Lies, Damn Lies and Construction Projects

BY ROBERT P. MADER

Of CONTRACTOR’s staff

PHILADELPHIA — Contractors in the hallways here at MCAA’s mid-year educational conference called the case study that was the centerpiece of the conference one of the best presentations the Mechanical Contractors Association of America has ever done.

The case study covered most of the lies that can be told on a construction project and how to deal with them.

The MCAA’s June meeting attracts its share of CEOs, but many of the participants are vice presidents, project managers, estimators and other operating management.

The case study divided them up into several dozen tables of eight persons each, charged with the task of recommending how to get out of the construction project at hand without losing their shirt.

The case study revolved around a Wisconsin mechanical contractor in business for nearly 50 years. The contractor had won and worked on Phase I of a project for a global industrial customer in northern Illinois. The contractor was asked to bid on Phase II, which involved mechanical installation and instrumentations on additions and renovations to the Phase I site.

One nascent problem surfaced during the pre-bid meeting, at which the owner indicated he wanted to supply all equipment and said all materials would be delivered to the jobsite within 24 hours of a request.

By the time the contractor is into the third week of the 24-week project, the situation is already deteriorating. Among the many problems and issues are:

• The owner’s friendly project manager and superintendent are transferred to a new project in Puerto Rico.
• The contractor had to over-man the job because the owner wanted a “show of commitment.”
• The foreman ordered materials on the third day and they showed up the following Monday. The owner said, “These things take time.” The second requisition of material showed up after four days with 20% back ordered.
• The owner had two chemical spills, which the contractor’s foreman believed were handled too casually.
• The owner’s new project manager declared that all lunches and breaks would be taken in the owner’s cafeteria, 200 yards away from the site.
• The drawings are inadequate, leading to 25 requests for information from the engineer in just the first few weeks.

The task given the tables of contractors was to figure out how to minimize risk and mitigate the damage that was sure to come. Following the session, volunteer case study facilitators spent hours going over the contractors’ responses to pull out some of the better answers.

MCAA President Tom Williams went over the answers the next morning. Williams noted that there were no right or wrong responses, but the ones they selected were pretty good.

The contractor and owner need to have a partnering session, Williams said. The contractor has to let the owner know that they all want to make money and that the contractor is a team player. Review the issues, he suggested, constantly listening to and educating the owner.

Compare and contrast the successful conclusion of Phase I with the debacle that’s taking shape on Phase II.

Let the owner know that the price was based on “assumed conditions” from Phase I that didn’t include changes such as leaving the site for lunch and breaks.

The top priority problem is the over-manning, created by the owner’s demand for a show of commitment and the lack of materials. The contractor should tell the owner that he wants to be constructive and proactive and that the assumption that more people on site means more work gets done is not true, Williams said.

“Say that working as a team will get more done at less cost,” he said. “Customers respond to that.”

Next, tell the owner that your foremen can do a good job expediting the ordering, Williams suggested. Offer to requisition from your suppliers with a copy to the owner’s purchasing department. If the owner wants to control specialized equipment, offer to direct order basic materials. Or offer an alternative supplier with better service. Or offer to submit a master estimate of materials to cover 90% of the job.

Third, handle the RFI problem by proposing that the engineer come on site with your project manager and foremen. The contractor must set the priorities and write and distribute the minutes of the meeting.

The fourth problem is the offsite breaks. Inform the owner that if the workers walk a round-trip of 20 minutes for two daily breaks and lunch, that would be a loss of 1,440 hours over an 11,500-hour project.

The contractor also has to educate the owner that change orders are disruptive, not a moneymaker, Williams said.

The contractor and owner’s safety directors should handle the chemical spills based on what the MSDS sheets say.