Many of our construction projects start as ideas with little formal documentation. We’ll walk through a facility, listen to our client’s ideas about the work, and start to help them define their project. We’ve successfully used Trimble (formerly Google) SketchUp software for a couple of years now to help do this.

Our clients typically need budget, scope, and schedule information to secure project funding. Taking the information from the walk-thru, we create a 3-D SketchUp model of the proposed work.  The model gives us a solid starting point to refine the concept and prepare the information our client needs for project approval.  3-D representations help clients visualize and understand the work better.  We can also color code the model for better scope definition.

Internally, SketchUp helps us to convey information to subs and vendors for pricing, quantify the work for estimating, and sequence the work for scheduling.  It’s also a good starting point for design firms if they are needed after the project is approved.  Best of all, we typically spend 2 to 4 hours on building a model – a great value for time invested.

We don’t typically use the Google Earth feature, but we do import objects.  It’s amazing what is available. Some manufacturers have an extensive product line available.  We try to limit what we import because while the detail is great, the file size grows quickly when they are included. Our models are simple and we find that works best at this level of effort.

There are certainly other software applications available other than SketchUp, but we stumbled across it a few years ago and have adopted it. The free version (http://www.sketchup.com/intl/en/product/gsu.html) was easy to learn and suited our needs.

 

Having the right materials and equipment at a project when they are needed is the goal of procurement and essential to meeting a schedule.  How long it takes to do that is frequently mis-understood, even by professionals.

A typical procurement process proceeds like this: specify, quote, analyze, purchase, prepare submittals, approve submittals, release for fabrication, fabricate, and deliver.  The time it takes to do all this is frequently called “lead time” and is generally referred to in weeks of time.

Most buyers expect “lead time” provided in vendor quotes to include all the time required from date of purchase to delivery. However, many times vendors use the same term (“lead time”) for the part of the procurement process they control beginning with approved submittals.  Vendors do this for a good reason – the time to secure approved submittals is mostly beyond their control and many have been burned by the “approve submittal” step taking much longer than expected. “8 weeks lead time” in a vendor quote is almost always from date of approved submittals and sometimes that qualification is not clear, especially when quote is verbal.

That’s where a lot of problems begin.

Depending on what is being procured, the time for the steps from “purchase” through “approve submittals” can take as long (or longer) as the time from “release for fabrication” through “deliver”.  The “8 weeks lead time” quoted by vendor could be 16 weeks or more from date of purchase. It will almost certainly be longer than 8 weeks from purchase.

For complicated, critical, or near critical items, we typically request lead time be quoted as “weeks to delivery from date of purchase including X weeks for required approvals” to get a clearer picture about total lead time for a purchase.  For non-critical items, we typically double the lead time quoted “after approval” for planning purposes.

If you plan your project using the wrong “lead time”,  the outcome won’t be good. Ask a question or two about lead time when you’re reviewing quotes – it could save time, money, and a lot of frustration.

 

 

Thanks to Bob Padgett, PE of Padgett Engineering Group (www.padgettengineering.com) for assistance with this posting.

Manufacturing facilities are focused on production and it seems non-process building components are a low maintenance priority. As facilities get some years on them, there are some basic building components that should be reviewed periodically.

One such component is a metal roof deck.  It’s an important structural element (diaphragm) that does more than support your roof – it also provides important lateral bracing for your building structure.  It is frequently loaded and unloaded by wind and rain, and is often covered by a ceiling or above bright lights making visual inspection a challenge. When first installed, the roof deck is usually either prime painted or galvanized giving it some basic protection from rust.  However, many manufacturing plants are relatively harsh environments and we see a lot of metal deck damage. Often, the damage is severe enough to be a concern.

When you hear of roof collapses, it’s usually when it’s raining. These types of collapses can begin as metal deck failures due to damage from rust, structural overloading from added equipment, or “beyond design weather events”.  Once roof deck or structural support failure begins, which may not be sudden or particularly noticeable, the local area sags encouraging water to pond.  The increased ponding compounds the overloading and sudden collapse can occur.  Nothing stops production like a hole in the roof – not to mention the life safety aspect of such an event.

If you have a facility with a metal roof deck, part of your preventive maintenance program should be the periodic inspection of the roof immediately after a rain to look for areas of ponding.  If ponding is found, look for the cause, including inspection of metal roof deck and structure below, and make the necessary repairs.  If the cause is not obvious, like a clogged roof drain, consult a structural engineer for an assessment and recommendations.  He’s a lot cheaper than the lost time, possible injuries, and repair costs of a collapsed roof.

 

We were in the lobby of a major client waiting for a meeting when the CEO of the company happened to come through on his way in.  Having met previously, we nodded in greeting and got a return nod.

Two others waiting in the lobby recognized him, stood to introduce themselves, and got probably 2 minutes of unexpected face time with the CEO.  Valuable time they proceeded to waste.

The younger (35 or so) of the two was on his smart phone the entire time and never made eye contact even while shaking hands.  Neither did he speak the entire time that we could tell.  The older of the two tried to salvage the opportunity by gradually moving to where his younger colleague was out of view of the CEO. But we think the first impression was already made.

What would your reaction be if that had been your employee?  Face to face communications is the most valuable interaction you have with a client. Wasting it by failing to focus on the people in the room with you is rude.  Rude is bad for business.

Some meetings seem to be gatherings where people are in the same room at the same time and mostly distracted from the meeting’s purpose by the electronic devices they bring along.  No wonder so many meetings seem to be a waste of time. Turn your cell phone off (or better yet, leave it somewhere else) when in a meeting.  Playing with it in your lap fools no one.  And that computer you might need? Keep it closed until you really do need it.

 

Construction contracts are typically tedious, detailed things attempting to address all conceivable legal issues that may arise in the course of a project. With large contract values and a complex effort, these complicated contracts probably make sense.

But it seems all the attention to fine tuning the wording and working out the “mutually acceptable terms and conditions” for the various legal and financial issues can distract from what the contract should focus on.

During a particularly tedious contract negotiating session where every word was being parsed; we, in jest, proposed scrapping the entire proposed agreement and substituting the following:

“We, _______(contractor) promise to do what we’re supposed to do, how we’re supposed to do it, when we’re supposed to do it and you ____ (owner) promise to pay us $____”

While this brought some much needed levity to an effort we eventually successfully concluded, we do think it gets to the point of any agreement.

1.  “What you’re supposed to do” is the scope of work covered by the agreement.   It’s rare for contract drawings and specifications to fully and clearly define the scope of work included in the agreement so details and clarifications are important.

2.  “How you’re supposed to do it” are the means and methods to achieve the desired results.  Plans and specifications go a long way towards clarifying this, as do applicable industry standards, but sometimes “how you do it” is as important as “what” and needs to be clearly stated.

3.  “When you’re supposed to do it” is the schedule for the work including any intermediate milestones or other dates important to the project’s success. By the way, scope to be completed for intermediate milestones needs to be well defined and frequently isn’t. If a part of a facility needs to be ready early for some reason, what does that mean and how well is “ready” defined?

4. “Promise to pay” defines the compensation for the work covered by the agreement.

Next time you’re reviewing or preparing a contract, take a step back and see if these 4 items are clear and complete.  If not, take the time to have a meeting of the minds on these items – there are a lot of potential grey areas that are better resolved now than later.  You’ll have a more successful project and probably won’t have rely on all those other parts of the agreement.

 

 

 

The trend over the last few years has been for Clients to demand longer payment periods to its Vendors and Contractors.  We see many proposed payment terms in the 60 day range, some in the 90 day range, and a few in the 120 day range.  Why is this and what does it mean to the industry?

The “why” part of the question seems to be driven by the fact that in slow economic times, it can be done with little negative impact and some tangible benefits.  The Client’s cash flow is improved and risk is reduced since more money is being held longer.  Since money is cheap and competition is fierce, even the top tier contractors seem willing to put up with these terms (at low to no cost) so Clients continue to get good service from good firms.

A subtle benefit to Clients is the additional leverage it provides in the event of a dispute or problem. Since most contracts are based on 30 day billing cycles, extended payment terms mean multiple billings are “in process” and can be withheld increasing the leverage to force a resolution of a dispute in the Client’s favor.

There may also be subtle benefits from lien rights expiration that can result from extended payment terms. Our home state has statutory lien waiver forms that say payments are “deemed” to have been made in 60 days (even if they haven’t) unless a contractor files a lien or notice of non-payment.  Some contractors may decide to waive their lien rights rather than disrupt payments by these filings.

It’s hard to say what this means to the industry and whether there will be any structural changes in reaction to these extended payment terms.  Possible options include changes to lien laws, a push by Contractors and Vendors for up-front payments (deposits), or a reduction of the now typical 10% retainage to a lower amount . 0% retainage and 90 day payment terms would typically have more money being held by Client than 10% retainage and 30 day payment terms.

Our guess is that as economic conditions improve, Clients may want to re-think their extended payment terms.  Costs will likely increase but these will mostly be lost in the noise about price inflation for commodities and labor. But they will also increase due to the increased cost of money and reduced competition. Contractors and Vendors will start adding money to their quotes for the payment terms because they can. Firms who were previously willing to agree to extended terms may choose to pass on those projects as their work load increases.

We suspect within a year of solid economic times, we’ll be hearing some Clients complain about the quality and performance of their Contractors and Vendors. If you are a Client, that’s one sign it’s time to address your payment (and other) terms that define your relationship with Contractors and Vendors to assure you have motivated and qualified firms for your work.

 

 

When capital projects are conceived, budgets for various costs of the project are developed and then refined over the life of the project.  For a new facility one of those costs is “Site Acquisition”.

It’s fairly common for a community to offer “free land or work” in some form to entice a desirable business to locate there.  Who doesn’t want something for free? Especially if you have budget responsibility for the project.

Sometimes these are good sites and worth consideration. But sometimes, they aren’t.

Several years ago, a site was selected by a future Client mainly because it was “free” and in a desirable location. The Client felt good about the decision because the budget for site acquisition was about $1 million.

Then came the bad news – because of soils issues, the costs of site grading and development would be more than $3 million over their budget.  And extended their schedule by 2 months.  Not exactly “free land” anymore.

Reasonable due diligence and an understanding of the results would have identified the problem and without doubt the Client would have made a different decision. They got excited about the prospect of savings $1 million early in the process and failed to count the total cost of the “free land.” It was a hard earned lesson we’re sure they never repeated.

A while back we called on a prospective client. As the meeting broke up we had the chance to talk with the client’s project manager.  Wanting to tailor our proposal to his preferences, we asked what type of Project Delivery Method he preferred. He deflected and asked what we suggested.

Since it was a process expansion project we suggested EPC. He replied “I tried that once. It didn’t work out.” We poked and prodded trying to find out why, but made no progress.

Ok, what about CM at Risk? “I tried that too. It didn’t work out either”.

Straight CM? “Did that once too. It didn’t work out”.

Design-Bid-Build? “No, tried that too and it was the worst job ever.”

There was obviously a problem here and it wasn’t which type of project delivery method to use.

More important than the delivery method are the capabilities of the people assigned to your project.  Any delivery method is only as good as the people executing it.  That includes the Client’s.

The best project delivery method? Depends.  Get some good advice from a good firm to find out which is right for your project (and why).  And pay attention to the qualifications of the people involved – we think they are more important than the delivery method.