CONSTRUCTION MANAGEMENT
How It Works
The traditional method of construction is to contract the
entire project as one fixed amount by a General Contractor (GC). Often this is
difficult with unusual renovations or for large complicated projects due to
many unforeseen circumstances that can and will happen which are next to
impossible to predict. The Contractor's only defense against this is to
add to his price a risk factor amount which in construction is called a
contingency.
These types of projects, in particular, tend to be so
highly priced that the job often becomes economically infeasible to complete
due to the large risk a GC must face. A General Contractor could easily become bankrupt if a
risky project is improperly bid upon.
It is generally understood that the value of a
development is assessed by adding the cost of the land, the labor time
involved and the material cost of the structure. This total cost is then a basis
for the market value upon resale. Usually the market value is much greater
than cost, unless a GC bidding on the project feels it is a high risk venture
and just add a high contingency and profit margin to the price, creating a
development cost greater than the market value will hold. This could turn an
excellent project idea into a financial impossibility. An Alternative had to
be developed.
Construction Management is a method that allows for these
projects to become feasible. First, by acquiring a Construction Manager (CM),
all profit margins and contingencies which would normally have been created by
General Contracting are removed from total cost.
Any overage in cost due to negligent estimating of the
project a GC must forfeit, depending of course on the contract and
reputability of the GC. This type of risk a GC normally faces is completely
removed and leaves a substantially lower construction cost with Construction
Management.
By hiring an experienced CM, he will perform all the
necessary duties required for construction and update the client with all the
necessary information. Instead of placing someone on payroll, a Construction
Management Company would perform all the duties at a fixed fee, based upon the
time to complete the complexity of the development. this cost is still a part
of the development cost, since it represents the GC's business overhead.
The Client is now prepared to develop any project
himself.
What is It?
For business in general, Project Management is a broad
term that can be applied to anything from filing systems to complex strategic
military applications. Across the business spectrum, Project Management
specialists are in increasingly high demand.
Generally, Project Management is the organizing and
directing of a set of tasks to reach defined goal, efficiently and
successfully.
When it's applied to buildings, it's called Construction
Management. In most sectors of construction, it's a relatively new and
frequently misunderstood process. it's often confused with, or incorrectly
thought of as an addition to, the traditional General Contract method of
construction. Construction Management is a different answer to the
Owner's question, "How can I get what I want for a building?"
In the traditional General Contracting method, there has
always been a Project Manager, hired as an employee of the General Contractor,
who was responsible for the management of each building. It was his
responsibility to organize and direct the project, in the interest of the
General Contractor.
Construction Management allows the Owner to retain the
same type of service, along with the all the support staff which came with a
General Contractor, and have the the independent Construction Management team,
working on a fixed fee, organize and direct the project in the interest of
the Owner.
Very simply, the Owner can now consider himself as the
General Contractor, with a full construction staff as a part of his team. they
all work for him: Full control when you want things your way, full support so
things move smoothly and efficiently when you have other things to do.
Just as a CPA or an Attorney becomes your personal
consultant on business matters, the Construction Manager becomes your personal
consultant for various building needs. He joins with the owner, the Architect
and/ or Engineers to form a team of professionals who can work together to
investigate any facility situation that may arise, and then provide the Owner
with the options available and give him the "tools" needed to make a sound
decision. This is the control path that assures you that the end project will
have the maximum benefit to you, and not just others.
You are most interested in the decisions which affect
Cost, Quality, and Time. Construction Management gives you direct control over
the decisions which control those factors , at the same time, your Construction
Management team takes care of the day to day operations. When you want
involvement, you have it. When you don't, the Team handles it for you. You get
the facilities you want while you continue to manage the things which directly
affect the profitability.
Construction Management gives you control. Joplin
Construction Design & Management, Inc. gives you the best product in the
shortest amount of time at the lower cost.
How Does It Work?
Construction Management my best be understood by
comparison with the traditional method, General Contracting. With a General
Contract, the entire project is contracted for one fixed dollar amount. Since
that dollar amount must not only span a number of trades and suppliers, but
also allow for a number of unforeseen developments, each General Contract must
include money for the risk factor involved. This is called Contingency.
The more complex the project, the larger the contingency
must be, since the General Contractor is at risk for all costs of
construction. The result can be a much higher contract cost than the actual
cost to build. The difference is essentially an insurance policy against the
project going over the bid amount. All of the dollars saved go to the General
Contractor, who took the risk and managed the potential problems.
This protection against the risk factor is a very common
reason that actual General bids are so often much higher than Development
estimates or Pre-Construction appraisals of Market Value. The Project can
really be built at or at least near those estimates, but the project
complexity or the variables of the risk in a fixed cost bid cause the
Contingencies to make an otherwise excellent project economically impossible.
Construction Management solves the dilemma by changing
the structure of the process:
- First, since the Construction Manager is a part of the
planning team, many of the potential risks a General Contractor would
cushion for can be identified and resolved in the planning phases
- Second, since the Owner is in a position of General
Contractor and the Construction Manager is paid by a fee, all contingency
dollars belong to the owner. If they aren't spent, they stay in the Owner's
pocket, not a General Contractor's.
- Third, since the project is bid out at the
subcontractor/supplier level, the Owner's risks are minimized. The same
internal controls a General Contractor would use to mitigate and minimize
unforeseen costs are employed by the Construction Manager on the Owner's
behalf.
Risks are minimized and managed. Problems are resolved
expediently by the building team.
With Construction Management, the project costs what is
should cost. With General Contracting, you always pay what it might
cost.
You really can control the development of your own
projects.
The Organization
The overall authority and responsibility for the JCDM Program is the Officer-in-Charge
of the project, Steve A. Smith, President of JCDM, Inc.
JCDM's Quality Control Representative reports directly to the Officer-in-Charge. He is
delegated the requisite authority and responsibility for the Project Q.C. Program,
functions, activities and organization.
The Project Q.C. Representative is functionally independent of other project
management, thus, has the freedom to identify quality related problems and initiate,
provide and/or recommend solutions. He shall assure that corrective actions are
implemented and verified in accordance with engineering-defined methods. The Project Q.C.
Representative is delegated the authority by the Officer-in-Charge to stop work at the
project when adverse quality conditions exist (such as non-conformance, failures,
malfunctions, deficiencies, deviations, and defective material, items and equipment) and
proper corrective action is not being taken in a timely manner.
The Project Q.C. Organization is divided into the following Quality Control functions
and basic responsibilities:
