Broken Projects, Busted Budgets and Late Schedules – What is an Owner to do??

05 January 2017 / By John Manning

Research has shown that over the past 40 years manufacturing productivity has increased by over 200% while productivity in the construction industry has actually declined! Statistics in the industry have indicated that 70% to 90% of projects exceed the originally planned costs with overruns commonly between 50% and 100% of the budget. The key player in the development and construction equation that really feel the brunt of this problem is the Owner. It is the Owner’s money on the line to fund the project while tasking others to design and build the project.

In 2007, Barry B. LePatner, a recognized construction lawyer, published the book “Broken Buildings, Busted Budgets – How to Fix America’s Trillion-Dollar Construction Industry.” Mr. LePatner laid out the issues that plague the construction industry which produces $120 Billion in waste and inefficiency. Waste and inefficiency results in over-budget and late finishes on the majority of projects, however Mr. LePatner detailed a path forward on how to fix those issues.

In 2006 the Construction Users Roundtable AEC Productivity Subcommittee published 4 key recommendations on how to improve productivity on a construction project. One of the key recommendations was “Leadership from Owners needed to Increase.” This same suggestion was also laid out in Mr. LePatner’s book where he emphasized the need for a strong Owner’s representative’s presence as an intermediary.

What does it take to be a “strong Owner’s representative?” To properly fulfill this position the individual for the team (based upon the size and complexity of the project) should have experience in oversight of design and construction. This would include a strong knowledge of design and construction contracts and RFP’s. The representative(s) should have a full understanding of the design evolution to develop a complete, constructible and coordinated design that can be built with the ability to task and track the design team to provide this deliverable. This representative(s) should also understand the critical elements of both, design and construction contracts, such that they help ensure the Owner is aligned to get the product desired. Additionally the representative(s) should have the knowledge of how a competent contractor should deliver the project to meet the Owner’s expectations. Armed with this knowledge the Owner’s representative(s) should be task master(s) to ensure all parties deliver to the Owner what is required to meet the Owner’s goals on a project.

If the Owner does not have individuals on their in-house team capable of managing their projects they will need to look for outsourced representatives. The industry already has a place to find these experienced individuals who have proven skills to manage projects from concept to completion. These individuals have demonstrated experience in all aspects of managing successful projects and they have passed a rigorous test to achieve an ANSI recognized certification the CCM, “Certified Construction Manager.” The Construction Management Association of America has developed a detailed process of vetting, certifying and training individuals who can run your projects.

Over the next 52 weeks I will be detailing some the key processes that a strong Owner’s Representative can bring to the table to help an Owner succeed in their projects. These processes will start from the concept stage and go thru building commissioning to help detail what will make your next project successful using a strong Owner’s Representative with CCM credentials. We at KMI International are proud to have 33% of our operation staff CCM’s. We look forward to helping Owners deliver successful projects by delivering the leadership and skill set of a Certified Construction Manager.

About The Author

John Manning

John Manning is the Principal and CEO of KMI International with more than 30 years of global experience in project management of the design and construction processes on resort hotels, parking structures, infrastructure, area development and mixed use. He is a CCM (Certified Construction Manager), PE (Professional Engineer) and a LEED Accredited Professional while serving on the national board of CMAA. He has worked as a project manager for large Owners and Construction Management Firms on projects ranging up to $3 Billion. Mr. Manning also testifies as a forensic expert in state and federal courts.

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