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Mit1 040s09 lec18
- 1. MIT OpenCourseWare http://ocw.mit.edu 1.040 ProjectManagement Spring 2009 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.
- 2. Spring 2009 Spring 2009 Departmentof Civil and Environmental Engineering Department of Civil and Environmental Engineering Massachusetts Institute of Technology Massachusetts Institute of Technology Fred Fred Moavenzadeh Moavenzadeh Project Organization Project Organization Project Management Project Management 1.040/1.401J 1.040/1.401J
- 3. Broad Delivery MethodSpace Broad Delivery Method Space Segmented Organization Integrated Organization Direct Financing Indirect Financing
- 4. Most Common DeliveryMethods Most Common Delivery Methods Owner General Contractor Subcontractor Subcontractor Subcontractor A/E Traditional Design-Bid-Build Owner Trade contractor C/M Trade contractor Trade contractor A/E Pure or Agency Construction Management Owner Trade contractor C/M Trade contractor Trade contractor A/E Construction Management at Risk Owner Sub contractor Sub contractor Sub contractor Constructio n Function Design Function D/B Entity Contractual Relationship Communicational Relationship Design - Build
- 5. A Bit ofHistory (Western World) „ „ Antiquity, Middle Ages: Design build Antiquity, Middle Ages: Design build „ „ 15 15th th century century „ „ Greater Distinction between architect & trades Greater Distinction between architect & trades „ „ Greater attention to design Greater attention to design „ „ 18 18th th century: Century of engineering century: Century of engineering „ „ General contractor in charge of trades, little subcontractors General contractor in charge of trades, little subcontractors „ „ Before 1930s: mixture of methods Before 1930s: mixture of methods „ „ Most design Most design- -build, some with alternative financing (94%) build, some with alternative financing (94%) „ „ Post WWII: Emergence of more specialized needs, Post WWII: Emergence of more specialized needs, subcontracting subcontracting „ „ 1960s, 1970s: More complicated structures, emergence 1960s, 1970s: More complicated structures, emergence of CM, constructability needs of CM, constructability needs A Bit of History (Western World)
- 6. Traditional Traditional Delivery Delivery Method Method Owner General Contractor SubcontractorSubcontractor Subcontractor A/E Contractual Relationship Communicational Relationship
- 7. How To: Traditional HowTo: Traditional „ „ Hire a design professional in charge of the Hire a design professional in charge of the preparation of the design and contract preparation of the design and contract documents documents „ „ Competitive bid or negotiation with Competitive bid or negotiation with contractors contractors after after design complete design complete „ „ Contractor in charge of the delivery of the Contractor in charge of the delivery of the completed project (may decide to completed project (may decide to subcontract) subcontract) „ „ The contractor is the only one responsible of The contractor is the only one responsible of the execution of the work the execution of the work
- 8. Traditional Traditional Delivery Delivery Method Method „ „Sequential Construction Process Sequential Construction Process „ „ Collaborative Relationship between A/E Collaborative Relationship between A/E (Chosen on Qualification Basis) and Owner (Chosen on Qualification Basis) and Owner „ „ Different Participants Different Participants’ ’ Interests: Interests: „ „ Owner: Quality and Value Product, Delivery Owner: Quality and Value Product, Delivery Schedule Schedule „ „ Contractor: Profit, Construction Time, Site Contractor: Profit, Construction Time, Site Safety, Relationships, Reputation Safety, Relationships, Reputation „ „ A/E: Profit, Aesthetics, Relationships, Quality, A/E: Profit, Aesthetics, Relationships, Quality, Recognition Recognition „ „ Lump Bids Commonly Adopted, Resulting in Lump Bids Commonly Adopted, Resulting in Adversarial Relationship between the Owner Adversarial Relationship between the Owner and the Contractor and the Contractor
- 9. General Contractor General Contractor Responsibilities Responsibilities „ „Still responsible for a large fraction of jobs Still responsible for a large fraction of jobs „ „ Particularly public jobs with bidding Particularly public jobs with bidding „ „ For larger job, GC doesn For larger job, GC doesn’ ’t do much of work t do much of work „ „ „ „ Division of responsibility for problems (Different Division of responsibility for problems (Different teams) teams) Owner must mediate fights between contractor, designer Owner must mediate fights between contractor, designer Contractor designs temporary structures Contractor designs temporary structures „ „ Engineer needs to stamp (often Engineer needs to stamp (often not designer not designer architect) architect) (sometimes <10%) (sometimes <10%) „ „ Sometimes verge up against Sometimes verge up against CMs CMs
- 10. Subcontractors Subcontractors „ „ GC managesmost subcontractors GC manages most subcontractors „ „ Overhead at each level Overhead at each level „ „ Handles submittals Handles submittals „ „ Get bids from subcontractors (bid shopping a danger; no Get bids from subcontractors (bid shopping a danger; no formal guarantee of award of contract) formal guarantee of award of contract) „ „ „ „ „ „ „ „ Can be large number of subcontractors Can be large number of subcontractors Responsible for failure Responsible for failure Shop drawings typically produced by subcontractors Shop drawings typically produced by subcontractors „ „ E.g. engineer consultants E.g. engineer consultants „ „ Signed off on by architect to say that meets design needs Signed off on by architect to say that meets design needs Problem: Things can fall through the cracks Problem: Things can fall through the cracks
- 11. Subcontractors 2 Subcontractors 2 „ „Motivations Motivations „ „ No In No In- -house ability house ability „ „ GC overstretched GC overstretched „ „ „ „ „ „ „ „ „ „ Required to have bonding by owner Required to have bonding by owner „ „ Laws and regulations (assign subs to contractor) Laws and regulations (assign subs to contractor) „ „ Due to specialization, more efficient, cheaper Due to specialization, more efficient, cheaper Sometimes GC provides equipment to subs Sometimes GC provides equipment to subs Tensions (e.g. how quickly, many subs on site) Tensions (e.g. how quickly, many subs on site) Subcontractor management very important for productivity Subcontractor management very important for productivity Sometime owners or GC put umbrella insurance over Sometime owners or GC put umbrella insurance over „ „ GC lacks familiarity with local conditions GC lacks familiarity with local conditions „ „ Need to get warrantees Need to get warrantees
- 12. Role of Architect/Engineer Roleof Architect/Engineer „ „ Typically negotiated contract Typically negotiated contract „ „ Recruited on service rather than commodity basis Recruited on service rather than commodity basis „ „ Financial stability, other factors critical Financial stability, other factors critical „ „ Sometimes have design competition Sometimes have design competition „ „ Don Don’ ’t want to push too low: t want to push too low: „ „ Poor de Poor d sign esign „ „ Poor personnel Poor personnel „ „ „ „ Contrast Contrast „ „ „ „ No time for double No time for double- -check check Price of design has small impact on overall price Price of design has small impact on overall price Quality of design has big impact on overall price Quality of design has big impact on overall price
- 13. Role of Architect/EngineerII Role of Architect/Engineer II „ „ If estimates off, may be required to redo design at own If estimates off, may be required to redo design at own expense expense „ „ Carry errors and omissions experience Carry errors and omissions experience „ „ Limited participation in construction process Limited participation in construction process „ „ Typically Typically “ “observes observes” ” constructions constructions „ „ Avoid official assumption of inspection guarantees Avoid official assumption of inspection guarantees „ „ Review shop drawings Review shop drawings – – with disclaimers with disclaimers „ „ Avoids close communication with GC Avoids close communication with GC „ „ Do not want to direct construction methods Do not want to direct construction methods „ „ May put suggestion in contract documents May put suggestion in contract documents
- 14. Advantages Advantages „ „ Well knownmethod (courts, companies) Well known method (courts, companies) „ „ Flexibility during design (vs. design Flexibility during design (vs. design- -build) build) „ „ Cost defined early (when bidding) Cost defined early (when bidding) „ „ Good contractual protection for the owner Good contractual protection for the owner „ „ Open bidding procedure very easy Open bidding procedure very easy „ „ Owner not too involved in the construction Owner not too involved in the construction process process „ „ Fiduciary relationship between A/E & owner Fiduciary relationship between A/E & owner „ „ Good if uncertainty primarily in design Good if uncertainty primarily in design
- 15. Disadvantages Disadvantages „ „ Design notreviewed before construction Design not reviewed before construction „ „ Miss opportunities for major time/cost savings Miss opportunities for major time/cost savings „ „ May yield changes due to constructability May yield changes due to constructability probs probs „ „ Sequential and linear process preventing from Sequential and linear process preventing from overlapping of tasks and money saving overlapping of tasks and money saving „ „ Few interactions among the participants Few interactions among the participants „ „ Too rushed to consider multiple alternatives Too rushed to consider multiple alternatives „ „ Construction can Construction can’ ’t start until design is t start until design is complete complete
- 16. Disadvantages II Disadvantages II „ „Innovative financing difficulty Innovative financing difficulty „ „ „ „ Difficult for complex projects Difficult for complex projects Leads to very conservative design strategies Leads to very conservative design strategies
- 17. How To: Construction HowTo: Construction Management Management „ „ The Owner hires both a design firm and a The Owner hires both a design firm and a construction management firm construction management firm before before the the beginning of the construction of the project beginning of the construction of the project „ „ Typically CM selected based on quality Typically CM selected based on quality „ „ Many variations are possible in the delivery Many variations are possible in the delivery method depending mostly on when the method depending mostly on when the management team is hired and its skills management team is hired and its skills
- 18. General Characteristics General Characteristics „ „Started in late 1960s Started in late 1960s „ „ World trade center World trade center „ „ Madison Square Garden Madison Square Garden „ „ May recommend A/E May recommend A/E „ „ Check billings Check billings „ „ Specific CM firms tend to be quite sophisticated Specific CM firms tend to be quite sophisticated „ „ Warning: Many GCs claim Warning: Many GCs claim CMs CMs „ „ “ “design CM design CM” ”, , “ “construction CM construction CM” ” “ “owner CM owner CM” ”
- 19. Tasks Tasks „ „ Preconstruction Preconstruction „ „ Constructability,value eng, estimation, alternatives, Constructability, value eng, estimation, alternatives, schedule, financing, manage designer, early schedule, financing, manage designer, early procurement procurement „ „ Field supervision Field supervision „ „ QA, Targets met, invoice checking, coordinate work QA, Targets met, invoice checking, coordinate work of contractors, M&E, change orders, payments, of contractors, M&E, change orders, payments, claims, inspections for design requirements, claims, inspections for design requirements, sometimes safety sometimes safety
- 20. CM General Advantages CMGeneral Advantages „ „ Involvement in design allows better Involvement in design allows better „ „ Knowledge of price early own Knowledge of price early own „ „ Eliminates risks in design before bids Eliminates risks in design before bids „ „ Constructability, value engineer. reasoning from start Constructability, value engineer. reasoning from start „ „ Working construction constraints into design plans Working construction constraints into design plans „ „ Allows flexibility in the Schedule (Fast tracking ) Allows flexibility in the Schedule (Fast tracking ) „ „ Can select CM based on quality Can select CM based on quality „ „ Really familiar with plans before price/get bids Really familiar with plans before price/get bids
- 21. CM General Disadvantages CMGeneral Disadvantages „ „ Don Don’ ’t know total cost when start construction t know total cost when start construction „ „ Potential conflicts with other parties Potential conflicts with other parties „ „ Designer Designer „ „ Subcontractors Subcontractors „ „ (Where applicable) GC (Where applicable) GC
- 22. Pure ( Pure (“ “Agency Agency” ”) ) ConstructionManagement Construction Management Owner Trade contractor C/M Trade contractor Trade contractor Contractual Relationship Communicational Relationship A/E
- 23. Pure Construction Management PureConstruction Management „ „ Great Flexibility in the Schedule and for Great Flexibility in the Schedule and for Changes Changes „ „ Market Competition for subcontracts Market Competition for subcontracts „ „ Fiduciary Relationship with the Contractor Fiduciary Relationship with the Contractor „ „ Small Financial Risks of PCM and High Risk of Small Financial Risks of PCM and High Risk of Loss of Reputation Loss of Reputation „ „ PCM Generally Paid a Fixed Fee (professional) PCM Generally Paid a Fixed Fee (professional) „ „ Take over work of designer, GC, owner Take over work of designer, GC, owner „ „ PCM as Facilitator/Mediator in Conflicts PCM as Facilitator/Mediator in Conflicts
- 24. Advantages Pure CM AdvantagesPure CM „ „ Great Flexibility for Changes Great Flexibility for Changes „ „ CM more objective, less partial CM more objective, less partial „ „ Less conflict between owner and CM Less conflict between owner and CM „ „ Small Financial Risks of PCM Small Financial Risks of PCM „ „ Have both Have both „ „ Cost competition (for subcontractors) Cost competition (for subcontractors) „ „ Often 5 Often 5- -8% savings for dealing directly with subs 8% savings for dealing directly with subs „ „ Fiduciary relationship with GC Fiduciary relationship with GC „ „ One common reference point: The CM One common reference point: The CM „ „ Owner can get rid of particular subcontractor Owner can get rid of particular subcontractor „ „ Lessens owner Lessens owner’ ’s responsibilities s responsibilities
- 25. Disadvantages Pure CM DisadvantagesPure CM „ „ Lower incentive for CM to reduce price, time Lower incentive for CM to reduce price, time „ „ Owner alone takes risk on cost of project Owner alone takes risk on cost of project „ „ No guarantee from CM! No guarantee from CM! „ „ Participants must all be cooperative and well Participants must all be cooperative and well communicating communicating „ „ High Risk of Loss of Reputation High Risk of Loss of Reputation „ „ All parties must be committed from the All parties must be committed from the beginning beginning
- 26. Lessens Owner Lessens Owner’ ’sResponsibility s Responsibility „ „ E.g. E.g. „ „ Project control Project control „ „ Job meetings Job meetings „ „ Management meetings Management meetings „ „ Reports (operational and annual) Reports (operational and annual) „ „ Administrative tasks Administrative tasks „ „ Budgets Budgets „ „ Drawing approval Drawing approval „ „ Oversight Oversight „ „ Quality assurance Quality assurance
- 27. Central Artery /Big Dig Central Artery / Big Dig http://www.masspike.com/bigdig/index.html
- 28. Central Artery /Big Dig Central Artery / Big Dig „ „ Most complex highway project in American Most complex highway project in American history history „ „ The project consist in building 161 lane miles The project consist in building 161 lane miles of urban highway of urban highway - - about half underground in about half underground in a 7.5 a 7.5- -mile corridor mile corridor „ „ Planning for the Central Artery/Tunnel Planning for the Central Artery/Tunnel Project began in 1982 Project began in 1982 „ „ Congress approved funding and the project's Congress approved funding and the project's basic scope in April 1987 basic scope in April 1987 http://www.masspike.com/bigdig/index.html
- 29. Central Artery /Big Dig Central Artery / Big Dig For the Fort point channel: For the Fort point channel: „ „ Notice to proceed was granted to Modern Notice to proceed was granted to Modern Continental on March 7 1997 Continental on March 7 1997 „ „ Expected date of completion: March 13 2002 Expected date of completion: March 13 2002 „ „ Estimated cost: 301,377,284.10 $ Estimated cost: 301,377,284.10 $ „ „ Modified estimated cost: 403,929,276$ Modified estimated cost: 403,929,276$ „ „ Modified date to completion: December 2004 Modified date to completion: December 2004 „ „ Engineers + consultants = 100 Engineers + consultants = 100 „ „ Workers on the site = 800 Workers on the site = 800 „ „ Priorities = schedule Priorities = schedule- - cost cost- - technical technical http://www.masspike.com/bigdig/index.html
- 30. Project Organization Project Organization 9 9ProjectDelivery Systems (most common) Project Delivery Systems (most common) 9 9Traditional Traditional „ „ Design / Build Design / Build „ „ Summary Summary 9 9Pure Construction Management Pure Construction Management ¾ ¾ Construction Management at risk Construction Management at risk
- 31. Construction Management at ConstructionManagement at Risk Risk Owner Trade contractor C/M Trade contractor Trade contractor Contractual Relationship Communicational Relationship A/E
- 32. Construction Management atRisk Construction Management at Risk „ „ CM CM usually usually Guaranteeing Maximum Price: Guaranteeing Maximum Price: GMP to give the owner security that the GMP to give the owner security that the project will be built within budget project will be built within budget „ „ Often set at 95% of design Often set at 95% of design „ „ This is a big difference from pure CM This is a big difference from pure CM „ „ Fee typically 10 Fee typically 10- -15% 15% „ „ Reduced Owner Risk Reduced Owner Risk „ „ Risk Risk- -wise, wise, ½ ½ between the DBB and the PCM between the DBB and the PCM System (VERY similar to GC hired early) System (VERY similar to GC hired early) „ „ Contractual Relationships Contractual Relationships betw betw. . CM&subs CM&subs „ „ Performance bonds typical Performance bonds typical
- 33. Advantages CM atRisk Advantages CM at Risk „ „ Reduced Owner Reduced Owner’ ’s Risk s Risk „ „ „ „ Trade Contractors Trade Contractors CM at risk usually goes with Guaranteed CM at risk usually goes with Guaranteed Maximum Price (GMP) Maximum Price (GMP) Contractual Relationships between CM and Contractual Relationships between CM and
- 34. Disadvantages CM atRisk Disadvantages CM at Risk „ „ The GMP is a defined price for an undefined The GMP is a defined price for an undefined product product „ „ Bad during design: Design pressure Bad during design: Design pressure „ „ Tension Tension „ „ CM hired early: more price risk CM hired early: more price risk „ „ CM hired late: less value during design CM hired late: less value during design „ „ CM is no longer impartial (may argue against CM is no longer impartial (may argue against changes changes b/c b/c of own interest) of own interest) „ „ Risk of adversarial relationship Risk of adversarial relationship „ „ The contract can be hard to enforce The contract can be hard to enforce
- 35. Albert and Barrie Albertand Barrie Zesiger Zesiger Sports Sports and Fitness Center and Fitness Center „ „ Groundbreaking Groundbreaking : : October October 2000 2000 „ „ Occupancy Occupancy : 2002 : 2002 „ „ Designed Designed by the architectural by the architectural firms firms of Roche & of Roche & Dinkeloo Dinkeloo and and Sasaki Sasaki Associates Associates „ „ Construction: Turner Construction: Turner Construction Co. Construction Co. „ „ Cost Cost : $45 million : $45 million „ „ Olympic Olympic- -class 50 class 50- -meter meter pool pool „ „ An 11,000 An 11,000- -square square- -foot fitness foot fitness center center