Building the Case for Construction Management Consulting
"Why provide solutions when you can prevent problems"
At Adah International, we’ve studied and performed industrial project management for the past 12 years, and in more than five countries. Through this experience, we found that one of the most in demand, but somehow underutilized type of project management is construction management.
The following attempts to answer why construction project management consulting is necessary, and why it’s not a solution to construction project problems, but rather a source of prevention, value addition and costs savings before, during and after the project.
According to the Construction Management Association of America, “Construction Management, or CM, is a service that uses specialized, project management techniques to manage the planning, design, and construction of a project, from its beginning to its end. The purpose of CM is to control a project's time, cost and quality.”
Construction Management is by far the most requested type of project management service Adah International provides, slightly more than our operations rollout and logistics planning services, and one of the three main service groups we offer as a company.
From a March 2017 Inc.com article, Why Construction Management Is One of the Best Industries for Starting a Business in 2017, “Spending on U.S. construction projects has steadily increased over the past five years. In 2016, the U.S. industry was valued at nearly $1.2 trillion--up 47 percent from 2011, according to the U.S. Census Bureau.”
Our clients run as lean on staff as possible, meaning they have only the personnel necessary to manufacture or distribute their products or service their customers. They may have an industrial maintenance- and even a facilities maintenance person, but neither are usually educated and experienced to manage major construction projects. More importantly, the additional, out-of-scope work for existing staff detracts from the operational focus of the company.
It’s true the client could consider directly hiring an internal construction manager, but that adds several hours of work to usually, already stressed human resource and administration departments. It also means that, after project completion, the client would have to either support a nonessential employee, or terminate the position after a relatively short-term project, possibly leading to frivolous but costly legal problems.
Of course, construction companies offer additional project managers to their clients, but they can be very expensive; some adding as much as $50,000 per month to a project’s total cost. And, as they are employed by the construction or design company, they do not always have the client’s priorities in mind.
Instead, construction management consultants offer management services with the client’s interest always at the forefront. Services are offered at a fair rate, with multifaceted experience and with both construction expertise, as well as enough various industry experience to truly understand the client’s processes, standards and needs.
Throughout their projects, construction managers take into account the following three most important topics to achieve success for their clients:
§ Developing a project plan which equally combines the client’s budget, schedule and the design / construction industry’s capabilities
§ Choosing a design-construction team to create the most accurate budget and schedule possible
§ Determining which existing personnel of the client can be utilized for the project without harm to existing operations or protocol
Successful construction management begins with the very first planning phase of the project. Many of today’s industries operate globally and therefore require the multicultural, and multilingual experience necessary to understand both foreign companies’ needs. Additionally, construction management consultants have local knowledge of the capabilities and assets specific to the project location.
Construction management consultants with these assets, create the best project plan possible by considering both the client’s needs and local design-construction industries’ capabilities, then combining the best of both to achieve the best initial plan.
Although the final decisions always rest with the client, construction management consultants advise on important planning decisions to reduce risk, overscheduling, under budgeting and expensive change orders.
Construction management consultants work in-house, alongside the client’s operations team, to ensure understanding of client’s processes, culture and standards. This creates a co-working environment necessary to collaborate on the best plan possible. The plan not only takes in to account the client’s goals, but also the prevents interruption in existing operations. And, by better understanding their operations, construction management consultants can assist clients in reassuring their existing and new customers will be well served during and after the project, respectively.
Hiring a design-build team together and early in the project is more beneficial than the bid-build method in that the former results in a project deigned to be built. For example, architects are notorious for designing buildings that are not always able to be built practically, and even though contractors want to build what architect design, they often change plans when met with impractical design. This results in lengthy delays and costly change orders for the client.
A construction management consultant will help clients research, interview and choose the best architect and contractor team for the project. Consultants will manage the design process and keep not only the client’s interests in mind, but also the contractor’s, preventing potential problems from attempting to build an extraneous design.
According to an article in ConstructionDive.com, titled 10 construction industry trends to watch in 2017, “Collaborative project delivery methods are becoming more and more popular and cost-effective for companies. The design-build process consolidates the design and construction phases into one contract. It allows more collaboration and gets you to the completed product much faster.”
Many clients are, at first, adverse to the design-build method, believing that using their internal purchasing team to control the bid process will reduce costs. However, clients using their already overworked purchasing team to manage bidding on construction in lieu of their core business, results in current customer negligence, internal stress, lower morale and costly mistakes as construction is such a unique and frankly, fickle industry.
Some clients also believe the internal bidding method keeps their plans and information confidential. The construction industry, although incredibly large and technically advanced, is still a close network of intermingled contractors who depend on the sharing of information to survive. Meaning, the information given to a few general contractors must be shared with so many subcontractors that the client might as well just have posted their plans on the open Web.
The same goes for pricing; general contractors know the industry better than anyone and will therefore choose the best subcontractors based capacity and quality, and without bidding. If they do need to bid some work, general contractors as the industry experts can negotiate much better pricing than their clients and without reducing quality.
Also, the bidding process is extremely time consuming. On one past project, we noted the bid process handled by the client internally, took almost eight weeks of a proposed 18-month project. A retrospective study, estimated a cost reduction of almost $300,000 for this specific project if the client had not bid-out the project. By assisting the client in choosing the design-build team first, the construction management consultant can reduce the bid process time almost entirely.
Some clients might argue that the design-build method removes them from the cost estimating process, possibly resulting in overcharges. However, construction management consultants are certain to keep the architect’s and contractor’s pricing transparent or “open book” throughout the estimating process. This way the client’s executives and directors have complete visibility, are still involved in the budget process and making the big decisions, but not enough to cause dilution and potential harm to current operations.
Involving the client’s existing personnel in the construction management process is necessary to ensure a successful project. And, one of the most important client’s existing departments to add to the construction management team is maintenance. Industrial and facility maintenance personnel are extremely valuable to the project, as they know more about the existing facilities and equipment than anyone. But again, construction management consultants should always be respectful of the client’s existing personnel, especially the highly sought-after maintenance employees, as to not disrupt current operations.
Other existing client personnel valuable to construction management are the directors, especially of the operations, human resource and finance departments. However, one critical point the construction management consultant must relay to the client as early as possible, is that although the construction management consultant leads the project, they are in no way responsible for leading the client’s existing personnel, especially the directors. The best scenario for hierarchy in construction management, illustrated in the organizational chart below, is when the construction manager gives planning and execution advice to the client’s executive in charge to be discussed, delegated and executed in accord with existing hierarchy and protocol.
Although each client is a little different, this basic organization prevents confusion in leadership and keeps the status quo for existing personnel to receive and understand instruction from their leaders, as they always have. There are few things more prone to failure than an external consultant trying to manage internal directors of a client.
In conclusion, utilizing construction management for large, even some small and medium projects, will produce on time, under budget, and quality results. Construction management consultants reduce stress on existing personnel while allowing the client to maintain and even improve upon its company standards. Most importantly, construction management consultants prevent problems rather than provide solutions resulting in cost savings well in excess of their fees.
About the Author
Kirk Atkinson, president of Adah International, Inc., started his project management career with Yates Construction in 2004. He went on to serve as the lead project manager for the former site-selection company, World Business Advisors as well as the Tuscaloosa County (Alabama) Industrial Development Authority and the City of Birmingham, Alabama. To date, Kirk has managed over $500 million dollars of construction projects and operations roll out in six different countries.
About Adah International, Inc.
Adah International, Inc. is a boutique project management consulting firm with over 30 years’ combined experience in assisting both foreign and domestic companies with facility planning, construction management and operations rollout throughout Europe and the Americas.