Donor Network West Building

Apex Provides Project Management for Donor Network West’s New Corporate Headquarters

Donor Network West, a federally designated procurement agency for organ donations, has relocated its corporate headquarters from Oakland to San Ramon. Out of several project management firms interviewed, Donor Network West confidently partnered with Apex Project Consulting to successfully oversee the architectural, engineering, on-site construction, furniture, and move management.

The final touches on the 41,000 square-foot space on Alcosta Blvd. were completed in June of this year. The approximately 160 employees were relocated in phases, with the most recent phase finishing in early July. An open-house to showcase Donor Network West’s beautiful new facilities is scheduled for late July.

In addition to delivering full-service, tenant representative project management, Apex was called upon to contribute to the real estate transaction and lease negotiations with the developer, Bishop Branch.

According to Cindy Siljestrom, CEO, Donor Network West,

“Apex Project Consulting provided full service project management; including architectural design, engineering construction, as well as move management, furniture selection, and finishes.  Apex got involved and immediately represented us with the landlord. 

Apex’s expertise was invaluable and saved us tens of thousands.” 

Donor Network West’s mission is to save and improve lives through organ and tissue donation and transplantation. Donor Network West is a non-profit organ procurement organization that works in close partnership with families, doctors, nurses, and coroners to connect organ and tissue donors to recipients.  “We are proud to be affiliated with the wonderful folks at Donor Network West and to help them in some small way to fulfill their life saving mission.” Tom Conzelman, President, Apex Project Consulting, was quoted as saying.

In addition to Donor Network West’s corporate headquarters, Apex has been entrusted with the project management of DNW’s future clinical and warehouse space. This critical AATB-compliant, state-of-the-art facility will be used to provide the surgical instruments and medical supplies, as well as, the clean rooms needed for life-saving organ and tissue recovery procedures.

Apex Project Consulting, Inc., (www.apexpjm.com) based in Orange County California, provides one-of-a-kind, full-spectrum project management leadership across a wide variety of project types, including both ground-up and tenant improvements, throughout the U.S. as well as internationally.  Apex has managed over eleven hundred projects, from due diligence and design through construction, including commercial, industrial, office, clean rooms, life science, labs, manufacturing, and specialized environments.

Mr. Conzelman is a licensed electrical contractor and general contractor, LEED® AP, PMP, CCM, and a California RE Broker License 01128636. Mr. Conzelman graduated from Western State University, College of Law and has taught Contracts-for-Contractors. Tom Conzelman is the author of “Protect Your Project”, the innovator behind the No Change Order Guarantee™ and the creator of the revolutionary Negatively Inferred Scope™ procurement process; Stopping Specification-Driven Change Orders and Rework.

Facebooktwitterpinterestlinkedinmail
Apex Introduction Video

Apex Project Consulting, Inc. Introduction to No Change Orders-Guaranteed!

In this video, Tom Conzelman, President, Apex Project Consulting, Inc. shakes-up and challenges the status quo by declaring that for design, engineering, construction and real estate development project leadership, the value proposition must include a Return On Investment. See how Apex Project Consulting has saved clients millions of dollars in hard and soft design, engineering and construction costs.

Apex Introduction Video

Return on Investment is one of the most important value propositions for project leaders.

Facebooktwitterpinterestlinkedinmail
Are You a (Project) Thermometer or Thermostat?

Are You a Thermometer or Thermostat?

What would you think if I said that one of the project leader’s most important jobs is forecasting the future? I’m crazy? Out of touch? Yet it is absolutely true!

If a project schedule is not an accurate and reliable predictive tool, then what’s the point? If a detailed project schedule isn’t used to integrate, communicate and  predictably ensure the on-time, sequenced contributions of project team members, then it’s nothing more than a simple calendar – sans the scenic photos.

At first pass this might sound a bit over the top, but consider this.

A project schedule is to a calendar, what a thermostat is to a thermometer. One simply reports the conditions while the other acts to actually control and predict conditions.

Only the thermostat has any meaningful value.   Which do you want to be (alternatively, which are you?)

Your garden-variety project manager is charged with tracking the budget, updating the schedule, and hosting project status meetings. I would suggest that’s babysitting and not real project leadership.

In the hands of a seasoned expert, the project schedule is a powerful predictive tool. It’s like a roadmap. Or a GPS navigational device. If it doesn’t help predict where you’re going, then exactly what’s the value? Much like a financial forecast, the value is not in telling you where you’ve been, but where you’re going to be. This is actionable information.

Knowing where you’ll be, when you’re going to be there, and what tasks are parts of the critical path is essential to confidently arriving at your target completion date. This knowledge will empower you to make critical business decisions and course corrections before it’s too late. It’s another key element of effective project preplanning.

A well honed project schedule also influences the project outcome.

You may recall from previous posts, that initial conditions are always the greatest indicator of final outcome. Thus an empirically derived schedule is a powerful tool. Consider this example situation.

A RECENT EXAMPLE

A client came to us at the end of last year. Their challenge – and our mission – was to get their new facilities designed, engineered, permitted and constructed – as well as their personnel relocated to the new facilities – before their lease expired. There was no way to know the magnitude of this undertaking without some analysis.

STEP ONE: OBSERVE

The first step towards influencing the project’s final outcome is to objectively observe and assess initial conditions. This is never more true that when it comes to the project schedule. The first thing to do is determine what the prospective schedule predicts. That is, when the fundamental tasks are linked in logical, predecessor-successor sequence, does that project schedule actually predict success? If you can’t make it work on paper, it’s not going to work in real-time.

STEP TWO: ASSESS

More importantly, the window of opportunity to make course-corrections or to take remedial steps is before the clock runs out, not after. Or to put it differently, “bad news doesn’t get better with age.” It’s better to find out now – while there is still some elbow to create new or revised schedule improvements.

STEP THREE: TAKE ACTION

In the case of this client, the data suggested that they would barely make the move-in date before their lease expired. However, instead of being viewed as bad news it was correctly interpreted as predicting success – but only if we started the project rolling ASAP.

MAKE THE CHANGE

One of the first steps with any project is not to just report out the “temperature”. It’s to predict the temperature and then set it at what you or your client wants it to be. YOU are the thermostat!

Taking this view of the project schedule will turbocharge your ability to stay on schedule and achieve all your project milestones.

Remember, it’s a project leader’s job to predict the future. Or as Yogi Berra said, “It’s tough to make predictions, especially about the future.”

Facebooktwitterpinterestlinkedinmail
Apex Project Consulting Saves Tissue Banks International Over $2ML

Apex Completes New Processing Lab for Tissue Banks International

FOR IMMEDIATE RELEASE -June 3, 2014—Apex Project Consulting, Inc., has successfully completed Tissue Banks International’s new Richmond, CA, facility that will house the company’s state-of-the-art ocular processing laboratory for musculoskeletal allografts, Apex President Tom Conzelman announced today.

Apex provided a broad range of diversified project development services including purchase and sale agreement consulting, building evaluation, architect and engineer selection/administration and construction contract drafting (modified GMP) as well as on-site construction management.

 Tissue Banks International Microbiology Lab
Tissue Banks International Microbiology Lab

“We are proud to have been part of the Tissue Banks International team,” Conzelman said. “Working closely with their executive team, we were able to negotiate a strategic collaboration and partnership between the MEP engineering teams and the general contractor.”

According to Terrell Suddarth, Vice President of Product Engineering, Apex’s leadership “Resulted in over $2 million in hard cost savings and a 3 month reduction in the overall project schedule.”

At 57,820 sq. ft., the new facility includes show-case caliber offices and conference rooms, warehouse and approximately 20,000 sq. ft. of dedicated state-of-the-art ISO Class 5-8 clean processing rooms and labs. TBI/Tissue Banks International is a non-profit network of medical eye and tissue banks dedicated to the relief of human suffering through transplantation. More than 100,000 patients are treated with TBI tissue annually.

Apex Project Consulting, headquartered in Orange County, CA, leads projects throughout the western U.S. Apex has managed over a thousand projects from design through completion, including commercial, industrial, clean rooms, labs, manufacturing, and specialized environments.

Facebooktwitterpinterestlinkedinmail
Three types of estimating image

Three Types of Construction Estimating Techniques

(…Everyone Uses Whether They Know It or Not)

There are a gazillion types of software, programs, catalogs and/or other tools for estimating construction costs. But all of these price-delivery tools fall into one of three basic categories.

  • Analogous
  • Parametric
  • Bottom-Up

What do these mean? How are they used? Which one should you use?

Glad you asked.

Analogous Estimating

Analogous estimating (sometimes also called top-down estimating for reasons you’ll understand in a second) is a form of experienced, sophisticated guess-estimating.  It’s also the handiest and least detailed.

Analogous estimating relies on experience. Cost information is derived from historical information from previous, like-kind projects. The projects need to be similar only in broad categories such as size, project schedule, industry type, (manufacturing, distribution, bio-tech, lab, etc.) and the type of the constructed or installed improvements.

For example, let’s say you’re using the Analogous estimating technique for a life science lab. Start by drawing on cost information that you have archived from previous similar projects. This would include mechanical, electrical, lab equipment, benches, finishes and flooring etc.  Assuming the projects are similarly sized, an estimator could “analogize” the cost of the previous projects to the present example.

Architects and engineers are likely to select this type of estimating methodology.

This works well if the projects are similar in many broad dimensions. What the Analogous method lacks in specificity or detail it makes up for in speed and convenience.

Parametric Estimating

Parametric estimating introduces a bit more empiricism. While not detailed down to every nut and bolt, it does rely on algorithms and mathematical relationships to establish cost.

Parametric estimating relies on the mathematical relationship of cost per unit. The unit can be square footage or length of cable or number of outlets or linear footage of wall. The point is that manageable chunks of the work are assigned labor and material costs. These unit costs are then multiplied by the quantities in the particular project.

Parametric estimating provides a much more higher level of accuracy and sophistication. As long as the underlying data is up to date and accurate, one can get high quality estimates without the tedium of counting every single carpet fiber.

While not as solid as Bottom-Up estimating, Parametric estimating is a great way to get a semi-solid estimate of costs without the brain damage and time required for a complete Bottom-up estimate.

Bottom-Up Estimating

This is the methodology used by almost all general contractors. 

Bottom up estimating is a detailed quantity and labor take off. Materials and tasks are broken down into the smallest reasonable component.

Let’s take light fixtures for example. Imagine a matrix of every light fixture to be installed on the project. Naturally each light fixture would have an individual cost multiplied by quantity. Similarly each fixture would have a associated amount of time for installation. Multiply the number of fixtures by the time by the fully loaded cost of labor to install the fixtures and voila!, you’ve got a powerful, detailed component of the larger cost estimate.

Then basically rinse and repeat for every other element of the project.

This technique is embodied in a broad range of construction estimating software and books. But generally speaking, they’re all just automating or more efficiently executing the technique above.

This technique is essential, maybe even mandatory for competitive bid situations. On the other hand, if time is of the essence and the scope of the project is still a bit fluid, an Analogous or Parametric estimating technique may be more suitable.

Bottom Line (no pun intended)

It’s less important which of these methodologies you choose as long as you’re aware of what you’re getting.

A conceptual budget to provide a broad framework of the total cost of the project may be effectively accomplished with Analogous estimating. However in a competitive bid situation expert professionals, regardless of the software or tools, will perform some variation of Bottom-up estimating.

As long as the choice is informed and deliberate, each estimating technique has its place depending on the trade-off between speed and accuracy.

Either way there’s no substitute for experience. I’m reminded of the old saying, “Good judgment comes from experience and experience comes from bad judgment”.  Choose wisely my friend.

 

Facebooktwitterpinterestlinkedinmail
Higher Total Costs from Low Bid

Think Low-Bid Delivers the Lowest Cost? Think Again.

Think Low Bids Deliver the Lowest Cost? You’d be Wrong.

It never ceases to surprise me when a procurement executive insists on selecting professional engineers or contractors exclusively on the lowest bid. This often repeated process never saves money in the long run. In fact, it’s only correlated with a higher risk of defects, delays and overall total costs.

Based on case studies and my years of experience on literally hundreds of projects all over the U.S., there is no direct causal relationship between low cost and high performance. Let’s look at it more closely.

First, let me define what I mean by the low bid only procurement process. For purposes of this article I’m talking about the purchase of services involved in the real estate improvement supply chain—that means architects, engineers, general contractor or specialty subcontractors—regardless of the industry.

A low-bid-only procurement process is one in which the sole controlling determinant of which vendor is awarded the work is the one with the lowest price. Sometimes this is also called lowest responsible bid. The net of it is, if price is the sole reason for the selection, it doesn’t matter what you call it.

Low bid criteria sets up a whole series of circumstances, none of them good. For example:

Low Profit Margins. If profits aren’t high enough, contractors, subcontractors and designers risk going out of business. As a result, they don’t assign their principals, vice presidents or other senior level team members to your project. Those personnel are just too expensive. Margins in the construction and architectural industries/professions are normally under 2%. Slice those margins even further, and you get junior personnel assigned to your team. That means low-bid, low profit vendors are a serious risk.

Smaller Margins for Error. Every project has errors in it. You can plan meticulously, but inevitably a problem will crop up. The issue is how does one ensure that the errors are minimized or transferred? If there’s little profit for the vendors hired for the project, there’s less elbow room for fixes—and guess who those costs then come back to? That’s right, they come to you.

Unless you hit the expert-professional-lottery and get an exceptionally competent, experienced pro who just also happens to provide the lowest bid, then you’re setting your project up (and yourself) for more change orders. Additionally, motivation to perform will be low and/or (in extreme cases) your vendor may just make a business decision that continuing with the project is more costly than abandoning it. Or worse.  Consider just the problems connected to bankruptcy from this excerpt from Greg Daily and Amelia Valz, of XL Group, as reported in Engineering New-Record, February 2014.

“What can happen when contractors’ subs file for bankruptcy? For one, contractors can be left in a holding pattern as various bankruptcy rules may govern how a contractor can terminate and replace a subcontractor. There are also risks of additional project liens by previously paid second-tier suppliers and subcontractors.

When a subcontractor files for bankruptcy, all lower-tier payments made by the subcontractor within 90 days of the bankruptcy filing can be deemed a preference. Any payment that is considered a preference will have to be paid back to the bankruptcy court as an asset of the subcontractor. Preferences can lead to a second-tier supplier or subcontractor reimbursing the court for payments it has received from the subcontractor. In turn, the reimbursements will likely lead to second-tier supplier or subcontractor looking to the contractor for payment.”

Lower Performance Results. The statistics speak for themselves. One recent industry study looked at the impact of low bids upon outcomes and found that  only 56% of projects awarded on a low bid basis were completed on time. Only 41% were on budget, and there were claims and/or litigation on 13% of the projects. I would love to ask those execs who made the decision to go with low bid if they thought it was worth the delays, expense and headaches.

When you remove the reasonable expectation of a fair profit from a project, you also remove the incentive to do a better or even outstanding job.

“In the price based environment, price is the only recognizable and dominant factor…It is a confusing environment that depends on a relationship between the client expecting the highest performance and the contractor offering the lowest possible performance because of the price based award and pressure on profit.”[1]

An Eroding Workforce. Additional statistics show that more people are leaving the construction workforce than are entering it. Check these stats:

“By 2012, the number of workers ages 35 to 44 will decrease, causing a market-wide shortage of middle managers. The market for craft laborers will tighten due to the decline of individuals entering the workforce between the ages of 16 and 24. Finally, the availability of workers age 45 to 52 will shrink, creating a shortage of seasoned senior managers. About 2.5 million workers are needed between 2002 and 2012 to build tomorrow’s America, given one million new jobs added for workers in the construction industry coupled with those leaving due to retirement or to enter other careers (Jackson 2005).”

Contractors are having a hard time finding high level staff to keep pace with the increasing work volume. As a result, especially in low bid projects, less experienced staff are replacing the higher priced experts. A 2005 study showed that three out of four contractors are experiencing a labor shortage, and that on many crews, apprentices make up the majority of the team.

And that’s just part of the story. Check out our other post for even more details.

Then consider whether going with the lowest bidder will save you…or hurt you.

Tom Conzelman is President of Apex Project Consulting, Inc., a one-of-a-kind,  full spectrum project design, engineering and construction management consulting firm for commercial, industrial, healthcare and specialized-environment projects; both locally and across the United  States. Mr. Conzelman is a licensed electrical contractor and general contractor, LEED® AP, and a California RE Broker License 01128636 (www.apexpjm.com). Mr. Conzelman graduated from Western State University, College of Law and has taught Contracts-for-Contractors at the college level. Tom Conzelman is the innovator behind the No Change Order Guarantee™ and the No-Fee Guarantee. ™


[1] Northern Arizona University, Flagstaff, AZ: 2007. CD 6:10. Kashiwagi D, Kashawagi J, Savicky J.  Industry Structure: Misunderstood by Industry and Researchers. NED University Journal of Research, Vol. VI No. 2 2009.

Facebooktwitterpinterestlinkedinmail
Project management and contracts

What Your Project Manager Should Know (But May Not Tell You) About Your Contract

 

Businesses and property owners rarely begin projects with plans to fail. The fact is however that many projects do fail and many owners end up confused, looking around trying to figure out what happened and why. While there are many reasons for such failures most of these can be traced to a single problem: A lack of understanding of the contracts and contract drafting required to lock-in success.

Unfortunately this problem occurs not only with owners and contractors but with most Project Managers as well and this lack of understanding can lead to disastrous consequences.

Where the Problems Begin

There are two potential problems with poorly drafted project contracts and scopes:

• The contract is legally sufficient, but ignores critical performance criteria or specifications outside of the legal terms and conditions, or,

• The client took a ready-fire-aim approach. That is, the contract, and particularly the scope, was settled upon before an expert could make dramatic cost saving and risk prevention contributions.

A well crafted contract is, and should be, a very versatile tool. The details of the contract not should not only protect the legal interests of stakeholders but also contain expectations of performance of the service and/or the quality of the finished product. Without proper protections, the agreement might as well be written on the back of a napkin. Strong contracts the necessary scope and protections for the project’s and client’s success. Doing this right can mean hundreds of thousands of dollars; saved or lost.

Creating a Properly Crafted Contract

When a project begins, especially before the contracting phase, successful users, client and tenants should expect their project lead to protect them from what they-don’t-know-they- don’t know. Most users of real property are in a field or industry for which architectural and engineering administration is not a required or institutionalized skill set. It is especially important to have a professional PM review contracts before signing to ascertain that owners are properly protected. A good example of this is when there are unexpected and unpreventable delays in one or more phases of the project. Delays lead to costly change orders and, in the end, the user typically will have to shoulder the loss. Consider excerpts from this example.

The plaintiff commenced an action to recover damages for delays in the construction of a college library, which involved the renovation of two existing buildings and construction of an addition. The defendant…as agent for the owner, entered into a contract with the general contractor, whereby the general contractor agreed to act as construction manager, “[e]xpedite and coordinate the work of all Contractors,” and prepare a schedule for the project.

Pursuant to the “General Requirements” of the contract, the owner’s agent, was required to provide a “Critical Path Method” (hereinafter CPM) schedule, but plaintiff was obligated to cooperate with the contractor in the development, implementation, and updating of the CPM schedule.

The “General Conditions” section contained a no-damages-for-delay clause which stated: “No claims for increased costs, charges, expenses or damages of any kind shall be made by the Contractor against the Owner for any delays or hindrances from any cause whatsoever; provided that the Owner, in the Owner’s discretion, may compensate the Contractor for any said delays by extending the time for completion of the Work as specified in the Contract.” Further, “Should the Contractor sustain any damage through any act or omission of any other contractor having a contract with the Owner or through any act or omission of any Subcontractor of said other contractor, the Contractor shall have no claim against the Owner for said damage.” Provisions were made in the contract for changes and extra work.

Delays in the project were attributed to a number of causes.

The primary witness at the trial acknowledged that the schedule was updated four or five times but, in his opinion, the schedule was useless. He also acknowledged that there were weekly meetings of the prime contractors, the architect, and other representatives.

Updating the CPM schedule was abandoned in favor of two-week schedules, referred to as “look-a-heads,” because the updates were always behind what was actually happening as a result of deadlines not being met.

Among other things, the court held that the no-damages-for-delay clause exonerates the defendant for delays caused by inept administration or poor planning [poor project management].

How Properly Constructed Contracts Prevent Future Problems

A well crafted project contract should cover all aspects of the contract, including fine details like micro schedules for individual subcontractors, and most importantly outline expectations of each entity and the firms under their direct supervision.

A well drafted contract gives the PM powerful tool to keep the project running smoothly. Each of the terms of the contract, down to the smallest detail, can (and should) be expertly negotiated. An expert project leader should be expected to bring a broad set of skills to the effort and be able to foresee possible future problems and plan for them before they happen.

Fixing the Problem

The problem is that so few project management practitioners have the necessary credentials to carry this off and many in the community have basically decided that this type of involvement is simply not part of the job of a PM. They fail to recognize the very real fact that critical aspects of the project, such as contract details, are left out of the general structure it undermines the likelihood of meeting time and budget targets.

An expert project manager should have considerable design, engineering and construction experience to successfully complete the project. They should also possess sufficient contract drafting experience to handle and anticipate problems. Otherwise, without this potent combination of talents, users, tenants, purchasers and other occupiers and improvers of real property are just doing what they have always done, with the same unfortunate results.

Facebooktwitterpinterestlinkedinmail
Architect’s guide and tools

Five Contract Scope Must-Haves
to Improve Profitability and Reduce Risk

The best contract is the one you never have to refer back to. On the other hand, if you ever do, it won’t be for a nostalgic trip down memory lane. It may the one and only indisputable basis or reminder of what everyone had agreed upon when they were playing nice together. With that in mind, clear and transparent communication up front is key for increased performance and decreased risk.

As a project leader and fierce advocate of the importance of transactional drafting (writing contracts and contract scopes), I find that there are enormous opportunities with the one pivotal document that links and describes the input and output of critical project team members in the real estate improvement supply chain.

Very rarely do contracts used in the architectural, engineering or construction industry fail because of legal sufficiency. And this is not intended as a substitute for good legal counsel. Instead, this is a shorthand summary of issues that I find give consumers of architectural, engineering and construction services the most grief or that are the most misunderstood or overlooked.

1. Scope: How much detail is enough?

Every contract divides the risks and benefits of the transaction between the parties. Whether it’s for architectural, engineering or construction services, the scope is the meat and potatoes of the contract. On one end of the spectrum, I’ve seen design services agreements that are like pastries: light, fluffy and without much substance. On the other hand, I’ve been involved in contracts that were better described in terms of weight than the number of pages.

What goes in the contract scope is often a function of who is doing the writing. As a project leader in the real estate development industry (site acquisition, architecture/engineering and/or construction), I am almost exclusively in the position of advocating for a client-consumer that is seeking to design and construct (or, if it’s a new greenfield project, building up) – their new or existing facilities. As such, I draft scopes that ensure vendor performance, close the holes in the description of work and insulate my clients from unnecessary risks.

In my view, the contract scope should be able to pass a three prong test. Protect the owner from risks (i.e., change orders). It should prevent disputes or misunderstandings by clearly communicating to both parties (good communication and transparency is key). Lastly, it should be broad enough such that there are no gaps in performance between the architectural, engineering and construction team.

2. Risk: How well are you protected?

A poorly drafted scope section of a contract is the “Welcome” sign for additional costs and almost limitless risks.  On the other hand, a well crafted scope is also the greatest opportunity for proactive cost controls and risk avoidance.  This is so for two reasons: (1) the contract drafting–whether it’s for design or construction services–naturally occurs before any work is performed. This means there is an invaluable window of opportunity to build risk protections into the agreement, and (2), this window opens early in the overall project life cycle so that in combination, this one-two punch gives users and project leaders an unparalleled opportunity to apportion risks, control costs and define deliverables before the risks arise and the costs are incurred.

3. Exit strategy: Getting into an agreement is the easy part.

Every agreement should be constructed so that the parties can exit without undue angst or pain. This is another area that is woefully overlooked. As a professional project leader and advocate for tenants, investors, and users, I’ve found that being able to pivot and exit an agreement or change vendors without undue costs or risk is critical to the success of a project. However unsavory it is to contemplate, some business arrangements need to be terminated. If the agreement provides no guidance as to how this is accomplished and how the handoff of deliverables and the payment for past work is taken care of it creates a recipe for disaster. Sadly, a few vendors will actually rely on a user, investor or tenant’s inability to terminate the agreement. Every agreement should have a clearly understood and clearly communicated exit strategy for either party; including exchange of deliverables that ensures the continuity of the project.

4. Change orders: the only constant is change

Change orders are always an unwelcome surprise. Setting aside the unanticipated, budget busting, additional capital costs piled on to what is probably already a project at its budget limits, many contracts fail to articulate the formula or calculation by which a change order is calculated. This opens a Pandora’s box of issues.

What costs can the vendor include with a change order? Administrative costs? Overhead? Profit? How much profit?  How is profit calculated? What about mark-up on materials? Setting aside all the potential component parts of a change order, like insurance, overhead, administrative costs, supervision, materials and God knows what else, what determines (or better said, what limits) the amount of markup? The answer is, without some experienced forethought, not much.

I recently completed a large manufacturing project that unfortunately was subject to a sizable amount of change orders. In doing our review of change orders, we discovered that they included startlingly high material cost. After much back and forth, we determined that the contractor’s subcontractor was using an arbitrary industry-invented material costing formulation. There was no basis in actual costs. Worse yet, the contract was silent as to how change orders were to be calculated. So don’t leave this area to chance. Set forth precisely when, how, and the calculation for all conceivable project change orders.

5. If it’s not in writing, it doesn’t exist.

This section may seem blindingly obvious. However, underlying the four points above is another axiom of good scope drafting. And that is everything about the scope and the agreement between the parties must be in writing. When in doubt, write it down.

In the same way that “good fences make good neighbors,” contracts that are expertly drafted, transparently negotiated and communicated with expert professionals ensure efficient, effective and cost savings between users and expert vendors.

A legally sufficient contract is a fairly basic undertaking. But don’t go it alone. Align yourself with an attorney or other subject matter expert who can skillfully help you navigate beyond the terms and conditions or legal sufficiency of the agreement and ensure that tactically and substantively the contract acts as not only the glue binding the input-output of the participants in your project, but also as a crucial communication tool and barrier to insulate and protect the user from unknowns or unbounded costs that are best put in the court of the expert professional. Do this, and you’ll be well on your way to building success into your next project.

Tom Conzelman is President of Apex Project Consulting, Inc., a full spectrum project development and construction management consulting firm for commercial, industrial, healthcare and retail projects; both locally and across the United States. Mr. Conzelman is a licensed electrical contractor and general contractor (www.apexpjm.com).  In addition to various project management credentials, Mr. Conzelman graduated law school from Western State University, College of Law and has taught Contracts-for-Contractors at the college level.  This not an offer or attempt to provide legal advice.

Facebooktwitterpinterestlinkedinmail
Video conference

Video Conferencing: The virtual project team is here now.

 

Are you using video conferencing as a major tool in your meetings arsenal? You should! Technology has made video and online meetings one of the best ways to upgrade meeting efficiency and effectiveness while driving down costs.

Imagine. No more wasted windshield time, fighting traffic, going to hour(s)-long in person meetings, and then driving back for another hour. Online meetings and conference calls are immediate and convenient whether you’re across town or across the globe.  This means the experts and professionals attending these meetings are much more efficient and thus less costly.  And this cost savings flows back to the client.

With online meetings and conference calls, there’s an infinite amount of data you can share depending on how deep a dive you want to take or how the meeting topics change.

And frankly, it’s just more interesting. You can draw on the screen and point or circle the part you want to highlight for everyone’s benefit. No more leaving any doubt with your team as to what part of the floor plan the project leader was referring to when you said “the office in the NW corner.”   Plus with the benefit of being able to share screens with participants and the ability to add video guarantees you’ve not only thoroughly communicated with the entire project team but enhanced understanding and retention.

So how do you make your video conferences as effective as possible? Jill Conrath is an author, speaker and business strategist who uses video conferencing as well as anyone I’ve seen. She gives these tips:

Mistake #1: Technology Screw Ups
If you’re like me, using new technology is not second nature. I freak out when things go wrong. To ensure that doesn’t happen, I practice ahead of time with safe people who will still love me even when I’m a total loser. Or, I rope in a savvy geek to give me step-by-step instructions.

Make your mistakes before you go live – or risk embarrassing yourself.

Mistake #2: Unwanted Interruptions
After my husband barged into my home office during an important online meeting, I realized I needed to do something. Today, my office has a huge “Do Not Interrupt” sign outside it when I’m online.

Make sure you shut down text message and email too. I’ve heard horror stories about what’s popped up at a most inopportune time.

Mistake #3: Inappropriate Looks
If you’re using video meetings to create a personal connection, then doggone it, you need to be looking people in the eye. Obvious, yes. But when you’re talking to someone online, I’ll bet you’re looking at where their video shows up on your screen — which may be in the lower corner.

Make sure to move their smiling face right up under your camera. That way you’ll be looking directly at them – not at their navels.
More Jill Konrath at jillkonrath.com

In every project lead, I always make video conference and online meetings a critical tool for for conveniently staying in touch with every member of the team and ensuring that I’ve communicated and achieved a uniform understanding of all the topics covered with each and every team member. Simply stated, we get more done, there’s better understanding and consensus than with simple phone calls. And everyone’s schedule is more efficient because no one has to travel across town or across the country to make the meeting.

How about your company? Let’s hear your thoughts about how video conferencing is being used to save you money…or conversely, how it’s costing you because you don’t use it yet. Please leave your comments below.

 

 

Facebooktwitterpinterestlinkedinmail
Construction project

Commercial Properties: Choosing Right

As a project leader, I often get called into the very earliest stages of company moves and purchases, especially those where new construction or renovation are involved. Over the years, I’ve found a few tips you may want to keep in mind.

First, if you and your broker are negotiating on a piece of commercial real estate and you get an inadequate offer, don’t dismiss it out of hand. You almost never get the most optimal deal in the first offer. I’ve seen a few company owners steam out of the room as though the offer were an insult. Expect a low deal, then start negotiating. That’s just the way these deals work.

Next, be sure to pay close attention to all the documentation and paperwork. You’ll be required to guarantee the accuracy of any document files you’re called upon to present (such as company financials). If you do not have all the appropriate files, loan providers will not likely give you the financial package you need to buy the property. File and collect all the essential files ahead of time.

Be a savvy entrepreneur. When considering commercial real estate opportunities, make sure you are getting exactly what your company needs call for. Don’t “settle” for less than the optimal facility for what your company really needs. And if you find a property that falls short of your goals, with inadequate amenities, the wrong dimensions, etc., make sure you can afford to fix it so that it does meet your original requirements. If the deal doesn’t make sense, move on to the next one.

Most importantly, don’t overlook the fact that your new facility is subject to local zoning ordinances. Be sure your architect takes that into consideration as he suggests upgrades, expansion or other changes to the original facility.

Check every aspect of the property so you understand you are getting exactly what you had in mind. Don’t rush into a purchase you may one day regret.

Get your staff and trusted allies involved. Ask their opinions. Put an actual value upon the new facility in terms not only of its real estate value, but its value to your company. Will you be more productive? If so, what’s that worth? Does that make the size or price of the new facility more palatable…or less so?

Fresh and independent point of views can give you a clear view of the amount of others think the new facility is worth. You might discover that you are paying too much, or that your real estate representative is over-estimating the value of the property or under-estimating the cost of converting it to your needs.

Choose that property carefully. Don’t get emotional about it. Ask trusted advisors for feedback. Do all of that and your chances for a successful project are higher right from the start.

Facebooktwitterpinterestlinkedinmail