Last week we interviewed John Manning, CEO and Co-Founder of KMI International, and talked a little about his experience with troubled projects. Today, we speak with Mr. Manning and take a closer look at who is ultimately impacted by a troubled project and what owners can do to avoid complications.
Q: Last week we spoke about your first experience with a Troubled Project and some of the challenges you faced. When a project is in trouble, who is ultimately effected by it?
John: The owner is the main player in the development and construction equation. He or She is the person who really feels the brunt of a troubled project. Primarily because the owner’s money is on the line to fund the project while others have been tasked to design and build the project. Unfortunately, industry statistics indicate that 70 to 90 percent of projects exceed the originally planned costs, with overruns commonly between 50 and 100 percent of the budget. Think about that statistic! Half, if not all the budget is spent on unplanned expenses. What are these common overrun areas—waste and inefficiency. Two expense areas that usually result in late and over-budget finishes on most troubled projects.
Q: So what can an owner do to prevent their project from entering into these troubled waters?
John: Several years ago, the AEC Productivity Subcommittee gave a presentation “How to Improve Productivity on a Construction Project.” One of the key components discussed in improving productivity was that “leadership from owners needed to increase.” One of the most effective ways to increase owner leadership is to hire a strong owner’s representative as an intermediary to manage the project.
Q: In your new book, you discuss the steps owners and owner representatives can take to prevent and turnaround a troubled project. What should an owner look for in an Owner’s Representative?
John: There are many things to look for when seeking to identify an Owner’s Representative, some are specific to the project’s scope and experience with similar projects. A few of the critically important skills an Owner’s Representative will exhibit are:
- Strong experience in the oversight of design and construction, which matches the size and complexity of the project.
- A full understanding of the design evolution to develop a complete, constructible and coordinated design; with the ability to task and track the design team to provide the deliverable.
- An understanding of the critical elements of both design and construction contracts to ensure they are aligned to produce the desired outcome.
- An Owner’s representative should know how a competent contractor would deliver a project to meet an owner’s expectations.The owner’s representative should be a taskmaster, ensuring all parties deliver what is required to meet the owner’s project goals.
Mr. Manning, we would like to thank you for taking time to talk with us about Troubled Projects.