Building the Case for Contruction Management - Iowa League of Cities

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Building the Case for Contruction Management - Iowa League of Cities

Building the Case forConstructionManagementDick Hierstein, IaCMA andLarry Gleason, CPMIHandouts and presentation areavailable Iowa League of online Cities // 2011 atMaking the Case for Construction Managementwww.iowaleague.orgOutline• Owner Perspective• CM Definition• Working Relationships• Why CM?• Project Approach– Pre-construction– ConstructionMaking the Case for Construction ManagementIowa League of Cities // 2011Owner Perspective• Construction Manager as Agent (Cma)• Early Involvement of CMMaking the Case for Construction ManagementIowa League of Cities // 2011


Timing of Decisions/ChangeOwner PerspectiveOutlinePlanning Pre-Design Design Construction$• Case Studies• Advantages of CM• Owner Perspective• CM Definition• Working Relationships• Why CM?• Project Approach– Pre-construction– ConstructionIowa League of Cities // 2011Iowa League of Cities // 2011Iowa League of Cities // 2011Making the Case for Construction ManagementMaking the Case for Construction ManagementMaking the Case for Construction Management


WHAT IS CM?Construction Management is a project deliverymethod that applies modern management techniquesto project planning, design and construction in orderto control time and cost and assure quality for theproject owner.The CM’s primary task is to represent theinterests of the owner throughout all phases ofthe project.Outline• Owner Perspective• CM Definition• Working Relationships• Why CM?• Project Approach– Pre-construction– ConstructionContractRelationshipsCONTRACTORSOWNERCMDESIGNTEAMIowa League of Cities // 2011Iowa League of Cities // 2011Iowa League of Cities // 2011Making the Case for Construction ManagementMaking the Case for Construction ManagementMaking the Case for Construction Management


Bridging CompetingProject InterestsBUDGETADVOCATESProject CostsContingency5%Other Owner20%OutlinePROGRAMADVOCATESMaking the Case for Construction ManagementCMDESIGNADVOCATESIowa League of Cities // 2011DirectConstruction68%Making the Case for Construction ManagementCM Fee1%On-Site Staff4%Genr'l Cond.2%Iowa League of Cities // 2011• Owner Perspective• CM Definition• Working Relationships• Why CM?• Project Approach– Pre-construction– ConstructionMaking the Case for Construction ManagementIowa League of Cities // 2011


Why CM? Early Construction Expertise Checks & Balances Value Engineering Targeted Bid Flexibility Bid Package Flexibility Cost SavingsManaging RiskManaging RiskWhen an entity is allocated a risk that it cannotadequately control, it will seek to protect itself againstthat risk in at least two ways:(1) up front, by increasing its contract price in orderto build in additional contingency to cover the risk;and(2) later in the project, by bringing claims ordemanding change orders to recover costs resultingfrom the risk.Making the Case for Construction ManagementIowa League of Cities // 2011Making the Case for Construction ManagementIowa League of Cities // 2011Making the Case for Construction ManagementIowa League of Cities // 2011


Managing RiskBid StrategyBid StrategyLow Individual Trade Package Bids Low Trade Combination Package Bids Low Traditional General Contractor BidSample Contingencies18%Design Contingency 13%8% 3%Construction ContingencyDesign ContractConcept Schematic Development Documents Construction• REQUEST BIDS FROM INDIVIDUAL TRADE CONTRACTORS• REQUEST COMBINED BIDS FROM TRADE CONTRACTORS• REQUEST BIDS FROM GENERAL CONTRACTORSP1 Multi-Scope 1,174,000$ P1-13,21 Grooms Co. 2,588,000$ P1-21 Grooms Co. $ 6,585,000P2 Arch. Woodwork 113,495P3 Alum,Glass,Glazing 228,311P4 GWB Systems 496,907P5 Ceramic Tile 53,832P6 Terrazzo 35,888P7 Acoustical 202,962P8 Aud Floor (Alt #1) -P9 Carpet & Resilient 133,989P10* Painting,Wallcover 171,190P11 Lockers 92,000P12 Lab Casework & FH 106,480P13 Aud Seating (Alt #1) -P14 Test, Adjust & Bal. 23,575 P14 Systems Mgmt. 23,575P15 Plumbing & Piping 917,875 P15 AAA Mech. 917,875P16 Mech. Insulation 142,000 P16 Eller Insulation 142,000P17 Fire Protection 213,700 P17 Midwest Fire 213,700P18 Ventilating 951,100 P18 Winger Contract. 951,100P19 Controls 261,480 P19 Accurate Mech. 261,480P20 Electrical 1,090,000 P20 DeVries Elec. 1,090,000P21 Aud Sound (Alt #1) -Total Bids $ 6,408,784$ 6,187,730$ 6,585,000CM Coordination Fee $ 161,310$ 161,310$ -Comparative Cost $ 6,570,094$ 6,349,040$ 6,585,000Making the Case for Construction ManagementIowa League of Cities // 2011Making the Case for Construction ManagementIowa League of Cities // 2011Making the Case for Construction ManagementIowa League of Cities // 2011


Pekin City HallBID STRATEGY BENEFITSBID STRATEGY BENEFITSLow Combination Trade Package BidsLow Traditional General Contractor BidP1 Concrete/Earthwork 827,400$ P1-20 $ 4,831,000P2 Sewer/Drainage 73,000P3 Paving 87,000P4 & 12 Multiscope 380,772P5 Masonry 658,000P6 Steel 410,500P7 Drywall/ACT 299,800P8 Roofing 87,100P9 Alum. Storefronts 184,600P10 & 11 Flooring 89,918P13 Elevator 48,145P14 Fire Protection 59,000P15 Plumbing, Piping 299,500P16 HVAC & Elec 708,800& 19P17 Mech Insulation 68,264P18 Controls 64,300• SECURE TRUE LOW BIDS• REDUCED MARKUPS AND FINANCING COSTS• INCREASE LOCAL CONTRACTOR PARTICIPATION• INCREASE TRADE CONTRACTOR COMPETITION• REDUCE CHANGE ORDER COSTSREDUCE CONSTRUCTION COST BY UP TO 10%P20 Data/Telecom 75,550$ 4,421,649$ 4,831,000Making the Case for Construction ManagementIowa League of Cities // 2011Making the Case for Construction ManagementIowa League of Cities // 2011Making the Case for Construction ManagementIowa League of Cities // 2011


Budget Development ChecklistCOST COST COST COSTPROJECT BUDGET OTHER BUDGETS PROJECT BUDGET OTHER BUDGETSCONSTRUCTION COSTSGENERAL CONDITIONS (cont.)Sitework $ $ Temporary Water $ $Foundations $ $ Temporary Gas $ $Floor System $ $ Temporary Sewer $ $Columns $ $ Temporary Office $ $Roof System $ $ Building Layout $ $Exterior Wall $ $Exterior Glazing $ $Interior Wall $ $ OCCUPANCY COSTSDoors $ $Specialties $ $ Movable Fixtures, Furnishings and Equip. $ $Equipment $ $ Artwork $ $Conveying Systems $ $ Relocation/Moving $ $Plumbing $ $ Technology $ $Fire Protection $ $ Occupancy Permit $ $Heating, Ventilating & Air Conditioning $ $ Open House/Dedication $ $Electrical $ $ Final Cleaning $ $General Conditions, Overhead and Profit $ $ Signs $ $Management Fees $ $ Keying $ $Design Contingency $ $ Phone System $ $Escalation $ $ Custodial Equipment $ $Construction Contingency $ $GENERAL CONDITIONSNOTES:1. Indicate cost or budget amount for each applicable item.Job Sign $ $ 2. If the cost or budget amount is not known but the item is applicable indicate withSite Fence $ $ a star.Temporary Roads $ $ 3. If an item is not applicable indicate with NA or a dash.Temporary Heat $ $Temporary Electric $ $Iowa League of Cities // 2011Making the Case for Construction ManagementConstruction Process• On-Site Staffing• Quality Control• CPM Scheduling• Financial Status Reports• Payment Control• Change Order Control• Warranty and Long Term SupportMaking the Case for Construction ManagementIowa League of Cities // 2011Dick Hiersteinhierstein@hotmail.com641-752-2364Larry GleasonLgleason@cpmi.com800-651-2764Making the Case for Construction ManagementIowa League of Cities // 2011

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