Cursed By Knowing The Numbers

I have been producing architecturally significant homes for ten years now.  Along the way, I have learned a few things that the pros use that can really make a difference in your home [and in our own home] that help make waking up in the morning an Insanely Great experience.

Make one or more of these part of your New Year's resolutions:

  Buy and have handy a copy of Christopher Alexander's A Pattern Language.  It formalizes many of the spatial relationships into a grammar for great residential design.  It is a book you can jump in and out of when you are looking for "how to say" a solution to a site, a problem, or a requirement.

Install a Skylight in your Bathroom.

Install Dimmers on all dimmable Circuits.  I like the Lutron Maestro dimmers, about $25 at Home Depot. All your circuits (other than closets or garages) should be dimmable.

No naked bulbs.  You want to see the wash of light, not its source.

Experiment with LED's.  We still need a warm white version in the 3000K range, but we are getting there.

Add a lamp--layer the lighting in the room. Uplights behind furniture act as background lighting at night.

Combine the three types of lighting--ambient or background lighting; task or focused lighting, and mood lighting (candles).

Get paid for being Smart & Green.

Install a Solar Roof Fan.  This lowers the cooling load in the summer.

Check your insurance coverage.  Increasing home values over the past three years may have left you exposed on what is probably your largest asset.

Install a photovoltaic power system to replace the higher tariffs of power.  Look to replace any power that costs you more than $0.20/KWh (>130% of baseline in PG&E territory).

Bring more southern light into your home--windows, clerestories, anything to get more daylight into your home.  Install/Replace a window with one that better captures the light or view.

Find a Better Shower head.

If you are thinking of selling your home, check your property information on Zillow.  If someone knows the property owner's name--a matter of public record--they can post false information about a property because Zillow does not independently verify it.  Zillow says it will ban anyone who posts maliciously from claiming homes in the future, and will respond to owner comments in one day.  False information on Zillow about your property can be one more roadblock to a successful sale.

Posted by Ted at 1:58 PM | Permalink

...makes my job so much easier later on in a project.  And delivering quality is what it is all about, right?

Buy the right site.  Sites are all unique, and offer you unique advantages to meet your program.  If you are building green, you should have plenty of southern exposure (and minimal western exposure) to meet your daylighting and PV requirements.  If view is your priority, the view corridor and your rights to it need to be carefully understood. Cost.  Entitlements. Variances?   What are the trade-offs?   Quantify them.  Have your architect/CM/contractor walk through with you and understand what they see as opportunities/constraints.  What does the site want to be?

Entitlements.  Permits, and what permissions they provide, affect schedule.  We never could have produced Showcase in the time we had to deliver if the permitting hadn't been precisely correct.  Hat tip to Dan Phipps Architects.

Be careful what you ask for.  Rightsize your requirements.  Emergency power sized to cool the house and fire up the spa can get expensive.  Increasing granularity on program and budget allows you to move in sync.  Visions [.pdf] need to be tested, understood, and undertaken by those who will build them.

Design from the Inside Out, Build from the Outside In.  One designer told me that he designs a home from the door jambs out.  Builders start with setting horizontal and vertical control for a site.  At some point, these two vectors intersect.  Quality happens when the glide path of these vectors is understood and integrated.

No Leaks, No Squeaks, No Smells.  The three most significant reasons owners are not happy with their homes is the presence of leaks, sounds that should not be there, and smells that should not be there.  Design to eliminate possibilities of this happening.  Choose materials in a similar manner.  Build well.  Size the HVAC system correctly. 

Understand What you are Building. This goes for Owners as well as Contractors.  I cannot recite the number of times I have been told, "That is Wrong!"  after we have gone through design, reviewed and approved shop drawings, and tried to be as clear about what is being built as possible.  You never catch 'em all, but boy is it a pain in the butt to rip stuff out and pay for it twice.  Fabrication drawings are the way the builder confirms what is meant in schematics, so carefully review them before releasing them for fabrication.

Posted by Ted at 3:30 PM | Permalink

...is what I am constantly telling myself makes the real difference.

This came up again over lunch with Lewis Butler, noted local architect, when we were discussing project delivery systems and what was important.

Quality is the one quality that is non-negotiable.  The job can cost a little more, it can take a little longer, but quality is the touchstone of any job.

How do you achieve quality on a repeated basis?

1. Build the project on paper first.  Good plans, good schedules.
2. Do Mockups. A lot of mockups.  Use these approved samples against the final finish.
3. Hire reputable trade contractors.  Getting a B minus sub to do A work is excruciatingly difficult, and impossible on a schedule.
4. Horizontal and Vertical control.  Maintaining control to within an eighth allows finishes to meet, windows and doors to operate properly, and keeps spaces visually quiet.
5. Details.  How and where materials meet.  Communicate these in construction documents or shop drawings.  Veneer matches.  Alignments. Carcass construction.
6. Hardware. Hardware is the jewelry of a job.  Custom hardware, contextually installed, sends a message.
7. Doors and Windows.  The sound of a door shutting can tell a lot about the quality of construction.  The thickness of the door can help define the quality levels...7/4, 9/4, 12/4.
8. Scale.  I gained a real appreciation for overscaled trim when producing a home designed by Grant Marani of Robert A.M. Stern's office.
9. Context--keep finishes consistent.  A poor sheetrock job illuminated by a $2000 sconce is a bad idea.
10. Keep the jobsite clean.  It sends a message to all who pass through the gate.
11. Protect all installed finishes.
12. Exacting supervision.  Fake it 'til you make it doesn't cut it.

Ten years after you finish the job, it won't matter that it took a little longer, or that it cost a little more.  What will live on is the quality of the construction and design.

It is this essence--of quality--that separates residential properties of architectural significance from every other type of real estate.  It is the home that defines how we live, and says who we are.

Lewis adds:

A couple of thoughts.  It's the relationship of quality to budget and schedule that gets interesting.  How one pegs those things to one another is the trick, expectations have to be set as usual.  The high end bay area market only rewards quality on resale, not budget and schedule.

You can't get a B sub to do A work, that's why they are a B sub.  But A subs do great B work for less money that sometimes really ends up being A.

Hardware is important, it's one of the few traditionally mechanical things that the owner operates in the house.

And of course if it's a bad piece of property, or bad design, construction quality, budget and schedule don't really matter...  so bring the architect or CM in early!  I do a lot of house shopping for people and it guarantees the best results.

That's all for now, interesting discussion.

Lewis

Posted by Ted at 12:47 PM | Permalink

The single most difficult challenge in producing the architecturally significant home is the ongoing check of budget versus scope of work.  Quality construction is best attained by a team that knows what is expected, when it is needed, and that all team members are focused on resolving issues before momentum and equilibrium are affected.

An on-time, on-budget development project flows--it has a tangible equilibrium and momentum to the work.  I maintain this momentum by:

• Establishing real budgets based on historical costs upfront, before commencing design and development work.
• Designing to a budget.
• Recruiting reputable contractors.
• Contracting to a budget.  Contracting with enforceable construction documents adequate to defend the price.
• Resolving any scope changes or unforeseen items against the budget before folding them into the scope of work.
• Reconciling current scope to current budget once per month--Our Cost to Complete.
• Reconciling current work in place momentum against current scope once per month--Our Time to Complete.
• Quick resolution of open issues requiring clarifications or resolution--the HotList.
• Ongoing dialog with planning and building officials.
• Current project information maintained and distributed.

If you must build, there are a lot of us who understand.  The challenges facing you are not really unique, and have been surmounted before.

Keep your eye on the prize, and get started.   Drop me a line if you need a hand, or a positive word.

Posted by Ted at 4:19 PM | Permalink

Change orders present an opportunity to increase profit margins on a job for a contractor.  They provide an Owner a handy tool to accomplish deviations from the originally intended work based on better information, superior materials, or simply understanding the work from a "full scale model" approach.

Equitable adjustment of the construction contract can provide a fair and balanced approach to the need to increase the scope of work without unduly enriching the contractor.  I covered the sources of changes here.

RFI's, or Contractor Requests for Information, are the lead document in identifying issues that are not clearly understandable from the working drawings and specs.  Projects get in trouble when there is a cascade of minor undocumented changes, contractors respond to them and, at some point, start to realize they are over budget.  RFI's are a way of documenting minor changes and understanding the cost, if any, of implementing a requested change.

Changes happen.  Contractors don't get to say "I don't wanna" and Owners have to negotiate for an equitable adjustment to the contract.  Changes can be ordered, and there is no way to compel pricing.

This is what I do to help the team equitably adjust our contracts for changes:

• Original contract shows quantities and unit prices for typical assemblies.  For example, retaining walls are so many $/SF, or $/CY of concrete.  Flat work is one price, structural slabs are another.  Electrical is priced at so many $/fixture.  Adjustments up or down are done from these unit prices.
• Mockups and color samples are called out in the submittals and are used to establish acceptance criteria.
• Shop drawings are contract documents and supercede dimensions on drawings.  Contractor responsible for tying back all these dimensions.
• RFI's are incomplete without the Contractor's recommendation of an on-time, on-budget resolution.
• Owner/Architect needs to understand when complete information is needed to maintain intensity and pace of the work.
• A contingency account is set up to provide for resolution of minor design errors and omissions, unforeseen conditions, and code compliance issues.  The balance in the account at the end of the job is split between the Contractor and Owner, providing a bottom line incentive to the Contractor to achieve faster/better/smarter resolution of these issues.

Posted by Ted at 3:48 PM | Permalink

Built quality is the touchstone of a contractor's operation...at least as far as the Owner is concerned.  Quality is the only element of a project that survives until resale, long after the delays and the value engineering are forgotten.

I define quality in that you get what you inspect, not what you expect--insight provided to me by one of my chief petty officers when I was a wet-behind-the-ears ensign in the US Navy Seabees.

The best way to get a fix on quality is by seeing mockups and samples to provide a real example of what is buildable, and hence approvable. 

The second best way is to find where it was done elsewhere and find out who did it.  Look at what they did, and see how close it is to where you want to end up.  Architect's monographs can be a great source of solutions.  When I'm stuck, sometimes I wander over to Bill Stout's bookstore and look for solutions.

Specs help get you in the general ballpark, but seeing is believing. 

In our world of design once, build once, operate once, I use mockups and samples extensively to get agreement on what it is that we want--how materials meet, finish conditions, trim options.  I usually have a mockups budget to help get us iterating through the finish options to get us where the building needs to be.

Posted by Ted at 3:03 PM | Permalink

One of the most frustrating things to encounter on a jobsite is to find a crew working off an obsolete set of plans, installing assemblies that will have to be torn out.

Managing change is easier when the plan is current, distributed, and accepted by those who will be performing the work.  If you can shave a couple of months off a project through open-door collaboration tools, the savings are real when builder overhead is $30 to $50K per month.

Here is what I need from an online interface...

• Plans are available to all team members in .pdf format.  Architecturals, specs, SK's, OSK's, CSK's with acceptance chain.
• Current milestone schedule is posted, with time to complete tracking against last known, current and if on the critical path.
• Finish schedules.  Fixture Schedules.  Door and Window Schedules.  Hardware Schedules.
• View, markup, upload and download drawings and SK's.
• Time to Complete.
• Hot List, including RFI log.
• Change order tracking log.
• Current Cost to Complete.
• Photo journal/weblog tracking news, changes and touchpoints.

Am evaluating a couple of project collaboration tools right now

37 Signals Basecamp web-based software may be a good first step.  It runs from $50 to $150 per month.  Free one-month trial.

Anticipate Acrobat will be the primary markup tool.  Need database functionality for tracking milestones, RFI's and change log. 

Do you use a web based collaboration tool?  Any recommendations?

Posted by Ted at 2:52 PM | Permalink

Nothing screws up a project faster than cascading changes forcing remodeling and redeployment of tradesmen.

Changes folded into the project late end up costing you two to four times what they would have cost if in the initial scope of work.  Reversing progress is demotivating.  Changes happen--all I ask is that everyone understands the true need, the best solution, and the true cost before you start demolishing what you have built.

I posted about where changes come from here.

Projects reach a tipping point where the motivation changes from "Perfect is good enough" to "Good enough is perfect". 

Understand where you are vis-a-vis this point in your project.

Here are five tips on how to avoid impending disaster by changing work mid stream:

• Freeze the Design.  Owner and architect agree to freeze the design at a point, and not backtrack.
• Appropriate finishes sometimes only become apparent in the "full scale model stage", that is, during construction.  This can trigger changes to the finish schedule.  Understand what elements in the finish schedule are placeholders and what lead times are to procure the options.
• Faster/Better/Smarter.  Substituting a better, faster, or smarter finish may help progress--look for hangups due to E&O (errors and omissions) where you can leverage a better solution to maintain pace and intensity.
• Keep off the critical path.  Know when information is needed by the building team and how the scope of work cascades through this area and this item of work.
• Live with it.  If it is a change to finishes, casework or cabinetry, hold off until after you have lived with it for a while.

Making changes late have costs beyond the direct labor and material involved in the direct scope of work.  Make sure you understand these costs when asking for this change.  There is a value to the new and improved solution, just know the numbers involved to get you there.

Posted by Ted at 1:08 PM | Permalink

The critical path, or flow of a project’s momentum, is always changing.

Know what the team’s next three milestones are, who owns them, and how close you are to accomplishment and acceptance.

Stay off the critical path—have your deliverables provided on-time, and in a way that is easily acceptable by who is taking custody for this delivering this solution from you.

If your solution is not acceptable to the next one in your project foodchain, you own the problem of making it acceptable.

Posted by Ted at 8:55 PM | Permalink

The pace and intensity of a job tells you a lot about the team producing it

 It can tell you a lot about how good the schedule is, and whether people actually do what they say they will.

Jobs lose pace and intensity through cascading change orders, encountering unforeseen obstacles, or lack of buildable information.

Quickly clarifying design intent to maintain pace and intensity is a critical responsibility of the entire team.

This is how to get the information out to the team to build and maintain the pace and intensity on our projects

Acceptances are the way to build schedules.

 Track accomplishments, not start dates.

Maintain current project information—plans, specs, and schedules--in an accessible online website so everyone can get current copies whenever required. Have everything in .pdf format

Track issues via Hot Lists to track conflicts, omissions, or errors in articulating design intent. Make sure someone has both action and the tools necessary to find a solution.

Use RFI’s correctly. Requests for Information are not a substitute for reading and understanding the plans and specifications, nor for adding scope or initiating changes to the project.

 There should be enough information available so that the RFI process is confirming design intent, not developing it.

Make sure submittals are correct. Do they comply with the specifications?

Will it fit? Will it get here in time? What is missing?  Build it on paper first.

Generate options for errors and omissions discovered for the Owner to review and accept.

 Define what the error or omission is clearly, and list a range of solutions with money and time effects. Contingency accounts are useful here in that everyone becomes focused on the optimal solution is, rather than trying to duck blame.

Describe any  changes needed completely and build them on paper first. Is the cost, in both time and money, understood and agreed to by all parties? Avoid making changes on a time and materials basis unless you are exploring an unforeseen condition.

Wander around. Understand how the different crafts work with and around each other. Learn what they need to get their job done. Ensure the superintendent understands.  Appreciate what is happening.

Get it done. Now. The more time and delay on making a decision, the more it will effect downstream work

Understand how you got here. Is this a chronic weakness or a one-time deal.  Repair appropriately.

A happy job is one that is clean, safe, and trucking along on schedule.

Posted by Ted at 7:45 PM | Permalink

At this point, your architect and you have developed a common language and she has  captured what you want to build into a set of design development drawings and outline specs.  You now need to convey this intent to your builder in a manner that gives you certainty on the cost--the Cost to Complete--and duration--the Time to Complete.  Architects tell me that designing an architecturally significant home to a budget is difficult in the best of times, and impossible without a reputable contractor on the team to provide good pricing feedback.

Understand that your builder, if they are like most reputable builders, is motivated by two things:

• first, getting new projects, and
• after getting the project, increasing their margin, and reducing their risk.

This is how good contractors operate.  To get your contractor to build what you want, you need to first understand what they want.

There are two issues in getting the contractor to build what the architect wants.  The first is recruiting a reputable contractor that will build in accord with the architect's documents.  The second issue is that the standard AIA cascade of documentation does not do much to defend price, reduce risk, and maintain equilibrium in pricing power on margins. 

Recruiting A Reputable Contractor:

• Contractor Bench Strength--have their subs done work of this level of quality before?  Look at their subcontractor bid manual.
• Estimating--are their quantity takeoffs accurate?   Are they broken down into units and quantities or are they just lump sums.  Are performance specs called out and met (waterproofing and flashing).
• Supervision--the singlemost important person on the job.  Make sure you get the right person for the job.  Honest, forthright, experienced.  How did they punchlist their last job?
• Schedules--what is the critical path?
• Risk--what do they foresee to be the risks of the job?  How are they dealing with them?  Have them walk you through their notes to the AIA general conditions for the construction contract.  Understand any risk shifting that is happening here.
• Margin--understand what this number really is.

Producing Enforceable Construction Documents:

• Accurate project information, such as surveys, soils reports, local rules and regulations,  existing conditions if a remodel.
• Accurate and comprehensible plans, with sections, details, elevations, and matchlines fully coordinated.  Comprehensible specifications.
• Complete finish and fixture schedules with version control.  Headend information on electronics.
• Performance spec information on acoustical, waterproofing, HVAC, line voltage electrical, plumbing, and horizontal and vertical control.  Trade contractors need strong design skills to be responsive in the design/build environment.
• Constructable detailing.  Details coordinated with plan and elevation.

The pricing and negotiation period is the time to surface these issues.  Pricing equilibrium is lost if these issues are discovered during construction.

Posted by Ted at 8:08 PM | Permalink

...was the description of the program developed by the architect and owner on a remarkable house in Montauk profiled by Pilar Viladas in the NYT Magazine this weekend.

There are several tongues spoken on any project, threaded together through the course of design and construction.  The list includes:

• Architecture--the language of program, of design and the detailing, hardware and finishes.
• Contracts--who has to do what by when, and whom gets paid when, for what.  What to do if promises aren't kept.
• Construction--the sequencing of trades, resolution of conflicts, and getting different systems to fit and work with each other.  Translating the two dimensional language of plans to a three dimensional structure (the "full scale model").
• Interiors--finishes, fabrics, and interpreting light.
• Public approvals, and code interpretation--what needs to be approved to satisfy requirements, and
• Spanish is now a requirement, as it seems 60 to 80% of the workforce here in Northern California is Latino.

With all these languages, the potential for misinterpretation, and the fact that our industry is largely peopled with non-verbal male, action-oriented professionals, listening and problem resolution are key skills at all levels.  And the key contribution of a project manager is to understand these tongues, and to translate, tie together, and provide a unified picture of where you are at present.

The only common element that should course through all these threads is trust and respect.  It makes the rest of the job much easier.

Posted by Ted at 7:58 AM | Permalink

"...an architect has are the eraser in the drawing room and the sledgehammer on the construction site."

--Frank Lloyd Wright

Guess which one is cheaper?

A key point is  build twice--the first time on paper.  Changes late in the game get you twenty to fifty cents on the dollar in terms of value, not to mention the cost of the do-over.

This is why iterating finish schedules are so important. 

You start to understand materials in terms of thickness and edge conditions.  Good interiors derive from so-so interiors.  Mock-ups impact momentum a lot less than full scale model iteration.  Sometimes your best design is a clever take on working within the project's constraints.

Remember the carpenter's maxim:  "measure twice, cut once."

Posted by Ted at 12:10 PM | Permalink

A schedule that you have a high degree of confidence in, understand the probabilities and linkages, and that the team has bought into are a great focusing and forcing function.

What is a forcing function?  It is a behavior shaping constraint that prevents team members from losing sight of completion dates, deliverables, and helps to prevent common errors or mistakes.  An example of a forcing function is the approvals of dimensioned shop drawings for casework or cabinetry to prevent problems related to fit or alignment.

A schedule tuned to act as a forcing function clearly defines commitments and hand-offs between team members and motivates changes in perspective or behavior to meet these constraints.  It shows the cascade of milestones and identifies the critical path so that we understand how much time stands between us and turnover.

Is your schedule tuned to act as a forcing function?  Look for the following:

• handoffs defined as acceptances, not merely declaring victory and moving on.
• "chunkable" milestones instead of one long progress bar and a "miracle happens here" milestone.  Identify squeeze points such as close-in inspections that limit work-around options.
• Are schedule buffers called out?  A schedule buffer is adding a few days to a task for no apparent reason than contingency.  The next pass will look to replace schedule (or time) buffers with plan (or alternative location) buffers.
• Add add/cut periods after milestone completions as a way of  dialing in scope to check the cost to complete against the budget.
• What questions need to be answered to raise the confidence in the schedule?

A schedule as forcing function flushes out oversights and problem spaces, and helps team members understand dependencies and tackle risks earlier in the project.

When they understand the dependencies and inter-relationships between what they are responsible for and the rest of the team, it builds momentum and aids in early detection of problem spaces.

Posted by Ted at 11:38 AM | Permalink

Using the mogul skiing metaphor--that a project is merely a series of linked recoveries--then what is the probability of making it to the bottom of a run without some face first tongue-surfing--or more germane to this blog, completing a project on-time, on-budget?

Compound probability--the probability of an outcome dependent on a series of linked events--for example, the probability of obtaining two heads in two flips of a coin is 1/2 x 1/2 =1/4 or 25%, or five heads in five flips is (1/2)^5 or 1/32, or roughly 3%.

For a real world example, lets look at the feasibility cascade at recycling the 275 acres out at San Quentin.  To get an alternative, sustainable, job-creating land use going, there are three steps that have to be taken--

1. the State laws that require all condemned prisoners to be incarcerated at San Quentin, and executed there, has to be changed to allow for other locations in the State of California.
2. An alternative 320 acre site has to be identified and entitled.
3. The State has to end prison ops on the site and decommission the prison.

Lets say there is a 25% chance of the first happening, a 70% chance of the second event occurring and then a 85% chance of the third event occurring.   Multiply these together and you get an 15% probability of getting to first base.  Better than buying a lottery ticket, but not by much. 

When you are getting your head around a schedule, good probabilities make good estimates. And good estimates help you raise the confidence level of your schedule.  Which helps to get your deal capitalized.  And a good capitalization helps you get to an on-time, on-budget result.

Posted by Ted at 11:22 AM | Permalink

The key problem in watching your numbers too closely is that you lose sight of the team.  I've done this.  Overly focused on my hot-list, cost to complete, or pricing out options, I forget that these homes are designed and built by professionals who make this their livelihood.

In the heat of the moment, all you need to know is how much more time you are going to need, your next three milestones, and who needs help getting their job done.

In the end, all you have is your team (or what's left of it) a huge pile of paper, and your goal, however achieved.  Although the paper is important, it is you and your team that got you to the goal.

Posted by Ted at 11:10 AM | Permalink

...is my definition of the perfect jobsite.  This is the responsibility of the superintendent, and it is the best way to build and maintain momentum to an on-time, on-budget completion.  It sends a message to all that enter the grounds that this team is professional and will deliver dramatically distinctive results.

The costs to keep a site lean, mean, and spotlessly clean are a fraction of the costs to recover from damaged materials, lost time accidents, or the message that professionalism does not count.

How clean is your job?

Posted by Ted at 8:12 AM | Permalink

...and why are we owners so in love with it?

At least until construction pricing started rising here 2% per month...

The short definition of fast track is that you start digging the hole, installing your utility connections, and building a foundation prior to completing design of  the superstructure.

The benefit is that you get to overlap your final design time with the first phase of the construction period. This takes a couple of months out of the design/construction schedule.  It allows you to dial in your exact finishes when you get a chance to walk the building, and get a "full scale model" perspective of the light, air and spatial relationships.

It seems like we only perform fast track delivery anymore, much to the consternation of our talented (and opinionated) architects. Given the fact that this is what the market demands, what and how can you fast-track?

We will not commence a project until we have all permits and firm fixed price contracts for the following:

• We complete design on everything related to the exterior envelope, structure, waterproofing and rough openings for doors and windows.
• We complete design on HVAC system supply and return duct sizing and locate units.  We locate kitchen exhaust fans and ducts.
• We locate dryer exhaust ducts and waste plumbing returns.
• We complete all MEP work for each floor, detailing connection sizing and location of verticals.

Basically--we do all work under one building permit.  This takes a great deal of the approvals risk out of the budget, and allows us one or two passes of building it on paper to get our numbers close to right.

We price off a version 1.00 of the finish schedule.  Many of these items can be placeholders--the trick is the thickness of the assembly needed for stone or paneling--including any mortar beds.  What we want to fix are wall, ceiling and subfloor dimensioning and relationships--top of subfloor, and back of mortar beds in bathrooms.  Casework and cabinetry are placeholders, with unit costs budgeted in according to the level of finish indicated in the finish schedule.  Landscape and pool are placeholders.

In short, we have a complete budget tied to a placeholder finish schedule, that we can iterate off of as construction gets underway.  This eliminates a good portion of construction risk, and yields a cost to complete and time to complete estimate that is a reliable budget and planning tool.

Posted by Ted at 8:12 AM | Permalink

..are a part of any construction and development project. Whether the changes come from an element we did not foresee, or something that we changed our mind about, the development process seems very similar to the way a friend used to describe how she skied the moguls--"It is a series of linked recoveries"

This chart breaks out the cause of changes as a portion of total cost overages.

1.  Design errors and omissions are the elements a prudent designer would have included in a set of contract documents.  Examples are modifications to one location that do not ripple through to details, or changes in architectural drawings that were not picked up in structurals or MEP's.

2.  Trade Contractor Coordination is the cost of performing work that falls in the gap between trade contractor contracts.  Kitchens are prime examples of where these gaps could occur.  Cabinet maker's boxes do not align correctly with architectural woodwork, or HVAC, or appliance connections.  Coordinating plumbing--ie roof drains--with interior framing is another example.  Architectural drawings show intent, Structural drawings show member sizes, and it is left to the general contractor to get it all to fit.

3.  Unforeseen conditions</strong> are those uncharted items that are discovered only upon opening up the work area. Examples include dry rot discovered after demolition of a building interior, a geothermal hot spring discovered where a winery's underground chai, or barrel storage, facility is to be built, or soils conditions materially different from the soils investigation provided.

4.  Excessive change order pricing occurs when changes or additional work is ordered outside of the natural progression of the work, many times restricting the optimum pace and intensity of work being put into place.  Excessive pricing also occurs when a vendor is trying to make up lost margin over incomplete pricing.  Going to a sole vendor gives more pricing power to that vendor.

5. Code compliance is the cost of implementing corrections or changes to the work after an inspection by the authorities having jurisdiction over the work.  Obtaining final signoff on permits is often at the discretion of the authorities, and sometimes gaining this signoff requires additional work not in the contract.

6.  Owner scope changes are qualitative changes to finishes, or components.  Additional cost also comes from additions to the scope of work through added systems, or changes in the critical path necessary to incorporate these new requirements.  Qualitative changes ripple through a finish schedule, driving other changes to maintain a contextual relationship.  For example, basements are often an afterthought in the design process, but the intensity of building systems on this level and the fact it is the first part of the building constructed can trigger a lot of scope change early in the project.

The challenge is maintaining the pace and intensity of the work while folding in these changes.  We've met this challenge by:

• "building" the project on paper first through good scheduling and understanding the finish schedule
• making the general contractor responsible for any trade contractor changes.  If it is shown in the documents, the Owner is entitled to it.  Performance specification acceptance on waterproofing and acoustical aspects of the building.
• establishing a joint contingency account for design errors/omissions, unforeseens, and code compliance.  Motivation to resolve these changes faster/better/smarter is achieved through splitting  funds left in this account at the end of the project--money goes straight to the builder's bottom line
• establishing unit costs for installation at the time of writing the initial contract provides protection against excessive change order pricing, or at least a basis to understand where the pricing difference lies.

Owner scope changes are managed through our instant feasibility testing to provide a quick cost/benefit check before the builder spends any time pricing or implementing a change.  Limiting cost plus reimbursement on qualitative changes to tasks only on the critical path.  Owner supplies materials to keep on-time.  Coordinating building systems in the basement level by constructing this level on paper first with all players working together.

Changes make projects more expensive and run more lethargically than most realize.  Keeping our projects on-time and on-budget requires a roll-up-your-sleeves cooperative attitude to understand the real impact of any changes and the real benefit

There is realistically only so much recovery that can happen on a project before burnout occurs.  Keeping focus on achieving quality at the intended pace and intensity eliminates a great deal of contemplated changes before they start to slow things up.  Build it twice--the first time on paper. 

 Remember, oftentimes your first solution is much closer to the end result than you think.

Posted by Ted at 4:49 PM | Permalink

Architects want input from a builder as they progress on a design to check constructability, review details, and most importantly, to check the budget.

Owners pay for this review.  What is sometimes missing is the accountability for the quality of the numbers--marketing numbers do us no good. The constructability of details needs to be part of the review and recommendation.  You don't want to know how many times I have heard whining about flashing details during construction when not a peep was made during preconstruction over the same detail.  What you need is true construction expertise--in pricing and constructability.

What is the faster/better/smarter way to buy preconstruction services?

1.Set the baseline.  You need to know quantities, units, and unit costs making up the cost estimate.  Lump sum numbers are basically useless.

2. Set the finishes.  You need to price off a finish schedule.  Stain grade vs paint grade, stone vs tile, etc.  You can iterate up or down on the finishes to get a budget number circled once you know your quantities.

3. Identification of assemblies benefiting from design build or cost plus approaches to getting it right.  On one recent job, we were under construction when the manufacturer's rep backpedaled and would not warranty the installation of their material--two years after they had sold this material to the architect as perfect for the application.  The subcontractor was sweating bullets.  After a great deal of caveatting, to-ing and fro-ing, and mockups, the material went in, looked great, and the subcontractor ended up looking like a hero--and deservedly so.  These assemblies need to be called out during preconstruction and everyone locked in a room until a consensus is reached at that time--not when you are burning $60K a month in OH&P on an active jobsite.

4. Review design for warrantable installations.  In the world of design once/build once/operate once homes, sometimes we get a little too far out on the design limb, making materials perform unnatural acts.  Best to know what is warrantable--or how to make it warrantable--upfront rather than when we don't have the time to develop a good workaround.

Don't you get this if you just bid it to a couple of contractors?  Not really. You will get a partial #1, perhaps broken out by trade.  Bottom line numbers are pretty useless and you certainly don't get 2, 3, or 4.  Those remain as gotchas to be negotiated during the building process--when you have neither the time nor great leverage.

What is the right price to pay for 1 to 4 above?  I have paid from about $0.75 to $2.00 PSF, although I have seen preconstruction lines on projects--before I got involved--add up to $9.50 PSF.  Ouch.  Have your team work to these four steps and you will start your project in much better shape.

Posted by Ted at 5:02 PM | Permalink

All this talk about costs going up made me wonder.  My company has been improving property for almost 20 years, and although the $PSF number is creeping up, I wanted to understand where the exposure was.

We went back and sorted our historical construction cost data for our distinctive homes  to see what the relative weighting of the different trades were.  Our data base was based on the approximately $125M of distinctive homes we have developed or project managed over the last ten years. 

This is what we found:

Conclusion:  finishes are what you have to watch. The two single biggest variables are cabinetry and casework, and finishes.

And in our business, where the dream is sold from the finishes in, but built from the inside out, I start to understand why it is so difficult sometimes to keep these jobs on-time and on-budget.

Posted by Ted at 10:03 AM | Permalink

is that all an Owner needs to be concerned about is when tasks are completed--not when they are started. It is when you finish, not when you start, that needs to be understood.  Are milestones often enough (every week), are they sequenced in an understandable way, and if recovery is needed, is it apparent where the critical path runs?

There are three types of schedules:

• the Marketing Schedule--used to sell the job and to give an optimistic view of the pace, intensity and completion.  Gantt chart is a pretty picture.  Note where close-in milestone is, and where the certificate of occupancy/final inspection milestones are.
• The Owner's Schedule--milestones only on construction tasks, folds in designer tasking and decisions that need to be made.  Should include delivery of complete finish schedules to builder as well as any owner equipment or owner contractors that are sequenced after particular milestones.
• The Tracking Schedule--a gantt chart look at critical path milestones to be accomplished in the next four weeks, and compares them to the most recent schedule.  Needs to call out where the critical path lies as this changes due to slack, early completion or changes of sequence of the schedule.

What are the numbers behind a good schedule? 

• The needed burn rate--the daily, weekly and monthly work in place dollar amounts necessary to reach the agreed upon delivery date.  A first pass at this is to take the contract cost to complete and divide it by the unit of time you want to track by.
• The time to complete--the number of days on the critical path to certificate of occupancy/final permit signoff.
• Days ahead/Days of recovery needed to meet the next milestone.  Catching up in three milestones is not the way to recover time in a schedule.

How often should a schedule be published?  Whenever the critical path changes.  Everyone on the time needs to understand the critical path--who is on it, who they hand off to, and what this person requires in a handoff.

How do you make sure you are working off a current schedule?  Tie it to making progress payments.

A good schedule makes an owner understand the real costs of changing an element of the project so that a proactive cost/benefit check can be made, and it compensates a builder if the critical path changes.

Posted by Ted at 10:29 AM | Permalink