The Tampa Bay Water Master Program project, which includes massive Reservoir. Courtesy of CDG.

Owners see urgent need
for leadership in construction—and
look to Construction Managers to fill it

“Of all the building professionals we work with, construction managers are the ones we work with most closely,” says Robert Fraga, manager, facilities portfolio, for the U.S. Postal Service.

“What we do is a collaborative effort, with many parties involved,” says Fraga. ”As a project moves along, the need for leadership changes. I see the construction manager taking leadership in helping the owner manage the entire construction process.”

The Construction Management Association of America increasingly has focused on leadership as the key value its members can deliver to the nation’s ever-more-complex construction industry. Presentations by owners (both public and private) at CMAA conferences have called attention to the need for sound, consistent project leadership, and CMAA programs put growing emphasis on meeting this owner need.

Fraga presides over a huge national construction program at the Postal Service, and says USPS increasingly needs professional construction managers to augment its own staff. “Our industry has gotten more and more complicated,” he says. “It has been segmented and specialized. In the future, owners are going to need more help rather than less, and they’re less willing to staff up themselves.”

Embracing responsibility is a key to the value of professional CM, Fraga says. “A great part of the growth of CM in the 1960s and 1970s came about because other professions were shedding responsibilities,” he observes.

Tacoma Light Rail. Courtesy of URS

Linda Phillips, CCM, project management officer with the U.S. General Services Administration in Kansas City, MO, expresses a similar view. “The architect is obviously the leader in design, but the architectural community has stepped away from the plate when it comes to the risks associated with the construction process,” Phillips says.

As a result, “once we had the CM come in during construction and then during the design phase. Now, we have the construction manager coming in even earlier,” says Phillips.

Involving the CM at such an early stage is key to “getting project goals and business goals aligned,” Phillips says. “You want to be sure your buildings are designed efficiently, built efficiently, are efficient to occupy and efficient to maintain.”

Relying on a good construction manager goes hand-in-hand with having strong relationships with contractors, Phillips says. “As much as we love our contractors, at the same time you have to be responsible as a business person, and you may not have the means within your organization to maintain oversight.”

GSA’s 11 regions share a capital budget of $1.6 billion in fiscal year 2004, yet “our staff has gone down significantly in the last 20 years,” Phillips says.

Thomas Gormley, vice president/design and construction at HCA The Healthcare Co. in Nashville, TN, oversees a construction budget that can top $600 million annually. He identifies clear gains his company has realized by developing strong relationships with architects, contractors and professional construction managers who lead collaborative project efforts.

“We know who we’re working with,” Gormley says. “We’ve saved literally millions of dollars over the years just by not bonding.”

Still, Gormley sees some areas in which the process needs improvement and the CM is the logical player to deliver. Commissioning is one example.

“Nobody wants to step up and take the lead on commissioning, and making sure the building works efficiently when we open it,” Gormley says. “This is an area in which the construction manager can and should take a leadership role.”

Last fall, a survey by CMAA found that owners are paying much more attention to project closeout or commissioning issues. “Managing the post-construction phase of the project is a key process that must be handled well to achieve customer satisfaction,” says Don Basham of the U.S. Army Corps of Engineers, a member of the owners’ panel that discussed the survey findings at the CMAA National Conference.

A big part of the solution to these issues is to have proj-ect turnover planning already under way during the earliest stages of design. Another key is to vest full responsibility for the process in a single qualified participant.

Seeking responsibility rather than shifting it and focusing on total project success rather than separate niches are two ways today’s professional construction managers are becoming indispensable to owners. Moreover, many predict that the profession’s contributions are just beginning.

“Program management is really the next wave, and there’s nobody better to assume the program management responsibility than the construction manager,” says Fraga. “The CM is placed perfectly to fill that role.”

Ethics issues tainting industry, CMAA survey finds

Within the last 12 months, more than 80% of the construction managers, contractors, specialty contractors, architects and other construction industry participants responding to a recent CMAA survey personally experienced, encountered or observed acts or transactions they considered unethical. That is one finding of a major new study conducted by CMAA and FMI and made public in May. The study generally found that unethical and/or illegal acts are perceived as commonplace in the construction industry and are tainting the industry’s image and business success.

Of nearly 300 company executives responding to the survey, nearly 80% said they are sometimes or often concerned about the ethics or integrity of contractors they work with. Still, only slightly less than 40% said they would never work with a contractor or subcontractor they suspected of being unethical. Other respondents said they would work with such firms “with great reservations,” or “sometimes would, if circumstances dictate,” or even that they often worked with such suspect companies.

In a related question, more than 60% of respondents said they would hire a contractor with a reputation for unethical practices, although most of these respondents indicated this choice would be driven by compelling circumstances.

About 65% of respondents agreed or strongly agreed that “the construction industry is tainted by prevalent acts that are considered unethical,” such as mis-reporting of costs or time and misuse of equipment and supplies.

About half agreed or strongly agreed that “the construction industry is tainted by prevalent illegal acts like bribery, harassment, and alcohol use during work hours.”

Costs of these unethical and illegal activities were estimated to be substantial by survey respondents. More than a third believed these costs exceeded 2% of total job costs. Nearly 70% estimated the cost of unethical and illegal activities at more than 0.5% of total job costs.

Necessary initiatives to address this widespread problem include more ethics training in university and college curricula, and a great role for national associations and professional organizations in promoting ethics and delivering ethics training. Development of an industry standard code of ethics was supported by about 94% of all respondents.

In contrast, within their own organizations these respondents tend to have few, if any, formal ethics programs. Only about 30% said they have an ethics program that is formal, well-known throughout the company and enforced by top management.

As to whether companies they work with have ethics programs, 40% of the respondents said they did not know or have never asked.

CMAA backs qualification-based selection, warns against reverse auctions

However popular they may be for buying raw materials, office supplies and other commodities, Internet-based “reverse auctions” present some serious risks when applied to professional services in the construction industry, CMAA warns.

CMAA has adopted a policy statement warning that reverse auctions “could threaten the quality of a proj-ect, safety, and even may lead to an increase in overall project costs.”

Reverse auctions use the Internet to solicit construction price quotes from a wide variety of suppliers in a short time, making the current low bid known to all other potential bidders. This environment can create pressure to “beat” that quoted price rather than base a new quote on a thoughtful and complete analysis of client needs.

The result, CMAA says, can be imprudent bidding in which bidders assume unrealistic levels of risk that can jeopardize the success, or even the completion, of the project.

Moreover, as an organization dedicated to improving professional practice and promoting its benefits throughout the construction industry, CMAA strongly supports qualification-based selection (QBS). “The use of reverse auctions essentially removes QBS from the procurement process. QBS ensures that the qualifications and past experience of a bidder are considered in order for an owner to make the best informed choice when negotiating a contract,” says the CMAA board of directors.

“When price is the principal consideration and all other factors are essentially equal and known, reverse auctions may often be an effective manner in which to procure goods and materials,” notes CMAA. “Unfortunately, this is rarely the case in construction, where a multitude of factors including the quality of construction documents, schedule, weather, different site conditions, subcontracting, labor availability, etc. create significant risk...

“CMAA strongly believes that due to the increasing complexity of all phases and types of construction, the best method to price and acquire construction and construction-related services, when possible, is through a QBS process with a negotiated procurement,” the policy statement concludes.

Building on excellence...Surpassing expectations is theme of CMAA 2004 National Conference

CMAA’s 2004 National Conference and Trade Show will take place September 12-14 at the Hyatt Regency Riverwalk in San Antonio, TX, exploring the theme, “Building on excellence...Surpassing expectations.”

Participation in the conference has been growing dramatically in recent years as its programs have become stronger and CMAA membership has expanded.

Highlights of the conference in 2004 include:

• Keynote speaker D. Michael Abrashoff, former U.S. Navy Captain and author of It’s Your Ship: Management Techniques from the Best Damn Ship in the Navy.

• An Owners Panel discussion in which both public and private project owners will express their concerns and needs for leadership in the construction process.

• Nearly 30 breakout educational sessions on technical, operational, and business issues.

• The annual Industry Recognition Dinner, which will feature presentation of CMAA’s “Person of the Year” and Project Achievement Awards.

Information about the Conference can be found at CMAA’s website, www.cmaanet.org.

During the summer of 2001, PMA Consultants LLC (PMA) was engaged to assist the Visteon Corporation (Visteon) with combining various non-manufacturing facilities in Southeast Michigan into one corporate village.

PMA’s primary responsibilities assisting Visteon with this $250-million project include:

• Planning - Finalization of project strategy, site acquisition and financial modeling
  
• Time Management - Developing program schedule, requirements in A/E and contractor contracts, schedule review and monitoring
  
• Cost Management - Cost targeting and program budgeting value analysis, pricing of change negotiations
  
• Procurement - A/E and contractor model documents, Request for Qualifications and Proposals, interviews, evaluations and negotiations
  
• Design Oversight - A/E scope definition, contract administration, and errors and omissions tracking
  
• Construction - Management oversight, contractor scope, contractor procurement and administration, changes and claims resolution, and quality control
  
• Risk Management - Owner-controlled insurance, property insurance, and claims avoidance
  
• Administration - Program Management Systems,
  project meetings, and records
  
• Occupancy - Commissioning oversight, completion inspections, move-in planning, contract close-out, and correction period assistance

PROJECT STATUS
Ongoing

Christine Keville, President & CEO, Keville Enterprises, Inc.

President of the Construction Management Association of America

Q CMAA portrays the construction manager as the leader of the construction process. With so many highly qualified professionals involved in a typical project, how does CM leadership arise and what does it achieve?

A The profession of construction management has only existed for about 30 years now, but it came into being precisely because project owners felt that construction was becoming so segmented and specialized that no one player really could direct the entire process and take responsibility for its success.

CM has proven to be extremely effective for owners in controlling time, cost and quality on their projects. General contractors, architects, owners and construction managers must all communicate effectively and work collaboratively to ensure success, but the CM’s special claim to leadership is that the CM is the owner’s ultimate advocate.

The CM, in other words, is the one person who says, “I am responsible for the success of this project in its entirety.” By acting as an innovative problem solver, the CM demonstrates the leadership skills necessary to bring out the most effective management processes in all project stakeholders.

Q How is CMAA changing during your year as president?

A CMAA has been growing very quickly, but recently we’ve been working to grow differently as well as rapidly.

For instance, we’re concentrating on increasing membership of small, minority and woman-owned businesses. We restructured our membership committee into two bodies, one focusing on large and mid-sized companies and the other reaching out to these smaller firms.

We’re also working to increase owner membership and participation. Currently, 22% of CMAA’s membership is owners. We’ve also reorganized our owners’ committee to have two co-chairs, one public owner and one private owner. Programs at CMAA national events, and those offered by CMAA throughout the year, address owner concerns and issues in depth.

Part of the challenge of increasing owner support of CMAA is, of course, the same challenge the profession is tackling in the marketplace—that is, to educate owners on the value of construction management.

Q Is owner understanding of CM improving?

A We see a clear trend in that direction. Owners are becoming CMAA members in greater numbers. More and more owners see the value added to a project when construction management is applied effectively. It is important that CMs be involved at the inception of projects in order to ensure that the best delivery system is utilized. However, CMAA still has a great deal of work ahead of us to quantify the benefits of construction management and convey this persuasive information to owners.

Q What growth targets have you set?

A CMAA’s five-year strategic plan calls for membership to grow from 24 regional chapters and 2,300 members to 35 regional chapters and 5,000 members. This is a very aggressive but achievable goal, particularly when you look back five years and see that we had fewer than 10 regional chapters and 1,000 members.

The momentum for growth is there. Now we must maintain a concentrated effort to recruit a diverse membership throughout the country.

Q Is the CM certification program experiencing similar growth?

A We now have more than 450 certified construction managers in the U.S., more than double what we had just a few years ago, and another 290 applicants are moving through the qualification and certification process. We continue to receive significant numbers of inquiries and applications every week.

CMAA specifically encourages public sector involvement in certification and we’re pleased to see that these professional development opportunities have been well received among public owners.

Q What other initiatives is CMAA undertaking this year?

A We’ve set out to evaluate our entire publication library and look for opportunities to update and improve individual publications. For example, we’ve launched a review of the widely used Construction Management Standards of Practice.

We’ve also set up a Research and Development Committee whose objectives include researching the best mechanisms for conducting CM research and quantifying the benefits of utilizing professional construction management on projects.

We have a new Government Affairs Committee, as well as a Past Presidents Advisory Council that will serve as an informal think tank, giving us their knowledge and experience for the benefit of the association.

The Board of the CMAA Foundation has also been expanded from eight members to 11, so that we’ll have the energy resources necessary to accomplish the foundation’s many research and scholarship initiatives.

Our outreach to other professions has also continued and expanded this year. In addition to our ever-stronger links to architects, engineers, contractors, subs and others, we’ve formed new connections to organizations representing the design-build specialty, and we’ve become a member of the U.S. Conference of Mayors.

With all of this activity, we also are trying hard not to forget one other goal: To keep CMAA fun. We are learning, networking, and improving our businesses, but we also want to have time to laugh.

More than 200 construction managers have been certified by the Construction Manager Certification Institute (CMCI) this past year, thanks to several major federal owner requests for proposals that provided extra points for CM Certification.

“Owners have really given the program a boast this year,” says CMCI chairman, Joe McAtee. “Employers and clients around the world are using the CCM designation as a standard for measuring competency and integrity in the construction management profession.”

The prestige of holding the CCM designation is accompanied by the responsibility to uphold ethical standards. The CMCI's professional conduct requirements demand that certified construction managers adhere to the highest standards of ethical responsibility. Adherence to these standards fosters confidence and trust among clients, employers and other participants in the construction process.

Awarded only to a small percentage of construction managers, the CCM designation requires its candidates to have mastered a rigorous standard of practice that covers a broad range of construction project management and leadership skills. Candidates then must demonstrate their knowledge by passing a comprehensive exam.

The CCM designation has been earned by more than 450 professionals; there are more than 300 candidates in the program preparing for the exam.