Abstract: Organization and Management of Capital Projects

Introduction

Building at universities needs technical knowledge, management expertise, and political skill to manage inherent issues (e.g., increased expectations, resource competition, risks, technological advances, cash flows, limited land area, physical and cultural landscape preservation, campus debates, pressure to hire prestigious designers). Trustees and  administrators usually understand the importance of planning and high- quality construction (and related challenges), but finding a project manager who has the full  range  of  needed skills is a formidable task; few  professionals are trained   in these complex and interrelated issues.

Ways to Organize Project Oversight. Project management is complex and includes control of quality, budget, and schedule across diverse tasks (e.g., initial programming, budgeting, schedule development, project commissioning, final closeout, occupancy). The owner’s project manager (whether an individual or team) coordinates the project team and makes decisions based on project objectives. Although one manager for the project end to end has strong advantages, large organizations with somewhat independent departments usually cannot take this approach. Many organizational structures, each with benefits and concerns, can be used (e.g., planning and design, capital projects construction, or physical facilities and maintenance department; independent planning office, vice president for physical facility matters). These structures show the (1) range of skills and concerns in planning, designing, constructing, and maintaining facilities; and (2) impact of structure on project manager success (and participant crisis management).

Characteristics of Project  Managers.  The  value  of multi disciplinary factors must trump project manager expertise. The most important project manager characteristics are education and experience (e.g., strong skills in organization, leadership and team building, management of the unexpected, capability to review and prioritize user needs) and broad communication skills (e.g., graphics, 3D displays, written materials, spreadsheets, verbal presentations, and, most important, listening skills). The best project managers hold high ethical standards, delegate tasks but not accountability, and manage decision making.

Recruiting an Effective Project Manager. Most project manager qualities center not on technical skills but on working with individuals and project teams. Qualified candidates can be recruited from local or regional design firms, industry, or contractors. An institution with a small staff or upcoming expansion should consider one program manager with broad technical knowledge (not just design expertise).

Project Team: Roles and Responsibilities Regardless of contractual relationships, the three key people responsible for a project are the owner, architect, and contractor. Project delivery focuses on creating opportunities and alliances, blurring disparities among designers and builders, and elevating early builder (e.g., general and key trade contractor) involvement, using contractor expertise on assembly, scheduling, and material procurement before making design commitments that preempt its application. The  three key personnel must have a single leader, communicate directly and regularly, and lead their respective organizations.

Managing the Owner’s Project

Starting with the earliest discussions of program needs through ongoing occupancy, the project manager must deal with diverse and complex issues and processes (e.g., planning, design, construction, occupancy) that entail many stakeholders with differing objectives that must be reconciled.

Project Purpose and Developing a Building Program. Accuracy and credibility are key to initial project programs, which define project purpose  (e.g.,  user, space, building function, system, and desired feature needs) and underpin subsequent activities. Project managers assess program development realistically to clarify project purpose (one of the most challenging project manager roles). Devising a physical solution or granting a space request is not necessarily the best way   to meet every need, but altering operations or sharing spaces is controversial. Some schools have institutional planning and research offices to quantify space needs, and design teams often have a programming expert, architect, or consultant.

Adhering to Program and Controlling Scope. As the design team begins schematic and preliminary design phases, the project manager must avoid or respond to program creep to make sure that project size, cost, and schedule remain feasible. The project manager must make sure that the design team identifies added compensation needs at the time each program change occurs and must control scope, with the designer noting any additional requests for services immediately or at least at each project review.

Budget and Schedule

Projects often start with simply unrealistic budgets and schedules based on a very preliminary program, responding to enormous pressure to produce a budget and schedule early in the process although they are very difficult to modify, regardless of caveats, qualifiers, and subsequent information.

Establishing the Project Budget. Project manager experience and comparison of project type with those of peer institutions provide guidance, but project-specific factors (e.g., site conditions, institution building standards, utilities, phasing requirements) are almost impossible to identify fully, let alone price. Yet, a preliminary budget is usually required for approval (often with a cap) to begin design. Project managers must identify comprehensive project costs (e.g., technical costs, financing, and owner contingency fund, most important if the budget is formulated early in the process). Costs that exceed estimated construction costs can add 20 to 30 percent or more to total project cost. Establishing and maintaining a project budget is a reiterative process, with a preliminary budget subject to continual review and analysis.

Managing User Expectations. Revisited after design firm selection, this task is managed throughout the project. Realistic expectations involve educating users about the complex series of interrelated project alternatives, choices, and trade-offs; the end result cannot be perfect, so the goal is incorporating as many user needs as the project site, budget, and schedule allow. At initial design sessions, the project manager, users, and design team discuss, mutually agree on, and quantitatively document specific expectations, recognizing that the budget affects end-product quality (and vice versa). Users must understand the first (and follow-up) costs of flexibility. A design basis document is an effective way to address expectations.

Project Cost Control. The owner, architect, and contractor share responsibility for cost control; each assumes responsibility for costs directly under its management, but some contractual relationships affect all costs. The architect’s cost can be based on a lump sum, construction cost percentage, or hourly rate. The owner’s project manager should stress that any project team member request resulting in fees for additional services must be approved in advance, even if requested by the owner. The contractor assumes responsibility for the construction budget (lump sum, work cost plus fee, construction manager with or without guaranteed maximum price, or alternative delivery method). The contractor keeps a running budget tabulation (e.g., original agreement amount, approved changes to date, pending changes). The owner requires a log to track requests for information or evaluation of alternative prices, with estimated cost impacts for pending changes. The owner’s project manager, architect, and contractor work together to implement a change order evaluation and tracking process so that timely changes can be implemented. The project manager must be fully informed of the budget for design and construction and for associated owner’s costs (e.g., direct, contingency, built-in equipment, tax, warranty, and damage obligations).

Establishing the Project Schedule. The owner’s project manager develops an overall project schedule, but only after the project program and budget justify reasonable scheduling assumptions.

Project Schedule Control. The schedule monitors percentage of project completion and milestones, enabling deadlines to be met more readily. The design schedule is defined in phases (e.g., conceptual design, schematics, design development, construction documents, bidding). Scheduling method and detail level (e.g., time frames, sequences, responsible person) are matched to project size and complexity. Many scheduling methods (each with advantages and disadvantages) exist, such as the milestone chart, one of the simplest, for short projects with few participants; Gantt or bar chart, a widely used design scheduling tool for projects of medium complexity; critical path method for large complex projects to calculate difference between earliest and latest time an event can occur (slack time or float) and to define the critical path as a series of activities or events with no float. The design firm is responsible for presenting the updated project schedule at each design meeting and recommending adjustments.

Contract Management

Design Team Selection.  The owner’s  project manager is responsible for providing information about candidate firms and coordinating the selection of the project’s design consultant (architect of record).

Scope of Services and Fee Negotiation. The proposed scope analyzes activities to complete the project, working from a detailed list of standard and additional project services, and defines design services to achieve the project program; it is the basis for negotiating contractual scope and professional services fee. The developed activities list can be reviewed to identify design firm and in-house personnel responsibilities. Because of project complexities,  schedules,  and  in- house workloads, the staff might not respond promptly   to project issues, and apparent efficiencies from using in-house staff can evaporate, producing a contract or schedule dispute. For large projects, the owner issues a Request For Proposal (RFP) to identify three or four  finalist firms with qualifications matching the project. The RFP has a program statement, estimate of area and range of probable construction cost, and standard contract. The RFP requests an estimate of probable (not bid) design cost so that  owners  and  designers understand financial expectations before final interviews and selection. The 1972 Brooks Act requires agencies to select architecture and engineering firms based on competency, qualifications, and experience rather than design cost. Some public institutions might be unwilling   or unable to request an estimate of design cost before final selection. State  agency  staffs  might  not  be sensitive to school issues and complexities  (e.g., predesign and site analysis, design team travel, value engineering, building commissioning, site visits and inspections) that are key to  a  successful  project  and must be explained and included in the project scope.

Design Errors. Among the several design error types, simple mistakes are corrected relatively easily at little or no cost, while major errors can take years to manifest and are costly. The design firm must use a systematic approach to quality control and coordination among disciplines, verified by project managers. The design profession is undergoing its most significant transformation in decades manifested in Building Information Modeling (BIM), which has many advantages. Early and continual design idea communication in three dimensions significantly enhances owner, engineer, and contractor understanding of what is proposed; in later design stages, software can identify and resolve design document conflicts and increase coordination among all (especially architectural, structural, and mechanical) disciplines. The BIM-enabling software development path and learning curve are long and steep. Owner’s project managers using BIM must stress sharing the building model often among disciplines and require contractors to participate in conflict resolution. Another design issue, final contract documents conflicting with owner expectations, is minimized or eliminated if the owner issues clear and concise architectural and engineering guidelines (design standards) that are as brief as possible and rigorously reviewed and revised (every year or two).

Disputes. Design and construction contract disputes must be prevented if possible (e.g., through open communication among all parties; clear, thorough, and well-managed contract and full range of services).

Project Review and Approval. Formal reviews  (number and timing) are determined by project scope and size, are included on the project schedule, and focus on technical correctness, compliance, schedule, and cost and budget. The project manager is responsible for appropriate internal (and sometimes external) participants who vary  as the project progresses and take an active role in each collaborative review.  The  specific  review  method changes by project, phase, and available time.

Independent review consultants can provide a second opinion on large projects (e.g., on code compliance, constructability, coordination among contract documents, legal pitfalls in specifications); some municipal building code authorities provide preliminary plan checks. BIM compresses traditional design phases  and  predisposes the design team and owner to an  earlier  commitment, but the design is still subject to project review and approval. The final project review must also include an assurance from the design team that projected construction cost is expected to be within budget and might include a limited number of deductive or additive (usually preferred) alternates, prioritized before bidding and accepted in the order listed.

Project Management  Responsibilities  During Construction.   (1)  Maintaining  continuity  from  the design phase into construction is the job of the owner’s project manager, who is directly involved in overseeing capital construction (or at least reviews all project changes) to verify functional intent and protect user expectations. A stakeholder team united by a common mission and project objectives prevents disputes and instills a spirit of cooperation. (2) Construction change orders are the responsibility of the project manager, who reviews and approves all change order requests (e.g., validity, impact on budget and schedule, final product), sometimes after completion of  immediately  needed work; maintains an accurate status list of all in-progress change requests; and ensures timely and fair change request resolution.

Reporting, Documentation, and Communication To avoid costly oversights, standard documents and checklists are consolidated in a construction procedures manual. The content of many documents is dictated by state laws or state architecture and engineering agency administrative procedures. Documents also can be based on standard forms. University accounting systems typically include capital accounting modules that accommodate required contracting and invoicing procedures, but the modules rarely track all the detailed accounting information required by the owner’s project manager, who typically keeps financial records and reviews them with accounting, purchasing, and internal control personnel.

Project Management Alternatives

In-House Project Manager. Completely delegating ultimate authority for project budget, schedule, and functional design requirements to an outside source is not possible because final decisions rest with the institution or owner; delegating responsibilities but not corresponding authority impairs decision making.

Contracting Owner’s Project Management Services. Contracting for project management is usually considered when the owner does not have the needed staff or expertise. Many architectural design firms profess to offer full project management services.

When parties contract for project management services, all responsibilities, expectations, and limits of authority must be clearly defined and understood. A third-party consultant is free to provide an independent assessment of all aspects of the project.

Project Management by State Agencies. Some states encourage collaboration between the institution planning department and agency personnel; in others states, architecture and engineering agencies have complete autonomy. State agencies manage many other state facilities projects, so the  institution  project  manager must be involved in the process and provide pertinent  and timely information. Institutional-level direct management of design and construction has advantages and disadvantages. Direct responsibility expedites the project, enabling the institution to work  more  closely with the design consultants and the contractor and  control funds locally, but it must  accept  the  risks inherent in any construction project (e.g., lawsuits, financial judgments, construction claims and liabilities). Delegated authority does not relieve the institution from its obligation to comply with all state laws.