and private sectors such as the U.S. Army Corps of Engineers, MTA New York City Transit, Port of Long Beach, LAUSD, U.S. General Services Administration, WMATA, LA Metro, and
the U.S. Dept. of Veteran Affairs, plus state Departments of Transportation, airports, school districts, water authorities, healthcare systems, and many others. Visit nationalconference.cmaanet.org for more information!
Keville Scholarship Applications Now Being Accepted
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he Francis M. Keville Scholarship was established in 2009 by Christine Keville, FCMAA through her firm, Keville Enterprises, Inc., in honor of her late father. Upon his death in 1989, his family established the Fortini-Keville Radiation Center at the Jordan Hospital, now part of Beth Israel Deaconess Hospital in Plymouth, Massachusetts, and the Francis M. Keville Memorial Trust Fund. The Francis M. Keville Scholarship, administered by the Construction Management Association of America
(CMAA) Foundation, honors Frank’s lifelong commitment to learning and opportunity, and reflects his values as a leader and professional. The scholarship is awarded each year to a female student pursuing a degree in CM or a related discipline, who has a record of leadership and engagement both on and off campus, and who is planning a career in the field. Visit cmaanet.org/foundation for details on how to apply!
Rick Panos Appointed CMAA's First Visiting Certified Construction Manager
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ick Panos, CCM has been appointed CMAA's Visiting Certified Construction Manager. Panos has been a CMAA colleague, PCM instructor, conference presenter, and committed CMAA member and volunteer for many years. His technical experience will be an asset not only to our professional development team, but to CMAA as a whole. Rick is currently the Director of Construction Management at Simplus Management, and has a
long track history performing construction/ project management services. Rick's role represents a new direction for CMAA and for the professional development team in particular. Through our new Visiting CCM, CMAA has access to Rick's experience, not only as a professional CM, but also as a CCM and an engaged CMAA leader and teacher. Welcome Rick!
COMING SOON: A NEW WEBSITE The site will include single sign-on features and a modern interface which will be intuitive, robust, searchable, and visual. Stay tuned for more to come as we work to improve the quality of services that we deliver to you, our member.
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early a year in the making, CMAA's new website will be unveiled in April. Designed with users in mind, members will have access to a full library of technical content, a robust bookstore, training options, materials, and more. Members will be able to find one another as well as potential teaming partners in our new member directory.
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THE NEED FOR APPLYING PROJECT MANAGEMENT STRATEGIES TO FACILITY CLOSURES By: Amin Terouhid, PhD and Jeff Katz, PE
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he global economic downturn nearly ten years ago forced many corporations to cease operations at facilities to minimize costs. With the global economy gaining momentum in recent years, corporations are now faced with the question of what to do with these dormant assets, many of which are encumbered by environmental liabilities. Due to the difficulty of managing costs and uncertainties associated with these assets, these corporations are seeking a higher level of accuracy, assurance and transparency in establishing the true cost of closing and offloading these assets.
remedial alternatives and/or means and methods. When the decision is made to close a facility, pre-planning, including establishment of scope, schedule development and budgeting – all tenets of a robust project management plan – is a key component of the closure plan development.
thought-out scope “ Abaseline is the most
A successful facility closure project requires the effective application of project management techniques to ensure that the closure procedure is safe, physically secure, and economically-, environmentally-, and sociallyresponsible. Ineffective oversight and the lack of sound project management strategies result in schedule slippages, cost overruns, and project failures; here are sound project management strategies to manage facility closures.
important output of a facility closure plan. Developing a Closure Plan
A closure plan is developed once closing is authorized. The closure plan is considered a project management plan specifically customized and prepared for a facility closure project and is among the most important documents that are prepared in early phases of a facility closure. This plan specifies how the project is to be implemented, monitored, controlled, and managed. At a minimum, a facility closure plan should satisfy the following requirements: •
Identify the steps required to close and stabilize the facility;
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Project the timeline of closure and stabilization operations;
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Estimate the budget required for cleanup and closure activities;
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Identify a proposed post-closure land use of the facility site; and
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Provide a post-closure monitoring and maintenance plan.
Advisor Spring 2018
Introduction
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Facility closure projects include the key phases of investigation, design, closure and remedy, and site transfer. Given the varying specific needs for each project, achieving successful and efficient closure of facilities requires proper management of project-specific strategies, constraints, assumptions, and objectives. This article aims to address key characteristics of facility closure projects to systematically identify appropriate project management strategies for effective management of facility closure projects. Some special characteristics of facility closure projects differentiate them from other types of projects. Unique aspects of facility closure projects include the central role of the authorities and regulatory agencies, complexities and challenges of compliance with standards, regulations, and requirements, high potential for unknown and unforeseen conditions, and implications of selecting different
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The closure plan should progressively be elaborated and updated during the progress of the project to ensure that changes in scope are properly reflected in its plan for execution. The facility closure plan usually contains a conceptual remedial design and identifies the remediation strategy. A preliminary scope of work, schedule, and cost estimate are usually included in a facility closure plan; and the level of detail in these documents is chosen such that the feasibility of the
closure can be demonstrated. Regulatory agencies usually issue a Record of Decision (ROD) once they receive and approve the closure plan. Establishing the Baseline Scope of Work The main phases of a typical facility closure project include pre-closure actions, closure and remedial investigation, feasibility study, record of decision, closure and remedial design, closure and remedial actions, and postclosure facility surveillance. The scope of some closure projects may not include a re-use for the facility. However, if a re-use plan is part of the scope, the project team should account for the efforts and time required for ownership transition. A thought-out scope baseline is the most important output of a facility closure plan. From this scope, a detailed projectlevel schedule and cost estimate can be developed. Poor scope definition adversely affects the ability of the project team to accurately forecast costs and durations and control work processes, and typically results in the need for additional resources to adjust course. The direct results of these adverse effects are usually schedule and cost overruns throughout the project lifecycle. To avoid these risks, it is recommended that the project team uses one of the industry-standard project definition methodologies to ensure the team has a common understanding of factors involved in project definition and identifies the main risks that may arise due to poor scope definition. Facility closure projects are susceptible to schedule slippage and cost increases from poor scope definition because of challenges identifying site characteristics, technical complexities, changing regulatory requirements and involvement of third-party inspectors, and implications of selecting different remedial alternatives and/or new technologies. Phasing review in early stages of work is an important aspect of time management for facility closure projects. Phasing review covers the entire project scope and helps the stakeholders to study the
key categories: general requirements, decontamination, demolition, waste handling, environmental treatment and restoration, moving and storage, utility, and calculating overhead cost.
Risk Management
Developing the Project Schedule
Due to the large number of uncertainties that surround facility closure projects, it is imperative that the project team devotes its maximum effort to identify as many risks as possible in early phases of the project. Examples of risks that may adversely affect a facility closure project include unexpectedly inferior condition of the existing facilities or infrastructure, noncompliance with applicable codes, standards, and regulations, unforeseen site conditions, changing regulatory requirements, and risks associated with the use of new technologies.
Schedules provide a platform for collaborating, communicating, executing, reporting, and presenting. They also serve as a baseline for project performance measurement, and a means for collecting and reporting progress. Project schedules play an important role in communicating the project’s execution strategy and detail the work plan not only to the physical closure team, but also to project stakeholders and regulators. Work authorization documents are among the main references and starting points for developing detailed project schedules. The project level schedule is usually presented in a network logic or bar chart format and consists of all phases, features of work, and project activities. The project level schedule should be sufficiently detailed and identify all site work and activities leading up to the objective of the cleanup and closure project. The detail and logic of the schedule will determine the critical path activities and help guide resource allocation. A detailed schedule is also an important tool for developing the project budget, as the schedule duration and resources required to meet the schedule goals dictate the manpower levels required and duration of general conditions costs. A baseline schedule, accepted by the participating parties, is an essential project management tool to ensure that time and cost performance of the cleanup and closure operations can be managed and controlled effectively. Estimating Project Costs Cost estimates should, among other things, consider the estimated quantities of resources (e.g., labor hours, services, material, or other physical resources) required to achieve the projected timeline of closure and stabilization operations. Resource-loaded schedules will help identify the future resource requirements. The scope of work required to achieve a complete closure identifies the elements of the cost estimate. A cost estimate prepared for a closure project usually consists of the following
identified and accounted for. A closure project baseline is usually prepared as a package that includes the abovereferenced project artifacts including the baseline scope, project control basis, basis of schedule, detailed cost estimate, and basis of estimate to achieve the closure project objectives.
Conclusion
Because of uncertainties, such as remedial alternatives, hazardous waste management strategies, changing regulatory requirements, economies of scale, and prolonged time interval between planning and implementation, quantification of the scope of work can be a challenging endeavor. Greater uncertainties are usually involved if difficulties characterizing the site are experienced or a need for trying new technologies exists. Therefore, the more pre-inspection and testing of the site that can be accomplished during the investigation stage, the more certainty can be established in the generation of the cost estimate to remediate and close the facility. Examples of difficulties with characterizing a site include identification of asbestos-containing materials, lead paint, onsite pollution, and tracing and identification of ground-water pollutants or subsurface contaminants. A detailed cost control baseline provides a basis for monitoring against which the project work is controlled. Cost estimating professionals should properly identify assets and liabilities to ensure inclusions and exclusions are fully
Facility closure projects primarily include the key phases of investigation, design, closure and remedy, and site transfer. These projects have special characteristics and needs; therefore, considerations for management of these projects shall be applied with special emphasis, attention, and focus. Too many variables and uncertainties make time, cost, and risk management of these projects extremely challenging, but critical to success. Addressing these challenges in advance and effective risk response planning play important roles in successful completion of closure projects.
This article represents an abbreviated version. To download the full article, visit https://cmaanet.org/files/files/project_ management_strategies.pdf#overlaycontext= Amin Terouhid, PhD is a Senior Project Manager with The Vertex Companies and can be reached at aterouhid@vertexeng. com. Jeff Katz, PE is a Division Manager with The Vertex Companies and can be reached at jkatz@vertexeng.com.
Advisor Spring 2018
feasibility of the closure plan to ensure that the project can effectively be completed with safe, physically secure, and economically-, environmentally-, and socially-responsible outcomes. One of the key outputs of the phasing review process is the list of constraints that should be considered during cleanup and closure operations.
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2017 Winner Commercial Construction Value Greater than $50 Million 2018 PROJECT AND PHILIP FROST ACHIEVEMENT AWARDS PATRICIA MUSEUM OF SCIENCE, MIAMI, FL Miami Science Museum CALL FOR SUBMISSIONS Owner: CM: Hill International
CMAA’s Project Achievement Awards program is the highlight of CMAA’s National Conference & Trade Show in October 14-16. Our awards program highlights the best of the best, those projects that serve as an example to the industry, and are true pinnacles of excellence and innovation.
SUBMITTAL INSTRUCTIONS
Each entry must be submitted online at http://cmaanet.org/2018-project-achievement-awards and will require: •
Basic information about the project and project team. Contact information is needed for each project stakeholder listed in the application. • Clear and concise details regarding the construction manager’s contributions to the success of the project. • Owner/client testimonials and quantifiable project outcomes. • High resolution (300dpi) images of the project - three during construction, three of the finished project. Submitter grants CMAA the right to use photographs submitted for marketing use by the association. • Payment for project nomination. The entry fee is $395 for members, $595 for non-members, which must be paid online at the time of submission.
Now is your time to shine. This year, the spotlight could be on you and your project team. Have you completed a project you’re very proud of? Do you want to recognize your project team’s commitment to excellence? Is your project an example of successful construction/program management? If yes to any of the above, we invite you to compete for a 2018 Project Achievement Award. Organizations both large and small are invited to submit project nominations. Awards speak volumes about the level of service a firm provides. Here’s your chance to showcase your best work to the entire industry – and be part of a productive multitiered program honoring your accomplishments. Winners in all categories/market sectors will be showcased throughout the National Conference & Trade Show, in association news, press announcements, and social media.
DATES TO REMEMBER June 1, 2018 - Project nomination submissions and payment due via online portal at http://cmaanet. org/2018-project-achievement-awards. August 3, 2018 - Submitters will be notified with status of nomination. Those firms who were not selected will receive feedback on why their project was selected. October 14-16, 2018 - CMAA National Conference, Hilton Denver City Center, Denver, CO. More than 1300 will be in attendance to honor the best of the best during our awards dinner held on October 16.
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ach year, America’s leading professional construction and program managers deliver creative and innovative projects around the world. Many of these projects have a great story to tell, regardless of size or complexity. Whether a small elementary school renovation, a large federal installation, or a dam, successful projects represent lessons learned in our industry, and we want to know about them! In addition to client satisfaction and praise, you deserve recognition from your peers as well. And we’d like to deliver that recognition to you and your team.
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7926 Jones Branch Drive, Suite 800 McLean, Va 22102-3303 USA
INSIDE: Navigating the Digital Future: The Disruption of Capital Projects - P. 4 Non-Contractual Liability of Construction Managers For Injury of Third Parties - P. 6
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The Stryker Center: Managing Risk Through Private Sector P3 Experience - P. 8
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