Contractor

The title of Project Manager gets thrown around a lot today in our industry, and many others. Since the generally-accepted definition of a project is "A temporary endeavor undertaken to create a unique product, service or result", that's understandable. This broad-reaching definition written by the Project Management Institute can define a lot of different undertakings in so many industries, and since every project must have someone in charge, the title Project Manager is easy to assign. In some cases even, it's a de-facto title that someone assumes by accident or default in an organization, perhaps even on top of a functional role they already play within a company. In the construction industry, however, this is not a title that is taken lightly - nor should it be. A construction Project Manager is a specialized individual that takes the title through purposeful education and training, deliberate and hard work, and only after...

In late June, Turner Construction Company released its updated cost index for the second quarter of 2018. Turner has studied this data for decades, taking into account labor rates and productivity, material prices, and the competitive condition of the marketplace. This makes it unique to the many other indices available to our industry. The data from this month continued the quarterly trend of rising costs since 2014. In fact, costs were measured at 5.63% higher than where they were for the second quarter of last year. The quarterly increase from just three months ago is 1.68%. While these numbers don't show a change in trend, they remind us of an important reality: It is very difficult for contractors to hold pricing in these market conditions. That's also not to mention the volatility the recent tariffs have introduced to our marketplace, of which the impact is yet to be fully understood. Our only...

In my travels in Florida meeting with prospective clients, I hear continued complaints about the performance of their contractors.  I get that, it is difficult, particularly in Florida.  So what is the solution?  We have found five primary factors:

• Over supervise on projects.  This adds to general conditions, which nobody likes, but with high risk, highly leveraged, significant capital investments, such as these, it’s cheap insurance.
• Keep ironclad control over details—every day.  The smallest detail can derail a project.
• Ensure every activity that needs to occur on each job’s schedule occurs each day.
• Hire quality subcontractors and suppliers who commit the resources to do the job well.  They don’t need to be gold plated, but they may not be the cheapest.
• Have a cooperative, team and problem-solving orientation.  Every project will have its challenges.  The key is how teams work together to solve them.

There are cost inefficiencies intrinsic to the cost-plus/GMP delivery of construction (often referred to simply as GMP delivery).  The cost-plus/GMP method may have merit when delivering projects with significant unknown risks such as first-of-a-kind projects, or projects with limited historical data, or when a project must start construction without completion of the design.  However, when cost-plus/GMP delivery is used to deliver projects with well-established cost histories or projects with reasonably complete construction documents, then the cost-plus/GMP delivery method is likely to produce a cost premium when compared to a stipulated sum contract delivery (Lump Sum delivery). Let’s explore why. In a lump sum contract, the contractor is incentivized to deliver the project quickly and cost efficiently.  The incentive is simple.  When the contractor effectively drives the project with the optimal staff, he finishes on time or early and he enjoys the savings which result.  Lump sum contractors track their costs accurately and...

Fall in the Midwest is a wonderful time of year. However, in the construction industry fall is a time to start planning for the arrival of winter. The great thing is, for the most part, construction projects can continue to be built throughout the winter months. There are unfortunately schedule impacts and winter charges that come with the ability to work year round. The added costs start in early November every year when the concrete plants start charging for hot water for each yard of concrete due to freezing temperatures and the masons need to start adding an accelerator to the mortar. The asphalt plants normally shut down just after Thanksgiving. Therefore it is extremely important to plan around this event if the project schedule requires a parking lot to be installed before tax day the following year when the asphalt plants will normally reopen. The further into the winter that concrete and...