Professional Documents
Culture Documents
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P
erfection is a baseline expectation Better communication and integration
Managing Uncertainty and Expectations in Building Design and Construction
Stephen A. Jones leads High Performance Construction Harvey M. Bernstein, innovation and sustainability and
MHCs initiatives in BIM and events. Before joining MHC, F.ASCE, LEED AP, has been a currently serves as a member of
how emerging economic and Jones was a vice president with leader in the engineering and the Princeton University Civil
technology trends are transforming Primavera Systems (now part of construction industry for over and Environmental Engineering
the construction industry. Active Oracle), a global leader in project 30 years. Currently, he has lead Advisory Council and the
in numerous industry associations management software. Prior to responsibilities for MHCs market National Building Museum Board
research group, including MHCs
(including the buildingSMART that, he spent 19 years in creative of Trustees. He is a visiting
thought leadership initiatives in
Alliance, the BIMForum, and management roles with top professor with the University of
areas such as commercial and
Construction Users Roundtable, design firms, most recently as a Readings School of Construction
residential green building, BIM,
Alliance for Construction principal and Board of Directors information mobility, innovation Management and Engineering in
Excellence and Charles Pankow member with Burt Hill (now and global construction markets. England. Bernstein has an M.B.A.
Foundation), Jones frequently merged with Stantec), one of the Prior to joining MHC, Bernstein from Loyola College, an M.S.
speaks at events around the world largest A/E firms in the U.S. served as President and CEO of in engineering from Princeton
on the business impact of emerging Jones holds an M.B.A from the Civil Engineering Research University and a B.S. in civil
technology and trends. He also Wharton and a B.A. from Foundation. He has written engineering from the New Jersey
hosts MHCs ENR FutureTech and the Johns Hopkins University. hundreds of papers covering Institute of Technology.
T
he AIA Large Firm Roundtable I would like to thank the Roundtables
Managing Uncertainty and Expectations in Building Design and Construction
Bryce D. Pearsall, FAIA, is chair of the AIA Large Firm Roundtable and chairman of DLR Group, which has integrated design offices
throughout the U.S. and abroad, and a passion for design in the built environment. During his time as three term LFRT Chair, the LFRT has led
valuable initiatives supporting architectural firms, our partners in the building industry and most importantly our clientsbuilding owners and
users. Bryce received his Fellowship in the American Institute of Architects in 1998 and is an advocate for the value of design, leadership and
the profession at all levels. Additionally he serves on the Board of Directors of The American Architectural Foundation, the American Institute
of Architects National Board Advocacy Committee, as Chair of the Iowa State University College of Design Advancement Council and as a
Governor on the Iowa State University Foundation.
table of
contents
5 Executive Summary
0
5 Executive Summary
7 Observations and Recommendations
10 Data
10 Introduction
11 Understanding Uncertainty
11 Top Factors That Cause Uncertainty
12 Overall Impact on Uncertainty
13 Causes of Uncertainty With Greatest Impact on Quality, Cost and Schedule
16 data sidebar Owner Insights on Uncertainty Data Findings
17 Frequency/Impact Analysis of Causes of Uncertainty
18 Drivers/Frequency of Most Impactful Causes of Uncertainty
21 Perceived Business Advantages of Project Uncertainty for Team Members
22 data sidebar Owner Insights on Uncertainty Data Findings
Front Cover Photo By: Joe Woolhead/SPI; Following page: Left: Anton Grassl/Esto; Right: Courtesy of HDR Architecture, Inc., 2013 Ed LaCasse/HKS
This page:
Left: MaineGenerals Alfond Center for
Health, Augusta, Maine
Below: Camp Pendleton Replacement
Hospital, Camp Pendleton, California
contents
Case Studies
27 End-User Engagement
Mozilla Headquarters, Mountain View, California
38 A Successful Balance: Integrating Design-Build, Speed, Owner Control and Workplace Safety
Camp Pendleton Replacement Hospital, Camp Pendleton, California
59 Methodology
59 Managing Uncertainty and Expectations Study Research
60 Owner Advisory Group
1 Resources
6
Owners, design teams and contractors contend with many types of uncertainty
Managing Uncertainty and Expectations in Building Design and Construction
Most owners (80%) say they expect to face added under a quarter (24%) have a standard risk assessment
costs from design errors and omissions on their future process to determine the right amount.
projects, and on average they feel that a 3%4% range is Only about half (51%) always tell architects about a
reasonable for non-negligent mistakes. contingency, and only around a third (37%) always
tell contractors. While a quarter (25%) never tell their
architect, even more (37%) never tell their contractor.
Only about a third (37%) allocate contingencies into
Expects Future Projects to Be Completed With No Level of Additional Costs Accepted as Normal
Added Costs Due to Design Mistakes (According to Owners) (According to Owners Who Anticipate Additional Costs)
Yes 0%
No 3%
Not Sure
1%2%
40%
8% 12%
3%5%
38%
6%10%
15%
80%
11% or More
4%
The survey results and interviews with the projects Owner Advisory
Managing Uncertainty and Expectations in Building Design and Construction
Similarly, they cite the get messed up a little bit, Start early, integrate quickly and
Managing Uncertainty and Expectations in Building Design and Construction
disruption caused by but its going to certainly work together as a whole so you
designers not knowing the be more functional as it know what youre getting into.
[cost] ramifications of [the] moves forward.
design before show[ing] a
Construction months out, going through research findings show
pretty drawing to owners
Teams Anticipating the documents and the that more integration and
or regulatory officials,
Rather than plan to identify things better communication
causing what one refers
Reacting to that may become issues are the most effective
to as the terrible process
Problems later. And then have those mitigating factors against
of value engineering
The OAG members conversations as early as overall uncertainty. One
to basically identify what
express little patience possible so that its not a OAG member succinctly
we arent going to get
with experienced crisis later. If something puts it that documents
[that] our users are all
construction teams that requires input from the dont take the place
excited about.
dont identify uncertainty- owner to sort out some of communication,
On a positive note,
related problems in uncertainty, bring it up in continuing that if
several owners foresee
advance that they should a spirit of having an equal communication is better,
what one calls a
have seen coming. One seat at the table. Everybody coordination would be
big opening for the
owner says I tell them, is a professional. Lets better. Anothers formula
architectural community
Dont tell me its new not let the project suffer for mitigating uncertainty
to step up and help
when youve dealt with because we dont want to is to start early, integrate
out by providing
this your entire career. surface something for a quickly and work together
greater leadership and
Instead, they value group conversation. as a whole so you know
evolving toward a deeper
construction teams that A third extols the benefit what youre getting into.
relationship with owners
anticipate issues and of open dialogue [with Integration can take
that he calls a trusted
will initiate the tough contractors] from start many forms, from
advisor, participating a
conversations early to to finish, asking the right full-on IPD (integrated
lot more and a lot sooner,
avoid crises later. For questions as you work project delivery) to less
really doing an integrated
example, to prevent through it. If the contractor intensive approaches
project design around
cost conflicts related to is proactive saying, Were applicable within other
that clients mission and
scope, one owner tells concerned about this, more conventional project
that clients culture. He
contractors, When then the owner can say, delivery methods.
predicts it can be a whole
something comes up No, I think youre going For example:
new paradigm for the
that isnt part of what you forward in a good fashion. On design-bid-build
architectural world, not a
signed up for, raise your Or the owner can go to the projects, some OAG
transaction based on You
hand and say right there contractor saying, Weve members are finding
tell me what you want
and then No cost, maybe got four other jobs with the success by engaging
and Ill tell you how its
cost or definitely cost. same inspector, he keeps trade contractors in
going to be, but more of
Another says, a doing this, can you guys a Design Assist role,
an ongoing, participative
really high-performing think this through as you either for a fee or as a
process where theyre
construction team has move forward? guarantee of being able
continually helping you
not only people who to bid the job, to review
get to where you need
to go. He believes that
are excellent in the field Communication, cost and constructibility
in this less prescriptive
with communication Collaboration and of documents prior to
role, architects will need
and coordination for Integration: Early, finalization. One owner
to get comfortable that
whats happening now, Open and Often says Though not 100
but somebody [who is] Expanding the focus to the percent, weve had very
their designs going to
looking several weeks or whole project team, the solid success to the point
M
cGraw Hill Construction has conducted extensive research
Managing Uncertainty and Expectations in Building Design and Construction data
over the past few years on construction industry trends that are Note About
changing the ways in which design and construction projects the Data
are conducted. The SmartMarket Reports that are based on The data in this report
this researchincluding a series on building information modeling (BIM), are based on a survey
the use of different project delivery systems, the adoption of lean building conducted from April
approaches, the impact of improved information mobility and the wider use of to May 2014 with 155
owners, 82 architects
prefabrication and modularizationall focus on ways in which the industry is
and 78 contractors.
evolving to improve productivity, quality and profitability. The initial screening
However, despite the continuing advancement of tools and approaches, process was conducted
building design and construction teams still frequently face unanticipated by phone, and the
problems that negatively impact quality, cost and schedule. While in an ideal survey itself was
world, the uncertainties that create these problems would be understood, conducted online.
anticipated and addressed collaboratively and proactively by the project team,
Respondents were
the focus is more typically on assigning blame for unmet expectations and
screened in part based
determining responsibility for recovery. on their involvement
The purpose of the research on uncertainty and performance expectations with complex projects.
presented in this SmartMarket Report is to: For more information on
Identify which aspects of uncertainty have the most negative impact, what the survey methodology,
their causes are, and what tools and processes are available to project teams see page 59.
to reduce their occurrence and mitigate their impact.
In addition to the
Understand the varying perspectives of owners, designers and contractors on
quantitative study,
their own and each others level of performance, what the most meaningful interviews were
aspects of performance are and how they should be measured, and how all conducted with
parties can more productively align around reasonable expectations. seven owners widely
recognized as leaders
In addition to the owner, architect and contractor perspectives captured in in the construction
the main survey research, McGraw Hill Construction conducted in-depth industry. Their
interviews with an Owner Advisory Group comprised of seven innovative responses to the issues
owners, each specializing in a different building type. Their commentary raised in the broader
on the broader research results provides experienced insight into how the survey are represented
industry can best capitalize on these findings. in a series of short
articles interspersed
The goal of this research initiative is to provide objective data and
throughout the data.
experienced perspectives as a context for entire building teams to engage in For more information
constructive, informed conversations about realistic performance expectations on the owners included
and to consider practical ways to address the factors that drive uncertainty, in this discussion, see
so that they can both reduce its occurrence and mitigate its impact. page 60.
Design Errors
Design Omissions
Contractor-Caused Delays
Respondents rated the relative impact of each of the Top Factors That Cause Uncertainty
Managing Uncertainty and Expectations in Building Design and Construction data
seven major drivers on overall uncertainty. Comparing Source: McGraw Hill Construction, 2014
Causes of Uncertainty
With Greatest Impact on Quality, Cost and Schedule
To look deeper into the impact of these causes, owners, Cause of Uncertainty With Greatest
Managing Uncertainty and Expectations in Building Design and Construction data
1_2_Uncertainty_Quality_C5_#02
1_4_Uncertainty_Schedule_C4_#02
While one cause of uncertainty may occur frequently but Frequency and Cost Impact of
Managing Uncertainty and Expectations in Building Design and Construction data
have relatively low impact, another may not occur often Top Causes of Uncertainty
but have a major impact when it does. Conducting Source: McGraw Hill Construction, 2014
expensive rework. The use of BIM is making a major Accelerated schedule (38/100) and contractor-caused
contribution to reducing both the incidence and severity delays (37/100) benefit from relatively low reported
of coordination problems. For more information on the frequency across all the respondents project experience.
use of BIM to manage uncertainty, see page 49. This frequency/impact analysis clearly indicates that
Unforeseen Site or Construction Issues (51/100) are reducing owner-driven changes will be the most effective
always a potential cost problem. As such they are an way to mitigate the impact of uncertainty on project cost,
excellent candidate for a reasonable owner contingency followed closely by fewer omissions in design documents
and a well-established change management process. and better coordination.
Drivers/Frequency
of Most Impactful Causes of Uncertainty
changes, design omissions and coordination issues as (According to Those Who Rate Them Important/
the most impactful causes of uncertainty (see page 17). Very Important)
To effectively address these, it is important to understand Source: McGraw Hill Construction, 2014
While uncertainty can be seen as a root cause for all Team Member Who Gains The Greatest
Managing Uncertainty and Expectations in Building Design and Construction data
low citation as potential beneficiaries. The firms The varying perspectives among the key parties
least perceived to benefit are the architects (3%) about causes and impacts of uncertainty point to
and consulting engineers (2%), an important the need to better understand expectations and
acknowledgement by the broader industry. perceptions about performance.
Changes
Lack of Upfront Planning
[in our contract] that we want them Design Teams Role in
and Unclear Project
to include normal and customary Causing Owner Changes
Requirements
changes that are reasonable for Boyd Black, University of Chicago,
The members of this projects
them to address. But if the changes believes that design firms often have
Owners Advisory Group (OAG,
are unreasonable, then weve got to a hand in causing what can appear to
see page 60 for more information)
pay for them. Were going to be fair be owner-driven uncertainty by their
had a variety of perspectives on
about it because if were not, they tendency to establish and perpetuate
these issues.
wont be there next time for me. a culture of change during design.
Chuck Hardy, GSA, points to the
Eric Miller, Sutter Health, feels it is Design is a very iterative process,
extended gestation period of many
important to do a good job gaining and each step along the way youre
federal projects. We often plan far
understanding on what the terms making refinements. [Design teams
too soon for a project that we get
of satisfaction are for a project. are] always looking to make another
the bill for later. The alignment was
If that has been done, he agrees tweak thatll make it a little bit
clear when we did the study five
there is a reasonable limit to the better. Some are still making design
years ago and confirmed when we
changes owners should expect changes during construction. But
submitted for funding three years
a team to anticipate. When the that generates a culture that change
ago. Now were starting design,
changes stack up, and its all these is okay, and the users experience a
but things have changed. I dont
little things that add up to hundreds design thats constantly in flux. So,
think youre ever going to get away
of thousands, sometimes millions why should they feel that they cant
from having changing project
of dollars, its difficult to look [the make suggestions to refine and
requirements [in that situation].
project team] in the eye and say, improve design without the design
But if you can understand why
You should have thought of all team immediately saying Youre
theyre changing, then you can
of them. changing things? My response is
manage to them.
Well, yeah, but you changed a whole
Don Vitek, Whirlpool, faces the Changes to Owners
bunch of stuff last week. The culture
opposite situation in a fast-moving Project Staff
of change either needs to be avoided
corporate environment. Its John Moebes, Crate & Barrel, thinks
or better managed.
not unusual for us to be asked to isolating changes in owner project
He also sees that a lack of sufficient
completely scope out something staff [as a cause of uncertainty] is
depth in programming can end
and commit to a number and a important. Ive seen a lot of that
up driving owner changes that
delivery time frame with very, staff-cycling-through-the-project
could have been avoided. I think
very little information. Then were thing, especially with landlords and
architects and engineers can provide
charged with delivering on a developers. Generally the owners
incredible leadership by drawing
schedule that is extremely difficult project manager knows the most
out the information from owners
to achieve. Thats just kind of the about the project and stakeholder
that they need to make more fully
way it is in corporate America needs. When you lose that person
informed recommendations before
these days. and get a new replacementif you
they start getting people excited
Jerry Lea, Hines, says as a get a replacementthe project AEC
about where spaces will be, or what
commercial developer they do their team can really be leaderless. I think
the building will look like. Really
best to predict what the market thats a huge Pandoras box for
understanding all the [technical,
wants, but [project teams] have uncertainty, and [negative impact on]
workflow and performance] criteria
to be ready to adapt midstream cost and schedule. Its something
that need to be met and testing it
when market changes force project the owner side of industry needs to
at a relatively detailed level, so that
changes. He continues that we say do better.
when we do start design and we do
start placing these different elements Frequency of Errors Vitek, Whirlpool, concurs that the
Managing Uncertainty and Expectations in Building Design and Construction data
in the building, we understand the and Omissions contractor expects perfection and
implications not just from a spatial The OAG members commented on 100% clarity on drawings, but you
organization standpoint but from a the difference between contractors never get that. And architects expect
performance standpoint. Because and architects perceptions about the well-informed contractors [who] can
I dont think the owners, in many frequency of errors and omissions. interpret drawings where needed
cases, understand enough about Lea, Hines, says although design to fill in the gaps. I think thats
design and construction to really teams arent doing the same quality reasonable if its not taken too far.
give clear direction all the time. So of documents [they used to], we
There are strong feelings about the
as design goes on, owners say, Oh, also find that contractors and
value of integrating construction
I didnt realize that. Well, that wont subcontractors have begun to get
knowledge into design documents.
work. And then the architects say, a little lazy. We typically will not
Miller, Sutter Health, notes, Im
Well, thats a change. Well, yeah, have an architects or engineers
finding the pushback from contractors
its a change, and its an owner representative onsite full-time,
to be If that darn professionalit
change, but if the design team had because the contractors quit
doesnt matter, architect, mechanical,
a deeper understanding of the full doing their job. Instead of looking
whatever it isknew what it took
implications of the design on the at the drawings, theyll just ask
to install this, they wouldnt draw it
users operations, there wouldnt the architect, Where do I find the
that way. He, like others, involves
need to be a change. I think thats detail on this? Whats the answer
contractors earlier because the open
a huge opportunity for architects to this question? Its clearly on the
conversation, the open platform,
and engineers to demonstrate true drawings or in the specs, but they
the Big Room, whatever you want
leadership on projects, true value. dont want to bother to look for it.
to call it, has helped that.The
Hardy, GSA, observes that
Inexperienced Owners conversation drives documents that
architects tend to focus
Create More Uncertainty are constructible.
documentation effort on design
All of the group members cite Hardy, GSA, forecasts that further
intent, because if I care about it,
inexperience as a major cause of blurring of the traditional lines
Im going to put more detail into
owner-driven uncertainty. Hardy, between design and construction will
it. That leaves other aspects less
GSA, makes the comparison that impact business models. How much
thoroughly defined, yet he sees
people who arent typically engaged of the design is actually being done
trade contractors expecting to
in this industry are much like by the detailers in shop drawings and
use the documents almost like
someone who is dealing with new not by the architect? While our fee
instructions to build an airplane
IT in their office. Its that happiness structures, our logic and everything
model from a hobby shop, saying,
that Im going to finally get what I has the architect as the master of
Im going to build it just like it says.
need, and its going to be perfect. those, a lot of it is migrating to the
Every piece will fit. Everythings
And they expect it to work magically, sub community. So I think there has
going to go together, and its going
but their expectations are much to be a realization of how design
to be a happy place. But life doesnt
higher than reality. is really getting done right now,
work that way.
and that it will likely result in a fee
realignment. Not a lessening of fees,
but allowing architects to spend
more money on what theyre good
If that darn professional knew what it took to at, which is the design intent. And
install this, they wouldnt draw it that way. let the subs and GCs spend money
on what theyre good at, which is the
detailing and the implementation of
that design intent.
Causes of Coordination Vitek, Whirlpool, puts it most smoother? The general contractor is
Managing Uncertainty and Expectations in Building Design and Construction data
Issues and simply. If communication is better, [being blamed for poor] preplanning
Contractor Errors coordination would be better. and has to deal with all the trade
Commenting on the research coordination and disruption in the
finding that general contractors Who Benefits From schedule. And the owners going,
think trade contractor performance Uncertainty? Where am I going to get money for
is the leading cause of coordination Moebes, Crate & Barrel, speaks this? What am I going to do? I think
issues and construction errors, for the entire OAG when he says at the end of the day, architects,
Miller, Sutter Health, identifies I dont think uncertainty really owners and general contractors are
internal discontinuities within the benefits anybody. Miller, Sutter really linked on a project. And I think
trade contractor as a driver. The Health, adds, No one really wins all of them equally are pained by
biggest issue usually is that the in uncertainty. No one does. Your uncertainty and change.
person who estimates and does the owners checkbook is never large Craig Russell/Disney makes
detail is not the person [who] leads enough, and your contractors the point that many owners,
the installation. The superintendent appetite for doing work for free is such as his organization, are
or job foreman walks in the first never going to be there. interested in long-term relationships
day and says, Thats impossible. Although the research shows most with design and construction
You cant do that. But I have to respondents believe contractors companies. He continues that
say, Heres a mirror, start looking, are the most frequent beneficiaries If we feel that another party was
because youre now talking to your of uncertainty, Chuck Hardy, GSA, materially advantaged on a particular
own team. Thats within your thinks pointing to general contractors project because of our own inability
own dance. is a troublesome sign. It further to get our act together, it will work
Offering another perspective, encourages the misperception that counter to the spirit of maintaining
Moebes, Crate & Barrel, points a change order is a good thing for that long-term relationship. n
to the common use of a design- themthat theyre making money on
bid-build delivery system as an them. He believes a more nuanced
underlying cause. Youve got a view is that trade contractors and
lot of placeholders and straw man
systems in your model that really If we feel that another party was materially
cant be coordinated until the actual advantaged on a particular project
sub-trade shows up. And most of the
because of our own inability to get our act
industry is relying on a design-bid-
build type of project delivery that together, it will work counter to the spirit of
holds the sub-trade to the very end. maintaining [a] long-term relationship.
But by that point the designers have
spent so much of their fee that they construction managers are the ones
dont want to have to re-coordinate, [who] dont have liability in the bigger
and the owners already procured picture. And as change comes, and
documents, so no one wants to uncertainty is added, and scope is
change anything. Youve got so added, the trade contractor and the
much industry standard practice that construction manager are expanding
seems to work against having really their contracts. Meanwhile he says,
good coordination with the sub- the other three [architect, general
trades that, although I think its right contractor and owner] are having
to point to the sub-trades, its wrong real issues because for an architect,
to really tar them too thickly because its Why didnt you think of this
its the way the industry works. earlier, and why cant I have this
V
irtually all buildings Zack calculate that the direct costs of Project Complexity
will have unanticipated rework balloon by 80%, bringing total Project complexity also operates
changes during costs of rework for changes from all as a risk factor for error, but
construction. Some factors to 7.25% to 10.89%. industry literature tends to define
although fewer than is widely And these numbers are on the complexity loosely. In addition,
thoughtare due to design errors rise. In studies conducted between although the prediction makes sense
and omissions. Others are due to 2002 and 2011, costs of rework as a intuitively, few numbers are available
unexpected site conditions, freak percentage of cost of construction to back it. A couple of 1999 studies
weather, contractor modifications of run at more than twice the costs in attribute higher rates of errors and
construction materials or methods, studies from the previous decade. omissions to retrofits, which might
or other sources of havoc. Typically, Reasons suggested include the lack be considered a type of complexity:
owners handle the prospect of of skilled, qualified craft labor, and one expert puts the rate at 5% for
these uncertainties by adding the expectation that teams today do retrofits, compared with 2% for new
contingencies to their budgets, but more, faster, with less. More study construction; another study sets a
in todays business climate, many is needed, however, to understand 1.0% base rate for new construction,
owners express a shrinking tolerance this trend and to develop strategies with 1.5% for additions and 2.5%
for uncertainty-driven cost overruns, to reverse it. for renovations. 2
no matter what the scale.
International Projects
What level of uncertainty is Variables Affecting International projects carry a higher
reasonable to expect on construction Rates of Error percentage of cost changes due to
projects, particularly with regard to Variables associated with rates of
errors, compared with domestic
errors and omissions? How much do error include project size, complexity,
projects, according to the Dougherty,
changes typically cost? And how can location, delivery method, time
Hughes and Zack study, which cites
projects keep rates of error down? frame and certainty around project
figures of 2.1% for international
parameters, although there are
projects and 1.7% for domestic.
Baseline Rates of Change relatively few quantitative studies.
No studies examining possible
and Error Researchers in all disciplines call for
regional differences within the U.S.
According to a 2012 study by more investigation in this area, and
were found.
Dougherty, Hughes and Zack the largely qualitative conclusions
summarizing statistics from in the literature often add little to Project Delivery System
more than 25 papers covering 359 common sense. Qualitatively, researchers across
building and infrastructure projects, all disciplines consider design-bid-
Design Errors and
the direct costs of rework from build (DBB) projects apt to produce
Omissions
design errors and omissions alone more errors overall because of their
Changes due to errors and
range from 0.5% to 2.6% of total sequential nature and the resulting
omissions typically account for
construction cost.1 separation of project expertise into
a higher percentage of cost on
Factor in all other reasons for silos. But empirical data to support
larger projectsalthough some
rework, and direct costs range from that expectation are rare, and a
research suggests this trend goes
4.03% to 6.05%. Add indirect costs counterexample, a 1999 study of
into reverse when project budgets
on top of that, which are often not projects completed for the automotive
top $100 million.
tracked, and Dougherty, Hughes and industry, sets DBB as a baseline,
1. Dougherty, Jason M., Hughes, Nigel and Zack Jr., James G., The Impact of Rework on Construction & Some Practical Remeedies, prepared for the Navigant Construction Forum. August 2012. 2. Automotive Industry Action
Group (AIAG), Guidelines for Improving the Accuracy of Architect/Engineer Construction Documents, April, 1999. 3. ibid.
to other delivery methods: 0.5% to a Human Level owners past projects to avoid
construction management, and 1.0% The human-themed version of repeating the same mistakes
to design-build.3 In 2012, researchers better communication calls for
at the University of Colorado and more effective communication and Need for Additional
Penn State University began work collaboration among project team Research
on a database correlating project members. In particular, the tendency To get a true picture of the sources
performance with delivery method. to avoid difficult conversations about and costs of errors and omissions,
Work on the project is ongoing. potential conflicts at the outset of however, more quantitative study
a project, when all parties want to tracking changes and their causes
Other Factors
present themselves at their best, is needed. This tracking needs to
Other factors that make intuitive
consistently correlates with higher occur duringrather than after
sense as predictors of error include
rates of change. construction. In the meantime,
fast-tracking and initial uncertainty
owners and contractors may take
around project budget or goals. Team Members Leading
comfort from studies indicating that
Researchers across disciplines share the Drive for Improved
design errors and omissions are
an expectation that these factors Communication
responsible for a smaller portion
will correlate to a higher incidence Studies conducted by groups
of the costs of change than they
of error, but there are no prominent, representing design professionals
probably think. n
well-known studies or project data suggest benefits from designers
supporting the expectation. continuing contribution to the project
team throughout construction.3
Strategies to Cut Rates A position paper by an owners
of Change and Error group calls for owners to lead the
Two themes emerge from studies creation of collaborative, cross-
of strategies to reduce the costs functional teams comprised of
of change and error: better design, construction and facility
communication via technology and management professionals.4 And
better communication on a human most studies agree that owner
level between members of the expectations and buy-in are crucial to
project team. reducing costs of change.
From a contractors perspective,
Better Communication Via
strategies for avoiding changes and
Technology
cost overruns include:
The technology-themed version
Continuous involvement of a
of better communication calls for
buildings end users
more extensive and smarter use
Getting a design freeze prior
of building information modeling
to construction
(BIM) and digital design tools. These
Having the owner appoint a
are preferred because they allow
project czar as the sole source
all parties working on a building
of contact with the contractors
owners, architects, contractors,
and the sole entity who can
specialty trades, fabricators and
approve changes
othersto access and interact with
Third-party biddability,
design information that is up-to-date,
constructibility and operability
accurate and trackable.
reviews to reduce uncertainties
3. Two studies conduced by the American Consulting Engineers Council (ACEC): ACEC, Client Expectations of Perfection, prepared by the ACEC Risk Management Committee, 2005 and ACEC, TheCost of Perfection in Public
Works Projects: A Design Professionals Perspective, Revision 2.10, 2006. 4. Construction Users Roundtable (CURT), Collaboration, Integrated Information and the Project Lifecycle in Buildgn Design, Construction and Operation,
prepared by the Architectural/Engineering Productiviyt Committe of CURT, WP-1202, August 2004.
W
hen architecture The 54,000-square-foot-project utilized during a project they
firm MKThink relocated Mozilla headquarters from conducted in San Francisco. For the
began developing an existing location in Mountain Mountain View project, the team
concepts for Mozillas View to a new one in the area. chose to pursue even more direct
new Mountain View, California, Jonas Kellner, senior associate at engagement with employees. The
headquarters, the firm not only MKThink, says the strategy enabled strategy included online surveys,
sought to meet the expectations of the team to not only gather important in-person group and individual
company executives and facilities information on potential facility interviews, presentations to the
personnel, but the entire staff. usage, but it also improved employee entire staff and email exchanges.
Through extensive engagement buy-in about the new location.
with all 260 employees, the team Some of the staff was concerned User Engagement
ultimately created a design that about losing the downtown office, The process was structured around
increased employee efficiency, he says. Part of the desire for the a series of three brown bag lunch
minimized wasted space, improved client was to make the staff be part sessions with staff. Employees who
Photo courtesy of MKThink
building performance and eliminated of the design process and engage couldnt attend in person were able
the need for significant post- them in that before we started to connect via online conferencing.
occupancy alterations. construction. By the time the design During the first session, Kellner
continued
ti
n
co
says the team explained the process Kellner says that at its existing Although some value engineering
Managing Uncertainty and Expectations in Building Design and Construction
and announced that employees facilities, staff generally remarked was required, Middleton says
would receive a brief online survey. that there were not enough no functionality was lost in the
The team followed up with a conference rooms. Additionally, process. In fact, the completed
questionnaire about how and where in-office studies showed that project required no significant post-
employees carried out work, their conference rooms were often occupancy alterations, an outcome
opinions on existing workspaces occupied by only one or two for which Middleton credits the
and other related questions. The people at a time. The team also teams user-engagement process.
team also did an in-office study to remarked that staff may not know A lot of times, people dont
observe how spaces were used at the when conference rooms were understand what they need until
previous facility. Focus groups were available on short notice. things are built, and then they
set up with team managers and their In response, the design team want to make changes. Weve had
team members to gather additional created more than 60 unique no additional modifications since
team-specific information. The team spaces, including 37 we moved in, which is somewhat
team also set up a wiki page where conference rooms. The conference unheard of. n
presentations and results could be rooms range in size from large
posted, in case anyone wanted to spaces that can accommodate
reference them later. approximately 20 people down to Project Facts
st
at
The team presented survey video phone booths that can fit up and Figures
s
results at the second brown bag to two people. Video conferencing Architect
session, at which they were able is available in every room, but the MKThink
to discuss the findings openly with technology used in those rooms Type of Project
users. This gave us talking points, ranges, depending on space Tenant Fit-Out in Class A
Kellner says. We could say, You requirements. Middleton says this Office Building
guys said you want a slide [between translated into a significant budget Size
floors], but you also say you want savings for Mozilla.Instead of 54,000 sq. ft. over 2 stories
more conference rooms. Which building a 10-person conference Start
would you want more? People room with $60,000 in video October 2013
started to understand trade-offs. conferencing capability, [we] could
Completed
Do you want a bigger gym or scale that down and put three April 2014
bigger desks? four-person media rooms in the
Based on the collective input, the same amount of space, where the
team began to hone its designs. At technology is only $12,000 Overcoming Uncertainties
the third brown bag session, the per room. End-user outreach helped
team presented design ideas and User engagement continued determine facility needs.
solutions to concerns. By the end, during construction. Contractor All 260 employees were
we got a lot less comments and BNBuilders installed cameras at the surveyed and engaged in
emails; that was indicative of this project site so Mozilla staff could in-person meetings.
entire process, Kellner says. monitor progress. We collaborated Resulting design addressed
One significant finding from with the owners to create a Twitter employee efficiency, minimized
the teams survey process involved [account] and Facebook page, wasted space and improved
building performance.
the staffs use of conference so [employees] could see inside
rooms. Mozilla staff works in a everyday and could comment on the Conference room designs met
open environment with no private project, says Tony Castillo, project needs and saved money.
offices. As a result, staff needed to manager at BNBuilders. They No post-occupancy
have access to collaborative and become part of the project. That modifications were required.
private spaces when needed. was a big hit.
Architects and contractors were asked how often they Frequency With Which Projects Meet Expectations
Managing Uncertainty and Expectations in Building Design and Construction data
believe their projects meet owners expectations about Source: McGraw Hill Construction, 2014
quality, cost and schedule, while owners were asked how Always Meet Expectations
often they find that their expectations are met. Frequently Meet Expectations
The marked differential of perspectives between Sometimes Meet Expectations
owners and their project teams on three critical aspects of Infrequently/Never Meet Expectations
owner satisfaction reveals the need for much more clarity
about performance expectations and more standard Quality
methods for consistently measuring them. Owners Architects and Contractors
2% 0%
Meeting Quality Expectations 2%
Alignment among players is closest on the subject of 12% 20%
quality, where nearly all architects (99%) and contractors
(97%) feel they meet owners expectations with high
49% 49%
frequency, and a solid majority (86%) of owners agree. It
appears that BIM plays a role, because more (93%) of the 66%
owners who employ BIM on their projects report this high
satisfaction with quality, compared with those who do
not (84%). Only 2% say they are always disappointed in
the quality they receive from their project teams. Cost
Owners Architects and Contractors
1%
Meeting Cost Expectations
Perceptions are less well aligned relative to meeting 7% 11%
11%
owners cost expectations.
31%
Fewer than two thirds of owners (63%) cite a high
30%
frequency of satisfaction.
Most contractors (91%) and architects (85%), 52% 57%
on the other hand, believe they are frequently
satisfying their clients.
Effective Criteria
in Measuring Design Teams Performance on Project
Owners, architects and contractors are in relatively Effective Criteria in Measuring Design Team
Managing Uncertainty and Expectations in Building Design and Construction data
close alignment on the rank order of metrics that Source: McGraw Hill Construction, 2014
1_10_Perform_PerfCriteria_E10_#01
75%
Most owners (80%) say they fully expect to encounter The fact that eight in 10 owners (80%) say that they
Managing Uncertainty and Expectations in Building Design and Construction data
added costs on their future projects that will be caused fully expect added costs from design mistakes firmly
by design mistakes. resolves the question that imperfections of this nature are
When asked how much additional cost caused by well within reason. While the majority (53%) express the
design mistakes (as a percentage of total construction belief that a normal percentage cost impact from these
cost) they would accept as normal, owners responses issues is 3% or greater, the results across all owners show
range from 0% to over 20%, but the average is 3%5%. a wide variance, from 0% to over 20%. These findings
Only a few owners (3%) hold the line at 0% budget suggest another opportunity for an open and informed
impact being acceptable. team dialogue, based on specific aspects of a project
Less than half (40%) believe 1%2% is the early in the process, to develop alignment that will avoid
acceptable range. conflict later.
A similar percentage (38%) believes 3%5%
is an acceptable expectation.
The remainder (19%) would accept upwards
of 6% added costs.
Yes 0%
No 3%
Not Sure
1%2%
40%
8% 12%
3%5%
38%
6%10%
15%
80%
11% or More
4%
2_5_PerformOwnerExpectCostsC20C21_#02
Similar to the inquiry about design team performance, all Best Criteria for Measuring the Performance
Managing Uncertainty and Expectations in Building Design and Construction data
respondents were asked which metrics should be used to of the Construction Team
measure the performance of a construction team. Source: McGraw Hill Construction, 2014
architects and contractors on the importance of each Ability to Solve Issues Working With Team Members and
Not Escalate to Owner
one than with the design team metrics.
78%
The ability to work with other team members to solve 85%
issues and not escalate to the owner ranks as the top 77%
metric favored by all the parties. This collaborative
behavior is an important tactical way of dealing with Percentage of Construction Cost
Due to Construction Errors
the impacts of uncertainty as they manifest themselves
58%
on projects, but it requires an appropriate culture on
the project team and the discipline not to default to self- 62%
protective measures when challenges arise. 58%
Hard metrics make up the rest of the top five, Number of Change Orders on a Project
reflecting the more quantitative nature of the work
52%
performed by the construction team. There is
28%
general alignment between the parties on the order of
importance, especially since the option of no errors due 17%
to negligence ranks last overall, reinforcing the point that Percentage of Contingency Used
perfection is not an expected industry standard. Due to Construction Errors
Interestingly, although measuring the number of 50%
change orders on a project ranks last among contractors 45%
(17%), it is second-highest rated among owners (52%). 45%
This differential is similar to the large number of owners
(46%) who rate this as an appropriate metric for design No Errors Due to Negligence
teams performance, versus far fewer architects (28%). 43%
(See page 30.) 40%
The reasoning may be similar in each instance, 38%
in that architects and contractors both likely believe
there are many causes of change orders that are not in
their direct control.
2_6_Perform_Metrics_E13_#02
Expectations Regarding
Construction Teams Performance
Reasonable to Expect 7%
Perfect Performance From
the Construction Team 20%
When owners were asked if they think it is reasonable
to expect the construction team to deliver perfect
performance, far more (73%) expressed assent than did 73%
with perfect documents (21%). This clearly demonstrates
that owners hold the construction team to a higher
threshold of performance expectation than the design
team. This seems to convey a general sense by owners
that the types of uncertainty dealt with by design teams
may rightfully produce a wider margin of acceptable error
than they are willing to expect from builders. 2_8_Perform_OW_ConstPerf_E8_#01
Owner Insights on
Performance Expectation Data Findings
The Owner Advisory Group (OAG, contractor, its a great job for us.
see page 60 for more information)
believe that the variance between
owner and architect, engineer, into it with the attitude of, I want to Thinking in a larger context about
contractor (AEC) team ratings of help the contractor succeed. We measuring design team value,
owner satisfaction with quality, have found if its a good job for the Boyd Black, University of Chicago,
cost and schedule have to do with contractor, its a great job for us. expects them to be thinking on the
perspective and attitude. owners behalf about the entire
Don Vitek, Whirlpool, suggests Design Team Metrics project process, not just the design.
that although the project was The OAGs comments on design Its an opportunity to demonstrate
delivered on the agreed-upon revised team metrics support the research leadership by considering, for
schedule, maybe the owner agreed findings about the primary example, How do we make sure
on it reluctantly and still got beat up importance of good documents that the campus is as little impacted
by senior management because it and collaborative behavior, over as possible during the project?
was later than what was promised. hard metrics about changes and Generally, the quality of the design
That could leave a bad taste in the contingencies. As Hardy, GSA, itself is easier to deal with. Its the
owners mouth, even though the puts it, If you hit those top two, the quality of the process, the quality of
AEC team felt they met schedule. others will come in line. the experience, that we look for.
Chuck Hardy, GSA, further Eric Miller, Sutter Health, more
explains that while quality is a directly relates document quality to Perfect Construction
softer metric that can be finessed construction cost impact. When Documents
somewhat in discussions with top it comes to work that was missed, The Owner Advisory Group
management, cost and schedule if I spend a buck with an architect, generally agrees that perfect
are tougher. Were making Im going to spend fifteen dollars construction documentation is an
commitments internally that cant with a contractor to fix it. So his unrealistic expectation.
be easily moved. Architects and focus is on creating a complete set Although Lea, Hines, believes
contractors are saying, We handled of documents up front, so that you in general today drawings and
this uncertainty as perfectly as we dont have that expensive circle specifications arent as good
could, mitigated the risk as best of change. as they used to be, he also admits,
we could, but time or cost was still Another slant comes from Lea, I dont think Ive ever seen
added. And these are hard numbers Hines, who differentiates between a perfect set of drawings.
that owner project teams and their his metric for design, which is, Has I would love to.
hierarchy upwards dont like to take the building been successful from a Craig Russell, Disney, says perfect
into the board to explain leasing standpoint? and production, documents could be possible
what happened. where its not only the quality of if you have all the people who
John Moebes, Crate & Barrel, the drawings but its getting them are going to build it foresee all
believes that owner experience done on time. His perspective on the the outcomes and plan together
impacts satisfaction. As satisfaction metric about avoiding finger-pointing to create a perfect, zero-defect
falls off, I would look at the level of with contractors: Ive seen that design. But, he continues, Im
sophistication of the owner. Jerry before, so I always insist architects not talking on the first project.
Lea, Hines, agrees and also thinks have a strong project manager to Im talking on the tenth project,
happy teams create happy owners. put a stop to it. Theyll take [the where this team is extraordinarily
We get good value for what we pay contractor] aside and say, You wont high functioning and can think
for, in quality, cost and schedule. We do that again. Youre going to work as through the project very well
staff the job during construction with a team, or well get you replaced on together. Otherwise, do I think its
a pretty seasoned team that goes the job. They just wont stand for it. reasonable? No.
Black, University of Chicago, adds, Generally, the quality of the design itself is easier
Managing Uncertainty and Expectations in Building Design and Construction data
We sometimes joke here that to deal with. Its the quality of the process, the
the only time we get even close to
quality of the experience that we look for.
perfect construction documents is
as-builts.
Though perfection is elusive, Hardy, GSA, believes if were doing number one right, most of
Hardy, GSA, captures a common 3% to 5% close to perfect on our those others would be minimized.
belief among the group that the drawings, I think that is probably a He fully expects problem-solving
expectation should always be that good number. from contractors. Owners are
youre going to get the best set ever, Moebes, Crate & Barrel, who does hiring contractors because theyre
if not perfect. Although he adds seven or eight stores a year, the subject matter experts in
that, its the owners responsibility believes the cost of imperfection construction. They get a set of
to determine the requirements for correlates to owner experience. drawings that shows the design
document quality and clarity. He For us, its probably less than 3%. intent, and he expects them to
feels owners train [design teams] But less frequent builders, such as solve some of the anomalies in the
into what is an acceptable level of mall developers he deals with, are drawings and the design to meet the
documentation. And if they let seeing more impact and certainly expectations of the owner.
their vigilance slack on a project, the have more E&O issues. Construction errors are generally
next project most likely will follow Miller, Sutter Health, who involves less of a problem for the group.
that lesser set. contractors early to help improve Lea, Hines, recalls, We see them,
design, is more pointed. If it but its not common. Weve had
Most are focused on how to deal
exceeds 3% to 5%, I start hunting. contractors lay out the job and get
with the inevitability of imperfection.
Weve invested a lot of money it wrong. Sure, they make mistakes.
Vitek, Whirlpool, states it succinctly:
in preconstruction, and I have Nobodys perfect. He focuses
Documents dont take the place
difficulty believing after multiple more on evaluating the quality of a
of communication.To that point,
months and a lot of iterations, that contractors service. I think through
Lea, Hines, extols the benefit of his
you have more than a 3% to 5% it in stages. In preconstruction: Did
firms hands-on approach. I think
wiggle on your total cost to deliver. they work with us in finalizing the
the industry standard for errors and
Russell, Disney, reminds us that design effectively, or did they play
omissions on drawings is probably in
sometimes its a design error, not any games? In construction: Did
the 5% to 7% range. Ours is less than
a designer error, meaning that a they manage the subcontractors?
2%, and we track this on every job. We
well-intentioned element of the Even some good contractors put a
hire good consultants, then we look
design simply didnt work out in staff out there that doesnt know how
over their shoulder and try to help
the field. Everybody kind of owns to manage the subs effectively. He
them.The idea is, Lets try to get the
that one. continues, The biggest place we see
most complete and coordinated set of
contractors fall down today is in close
drawings we can.
Construction Team out and commissioning, especially
The Cost of Imperfection Performance Metrics when theyre real busy. They start
The top metric for construction sending their top people off to the
The average impact of design
teams identified in the research next job, which is an event of default
imperfection is cited by owners in
is collaborative problem-solving, in our contract. The systems today
the research as typically 3% to 5%
followed by other quantitative are so complicated to commission
of construction cost. In general, the
metrics on construction errors that youve got to be paying attention
Owner Advisory Group members
and change orders. Hardy, GSA, or youre going to be in trouble.
focus on what Miller, Sutter Health,
agrees with that priority. Once
calls a range of reasonableness
the contractor gets into the drivers
that is appropriate to each project.
seat, its a great metric. If theyre
stuff isnt covered in the scope, and point, that construction is not an
theres going to be a change order exact science. Everybody wants
to handle that. But its not meant to it to be, but its not. So its not that
pillory any of the designers or set theres an issue, but how does the
up the contractor later. Were just contractor recover from that issue?
up front with saying, This is how I would expect performance at a
the jobs going to run. very, very high level for a team
Hardy, GSA, agrees. If I tell a that reacts and responds well
project team, Your metric is to uncertainty.
number of change orders, theyll
just start grouping change orders. Documents dont take the place of communication.
Instead of individual ones, theyll
have one huge one. Its a metric that
I dont put a lot of credence in.
Lea, Hines, addresses it by
T
he Navys new hospital at
Managing Uncertainty and Expectations in Building Design and Construction
a reduction in owner control. To of the Navys comprehensive RFP provide oversight throughout the
mitigate this, before issuing its RFP, and a fixed requirement of the bid. documentation phase.
the Navy retained HDR Architecture The bridging documents not only We focused heavily on this issue
to develop a set of documents that secured the Navys priorities, but of co-location, says Williams,
would outline the project program, they provided bidding teams with a attributing to that strategy alone a
generate a design concept, describe high level of certainty as to what the significant measure of the projects
adjacencies within the hospital and project entailed, while leaving the savings in both time and cost.
generally spell out the project the engineering and construction detail
Navy wanted. open to them to maximize. Make Haste Slowly
To ensure these bridging The result, says Thomas Todd, To get the project out of the starting
documents embodied the Navys AIA, vice president at HDR, was a blocks as fast as possible, the JV
continued
ti
n
co
packages: site work, structural says Carlos Gonzalez, P.E., vice Project Facts
st
at
with minimal mechanical, central president at Clark, because these and Figures
s
plant, parking structure, and the conversations added time up front. Owner
exterior and interior design of the But they avoided rejected final NAVFAC Southwest
hospital. For each package, the team submittals or incorrect designs that Architect
developed a schedule that would would have resulted in construction HKS Architects, Inc. and HDR
allow construction to proceed before changes later. Architecture, Inc.
the project was fully designed. By the end of design, 99% of Construction Manager/
For all its haste, the process of cost items were accounted for, and General Contractor
documentation and construction construction changes amounted to Clark/McCarthy Joint Venture
was far from pell-mell. A master plan less than 2%. Project Type
provided a clear and reasonable path Hospital with central utility plant
from breaking ground to handing Increased Safety for and parking structure
over the hospital, and field leadership Increased Certainty Size
for each major phase brought key On a project with a health-based Hospital: 518,000 square feet
subcontractors together to break up mission, worker safety becomes a
Central Utility Plant: 21,000
the master plan into daily activities matter of project integrity. The Navy square feet
the team could follow, monitor and provided great leadership on this,
Parking: 546,000-square-foot
remedy if any aspect of the work says Gonzalez. From day one, they
parking structure and 1,000
began to slip. were not afraid to stop work or slow
stall surface parking lot
The Navy instituted an approvals down until we could demonstrate
process of intermediate submittals that we could do it safely. Their Design Start
September 2009
consisting of three submissions unwavering commitment to safety
before the final permit drawings. At empowered us to follow along. Construction Completion
each interval the owner provided The project built its exemplary October 2013
feedback, which enabled the team safety record day by day, with
to develop the design in close initial orientations to safety, weekly Project Results
alignment with owner expectations. site walks by a joint government- Schedule: Finished 6 months
To improve the print-review-design contractor safety team looking for ahead of schedule
process, designers and reviewers ways to improve, monthly meetings
Cost: Project budgeted at
met a week prior to each review and to review and recognize safety-based $530,000,000 but came in at
flipped through the forthcoming behaviors, and a parade to celebrate $447,300,000
submittal page by page. When the the first million work hours without a
Safety: Zero lost time and zero
reviewers began their work, they loss-time incident. DART injuries in 2.6 million
were familiar with what they were The success Im most proud hours worked
looking at, and conversations with of, says Gonzalez, is safety. In
LEED: Gold certification
the designers were fresh in their 2.6 million hours worked at Camp
minds. In reverse, when the reviewers Pendleton, the number of DART (days
completed their review, they met with away, restricted or transferred) and
the designers again and ran through lost-time incidents was zero.
the same page flip, explaining their
comments.This process enabled the Outstanding Overall
designers to address a concern on the At the conclusion of the Camp reflects implicitly on the teams
spot and it distilled the real issues for Pendleton contract, the Navy strategies for managing expectations
action, which were then written up provided a performance evaluation and uncertainties. The verdict
into formal comments. to the joint venture, which overall: outstanding. n
U
ncertainties can be costly, director of PMA Consultants, says break that down. You do things in the
and sometimes they lead that schedule claims are traditionally model that catch many of the things
to disputes and claims. the most difficult to resolve, but that lead to problems in the field.
While many traditional advanced schedule control systems Still, working in BIM can have
causes for claims remain the same, enhance opportunities to avoid its downsides from a claims
some consultants say that advances issues or mitigate them quickly. perspective. The risk lines can get
in construction methods and tools We see that sophistication blurred when you get into a BIM
can help reduce the risks. from both contractors and owners; environment, he says. If there is a
Roy Cooper, vice president and contractors in terms of preparing and problem, it gets more complicated to
leader of Construction Claims submitting schedules and owners in figure out who is responsible.
Services at Arcadis, says analyzing terms of evaluating those [schedules] The increased complexity of
projects from a claims perspective and commenting on them, he says. projectsfrom both a technical
at an early stage can go a long way and organizational standpoint
toward identifying and avoiding Collaboration and can increase the risk of disputes as
costly risks. Enhanced schedule Communication well. A project may have numerous
reviews, for example, can make a Collaboration and communication stakeholders on the owners side,
significant difference. Nearly all among team members are critical each with a particular set of project
claims that his group encounters when trying to reduce uncertainties requirements and expectations.
have an element of time, he says, on projects, says Frank Guita, Likewise, large projects often
where issues affect construction senior vice president and managing require joint ventures of design
schedules. Cooper suggests that director of the Americas Claims and construction teams, where
project teams should view projects and Consulting Group at Hill each member may have a unique
not from a purely nuts-and-bolts International. More collaborative perspective. In a joint venture,
schedulers standpoint, but a delivery methods and tools like contractor X might think differently
claims perspective. building information modeling can than contractor Y and contractor Z,
This is different [from] your help in this effort, Guita says. Cooper says. Imagine if a dispute
typical schedule review, he says. By the intent of the process, BIM comes up: One might want a fight,
Were taking a harder look at it. is collaborative, he says. In the and the other wants to kiss and
What is in the schedule that can bite traditional design-bid-build delivery make up. The owner doesnt know
us down the road on claims? model, you can have islands of if they should bring flowers or
Cooper says that qualitative self-interest. When you go down a boxing gloves.
risk assessmentwhere potential BIM road, youre in a collaborative Regardless of the means and
risks are identifiedand quantitative environment, and that starts to methods used on a project, Cooper
riskswhere potential costs of connect those islands. says dealing with potential risks on
risks are estimatedhave been Guita adds that through such projects comes down to relationships
traditionally difficult for owners to collaborative techniques, teams between people. Half of the battle
execute. However, advancements can identify conflicts and problems is about the people, he says. If we
in technology, such as scheduling early. The number one cause of work out the relationship issues,
software and building information construction disputes we see is then we have a better chance of
modeling (BIM), are making it easier. problems or defects with contract avoiding or mitigating and resolving
Richard Martone, managing documents, he says. BIM starts to disputes early.n
To begin the process of identifying what practitioners Top Ranked Factors for Reducing
Managing Uncertainty and Expectations in Building Design and Construction data
should concentrate on in order to have the greatest Uncertainty (According to Owners, Architects
positive impact, respondents were asked to rank four and Contractors)
major potentially mitigating elements in order of their Source: McGraw Hill Construction, 2014
likely effectiveness in reducing all types of uncertainty in Ranked 1st Ranked 2nd Ranked 3rd
the building design and construction process.
Documents: Detailed construction drawings with no Detailed Construction Drawings With
significant errors or omissions No Significant Errors or Omissions
Early Collaboration: A collaborative approach with 48% 25% 18% 91%
involvement by the entire project team in early design A Collaborative Approach With Entire Project
Issue Resolution: Clear process for project team Team Involvement in Early Design
members for dealing with issues that arise during 34% 36% 20% 90%
design and construction
Clear Process for Project Team Members for Dealing
Shared Liability: A collaborative approach with shared
With Issues During Design and Construction
liability across the project team 10% 25% 48% 83%
To provide greater detail in identifying the most Top Factors That Reduce Project Uncertainty
Managing Uncertainty and Expectations in Building Design and Construction data
effective ways a project team can address and manage Source: McGraw-Hill Construction, 2014
2_9_Improve_ReducingUncert_F1_#02
SmartMarket Report McGraw Hill Construction 42www.construction.com
Opportunities for Performance Improvement
Effectiveness of Specific Factors on Reducing Overall Project Uncertainty continued
identified this factor as very important than those doing that proportion is reversed among architects, where
Managing Uncertainty and Expectations in Building Design and Construction data
mostly simple projects (67%). This is also reflected more small firms (71%) favor this as an important factor
among owners, where many more from the education than the large firms (60%), perhaps reflecting that more
(82%) and healthcare (77%) sectors cite it than office fee-based bidding activity typically occurs among those
project owners (62%). smaller firms.
More time for design firms to participate in Use of construction manager (CM) as contractor is
coordination garners high votes from two thirds favored by almost half (44%) of all respondents. Over
(66%) of all respondents. It is particularly supported half (54%) of healthcare owners cite it, as do 55% of the
by architects (80%), and also by the large contractors contractors, especially the larger ones (61%) who are
(74%), reinforcing the value of tighter designer/builder more likely to understand its value.
collaboration as an effective risk reduction strategy. Although the use of integrated project delivery (IPD)
Three quarters (75%) of BIM users weigh in with high contracts is an emerging trend still in its early stages,
support for this, versus just over half (57%) of non-users, over a third (37%) rate it highly, with contractors
reflecting its valuable role in coordination. And among (41%) leadingand even more notably, large
owners, the strongest support is shown by the large contractors (45%). Similarly, large architects (50%)
organizations (65%) and those in healthcare, where the greatly outnumber small ones (23%) and many more
benefit of coordination proves especially valuable. healthcare owners (46%) identify it as a top contributor
Clearer definition of deliverables between parties during than office owners (25%), probably reflecting the
the design process is cited by identical percentages difference in actual IPD experience between the two
(67%) of architects, contractors and owners, identifying groups. This statistic will be interesting to watch in
it as a high priority initiative for the industry with future research as IPD use evolves and more completed
unanimous support. Owners in the healthcare sector project metrics are made public.
(74%) and the larger contractors (73%) show above- The use of design-build contracts, while only cited by
average enthusiasm. Interestingly, three quarters (74%) about a third (31%) of the total population, receives
of owners with small (less than $50 million annually) high marks from contractors (42%), perhaps reflecting
building programs cite this, versus fewer (62%) of the greater experience with its benefits than architects and
largest owners (greater than $100 million annually), owners. This finding is also consistent with the results
perhaps indicating a greater perceived need for of the 2014 Project Delivery Systems SmartMarket
structured project processes in that portion of the market. Report, which showed that contractors favor design-
build over other delivery systems to achieve most
Team Formation and Project Delivery project benefits. Project complexity also impacts
Approach/Strategy preferences for design-build, with 44% of healthcare
Five of the cited factors relate to how teams are formed owners indicating their belief that it is a valuable
and what approaches and strategies they use for contributor to reducing uncertainty versus just 25% of
managing the delivery process. For more detailed the respondents who rarely do complex work.
information on the use and perceived value of many of Use of lean design and construction principles,
the delivery systems mentioned below, see the 2014 though only scoring high among a quarter (26%) of
Project Delivery Systems SmartMarket Report. all respondents, received top ratings from a larger
64% of respondents believe Best Value or other percentage of contractors (33%)especially the larger
team selection criteria not based primarily on low ones (40%), again likely due to their more extensive
fee can have a major impact on reducing uncertainty experience with the considerable benefits of lean. The
as the project moves forward. Owners, who might 2013 Lean Construction SmartMarket Report revealed
be thought to be most resistant to alternative team that a high percentage of the industry are still unfamiliar
formation approaches, are only slightly less enthusiastic with lean practices, suggesting that as familiarity with
(61%). More of the large contractors (74%) cite this this approach grows, it may be more widely recognized
approach than the smaller ones (59%), likely indicating for its impact on reducing project uncertainty. See page
a preference to be evaluated for their resources and 58 for more information from lean practitioners on the
experience, and to be paid fairly for it. Interestingly, benefits they have experienced from its use.
(BIM) and a sense that just one firm modeling does not
Two of the factors reported by the survey respondents provide the same degree of benefit.
identify the influence of BIM on reducing uncertainty.
McGraw Hill Construction has conducted extensive
Half (50%) of all the respondents believe the use of
research on the business value of BIM in the U.S. and
BIM and other virtual design tools by the entire project
beyond that demonstrates the advantages BIM provides
team significantly reduces uncertainty. As a sign of its
in reducing uncertainty. The findings are published in a
positive reputation even among non-users, a third (32%)
series of SmartMarket Reports, including the Business
of the respondents who are not currently using BIM
Value of BIM in North America SmartMarket Report and
still give it a high rating. Owners overall are slightly less
the Business Value of BIM for Construction in Global
convinced (44%), although size matters because over
Markets SmartMarket Report. For more information on
half (51%) of the large owners (those spending more
those findings, see page 49.
than $100 million on projects annually) cite this factor.
Also, large contractors show above-average support
(62%). These findings reflect the fact that currently, BIM
Importance of Budget Contingency
Almost half (47%) of all respondents identify contingency
tends to be used by larger companies on larger projects.
in the owner budget to accommodate design errors and
Overall, fewer (32%) see the use of BIM and other
omissions as being important to reducing uncertainty.
virtual tools by a single firm as highly important.
The results show very little variation between owners,
Interestingly, while over half (55%) of large architects
architects and contractors, providing a high degree
do feel BIM by a single firm is important, only a quarter
of alignment on this issue. For more information on
(24%) of contractors agree, perhaps acknowledging the
contingencies used by owners, see page 52.
growing, successful use of BIM by GCs and multiple
Seven key causes of uncertainty were studied in the The number scores in the matrix are the percentages of
Understanding Uncertainty section of this report. (See all respondents that rated a particular factor as having
pages 11 to 24.) To examine mitigation potential from either high or very high mitigating impact on each
another angle, respondents were asked to rate the specific cause of uncertainty. Color coding indicates six
relative effectiveness of 13 specific factors on those top tiers of perceived effectiveness ranging from red (scores
causes of uncertainty. above 80%) to purple (scores below 40%).
The Mitigation Matrix on page 45 summarizes these
findings. The matrix is organized, left to right, by primary Top Five Strategies for
responsibility for the causes: Mitigating Risks
Owner-Related Issues (Owner-Driven Changes and
Better Communication Among all
Accelerated Schedule)
Project Team Members
Design Team-Related Issues (Design Errors and
Better communication among all project team members
Design Omissions)
in early stages of the project is clearly identified as the
Contractor-Related Issues (Construction Coordination
most impactful factor versus every one of the top causes
and Contractor-Caused Delays)
of uncertainty. This underscores the main objective of
Unforeseen Conditions, for which no specific party is
this research, which is to encourage an informed and
primarily responsible
open dialogue as early as possible in a project. Such an
approach allows a team to acknowledge and manage Interesting variances occur between the scores of the
Managing Uncertainty and Expectations in Building Design and Construction data
uncertainty and its impacts, rather than relying on three parties for this factor.
contracting strategies that avoid and transfer risk, and Owners scores are consistent with architects and
operating under the prevailing patterns of misaligned and contractors on the topic of owner-driven changes.
often unrealistic performance expectations. However, owners have noticeably less regard for the
Better Communication
Among All Project Team
Members in Early Stages 88 96 94 88 93 79 79 88
of the Project
Greater Leadership or
Involvement by Owner in
All Stages of Design and 81 83 78 71 59 53 73 71
Construction
Use of Team-Based
Alternative to 64 70 75 71 72 49 65 67
Design-Bid-Build
Appropriate Contingency
Dedicated to This Issue 79 70 73 48 54 57 79 66
by Owner
Use of BIM 53 64 76 69 76 47 55 63
therefore merit closer involvement by and leadership and suppliers engage in integrated, model-based
Managing Uncertainty and Expectations in Building Design and Construction data
from the owner to manage with the least disruption. construction processes.
For more information on the value of BIM in reducing
Use of Team-Based Alternatives to
project uncertainty, see page 49.
Design-Bid-Build
Ranking third overall, the use of a team-based alternative
to design-bid-build is viewed as most impactful related
Additional Strategies for
to design errors (75%). This probably stems from the
Mitigating Risk
sometimes adversarial culture of a design-bid-build Shared Liability Across
project, where design errors are often sources of great the Project Team
contention. Unfortunately, fewer owners (62%) rate it In sixth place overall, shared liability across the project
highly, which points to a need to help owners understand team for problems created by this factor scores high
the potential benefits of team-based alternatives. with less than six in 10 overall (59%), but it is rated
relatively well for design errors (71%), especially among
Having an Appropriate Contingency
owners (78%).
Dedicated to Specific Issues
Although this finding could be interpreted as a
Having an appropriate contingency dedicated by
desire by owners to avoid and transfer risk and liability
the owner to the specific issue in question ranks
to other members of the project team, it can also be
fourth overall and is seen as especially relevant to
seen as an opportunity to engage with owners in
these four issues:
a constructive dialogue related to alternative team
Owner-driven changes (79%) not surprisingly garners
structures such as integrated project delivery, where
a top rating from more architects (83%) than owners
liability and reward are shared among participants in a
(74%), highlighting the need to discuss in advance how
collaborative environment.
these will be managed (re: professional time as well as
construction budget) when they occur. Use of Lean Design and Construction
Unforeseen conditions (79%) shows a similar diversity Practices
of perspective between contractors (96%) and owners Half (48%) of the respondents identify the use of lean
(76%), understandable because contractors have to design and construction practices as an effective
directly contend with the cost impact on a project. The mitigating factor for uncertainty caused by an
average is pulled down by architects (67%), who are accelerated schedule. This makes sense because of the
typically least directly affected. powerful schedule-oriented elements of lean (e.g., pull
Design errors (73%) earns consistent ratings across planning, etc.), and its focus on all parties making and
all three parties, indicating a general consensus on keeping commitments in an open and integrated process.
its importance. Compared with all the factors, the relatively low
Accelerated schedule (70%) is again led by contractors scores returned for lean likely reflect unfamiliarity
(79%) over owners (65%), reinforcing owners relative rather than informed negative judgment. This is
reluctance to implement extraordinary measures supported by the findings published in the McGraw Hill
related to it. Construction Lean Construction SmartMarket Report,
which quantifies the low general awareness level in
Use of BIM
spite of the outstanding benefits.
Use of BIM ranks fifth overall and is most closely aligned
For more information about how lean construction
with design errors (76%) and construction coordination
practices mitigate uncertainty on projects, see page 58.
issues (76%), two areas where a model-based process is
particularly effective.
It scores lowest (47%) with contractor-caused delays,
which may be because many of these kinds of delays
are typically not directly related to the design, so models
are not perceived as being effective for mitigation. This
may change as more trade contractors, fabricators
Owner Insights on
Mitigating Uncertainty Data Findings
Owners shared other ways What Im finding is that Black, University of Chicago,
Managing Uncertainty and Expectations in Building Design and Construction data
they achieve the benefits of an the contract has less has recently started using term
integrated approach. agreements with architects,
to do with it than the
Jerry Lea, Hines, says, We cant do engineers and contractors who get
real IPD. But by bringing contractors
attitude of my staff. the idea of working collaboratively
in to review the design drawings together for small projects on
for feedback, Im trying to get that to do with it than the attitude of my tight budgets and time frames. We
benefit without the IPD contract. staff. Now that my PMs have had a meet with our client together. Then
During design development taste of integrating, being involved we tell the team, Heres the budget
Black, University of Chicago, and working together as a team, the and schedule. Work together and
sends RFPs to select key trades contract is less important. They know get it done. The projects that we
to be design assist partners. But the benefit of getting parties together implemented it on so far are going
we dont find all trade contractors early so theyre doing it on every better than anticipated.
are up to the challenge yet. He contract because the predictable Lean construction is also gaining
also integrates the AEC team with outcome is improving. traction. Russell, Disney, is
facility operations about things Hardy, GSA, agrees that influenced by the ride systems
like potential shutdowns, to personnel are a critical element to vendors on his projects. They
engage their practical expertise project delivery strategy. With are manufacturing thinkers from
in the project. limited resources, we have to do aerospace and automotive, and
better at tying team selection to have been working in a much more
Hardy, GSA, believes the results of
project delivery selection, because lean way for a long time. Comparing
this research show that we need to
everybody isnt skilled in the same it to building construction
continue to push what I was going to
sets. Its a lot easier to change the sometimes makes me feel like were
call the conversation [about greater
delivery method you choose than incredibly backward. Hardy, GSA,
integration], but in fact, we need to
to suddenly make [different] people agrees: Forward-thinking last
stop the conversation and begin the
appear. Youre dealing with the staff planner and lean activities are just
action. I think it was George Patton
you have, so play to their game. At not as common in the industry as
who called it the Ready, aim-aim-aim
the end of the day, its the personnel they should be.
mentality. We need to actually do
who are going to deliver and drive
something about this. Moebes, Crate & Barrel, cautions
the best solution.
against overreliance on any of
Alternative approaches are gaining
Team Formation and support among some of the owners:
these approaches as a cure-
Project Execution- Craig Russell, Disney, has
all. I collectively refer to that as
Related Factors successfully garnered internal
whiz bang, and whiz bang cant
Miller, Sutter Health, says, solve a bad owner or no owner
support for IPD, often a difficult
Unfortunately, the traditional involvementor if you dont have
hurdle. Happily, we have some
delivery method sets everybody good team chemistry. If anything,
extraordinarily enlightened
up to spend an inordinate amount it can probably make it worse. If
contracts people who see the
of energy watching how much we dont have the right team, good
significant promise to our sustained
it costs to install what you said things just wont happen.
practice [being] much better off [by]
you could install. Its focused on
going that way.
piecework. And breaking that mind-
Vitek, Whirlpool, addresses
BIM-Related Factors
set is extremely difficult. To shift All of the OAG members are engaged
uncertainty by doing a lot of design-
that paradigm, he does a lot of with BIM. Their comments are
build, noting, the primary reason
GMP (guaranteed maximum price) included in the sidebar on BIM and
for that is to have the responsibility
projects as well as IPD. What Im Uncertainty on page 49. n
in one place versus two and tying it
finding is that the contract has less
together contractually.
M
cGraw Hill If teams are coming [into the project] like-minded
Managing Uncertainty and Expectations in Building Design and Construction
Construction has
around BIM, it definitely helps reduce the overall
tracked the growth of
building information uncertainty Owners Advisory Group.
modeling (BIM) through the
surveyed for the 2013 Business modeling from the primary design
SmartMarket Report series since
Value of BIM in North America team to do their design in
2007. Since then, the number of
SmartMarket Report. BIM as well. He continues
North American companies that
Reduced errors and omissions that BIM is very beneficial not
have been involved on a BIM project
is the top BIM benefit among all only to get a better coordinated
increased from 28% to 73% and is still
respondents, and reduced rework set of drawings, but its a great
growing, while almost all companies
is named top by contractors. tool for the contractors. I think
surveyed globally report increasing
Fewer claims and litigation every contractor we use now, if
their level of BIM implementation
grew by 40% as a BIM benefit they dont get a BIM model, theyre
once theyve started.
from 2009 to 2012 going to do one anyway.
Another perceives that depending
Use of BIM to
Address Uncertainty Owner Perspectives on whether youre an architect,
BIM is also demonstrated in contractor or owner, youre using
Contractors from 10 different regions
this SmartMarket Report to be BIM for different intentions, and I
were surveyed for the 2014 Business
an important tool for reducing think we need to get better aligned
Value of BIM for Construction in
uncertainty on complex projects. around the intentional use of BIM.
Major Global Markets SmartMarket
93% of project owners who use But he continues, I agree whole-
Report. Many findings relate to
BIM on their projects report a heartedly that if teams are coming
reduced uncertainty.
high level of satisfaction with [into the project] like-minded
Four out of the top six BIM benefits
project quality, versus non-BIM around BIM, it definitely helps
reported by contractors are
owners (84%). reduce the overall uncertainty.
related to reducing uncertainty:
In addition, 50% of all respondents One owner cautions that
(#1) reduced errors and omissions
to the research in this report believe An [inexperienced] owner
in construction documents; (#2)
that BIM reduces overall uncertainty saying [to an inexperienced
improved collaboration with
when used by a full project team; and team] I want 10 more pounds
owners and design firms; (#4)
its reputation precedes it because of BIM on that project, is not
reduced rework; and (#6) better
almost one third (32%) of owners going to help that project.
cost control/predictability.
not using BIM also agree about its Lastly, one owner whose internal
The top three preconstruction
efficacy for reducing uncertainty. staff uses BIM, shares that, the
BIM activities help reduce
In fact, every owner in the number of people [using BIM at
uncertainty: multi-trade
Owner Advisory Group reports that their company] always locked to
coordination, visualization of
BIM is being used on their projects, their computers now is quite high.
design intent and modeling for
and in some cases their internal You dont have the same sort of
constructibility evaluation.
staff is developing BIM capabilities. unit cohesion within your team
The top three construction
Their comments on the effectiveness that you really need. As a result,
phase BIM activities also help
of BIM to reduce uncertainty include he says, Were doing a lot more
address uncertainty: model-
the following. social management to get the
driven layout in the field, model-
One notes that both the integration BIM people up out of their cubes
driven prefabrication and status/
enabled by BIM and its growing use and talking. [Its] an interesting
progress monitoring.
by contractors are positive trends. sociological problem that were
Uncertainty-reducing benefits also Weve seen really, really good trying to manage more effectively.
scored well among the owners, benefit when major subcontractors Asked how, he says, Were having
architects, engineers and contractors such as piping and HVAC use more lunches. n
T
en months ahead of members waived their right to sue achieving LEED Silver certification or
schedule, some $20 million one another. They put into place an better; using evidence-based design,
returned to the project umbrella insurance program that standardization in prototypical
in value-added savings, covered everything and everyone, rooms and products, and LEAN
LEED-HC target exceeded by a full and rolled the insurance premiums process improvement techniques;
level, over 90% in-state workforce, into the project costs. The insurance and completing the project on
and 100% owner satisfaction across structure generated, in effect, a firm schedule. The team identified five
a list of measurable items: by any aligned to the project good. priorities or lenses for decision-
standard, MaineGeneral Healths Its an inspiring way to work, making in pursuit of these objectives:
newly completed Alfond Center for says Ellen Belknap, president of patients and families, physicians,
Health got a lot right. SMRT, architects to the project with staff, safety and cost.
Owner, architects and construction TRO Jung|Brannen. It allowed us to It wasnt something you wrote
manager unanimously attribute take our armor off. When youre not down and walked away from,
the projects success to a delivery protecting your turf, you release the says Steve Evers, principal at TRO
process that generated a culture and energy spent finding fault, and you Jung|Brannen. Every meeting started
a set of strategies for establishing just solve the problem. with a reiteration of the project
expectations, holding to them and Co-location in a Big Room mission and guiding principles, and
managing uncertainties that could environment throughout design the priority lenses were applied to
have otherwise undermined them. and construction completed the every decision.
integration of the project team and Throughout the project,
Cultivating a Culture incubated the advantages of the an iterative process of
The biggest project of my life, and IPD process. communication and consultation
Im going to do it a different way with stakeholders kept quality
than Ive ever done a project before? Expectations for Project and expectations on track. The
I must be crazy! Chuck Hays, CEO Quality team engaged interdisciplinary
at MaineGeneral Health, remembers As a road map for the project, the user groups in lean processes to
saying to himself when he IPD documents articulated a set of maximize spatial and procedural
committed to an integrated project conditions of satisfaction, such as efficiencies, for example, and
delivery (IPD) process. But it was bringing the project in under budget generated BIM models, cardboard
the best thing Ive ever done. Id do it and adding value to the outcome; mock-ups and full-scale mock-ups
Anton Grassl/Esto
again in a heartbeat. maximizing the employment of of key project components for user
Under the IPD contract, team local labor and local subcontractors; groups to approve.
continued
ti
n
co
Project Facts
st
In construction manager Robins plans signaled any aspect of the
at
and Figures
s
& Mortons near-70-year history, project that was veering off track,
which includes over 1,200 healthcare so team members could address Owner
MaineGeneral Medical Center
projects in the last 10 years alone, impediments promptly.
the Alfond Center for Healths Standardizing more than 250 Architect
construction finish rate of 25,600 headwalls and 170 inpatient TRO Jung|Brannen and SMRT
square feet per month stands as the bathrooms also enabled them to take Construction Manager
firms record. The team completed advantage of prefabrication which Robins & Morton
the entire design and construction sped up the work and helped level General Contractor
process 10 months ahead of the workforce curve. In particular, HP Cummings
schedule, saving the owner some $1 prefabrication of 52,382 square Size
million in financing costs per month. feet of exterior wall helped meet 640,000 square feet
Key to this achievement were lean an aggressive schedule to get the Construction Start
methodologies, prefabrication and building closed in before Maines August 2011
the IPD process. winter set in. Construction Completion
Among its suite of lean To speed decision-making August 2013
methodologies, the team used pull across the project, the project Cost
planning to develop the project implementation team had full Project: $312,000,000
schedule. Evers describes this authority to implement any decision
Construction: $224,000,000
approach as a constant pull of with which they all agreed. Only
information following the sequence controversial decisions were referred LEED Certification
of activity on the site. Production to the senior management team. anticipating LEED-HC Gold
of drawings was structured around Decisions could be made onsite,
three sets: footprint, core-shell says Hays. To retain ultimate control Results
and floor plan. Once issued, each of the project, the owner held a right
Financing Costs Saved:
set was considered locked, so that of veto over any decision; but with $10,000,000
construction could proceed while the that came the understanding that a
Value Added Savings:
remainder of the project continued veto would open up discussion on
$20,000,000
in design. Issuing architectural schedule and cost.
Schedule: Completed 10
drawings ahead of engineering
months early
inevitably entailed what Evers Cost
calls pain points, which the team The IPD structure motivated all In-state Labor Force: 91%
mitigating factor for many of the aspects of uncertainty Contingency Conducted in the Last Five Years
appears frequently throughout the research. (By Player)
To baseline the current practices related to Source: McGraw Hill Construction, 2014
Owners 26%50%
On average, almost all owners (97%) have 3%
contingencies on at least some portion of 7%
their projects. 9%
Most owners (81%) have contingencies on every
1%25%
one of their projects.
4%
Architects and Contractors 7%
Nearly all architects and contractors (99%) report
18%
at least some portion of the projects they work on
carry a contingency. No Projects Included a
Far fewer architects and contractors have them on all
Contingency
their projects. For architects, only 42% report that all 3%
their projects carry contingencies; 32% of contractors 1%
report the same. 1%
2_11_PerformProjsIncludingContD1D2_#01
Allocation of Contingencies by Owners (According to Owners Who Allocate Contingencies Into Separate Risks)
Source: McGraw Hill Construction, 2014
Owner/Scope Changes Unforeseen Site or Construction Issues Design Issues Requiring Clarification
2%
4%
9%
14%
18%
27% 31%
15% 13%
42%
16%
22% 22% 43%
22%
Owner Insights on
Mitigating Uncertainty Data Findings
All of the Owner Advisory is seen as [part of] the project cost. If they
Group (OAG, see page 60 for manage the project within that cost, its a
more information) members
success. So theyll track that like its the last
use contingencies.
Don Vitek, Whirlpool, always
glass of water they have in the desert.
carries a project contingency
outside of what the contractor or three-party contract with shared calibrate this kind of incentive to get
design builder has. savings on risk and reward, but were the desired results. If I put that just
John Moebes, Crate & Barrel, showing everybody exactly what ahead of them, I can get them to run
relies on contingencies for the our number is and how that number for it. If I put it too far ahead of them,
unforeseen condition in the field, is moving. So if theres an error or theyll ignore it.
or what we call the aberrant omission, or unbought scope or
inspector who throws something something, were showing everyone Subcategories of
at you that is not even in the code how thats affecting our number and Contingency
and causes a cost issue. how its coming out of our overall Most of the OAG members do not
Chuck Hardy, GSA, adds that project contingency. subdivide the contingency into
from an inside-the-owners view, He says this creates an interesting separate categories of risk.
a contingency is seen as [part of] shift in attitude. The first time we Moebes, Crate & Barrel, says,
the project cost. If they manage showed them exactly how much Weve tried to, but then you end up
the project within that cost, its a money we had in the pro forma just moving the money around.
success. So theyll track that like its budget to do a store and made it clear Jerry Lea, Hines, however, always
the last glass of water they have in we cant exceed that, I thought they carries a contingency specifically for
the desert. would like that level of transparency. non-negligent design issues. We
But I think it made them all a little take 3% of the construction contract
Telling the Project Team bit more nervous because we amount and give that to our [internal
About a Contingency suddenly made them responsible. staff] construction managers in the
Although they have contingencies, Not accountable. Were accountable. field to manage the normal errors
most say they do not share details But responsible. When the owner and omissions type change orders
about them with project teams. Boyd doesnt reveal that contingency, then that occur on any job. He expects
Black, University of Chicago, sums everyones just blissfully in the dark. them not to use it all, though. Weve
it up when he says, I found it to Eric Miller, Sutter Health, goes been tracking this for the last few
be a constant fight with the design even further on his IPD projects. years, and the actual is less than
team why Im not letting them use When setting contingencies he two, but to make sure we have
that money. Hardy, GSA, agrees: maintains a separate owners enough, we typically carry three.
Its like saying you have a couple bucket as well as a shared team Of course if it is an unusual project,
weeks to float on the schedule. Those bucket. Starting within guidelines a big renovation or something, then
couple weeks will get filled. that address project size and that metric will change.
Moebes, Crate & Barrel, takes complexity, he then works with the When Hines acts as a development
a radically different approach by team to set the shared contingency manager for a third-party client,
sharing his entire project budget, because its one bucket of money there is often an educational
including contingency numbers with that they all draw down. If they dont process required regarding
the design team, general contractor draw it down, a percentage of it goes design contingencies. They dont
and main sub-trades. We only back to them, which can increase understand that if you try to make an
started doing this two years ago. their profit to a capped level. So I use errors and omission claim against
Its kind of a twist on IPD [integrated contingency more as a carrot than a an architect for something that
project delivery]. Theres not a stick. But he is still learning how to isnt negligence, youre wasting
your time. Unless they are truly Some owners just is a simple matrix of uncertainty
Managing Uncertainty and Expectations in Building Design and Construction data
negligent in the standard of care in dont understand the factors that might cause problems
the industry, youre going to have to business well enough and estimates of their cost impacts.
pay for whatever that thing is. Were to get that they need He assigns a probability to each
doing a project right now where I am one based on the specifics of the
a contingency.
struggling to get them to understand particular project, then calculates a
that minor coordination is just a fact risk score. He uses the risk score to
of life and theyre going to have to 50 cents of. So, on those jobs our determine the right contingency for
pay for it. Some owners just dont change orders are less than 1%. He each project.
understand the business well enough began this process in Houston, but Boyd Black, University of Chicago,
to get that they need a contingency. it has now spread nationally. Ive creates a customized contingency
He also carries a separate got contractors around the country management plan when the budget
construction contingency for the who have heard about this, and is developed that reduces by phase
risk of being a general contractor, theyre saying, Cut me in on some through design, and again through
and being responsible for all the of that. And every time weve done the riskiest parts of construction.
subs and delivering the project on it, we spend less than half of the John Moebes, Crate & Barrel,
time. I explain that it is not the risk for [3% budgeted] contingency, and the assigns a contingency quickly
errors and omissions in my drawings general contractor has gotten a nice for the sort of project weve built
because I have my own contingency fee increase. We started out at 2.5%, 20 or 30 times and then adjusts
to deal with that. But he uses market and today were tracking between it for special conditions. With a
pressure to keep their pencils sharp. 1% and 1.5%. So if I can take the 3% seasoned team, I might reduce it a
When the contractor bids to us, I thats in my budget, and off-load that little bit, or dial it up for a new team
tell him, If you need a contingency, risk to the contractor for 1% to 1.5%, member, an unusual design or a
include it in your price and tell me Ive done a pretty good job. location with high seismic [activity]
what it is. And hes in competition, or aberrant inspectors. n
so hes got to think about how much Standard Process to
contingency to add that wont cost Establish Contingency
him the job. The Owner Advisory Group varies in
Recently he has developed a how they establish contingencies.
way to have contractors also take Craig Russell, Disney, says his
spent, Ill split with you, 50/50. Now, hand, says, GSA has a standard
they are negotiating the hell out of with set numbers for new
those subcontractor change order construction and renovation.
claims. Because every dollar that Eric Miller, Sutter Health,
they push back on the sub, they get developed a Risk Register, which
I
n 2008, Crate & Barrel deployed We looked at the design-bid-build works with an architect and comes
Managing Uncertainty and Expectations in Building Design and Construction
a new method for delivering process and said, We think there are up with a structure from the design
retail projects at locations certain elements of our buildings we side and engineering side, he says.
throughout the United States. could improve on if we rejigger that You wait until that process ends,
Dubbed design-build-bid, the process, he adds. then you start a new process with
process utilizes multiple-prime Although Crate & Barrel has a the general contractor and the steel
contracting between the owner recognizable brand and look, each fabricator. They are taking part of
and key specialty contractors with of its stores is unique. Although your time and money to deliver that
an integrated approach early in common elements are used, there to you.
the design process. That phase is is no prototype design for entire
followed by a traditional design- stores. In the past, the company used In-House Design Process
bid-build method, where a general traditional contracting between it and Early in the process, Crate & Barrel
contractor is hired under a stipulated an architect as well as a construction prepares a schematic design model
sum contract for the remaining manager. Moebes said the company in-house to show design intent
portions of the work. wanted to embrace an integrated and obtain internal approvals of
In bypassing the traditional project delivery (IPD) ethic, but the overall concept. Concurrently,
hierarchical relationships among without the three-party contracts the structural engineer is released
design teams and construction used on many IPD projects. Instead, to begin reviewing the schematic
teams, John Moebes, director of Crate & Barrel targeted specialty design model and establishing a
construction for Crate & Barrel, contractors that could have a direct preliminary foundation, upper-level
says the company has realized impact on a projects critical path. and roof-framing plan, including
significant savings on budget and One of the first opportunities brace frame locations.
schedules, while reducing many of pursued was structural steel.In From there, other key disciplines
the uncertainties on projects. the traditional approach, the owner can be involved, modeling MEP,
Image courtesy of Crate & Barrel
Rendering of a new Crate & Barrel store in Sarasota,Florida, scheduled to open Fall 2014.
continued
ti
n
co
exterior skin and other critical tons. Crate & Barrel claims that its including shipping in its process
Managing Uncertainty and Expectations in Building Design and Construction
components. The teams work structural steel costs dropped 38% reduces costs and improves
together in BIM to help with between 2005 and 2009. reliability. With our customers, we
coordination and visualization. Rob Rutherford, president of guarantee the stores get product,
Create & Barrel reports that failure SteelFab, Charleston, S.C., a steel he says. We take every measure
of spatial visualization on its part fabricator that has worked with possible to make sure product
is the root cause of the majority Crate & Barrel since it began this gets to customers on time and in
of the owner change orders on new process, says he sees a greater good condition.The construction
previous non-BIM projects. This push for innovation by working industry doesnt do that very well.
process allows owner stakeholders directly with Crate & Barrel. They Materials are needlessly damaged
to approve proposed concepts with are outside-the-box thinkers, always or needlessly lost. With steel we
confidence and avoid adjustments in trying to think of a better, smarter, took some of our supply chain,
the field during construction. faster way to do things, he says. logistics knowledge and applied
From there, the project architect [Moebes] takes every step in it to shipping structural steel.You
can assume full control of the the process and challenges us to might put [materials] in a container
owners model to develop higher streamline something or make and ship it.You might ship via barge
levels of detail. it simpler. or train.Thats a retail approach to
Although Crate & Barrel has early Because SteelFab and its shipping that saves money. n
and direct engagement with key engineering partners have worked
engineers, the company expects with Crate & Barrel regularly for
those engineers to have an ongoing more than six years, Rutherford Project Facts
st
at
relationship with fabricators. says the team has a relationship and Figures
s
Moebes says this presented an initial that helps reduce uncertainty. Its
Owner
challenge because most structural amazing how little conversation Crate & Barrel
engineers arent used to this process. has to happen sometimes, he
Type of Project
We kept hearing contractors tell us says. When you work consistently
Retail Stores
that the structural system [designed together on projects like this, youre
by the engineer] wasnt particularly always on the same wavelength.
practical and they would have to Rutherford says that SteelFab Budget Benefits
spend extra time on it, he says. is now regularly part of the early After instituting its
Since engineers arent [typically] design development process for design-build-bid delivery
partnered with fabricators, they dont Crate & Barrel projects. Were on method, Crate & Barrels
know much about what makes a steel a project with them now where average costs in 2009
structure expensive. the steel and HVAC will determine compared to 2005 were:
This process allowed the structural if this project happens or not, he
Hard Costs: -58%
team to have early discussions says. We need to have this building
designed, planned and evaluated Structural Steel: -38%
and come up with best-value
propositions on dozens of aspects from a cost standpoint before it Framing and Sheathing: -53%
of Crate & Barrel projects. They did becomes a project. What we do is Concrete: -56%
it in a way that gave best value to us part of making the business case for
HVAC: -55%
and gave them better profitability, a project.
he says. It was about finding the One of the most recent advances Plumbing: - 59%
most efficient options for all parties. for Crate & Barrel is to take over Electrical: -65%
Since then, Moebes says Crate & shipping of its construction
Fire Protection: -65%
Barrel has seen its average structural materials. As a retailer, shipping
steel needs on projects drop from is a core competency for Crate Finish Carpentry: -71%
around 200 tons each to around 150 & Barrel, and Moebes says that
W
ith the goal of Lean allows you to have the With Last Planner, youre trying to
increasing value conversations you need to have to drive out uncertainty of outcomes,
by driving waste overcome constraints, she says. he says. The biggest challenge is
out of projects You can accomplish more from a the uncertainty between trades. As
and improving predictability, schedule perspective if you have jobs have gotten more complex by
lean construction takes dead everyone from the team working nature of the buildings and systems,
aim at project uncertainties and together and an owner who has an that uncertainty is the greatest
expectations. A highly collaborative understanding of when they need to hindrance to achieving schedule.
process, lean seeks input from key make decisions. That includes [the Lean addresses that. Using Last
team players early and often, owner] asking questions about the Planner, [percent of plan complete]
using a range of principles information that they need to make is a reflection of someones ability
and practices. those decisions. to deliver something when they say
Beikmann says engagement they will deliver it.
Collaboration between the design team and key
In the lean strategy, the earlier you subcontractors can be particularly Results
engage a full team, the better situated effective when trying to drive On a 1.9-million-square-foot retail
you are to add value and drive waste value. On a traditional project, and warehouse complex in North
out, says Bevan Mace, vice president you often dont get a chance to Texas, Turner created a Punchlist
at Balfour Beatty Construction. talk to the people who are building Prevention Program using the
Mace says value stream mapping itits forbidden, she says. If I Last Planner System to develop
is a key element of the lean process have a conversation with a drywall critical punchlist milestones and
that addresses the needs of owners contractor on the constructibility of a quality tracking metrics. As the
while considering the flow of design certain design detail, theres a better team progressed through the
and construction. If youre involved chance I can give the owner what various turnovers, they focused on
early in the business case stage for they want for a price that the owner continuous improvement, reducing
a project, you are able to determine can afford, as opposed to us just the number of punchlist items from
the critical drivers; not just for focusing on the owners needs and 7.1 per 1,000 square feet to 3.9 per
construction but for operations, fulfilling that without understanding 1,000 square feet.
he says. Design and construction the complications with building it. Turner has also seen the benefits
is waste to an owner. They have a James Barrett, national director of applying Target Value Design. The
business need and want to use the of integrated building solutions at Northeast Georgia Medical Center
facility, so you minimize that design Turner Construction, says lean tools, project team of Turner, HGA and
and construction period. such as the Last Planner system, can Perry Crabb delivered $3.6 million in
Bernita Beikmann, principal and significantly reduce uncertainties savings at the time of GMP contract
director of lean strategy at HKS, during construction. In addition to finalization by utilizing Target Value
says a collaborative strategy that setting milestones and identifying Design. Last Planner is also being
includes early engagement of key conflicts, the system does regular used on the project, which Turner
team members can reap significant look-ahead planning and measures credits for enabling the team to
benefits, including reduced errors, percent completion of plan to tighten the schedule and put them on
more accurate budgets and more determine if schedules are slipping track to deliver the 350,000-square-
predictable scheduling. and need adjustment. foot facility two months early. n
This study was conducted by Owner Firm Size: across three At least some proportion of firms
Managing Uncertainty and Expectations in Building Design and Construction
McGraw Hill Construction to size categories projects in the last five years are
investigate the levels of uncertainty BIM Involvement: at least some highly complex
and related costs experienced on with such experience Respondent knows if company
building construction projects in the uses BIM software
Screening Criteria
U.S. More specifically, this research Respondents company is
Architect: Currently works
sought to explore the following: headquartered in the U.S.
at architecture, architecture/
Causes of uncertainty and
engineering or multidisciplinary
their impacts
(with architect as lead) firm.
Analytic Variables Used
Contingencies used to account
GC: Currently works at firm that
in the Analysis
for uncertainties In addition to the analysis by the
is general construction/general
Expectations of team three player groups, periodically we
contractor or multidisciplinary firm
members during the design also include references to differences
(with contractor as lead).
and construction process by the following variables:
Architects and General Contractors:
Mitigation factors that players use Type of Primary Project:
Has worked on at least one
to compensate Commercial (n=101)
building project over $10 million
Institutional (n=214)
The research was conducted in construction value in the past
Owner Project Type:
between April 22nd and May 27th, five years, and fulfills one of the
Education (n=48)
2014, using an initial phone module following criteria for responsibility at
Healthcare (n=31)
to screen respondents followed their organization for new building
Office (n=31)
by an online survey among those and renovation projects:
Others (n=45) (Includes
who qualified. Direct project involvement
amusement, multifamily,
Familiarity with multiple projects
hospitality and retail.)
Survey Participants Working knowledge of factors that
Percentage of Highly Complex
315 construction professionals impact project uncertainty
Projects: Defined as involving
across three firm types155 Owners: Approximate average
highly customized design solutions
owners, 82 architects and 78 general total value of all companys building
that are systems-intensive with
contractorstook part in this construction projects over the last
detailed technical requirements.
research. The total sample size has a five years is $10 million or more,
<=50% (n=102)
margin of error of +/-5.5% based on a and fulfills one of the following
51%-99% (n=137)
95% confidence interval. criteria for responsibility at their
100% (n=76)
The sample list was drawn organization for new building and
Owner Company Size: Defined by
from McGraw Hill Constructions renovation projects:
average total project value in the
Dodge Database. Direct project involvement
past five years.
Quota groups were established to Client responsibility on all projects
$10M to <$50M (n=59)
achieve target representation by: Familiarity with multiple projects
$50M to <$100M (n=27)
Firm Type: architects, Working knowledge of factors that
$100M+ (n=69)
GCs and owners impact project uncertainty
General Contractor Firm Size:
Primary Project Type: commercial Currently employed (but not in
Defined by total value of projects
or institutional the automotive or energy/public
in 2013.
Owner Project Type: sectors utility industry)
<$50M (n=30)
include education, healthcare Architects, General Contractors,
$50M+ (n=46)
(hospital and non-hospital), office and Owners:
Architect Firm Size: Defined by
and other (amusement, hospitality, At least 80% of firms construction
2013 billings.
multifamily and retail) projects over the last three years
<$5M (n=49)
were a combination of commercial
$5M+ (n=31)
and institutional
McGraw Hill Construction conducted Mr. Hardy serves as an ex-officio John Moebes
Managing Uncertainty and Expectations in Building Design and Construction
Acknowledgements:
The authors wish to thank all the partners and individuals who participated in
bringing this report to the industry. In particular, thanks to our founding partner,
the AIA Large Firm Roundtable (LFRT), for helping to conceive the study and
McGraw Hill Construction
secure industry interest and support, as well as to Bryce Pearsall for his individual
Main Website : construction.com
support, Clark S. Davis for his leadership on this initiative and the members of the
Dodge : construction.com/dodge
Research Advisory Committee from the LFRT, John F. Halleran, H. Ralph Hawkins
Research & Analytics :
and R. Craig Williams, for sharing their knowledge and insights.
construction.com/dodge/
dodge-market-research.asp We would also like to thank our premier industry partners, including the
Architectural Record : archrecord.com American Institute of Architects (AIA), Autodesk and the Design-Build Institute of
Engineering News-Record : enr.com America (DBIA). We thank their participants on the Research Advisory Committee,
Sweets : sweets.com including Ken Ross Jr. and Deborah DeBernard from AIA, Philip G. Bernstein and
SmartMarket Reports : Angi Izzi from Autodesk, and Greg Gidez and Robert Nartonis from DBIA.
construction.com/market_research In addition, we thank our other industry partners in this research, including
the Associated General Contractors of America (AGC), Graphisoft and the Lean
Construction Institute (LCI), as well as their participants on the Research Advisory
Committee, including Sylvester Giustino and Michael F. Stark from AGC, Ransom
Ratcliff from Graphisoft, and Dan C. Heinemeier and Bevan Mace from LCI.
We also would like to thank the owners who agreed to participate in our
Owners Advisory Group for their insights into and honest appraisals of our
research findings. We would like to thank Boyd Black of the University of Chicago,
Charles Hardy of the General Services Administration, Jerrold P. Lea of Hines, Eric
Miller of Sutter Health, John Moebes of Crate & Barrel, Craig Russell of Walt Disney
Imagineering and Don Vitek of Whirlpool Corporation.
Finally, we want to thank the organizations that participated in a phase 1
survey identifying the core concepts to be pursued. In addition to the associations
already named as our premier industry partners and industry partners, those
research partners include the American Subcontractors Association, Construction
Management Association of America, Construction Owners Association of
America, the Construction Users Roundtable, Mechanical Contractors Association
of America, National Electrical Contractors Association and Sheet Metal & Air
Conditioning Contractors National Association.
SmartMarket Report
www.construction.com