Managing Uncertainty and Expectations in Building Design and Construction

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McGraw Hill Construction Managing Uncertainty and Expectations in Design and President Construction Kathryn E. Cassino SmartMarket Report About McGraw Hill McGraw Hill Construction Executive Editor Research & Analytics/ Harvey M. Bernstein, F.ASCE, LEED AP Construction Industry Insights & Alliances McGraw Hill Construction’s data, Editorial Advisor and Chief Author analytics, and media businesses— Vice President, Industry Stephen A. Jones Insights & Alliances Dodge, Sweets, Architectural Record, Harvey M. Bernstein, F.ASCE, LEED AP Editorial Director and Engineering News-Record— Michele A. Russo, LEED AP create opportunities for owners, Senior Director, Research & Analytics Burleigh Morton Managing Editor architects, engineers, contractors, Donna Laquidara-Carr, LEED AP building product manufacturers, Director, Research Communications and distributors to strengthen their Michele A. Russo, LEED AP Senior Director, Head of Marketing market position, size their markets, William Taylor prioritize prospects, and target and Reproduction or dissemination build relationships that will win more of any information contained Creative Manager, Media business. McGraw Hill Construction herein is granted only by contract Juan Ramos serves more than one million or prior written permission from Art Director customers through its trends and McGraw Hill Construction. Alison Lorenz forecasts, industry news, and leading Contributing Art Director platform of construction data, Copyright © 2014, AD-BOUTIQUE, INC. benchmarks, and analytics. McGraw Hill Construction, Terumasa Yamada ALL RIGHTS RESERVED Contributors To learn more, Bruce Buckley visit www.construction.com. Deborah Snoonian Glenn Katharine Logan Research Project Manager Susan Barnett, MRA, PRC

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Introduction

erfection is a baseline expectation ■■Better communication and integration when you purchase a product. among project team members scores as ction But as experienced owners of the most effective approach to reducing u building projects know, design the causes and impacts of uncertainty. Pand construction is an imperfect process The objective for this initiative is to onstr

C with a variety of inherent uncertainties. advance the level of shared understanding Given that reality, what can project teams among owners, design professionals do to identify, anticipate and mitigate the and construction firms about the mutual Stephen A. Jones conditions and factors that drive uncertainty, Senior Director challenges they face in building design McGraw Hill Construction esignand and how can owners adjust their

D and construction. This will help to shift the expectations of project team performance conversation from blame and recovery to align with reasonable, achievable metrics for unanticipated problems to proactive ilding that truly benefit the project? u and collaborative ways to reduce their These are the core questions behind this occurrence and to performance metrics Managing Uncertainty and Expectations that foster these behaviors. in Building Design and Construction In addition to the AIA Large Firm SmartMarket Report, produced by McGraw Roundtable, McGraw Hill Construction Hill Construction in partnership with the wishes to thank the other industry leaders AIA Large Firm Roundtable. Key findings of xpectationsin B who provided support and guidance to this E this research with owners, architects and research in order to bring this important contractors include: study to the market. Those organizations Harvey M. Bernstein ■■Owner-related issues, such as include the premier industry partners of F.ASCE, LEED AP accelerated schedule, unclear project Vice President AIA, Autodesk and DBIA; and industry requirements, lack of direction and Industry Insights & Alliances partners AGC, Graphisoft and the Lean McGraw Hill Construction involvement, and program or design Construction Institute. changes, are cited as the leading drivers For more detail on the methodology of of uncertainty on building projects. this report, please see pages 59–60. ■■While only 7% of owners believe perfect construction documents are possible, design errors and omissions are still ManagingUncertainty and considered highly impactful sources of uncertainty. On average, owners say they expect to pay somewhere between 3%–5% added cost on a building project due to these issues, and consider anything up to 6% to still be acceptable as “good performance.”

Stephen A. Jones leads High Performance Construction Harvey M. Bernstein, innovation and sustainability and MHC’s 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 MHC’s market National Building Museum Board research group, including MHC’s (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 Reading’s 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 MHC’s ENR FutureTech and the Johns Hopkins University. hundreds of papers covering Institute of Technology.

McGraw Hill Construction 1 www.construction.com SmartMarket Report SmartMarket Report

Introduction

he AIA Large Firm Roundtable I would like to thank the Roundtable’s is pleased to present Managing steering committee for this project: Jay ction Uncertainty and Expectations in Halleran, Assoc. AIA, managing principal u Building Design and Construction of NBBJ; Ralph Hawkins, FAIA, chairman of TSmartMarket Report as lead sponsor for HKS; James Bearden, AIA, CEO of Gresham onstr

C this industry study. Smith & Partners; Craig Williams, AIA, The Large Firm Roundtable, founded principal and chief legal officer of HKS; in 1984, includes leaders of the largest and Tim Twomey, AIA, vice president and Bryce D. Pearsall, FAIA North American-based architectural and deputy general counsel of RTKL. This Chair, AIA Large Firm Roundtable esignand A/E firms.T he Roundtable is committed to project has been led for the Roundtable by

D Chairman, DLR Group advancing the interests of design firms and Clark Davis, FAIA, former vice chairman clients of all types and sizes. We undertake of HOK and principal consultant with ilding periodic research about industry issues Cameron MacAllister Group. u and best practices. This study may lead to additional While it’s generally acknowledged research about some of the topics that the design and construction process presented here. We look forward to your isn’t perfect, there has been a lack of real comments and invite others to join us in data about what uncertainty to expect our future work. and how to manage it well. As a result, xpectationsin B E even top-performing project teams AIA Large Firm Roundtable 2014 sometimes end their work with conflict and strained client relationships. After ADD Inc. Gresham Smith and Page Partners discussing this issue for several years, AECOM Pei Cobb Freed HGA the Large Firm Roundtable decided in BWBR Architects Perkins + Will Harley Ellis Devereaux 2012 to move forward with this research Callison Perkins Eastman project. We commissioned McGraw Hill HDR Architecture CannonDesign RTKL Associates Construction’s Research & Analytics group HKS CBT Architects Shepley Bulfinch to conduct the work. Cooper Carry Inc. HLW International We believe the study findings will help SHW Group Corgan Associates HMC Architects owners, architects and builders manage SOM ManagingUncertainty and HNTB Architecture today’s projects more effectively and Cuningham Group SmithGroupJJR HOK improve our industry’s performance in Dewberry Solomon Cordwell the future. This report is intended to be an DLR Group Jacobs Global Buildings Buenz educational tool for every member of the ennead architects KMD Architects Stantec Architecture project team. EwingCole KPF Swanke Hayden This project has included financial EYP Leo A Daly Connell sponsorship and active participation from FKP Architects Little tvsdesign many other groups across the design and Flad Architects LS3P Associates TRO JungBrannen construction industry—leading owners, VOA Associates architectural and engineering firms, FRCH Design Worldwide Morris Architects construction contractors, technology firms FreemanWhite MulvannyG2 WATG and professional organizations. We are Gensler NBBJ WHR Architects grateful to these partners for their support. Gould Evans Odell ZGF Architects

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 clients—building 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.

SmartMarket Report McGraw Hill Construction 2 www.construction.com SmartMarket Report Managing Uncertainty and Expectations in Building Design and Construction table of contents 05 Executive Summary 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 25 sidebar The Cost of Imperfection: Reducing Error-Induced Uncertainties

29 Performance Expectations and Metrics 29 Perceptions of Owner Satisfaction 30 Effective Criteria in Measuring Design Team’s Performance on Project 31 Expectations Regarding Construction Documents 32 Expectations About Cost Impacts of Design Team’s Performance Issues 33 Criteria for Measuring the Construction Team’s Performance 34 Expectations Regarding Construction Team’s Performance 35 data sidebar Owner Insights on Performance Expectation Data Findings 40 sidebar Claims Consultant Perspective

41 Opportunities for Performance Improvement 41 Importance of Four Major Mitigating Elements 42 Effectiveness of Specific Factors on Reducing Overall Project Uncertainty 44 Mitigating the Seven Top Factors That Cause Uncertainty 47 data sidebar Owner Insights on Mitigating Uncertainty Data Findings 49 sidebar BIM and Managing Uncertainty 52 Contingencies as a Means of Mitigating Uncertainty 54 data sidebar Owner Insights on Mitigating Uncertainty Data Findings 58 sidebar Lean Processes to Reduce Uncertainties FrontCover Photo By: Joe Woolhead/SPI; Following page: Left: Anton © Grassl/Esto; Right: Courtesy HDRof Architecture, Inc., ©2013 LaCasse/HKSEd

McGraw Hill Construction 3 www.construction.com SmartMarket Report Front Cover: Construction at the World Trade Center site, New York, New York

This page: Left: MaineGeneral’s Alfond Center for Health, Augusta, Maine Below: Camp Pendleton Replacement Hospital, Camp Pendleton, California ts n te n co

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

50 Project Culture Fostered by Integrated Project Delivery (IPD) Is Key to Success MaineGeneral Medical Center’s Alfond Center for Health, Augusta, Maine

56 Utilizing Design-Build-Bid to Minimize Uncertainty Crate & Barrel, United States

59 Methodology 59 Managing Uncertainty and Expectations Study Research 60 Owner Advisory Group

61 Resources

SmartMarket Report McGraw-Hill Construction 4 www.construction.com Managing Uncertainty and Expectations in Building Design and Construction Executive Summary

■ ■ ■ ■ ■ parties’ causes as being more significant. is responsible for, the general trend is to weight other While each party certainly cares about the causes it issues) relatively lower as drivers of overall uncertainty. (contractor-caused delays and construction coordination omissions). both point to the design team (design errors and design (also owner-related), while owners and contractors in on owner-driven changes and accelerated schedule factors cited by all parties. uncertainty on building projects. contractors on the relative importance of key drivers of P Top of Uncertainty Causes for performance by various parties and effective means of mitigating uncertainty to improve T outcomes for everyone. documents? error-free of execution flawless expect to even possible or it realistic is context, this In change. of frequent environment dynamic a budgets in and schedules strict on projects building produce they as of uncertainty many types with contend contractors and teams design Owners, ■ ■ ■ ■ ■ erspectives vary between owners, architects and his research examines the parameters of that question, including the causes of uncertainty, reasonable expectations documents than architects perceive. of owner-driven changes. identified by all parties as the top driverbehind (50%) believe that general contractors do. uncertainty, about half of architects (47%) and owners believe that trade contractors benefit the mostfrom than either the architects or the owners do. and scheduling thoroughness of preconstruction planning, estimating among prime and subcontracts higher percentages of contractors cite by all parties, led by the general contractors (67%). top-named reason for A D Individual trade contractor performance C Unclear project requirements at the outset O Unforeseen site conditions is among the top three ontractors cite a much higher frequency of five types lthough almost one third (32%) of general contractors espite their direct responsibility for these issues, design errors and omissions ther findings related to uncertainty include: A ll parties rank the contractor-related factors (33%) as leading causes of uncertainty construction coordination issues Architects and contractors zero in finalconstruction (41%), and McGraw scope gaps Hill is the lack of Construction is

Owners, Architects and Contractors Architects Owners, Top for of Causes Overall Uncertainty Source: McGra Source: 4_1_executive summary_#0 Causes of Uncertainty Issues Construction Coordination Accelerated Schedul Owner Contractor Design Omissions Design Errors Construction Issues Unforeseen Site or www.construction.com -Driven Change w Hill Constr Hill w -Caused Delays uction, 20 uction, e s 14

1 Owner 5 5 2 2 (tie (tie (tie (tie 4 1 7 Ranking of Causes by Player ) ) ) ) s Architects 5 2 1 4 7 6 3 SmartMarket Report SmartMarket Contractors 7 3 4 6 2 5 1 Managing Uncertainty and Expectations in Building Design and Construction reasonable for non-negligent mistakes. projects, and on average they feel that a 3%–4% range is costs from design errors and omissions on their future from the construction team. (73%) say it is reasonable to expect perfect performance expect perfect documents, and almost three quarters percentage of owners (21%) believe it is reasonable to (13%) outnumber owners (7%). project, surprisingly, architects with that opinion finalconstruction documents on a reasonablycomplex possible for the design team to create a perfect set of metric for construction team performance. and not escalate to the owner, ability to work with other team members to solve issues metric for design team performance, followed by the within budget the owner’s program requirements and are constructible on on Future Projects of Cost Impacts Mistakes Design Expected regardless of owner size or project complexity. highly satisfiedwith cost (63%) andschedule (64%), satisfaction with quality on their projects, fewer are While most owners (86%) report a high level of Performance and Expectations Executive Summary Source: McGra Source: Added Costs Due to Design Mistakes (According to Owners Expects Future Projects to Be Completed With No 2_5_PerformOwnerExpectCostsC20C21_#02 Report SmartMarket Not Sure No Ye Most owners (80%) say they expect to face added While only a fraction of the industry believes it is T he s ability to develop a set of documents that meet w Hill Constr Hill w 8% 80% 12 is unanimously cited as the most-valued uction, 20 uction, % 14 ( A

ccording to ccording continued which is the number one T hat said, a significant McGraw O

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11% orMore 6% 3% 1% 0% (According to Owners Who Anticipate Additional Costs) Level of Additional Costs Accepted as Normal 6 % –5 – % –2

3% 10% ■ ■ ■ fee other team selection criteria not based primarily on low elements. leadership by owners (68%) Clearer direction from owners (79%), and more active Improvement for Performance Opportunities transparency or leverage standard approaches. owners’ policies and practices generally do not embrace mitigating design and construction risk, although five. during the design process (67%) and clearer definition of deliverables between parties time for design firms to participate incoordination (66%) build parties during design and construction (77%), more collaboration, emphasizing the greater value of collaborative efforts. outranks the use of BIM by single firm (32%), 4% ■ ■ ■ separate project risks architect, even more (37%) never tell their contractor. tell contractors. While a quarter (25%) never tell their contingency, and only around a third (37%) always process to determine the right amount. under a quarter (24%) have a standard risk assessment Only about a third (37%) allocate contingencies into Only about half (51%) always tell architects about a Most (81%) always have a project contingency, but just www.construction.com R O as very important. einforcing the value of tighter designer/builder wner contingencies are a traditional method of A lso, the N 15 early two thirds (64%) identify use of BIM by entire project team (50%) more integration between design and % . are the top-cited mitigating all rank among the top

38 40 % % best value or further Managing Uncertainty and Expectations in Building Design and Construction Recommendations

that issue.” contractor recovers from an issue, but how the so it’s not that there’s not an exact science… puts it, “ one to contractor perfection, possible without them. projects are certainly of drawings, and great even seen a perfect set surveyed say they’ve ever O projects is not realistic. free drawings on building flawless execution of error- are clear that expecting T Inevitable Is Imperfection below. included are highlights Some for everyone. outcomes project building improve and expectations performance appropriate establish of uncertainty, impacts and causes the minimize teams help project to recommendations and (OAG)Group of observations a number yield Advisory Owner project’s the with interviews and results survey The Observations and Recommendations committing it. metric than frequency of is a more valuable dealing with imperfection A tailored to each project. impact of imperfection, reasonableness for the of an acceptable range of realistic acknowledgment to an informed and from a zero-defect baseline expectations must shift point that performance he findings in thisstudy nd effectiveness in nly 1% of owners T his makes the critical OAG C member aptly onstruction is A s the support it, nor does construction respondents metric, neither design nor orders as a performance the number of change owners favor using half of the surveyed T Bad Inherently Not Are Orders Change the number.” enough to just judge it on the end product. S many different places. change orders come from associated with it. But it generally has a cost connotation because has gotten “a negative owners notes that the term underlie changes. related problems that mitigate the uncertainty- activities that avoid and metrics aligned with consider more appropriate change orders and revisit how they view the process. down as needed” during to adjust contracts up or them simply as “a way o that point, while about ome are good and benefit O OAG wners should McGraw . O ne of those Hill A Construction nother uses I t’s not

member says, “ the project. schedule changes during control scope, budget or the outset, nor always perfect information at expected to provide they can’t always be advances, etc.). regulations, technology forces (market changes, and dynamic external operations staff, etc.) administrators, end users, (boards, finance officers, of internal stakeholders often dealing with a range that their owner clients are teams need to understand D OAG leadership by owners. as well as more active direction from owners, and the need for clearer are owner-driven changes, architects and contractors, the survey results from problems, according to uncertainty-related T Uncertainty of Causes Driven at Owner- Deeper Looking about about E Realistic the following: types of issues includes he top drivers of esign and construction xpectations xpectations www.construction.com advice on these O wne A s one C T r hange is hus, s OAG

perfect perfect guidance. enough to provide and construction well to understand design all owner stakeholders unrealistic to expect intense buildings, it is O we want.” instead of what you think what you’re answering, propositions so you know thing, finalize the value “Before you draw one another owner says, owner satisfaction. more likely to increase stakeholder changes and generate disruptive design is less likely to be.” where spaces are going to people excited about says, “they start getting before, as one owner operating requirements) (e.g., technical, workflow, be doing in the building what end users will really understand more about should make the effort to design professionals U O I Design in upfront.” how much work you put going to happen no matter mpact on on mpact n programmatically nce wne S uch better-informed r r tainty

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Managing Uncertainty and Expectations in Building Design and Construction Observations and Recommendations their design’s going to to “get comfortable that role, architects will need in this less prescriptive to go.” He believes that get to where you need continually helping you process where they’re an ongoing, participative going to be,’ but more of transaction based on ‘ architectural world, not a new paradigm for the predicts it can be “a whole that client’s culture.” He that client’s mission and project design around really doing an integrated lot more and a lot sooner, advisor, participating a that he calls a “trusted relationship with owners evolving toward a deeper greater leadership and out” by providing to step up and help architectural community big opening for the what one calls “a several owners foresee excited about.” [that] our users are all we aren’t going to get to basically identify what of ‘value engineering’ to as the “terrible process causing what one refers or regulatory officials, pretty drawing” to owners design before show[ing] a [cost] ramifications of [the] designers “not knowing the disruption caused by and tell me what you want Report SmartMarket S O imilarly, they cite the n a positive note, I ’ll tell you how it’s

Y ou

this your entire career.’” when you’ve dealt with T Pr to Reacting cost or definitelycost.’” and then ‘ hand and say right there signed up for, raise your that isn’t part of what you something comes up contractors, “When scope, one owner tells cost conflicts related to example, to prevent avoid crises later. For conversations early to will initiate the tough anticipate issues and construction teams that ‘ owner says “ have seen coming. advance that they should related problems in don’t identify uncertainty- construction teams that with experienced express little patience Rathe T C moves forward.” be more functional as it but it’s going to certainly get messed up a little bit, looking several weeks or but somebody [who is] what’s happening now, and coordination for with communication are excellent in the field not only people who construction team has really high-performing D he eams eams onst on’t tell me it’s new I A nstead, they value oblems nother says, “a OAG McGraw r r A members uction uction than than N nticipating o cost, maybe Hill I tell them, Construction

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whole project team, the E Often and Open Early,Integration: and Collaboration Communication, ‘ then the owner can say, concerned about this,’ is proactive saying, ‘We’re group conversation.” surface something for a because we don’t want to not let the project suffer is a professional. seat at the table. a spirit of having an equal uncertainty, bring it up in owner to sort out some requires input from the crisis later. possible so that it’s not a conversations as early as move forward?’“ think this through as you doing this, can you guys same inspector, he keeps got four other jobs with the contractor saying, ‘We’ve O forward in a good fashion.’ later. that may become issues plan to identify things the documents and the months out, going through through it. questions as you work to finish, asking the right contractors] from start of “open dialogue [with N xpanding the focus to the r the owner can go to the o, A www.construction.com third extols the benefit “ I think you’re going A Start early, integrate quickly and work together as a whole so you nd then have those know what you’re getting into. I I f something f the contractor E L verybody et’s what you’re getting into.” as a whole so you know quickly and work together is to “start early, integrate for mitigating uncertainty ■ For example: delivery methods. more conventional project applicable within other intensive approaches project delivery) to less full-on many forms, from better.” coordination would be communication is better, continuing that “if of communication,” don’t take the place puts it that “documents OAG overall uncertainty. mitigating factors against are the most effective better communication that more integration and research findings show ■ solid success to the point percent, we’ve had very says “ finalization. of documents prior to cost and constructibility to bid the job, to review guarantee of being able either for a fee or as a a trade contractors in success by engaging members are finding projects, some O I ntegration can take D n design-bid-build esign member succinctly IPD T A hough not 100 nother’s formula (integrated A ssist role, O ne owner OAG

O ” ne Managing Uncertainty and Expectations in Building Design and Construction Observations and Recommendations

■ ‘ looking at you and saying in the field, such as “a sub unanticipated problems on submittals to avoid collaborating intensely build owner recommends A owner has less risk. coordinated.” stuff and know it’s can go order their engineer, and everyone by the architect and finished, they’restamped completely. When they’re coordinate their submittals engineers to make them with the architect and in a room for a week and basically lock them and their suppliers, elevator subcontractors protection and usually building controls, fire electrical, plumbing, we take the mechanical, months [of construction], “Within the first three explains the process: I ■ forgot to order it.’” He do it.” where now we always “highly successful” quick projects. to collaborate on small, from within the group hoc integrated teams firms, then forms ad design and construction collaboration-oriented contracts to a number of indefinite quantity where he bids out on-call, A O primarily design-bid- greement program, ne has a new, but A nd the

T erm ■ their contingencies. category or as a whole. amounts, either by for establishing their have a standard method and typically do not them with their teams share information about they generally do not their projects, although owners carry them on all results show most (81%) uncertainty. used to buffer financial C Contingencies Through Risk Managing unused portion of, and sometimes the information about, approaches to sharing through creative are finding success money,” several others letting them use that one says, “ primarily because as contingency information, members do not share fight [about]why experienced special risk. projects can run a note, highly integrated one’s really responsible. shares responsibility, no says, “When everyone you have to watch that.” ■ major team members. contingency, with the pro forma, including the complete project ontingencies are widely O While most O ne owner shares n a cautionary McGraw I Hill t’s a constant A T IPD s one very he survey OAG Construction

owner I continued ’m not

■ ■ might impact a project. the ways uncertainty a spreadsheet listing all a formal member has developed project. will affect a particular with specific factors that based on their experience percentage up or down typically dialing a starting establish contingencies, a standardized way to Many ■ ■ all parties to act frugally. transparency incentivizes remainder is shared. of uncertainty, and the deal with the impacts down by all parties to is then openly drawn contingency, which in establishing the engages all members needing responsibility without sense of fiscal increases everyone’s awareness successfully He finds that this for the general contractor. earned incremental fee and it provides a well- total cost as low as 1%, his behalf, driving their negotiation of changes on T the unused portion 50/50. requests, agreeing to split for subcontractor change contingency specifically general contractor a 2% environment, gives the a design-bid-build A A his motivates aggressive www.construction.com third, working in nother, when using OAG O R ne IPD isk members have OAG R . egister, T IPD

his , half solved.” anticipated is a problem conclusion that “a problem affirm I Conclusion digital fabrication. virtual coordination and uncertainty through is effective in mitigating T Technology of Benefits project-specific risk factors. real-world experience and contingencies, based on informed ways to establish in developing more the lead of should definitely follow practice. However, owners remain standard industry amounts is likely to secrecy about their spending contingencies, more diplomacy around teams are displaying appropriate contingency. informs his setting an risk score.” is that, which gives you a are this, and the total value chances of it happening categories of spend. I B For more information on their area of the industry. the best technologies for firms should embrace page 61. the see the B of n all, the study findings t is “organized by the he findings cite that B I M, including the Until owners feel their D R evelopment standard, esources section on P eter I MForum link in OAG SmartMarket Report SmartMarket T D he total score n rucker’s members L A evel ll T he I M Data:SectionIntroduction Hed1

cGraw Hill Construction has conducted extensive research over the past few years on construction industry trends that are Note About data 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 ction u Mthis research—including 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 onstr owners, 82 architects C prefabrication and modularization—all 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 esignand survey itself was

D problems that negatively impact quality, cost and schedule. While in an ideal world, the uncertainties that create these problems would be understood, conducted online. anticipated and addressed collaboratively and proactively by the project team, ilding Respondents were

u 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.

xpectationsin B to reduce their occurrence and mitigate their impact.

E In addition to the • Understand the varying perspectives of owners, designers and contractors on quantitative study, their own and each other’s 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

ManagingUncertainty and 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.

SmartMarket Report McGraw Hill Construction 10 www.construction.com Data:Understanding Uncertainty

Top Factors That Cause Uncertainty

As the first phase of this research, over 1,500 owners, architects and contractors were presented with a list data of factors and asked to select the one that causes the

tion greatest uncertainty on building projects. Listed below c

u are the top seven causes of uncertainty identified by r these respondents. ■■Accelerated Schedule

■■ Const Owner-Driven Program or Design Changes d ■■Design Errors

■■ n ann Design Omissions g ■■Construction Coordination Issues si e ■■Contractor-Caused Delays D g ■■Unforeseen Site or Construction Conditions in d Interestingly, responsibility for all but one of these seven uil

B disruptive factors can be said to align closely with a particular project team member. ■■Owner: In most cases it can be fairly said that the owner is in control of a decision to implement an accelerated tationsin schedule and for generating owner-driven changes during the project process. xpec ■■Design Team: Similarly, the design team rightfully can E d be seen as having control over design errors and design

an omissions in the final documents. y ■■Contractor: Along the same lines, the contractor would be the party perceived as most responsible taint for construction coordination issues and contractor- cer

n caused delays. U ■■Player-Neutral: Only unforeseen conditions are neutral, g in not caused by any one party. g It is also important to note the other factors that scored ana

M relatively low among respondents regarding their impact on uncertainty. These include: • Team Formation Process • Project Delivery Method • Renovation (versus New Construction) • Project Complexity • Regulatory Permitting Process None of these factors was selected as having the greatest impact on increasing uncertainty by more than 7% of any respondent type, so they are not included as a focus of this report.

McGraw Hill Construction 11 www.construction.com SmartMarket Report Managing Uncertainty and Expectations in Building Design and Construction data R Overall Impact on Uncertainty Understanding Uncertainty seven the pattern. contractor as architects, issues, ranks highest overall (47%) brunt strong Report SmartMarket agree uncertainty. respondents who find them to have a high impact on a close second and third in the percentage of total changes (47%) and accelerated schedule (45%), rank 30% architects, as the least impactful overall, delays and construction coordination issues, ranked The contractor-related causes, contractor-caused contrasting very who errors (both 37%) ranked next overall. The architects’ two issues, design omissions and design 55%, espondents • • • •

having The neutral factor, unforeseen site or construction The two owner-associated causes, owner-driven

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V projects keep rates of error down? changes typically cost? errors and omissions? How much do projects, particularly with regard to reasonable to expect on construction no matter what the scale. for uncertainty-driven cost overruns, owners express a shrinking tolerance in today’s business climate, many contingencies to their budgets, but these uncertainties by adding owners handle the prospect of or other sources of havoc. construction materials or methods, weather, contractor modifications of unexpected site conditions, freak and omissions. thought—are due to design errors although fewer than is widely tracked, and on top of that, which are often not 4.03% to 6.05%. rework, and direct costs range from Group (AIAG), “Guidelines for Improving the Accuracy of Architect/Engineer Construction Documents,” April, 1999. 3. ibid. 3. 1999. April, Documents,” Construction of Architect/Engineer the Accuracy for Improving “Guidelines (AIAG), Group Action Industry 2012. 2. August Automotive Forum. Construction for the Navigant prepared Remeedies,” Practical & Some on of Construction Rework Impact Jr., “The G., and Zack James Nigel Hughes, M., Jason 1. Dougherty, construction cost. range from 0.5% to 2.6% of total design errors and omissions alone the direct costs of rework from building and infrastructure projects, more than 25 papers covering 359 summarizing statistics from D A Error and of Change Rates Baseline issue. of this quantitative understanding for a full, needed is research more but far projects, on of imperfection cost of the question the into conducted been has research valuable Some Reducing Error-Induced Uncertainties The Cost of Imperfection: ccording to a 2012 study by ougherty, Hughes and Zack What level of uncertainty is Factor in all other reasons for

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W occupancy alterations. the need for significantpost- building performance and eliminated minimized wasted space, improved increased employee efficiency, ultimately created a design that with all 260 employees, the team T personnel, but the entire staff. company executives and facilities sought to meet the expectations of headquarters, the firm not only new Mountain View, are designed with numerous collaborative and are conference room with numerous designed collaborative spaces. employees Mozilla work in an open with no environment private offices, so offices hrough extensive engagement concepts for Mozilla’s began developing firm MK hen architecture C alifornia, T hink End-User Engagement McGraw he says. “ about losing the downtown office,” buy-in about the new location. usage, but it also improved employee information on potential facility the team to not only gather important MK Jonas Kellner, senior associate at View to a new one in the area. an existing location in Mountain relocated Mozilla headquarters from construction. By the time the design them in that before we started of the design process and engage client was to make the staff be part Hill T “ Mountain View, California View, Mountain Mozilla Headquarters Mozilla Construction S T he 54,000-square-foot-project hink, says the strategy enabled ome of the staff was concerned P art of the desire for the

www.construction.com ownership in the design. was done, staff members felt D to connect via online conferencing. couldn’t attend in person were able sessions with staff. a series of three “brown bag” lunch T Engagement User we made in the design process. help them understand the decisions modern construction.” on a level that was unprecedented in gave users a chance to provide input our culture,” says than just a design team, they study the world. “ used MK facilities in the last three years, has MK grew out of Mozilla’s past work with for the new Mountain View project entire staff and email exchanges. interviews, presentations to the in-person group and individual strategy included online surveys, engagement with employees. chose to pursue even more direct Mountain View project, the team from our employees directly.” worked and didn’t work, but let’s hear We know the things that we think to have input in creating their culture. and actively engage our employees to take what we’ve learned elsewhere their opinion is valued. here at Mozilla has an opinion, and source-natured culture. at Mozilla. “We have a very open- director of workplace resources conducted in utilized during a project they studying how facilities were of surveying its employees and he process was structured around uring the first session, Kellner T T T he user-engagement strategy he team first used astrategy

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case studycontinued

says the team explained the process Kellner says that at its existing Although some value engineering and announced that employees facilities, staff generally remarked was required, Middleton says ction

u 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- onstr

C 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 team’s user-engagement process. team also did an in-office study to remarked that staff may not know “A lot of times, people don’t esignand

D 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. We’ve had ilding

u team members to gather additional created more than 60 unique no additional modifications since team-specific information.T he “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 stats reference them later. approximately 20 people down to Project Facts

xpectationsin B The team presented survey video phone booths that can fit up and Figures E 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 ManagingUncertainty and ‘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 team’s survey process involved [account] and Facebook page, wasted space and improved building performance. the staff’s 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.A s 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.”

SmartMarket Report McGraw Hill Construction 28 www.construction.com Data:Performance Expectations and Metrics

Perceptions of Owner Satisfaction

a Architects and contractors were asked how often they Frequency With Which Projects Meet Expectations t a believe their projects meet owners’ expectations about Source: McGraw Hill Construction, 2014 d

n quality, cost and schedule, while owners were asked how Always Meet Expectations

tio often they find that their expectations are met. Frequently Meet Expectations c u The marked differential of perspectives between Sometimes Meet Expectations r t owners and their project teams on three critical aspects of Infrequently/Never Meet Expectations ns owner satisfaction reveals the need for much more clarity

Co about performance expectations and more standard Quality nd methods for consistently measuring them. Owners Architects and Contractors a 2% 0% gn i Meeting Quality Expectations 2% es Alignment among players is closest on the subject of D 12% 20% quality, where nearly all architects (99%) and contractors ng i (97%) feel they meet owners’ expectations with high ld 49% 49%

ui frequency, and a solid majority (86%) of owners agree. It B

n appears that BIM plays a role, because more (93%) of the 66% i owners who employ BIM on their projects report this high ns satisfaction with quality, compared with those who do not (84%). Only 2% say they are always disappointed in tatio the quality they receive from their project teams. Cost ec p Owners Architects and Contractors x 1% E Meeting Cost Expectations nd Perceptions are less well aligned relative to meeting 7% a 11% 11% y owners’ cost expectations. t

n 31% ■■Fewer than two thirds of owners (63%) cite a high 30% tai frequency of satisfaction. ■ ■Most contractors (91%) and architects (85%), 52% 57%

Uncer on the other hand, believe they are frequently

satisfying their clients. ng i g a While only 1% of contractors confess to a low frequency n a of meeting cost expectations, a much higher percentage Schedule

M Owners Architects and Contractors of owners (7%) say their cost expectations are not met. 1% Among types of owners, the greatest percentage of highly satisfied owners are among those in healthcare 10% 12% 10% (74%), while the least are in education (56%). This may reflect the difference between healthcare project teams, 36% 26% which are frequently comprised of highly specialized designers and builders who are selected through a 52% 53% qualifications-based process, versus the large percentage of education project teams that are formed through public bid processes.

Meeting Schedule Expectations ■■Less than two thirds (64%) of owners agree. In fact, a significant percentage (11%) say they are rarely satisfied. The greatest misalignment between the parties occurs 2_1_PerformOwnerSatPerceptC18C19_#02 relative to schedule. In general, the findings among owners are consistent ■■A high proportion of architects (90%) and contractors across organization size, project types and the degree of (87%) believe they are hitting the mark frequently. complexity of their projects.

McGraw Hill Construction 29 www.construction.com SmartMarket Report Managing Uncertainty and Expectations in Building Design and Construction data design team. of each party as the single most important metric for a constructible within budget is cited by a large majority meet the owner’s program requirement and that are are emphasis should success with working with team members and not escalate to owner, close (77%) Owners, in Measuring Effective Criteria Performance Expectations and Metrics This approach adversarial less widely supported by any of the parties. contingency used due to design errors and omissions—is of design errors and omissions, and the percentage of cost due to design errors and omissions, the number omissions—including the percentage of construction Report SmartMarket neither owners for number of change orders on a , project because generate team performance. effective metric to apply in their measurement of design note that almost half (46%) of owners designate it as an design T A close second is the ability to solve issues by Applying metrics based on design errors and Only about a quarter (28%) of architects favor a metric

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I ” Photo courtesy of HDR Architecture, Inc.; © 2013 Ed LaCasse/HKS Managing Uncertainty and Expectations in Building Design and Construction case study T expiration date on its financing. 2009, the project came with a hard design-build basis. instead awarded the project on a preference for project delivery and its traditional design-bid-build response, the R start. Funded under the construction schedule from the their families, faced an aggressive veteran members of the military and the mitigate this, before issuing its a reduction in owner control. cost often come at the price of D Uncertainty Bridging says ahead of the project’s own schedule. a hospital project and six months time frame of five to seven years for below the 49 months from start of design: well documents embodied the N generally spell out the project the adjacencies within the hospital and generate a design concept, describe would outline the project program, to develop a set of documents that N more than $80 million below the $447,300,000, the project came in complexity and magnitude.” ahead of schedule for a project of this S project manager for Report SmartMarket ecovery and outhwest, “we were at least 30% esign-build’s speed and fixed avy wanted. avy’s $530,000,000 budget. T “By any industry standards,” T A o ensure these bridging he new hospital was completed in N nd at a contract cost of D A Successful Balance: Integrating Design-Build avy retained H avid Williams, Speed, Owner Control and Workplace Safety 70,000 active-duty and landmark facility serving M he N C avy’s typical completion N B N avy’s new hospital at R C einvestment avy departed from amp DR NA R P endleton, a .

A Architecture VF A ., senior merican AC N avy’s A T ct of o Camp Pendleton Replacement Hospital Hospital Replacement Pendleton Camp R I n F P , Construction Hill McGraw the emerging design. reviewed iterative documentation of themes and goals for the project and with H N of medical staff, patient groups and integrated team of representatives expectations, a multidisciplinary open to them to maximize. engineering and construction detail project entailed, while leaving the high level of certainty as to what the they provided bidding teams with a secured the T and a fixed requirement of the bid. of the completion level, became the basis which were developed to a 30% AIA he bridging documents not only Camp Camp avy stakeholders collaborated T T he bridging documents, he result, says , vice president at H N DR avy’s comprehensive P on a guiding charter of endleton, California endleton, N avy’s priorities, but

38 T homas

DR www.construction.com , was “a T odd, R F P blocks as fast as possible, the JV T Slowly Haste Make with HK team of a joint venture (JV) design-build advantages and owner control.” successful balance of design-build co-located at kept the bridging team intact and architect-of-record, the and Mc savings in both time and cost. significant measure of the project’s attributing to that strategy alone a of co-location,” says Williams, documentation phase. provide oversight throughout the trailers, where they continued to o get the project out of the starting Hospital used bridging documents used documents Hospital bridging A “We focused heavily on this issue fter fter award of the contract to to integrate to the integrate owner’s quality Camp Pendleton Replacement Camp Replacement Pendleton priorities with design-build’s with design-build’s priorities C S C speed speed and cost advantages. arthy Building

lark Architects as the project C C lark/Mc onstruction C C N arthy’s site ompanies, avy avy G roup continued Camp Pendleton Replacement Hospital Camp Pendleton, California

case studycontinued

team broke the project into discrete “It took a bit of convincing,” stats packages: site work, structural says Carlos Gonzalez, P.E., vice Project Facts ction

u with minimal mechanical, central president at Clark, “because these and Figures plant, parking structure, and the conversations added time up front. Owner exterior and interior design of the But they avoided rejected final NAVFAC Southwest onstr C 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/ esignand

D 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 ilding u 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

xpectationsin B the team could follow, monitor and provided great leadership on this,” E remedy if any aspect of the work says Gonzalez. “From day one, they ■■Parking: 546,000-square-foot 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.A t 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

ManagingUncertainty and 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 I’m 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 team’s 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

McGraw Hill Construction 39 www.construction.com SmartMarket Report Managing Uncertainty and Expectations in Building Design and Construction Sidebar: U can help reduce the risks. in construction methods and tools some consultants say that advances causes for claims remain the same, enabling better communication and collaboration. and communication better enabling that effort, in critical are members team between Relationships risks. reduce and issues potential identify teams help project can tools collaborative and methods construction in Advances Claims Consultant Perspective leader of modeling (B software and building information in technology, such as scheduling execute. However, advancements traditionally difficult for owners to risks are estimated—have been risks—where potential costs of risks are identified—and quantitative risk assessment—where potential us down the road on claims?” What is in the schedule that can bite “We’re taking a harder look at it. typical schedule review,” he says. claim’s perspective. scheduler’s standpoint,” but a “not from a purely nuts-and-bolts project teams should view projects costly risks. toward identifying and avoiding at an early stage can go a long way projects from a claims perspective S schedules. where issues affect construction have an “element of time,” he says, claims that his group encounters significant difference. reviews, for example, can make a Report SmartMarket ervices ervices at R R C “ T ichard Martone, managing oy ooper says that qualitative his is different [from] your C ooper, vice president and Claims C onstruction While many traditional to disputes and claims. and sometimes they lead ncertainties can be costly, C Arcadis, says analyzing I E ooper suggests that M), are making it easier. nhanced schedule N C early all laims

Construction Hill McGraw help in this effort, building information modeling can delivery methods and tools like I B self-interest. When you go down a model, you can have islands of traditional design-bid-build delivery is collaborative,” he says. “ and director of the senior vice president and managing on projects, says Frank when trying to reduce uncertainties among team members are critical C Communication and Collaboration early. “ can identify conflicts and problems collaborative techniques, teams connect those islands.” environment, and that starts to documents,” he says. “B problems or defects with contract construction disputes we see is and commenting on them,” he says. terms of evaluating those [schedules] submitting schedules and owners in contractors in terms of preparing and from both contractors and owners; issues or mitigate them quickly. enhance opportunities to avoid advanced schedule control systems the most difficult to resolve, but that schedule claims are traditionally director of nternational. More collaborative I ollaboration and communication M road, you’re in a collaborative “By the intent of the process, B G “We see that sophistication uita adds that through such C onsulting T he number one cause of P MA A

mericas C 40 roup at Hill onsultants, says G uita says.

G C www.construction.com I uita, M starts to laims I n the I M that lead to problems in the field.” model that catch many of the things break that down. figure outwho is responsible.” problem, it gets more complicated to environment,” he says. “ blurred when you get into a B perspective. “ its downsides from a claims well. can increase the risk of disputes as and organizational standpoint— projects—from both a technical contractor perspective. “ each member may have a unique and construction teams, where require joint ventures of design L requirements and expectations. each with a particular set of project stakeholders on the owner’s side, disputes early.” avoiding or mitigating and resolving then we have a better chance of work out the relationship issues, is about the people,” he says. “ between people. “Half of the battle projects comes down to relationships says dealing with potential risks on methods used on a project, boxing gloves.” if they should bring flowers or make up. and the other wants to kiss and comes up: than contractor C ikewise, large projects often ooper says. “ S T R he increased complexity of egardless of the means and till, working in B A project may have numerous T O X he owner doesn’t know might think differently ne might want a fight, I T n a joint venture, I magine if a dispute he risk lines can get n Y Y and contractor Z,” ou do things in the I M can have I f there is a C ooper I M

f we

Data:Opportunities for Performance Improvement

Importance of Four Major Mitigating Elements

a To begin the process of identifying what practitioners Top Ranked Factors for Reducing t a should concentrate on in order to have the greatest

d Uncertainty (According to Owners, Architects positive impact, respondents were asked to rank four and Contractors) on i 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 truct the building design and construction process. s ■■Documents: Detailed construction drawings with no Detailed Construction Drawings With on No Signicant Errors or Omissions C significant errors or omissions ■■Early Collaboration: A collaborative approach with 48% 25% 18% 91% and

n 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% g Desigg design and construction n i Clear Process for Project Team Members for Dealing ■ d ■Shared Liability: A collaborative approach with shared With Issues During Design and Construction il u liability across the project team 10% 25% 48% 83% B n A Collaborative Approach s i s Error-Free Documents With Shared Liability on Error-free documents rose to the top as the dominant i 9% 14% 12% 35% desire, with half of all the respondents (48%) saying that ctat if such documents were possible to produce, they would

xpe certainly be the most important mitigating element. Only E a few (9%) rank error-free documents as least important

and (i.e., not among their top three choices). 3_1_Improve_ReducingUncertTOTAL_E9_#01 y Although it has been well-established in the findings nt i that perfection is not a realistic expectation, the unanimity among architects, contractors and owners rta e on this point reinforces the importance of construction nc documents as the foundational element on which much g U g of the success of the rest of the project depends. n gi satisfactory issue resolution process and that Early Collaboration other mitigation strategies are more important for ana

M 34% chose early collaboration as most important, reducing uncertainty. although a similar proportion (36%) placed it second on their list, underscoring its subordinate position to Shared Liability error-free documents. Respondents who are involved Shared liability receives the smallest level of support in a high proportion of healthcare work felt especially (9%) as the most promising mitigation approach. Nearly strongly (41%) about the value of a collaborative two thirds (65%) of all respondents exclude it entirely approach, likely reflecting the growing popularity of it in from their top three, led by architects (78%), who most that market sector. likely feel that they have the least amount of control over the riskiest aspect of a project. Conversely, contractors Issue Resolution show the most overall support for shared liability as a The support for a clearly defined approach to issue means to mitigate uncertainty, with half (52%) including resolution ranks much lower, with only a few (10%) citing it among their top three. This may indicate a desire by it as most important and half (48%) placing it third on contractors for design professionals to accept more of the their list. Contractors seem least supportive, with 31% risk on a project, as well as showing that contractors have not even including it among their top three, almost twice an interest in exploring new ways to structure business the average (17%) among all respondents. This may be arrangements around risk and liability to reduce the because many contractors feel that they already have a impact of uncertainty.

McGraw Hill Construction 41 www.construction.com SmartMarket Report Managing Uncertainty and Expectations in Building Design and Construction data ■ ■ ■ repeatedly in this research. collaboration among all parties, a theme that appears Three of the top five factors highlight support for better Collaboration: and Integration relate directly to the owners’ role on projects. Two of the top three factors cited by all respondents Role Owners’ of the Importance S impact, but the analysis below looks at all 13 factors. rated each factor as either having a high or a very high by at least 50% of owners, architects or contractors who process. The chart shows the top nine factors selected of uncertainty in the building design and construction factors as to their impact on reducing the overall level uncertainty, respondents were asked to rate 13 specific effective ways a project team can address and manage To provide greater detail in identifying the most on Reducing Overall Project Uncertainty Effectiveness of Specific Factors forOpportunities Performance Improvement Report SmartMarket ■ ■ ■ everal themes appear in these responses. the respondents who do mostly complex projects (83%) complex projects. To that point, significantly more of of greater integration on their relatively large and probably because of their experience with benefits E by over three quarters (77%) of all respondents. during design and construction is deemed impactful primarily in simpler projects. as critical, versus just over half (51%) of those involved mostly complex work identify active owner involvement preferences, where over two thirds (76%) of those doing experience with project complexity does impact from active owner involvement. of uncertainty and thus would be likely to benefit most complex projects often involve especially high levels respectively. This is likely because their large and weigh in even more emphatically—at 77% and 83%, uncertainty. it as having high or very high impact on reducing factor, is third overall, with over two thirds (68%) citing higher (89%) among architects. (79%) of the total respondent pool, (73%) of those who rarely do complex projects. projects citing it as highly significant, versus fewer 10 (83%) of the respondents who do mostly complex influences this factor somewhat,with over eight in More integration between design and build parties More active leadership by owners, a closely related Clearer direction from owners ranks first with most specially appreciative are the large contractors (91%), L arge owners and architectural firms P I roject complexity ndeed, respondent McGraw and rates even Hill Construction

T Use ofBIMandOtherVirtualDesign Source: McGraw-Hill Construction, 2014 Construction, McGraw-Hill Source: Top Factors That Uncertainty Project Reduce 2_9_Improve_ReducingUncert_F1_#02 Design ErrorsandOmissions Contingency inOwnerBudgetfor Constructor Contracts Use ofConstructionManageras More T Not BasedPrimarilyonLowFee Best V Parties DuringDesign Clearer DenitionofDeliverablesBetween More ActiveLeadershipbyOwner Clearer DirectionFromOwners During DesignandCoordination More IntegrationBetweenDesignandBuildParties ools byEntireProjectT Owners www.construction.com alue orOtherT ime forDesignFirmstoParticipateinCoordination Architects 26 % eam SelectionCriteria eam 44% 45 47 Contractors 47 49% % % % 53% 55% 55 57% % 61 61 63 % % 67% 67% 67% % 68 68 70% 72% % % 75 76 76 77 79 % 80% % % % % 89% Opportunities for Performance Improvement

Effectiveness of Specific Factors on Reducing Overall Project Uncertainty continued

a identified this factor as very important than those doing that proportion is reversed among architects, where t a mostly simple projects (67%). This is also reflected more small firms (71%) favor this as an important factor d among owners, where many more from the education than the large firms (60%), perhaps reflecting that more on i (82%) and healthcare (77%) sectors cite it than office fee-based bidding activity typically occurs among those project owners (62%). smaller firms.

truct ■■More time for design firms to participate in ■■Use of construction manager (CM) as contractor is s coordination garners high votes from two thirds favored by almost half (44%) of all respondents. Over on

C (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 and

n (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, g Desigg support for this, versus just over half (57%) of non-users, over a third (37%) rate it highly, with contractors n i d reflecting its valuable role in coordination. And among (41%) leading—and even more notably, large il

u owners, the strongest support is shown by the large contractors (45%). Similarly, large architects (50%) B

n organizations (65%) and those in healthcare, where the greatly outnumber small ones (23%) and many more

s i s benefit of coordination proves especially valuable. healthcare owners (46%) identify it as a top contributor ■ on ■Clearer definition of deliverables between parties during than office owners (25%), probably reflecting the i the design process is cited by identical percentages difference in actual IPD experience between the two ctat (67%) of architects, contractors and owners, identifying groups. This statistic will be interesting to watch in

xpe it as a high priority initiative for the industry with future research as IPD use evolves and more completed E unanimous support. Owners in the healthcare sector project metrics are made public.

■■

and (74%) and the larger contractors (73%) show above- The use of design-build contracts, while only cited by y average enthusiasm. Interestingly, three quarters (74%) about a third (31%) of the total population, receives nt i 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 rta e largest owners (greater than $100 million annually), owners. This finding is also consistent with the results nc perhaps indicating a greater perceived need for of the 2014 Project Delivery Systems SmartMarket g U g structured project processes in that portion of the market. Report, which showed that contractors favor design- n gi build over other delivery systems to achieve most Team Formation and Project Delivery project benefits.P roject complexity also impacts ana

M 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.

McGraw Hill Construction 43 www.construction.com SmartMarket Report Managing Uncertainty and Expectations in Building Design and Construction data ■ ■ responsibility for the causes: findings.The matrix is organized, left to right, by primary causes of uncertainty. relative effectiveness of 13 specific factors on those top another angle, respondents were asked to rate the pages 11 to 24.) To examine mitigation potential from Understanding Uncertainty section of this report. ( S That Cause Uncertainty Mitigating the Seven Top Factors identify the influence of B Two of the factors reported by the survey respondents (BIM) Modeling Information of Building Use Effectiveness of Specific Factors on Reducing Overall Project Uncertainty forOpportunities Performance Improvement Report SmartMarket ■ ■ even key causes of uncertainty were studied in the do feel B I virtual tools by a single firm as highly important. of the respondents who are not currently using B positive reputation even among non-users, a third (32%) team significantly reduces uncertainty. BIM and other virtual design tools by the entire project growing, successful use of B (24%) of contractors agree, perhaps acknowledging the tends to be used by larger companies on larger projects. (62%). These findings reflect the fact that currently, B Also, large contractors show above-average support than $100 million on projects annually) cite this factor. half (51%) of the large owners (those spending more convinced (44%), although size matters because over still give it a high rating. Owners overall are slightly less Overall, fewer (32%) see the use of BIM and other Half (50%) of all the respondents believe the use of nterestingly, while over half (55%) of large architects • • • • The Mitigation Matrix on page 45 summarizes these U C D O and and primarily responsible primarily D Accelerated Schedule) Accelerated ontractor-Related ontractor-Related nforeseen esign esign esign esign wner-Related wner-Related C ontractor- I M by a single firm is important, only a quarter T O eam-Related eam-Related missions) C onditions, onditions, for is which no party specific C I ssues ssues ( aused aused I ssues ssues ( I I ssues ssues ( M on reducing uncertainty. O D wner- elays) I C M by onstruction onstruction D D esign esign McGraw riven riven G Cs and multiple E C rrors rrors and As a sign of its Hill hanges hanges and C Construction oordination oordination I

S M ee I M

open dialogue as early as possible in a project. this research, which is to encourage an informed and of uncertainty. most impactful factor versus every one of the top causes in early stages of the project is clearly identified as the Better communication among all project team members Proje Communi Better Risks Mitigating forTop Five Strategies above 80%) to purple (scores below 40%). tiers of perceived effectiveness ranging from red (scores specificcause of uncertainty.Color coding indicates six either high or very high mitigating impact on each all respondents that rated a particular factor as having The number scores in the matrix are the percentages of contingencies used by owners, see page 52. of alignment on this issue. For more information on architects and contractors, providing a high degree The results show very little variation between owners, omissions as being important to reducing uncertainty in the owner budget to accommodate design errors and A of Budget Contingency Importance Mc beyond that demonstrates the advantages B research on the business value of B those findings, see page49. Markets SmartMarket Report the Value of BIM in North America SmartMarket Report series of in reducing uncertainty. The findings are published in a provide the same degree of benefit. and a sense that just one firm modeling does not trade contractors in an integrated approach on projects lmost half (47%) of all respondents identify contingency G Business Value of BIM for Construction in Global www.construction.com raw Hill Construction has conducted extensive c SmartMarket Reports, t t T eam eam This underscores the main objective of M em c ation ation b ers ers . For more information on including the A mong all all mong

I M in the U. continued I M provides Business S S . and uch an and . Managing Uncertainty and Expectations in Building Design and Construction data

b causes are so closely related to owners. driven changes (81%), which is not surprising since these true regarding accelerated schedule (83%) and owner- important factor for all respondents. of design and construction follows as the second-most Greater leadership or involvement by owner in all stages Constru Source: McGra Source: 2_10_Mitigation Matrix_#02 (According to Owners, Architects and Contractors) Architects to (According Owners, of on Impact the Strategies Mitigating Seven Top of Causes Uncertainty Project G often unrealistic performance expectations. operating under the prevailing patterns of misaligned and contracting strategies that avoid and transfer risk, and uncertainty and its impacts, rather than relying on approach allows a team to acknowledge and manage Mitigating the Seven Top Factors That Cause Uncertainty forOpportunities Performance Improvement Construction Use of This Facto Problems Created by the Project T Shared Liabilit Use of by Owner Dedicated to This Issu Appropriate Design-Bid-Build Alternativ Use of Construction All Stages of Design and Involvement by Owner in Greater of the Project Members in Early Stages Among All Project T Better Communication y y reater reater Scores Above 80 O wner in in wner Lean Design and

BIM T eam-Based Leadership w Hill Constr Hill w e r to Contingency eam for Practices c L y tion eadershi Acros uction, 20 uction, or eam A ll ll e s Scores 70 to 79 14 S tages of design and and design of tages Changes Driven Owner p 28 48 53 79 64 81 88 or or - I nvolvement nvolvement McGraw Schedule Accelerated Scores 60 to 69 This is especially 48 59 64 70 70 83 96 Hill Construction Errors Design 32 71 73 75 78 94 76 Scores 50 to 59

45 Omissions Design

■ ■ often surprises to the rest of the project team, and they contrast, owner-driven program or design changes are requiring no special level of owner involvement. By the design and build team to plan for and execute against, identified early in the process and is the responsibility of belief that in most cases an accelerated schedule is This difference in perspective may stem from owners’ three parties for this factor. ■ ■ (90%) and architects (88%). impact of accelerated schedule (70%) than contractors contractors on the topic of owner-driven changes. However, owners have noticeably less regard for the Owners’ scores are consistent with architects and 31 62 69 48 71 71 88 I www.construction.com nteresting variances occur between the scores of the Scores 40 to 49 Issues Coordination Construction

54 72 59 93 39 63 76 continued Delays Caused Contr

Scores Below 40 32 53 47 57 49 53 79 ac tor - Conditions Unforeseen 28 58 55 79 65 73 79 SmartMarket Report SmartMarket A VERAGE 34 59 63 66 67 71 88 Managing Uncertainty and Expectations in Building Design and Construction data may change as more trade contractors, fabricators are not perceived as being effective for mitigation. This are typically not directly related to the design, so models which may be because many of these kinds of delays particularly effective. issues (76%) with design errors (76%) and construction coordination Use of BIM ranks fifth overall andis mostclosely aligned U ■ ■ ■ ■ D H the potential benefits of team-based alternatives. highly, which points to a need to help owners understand contention. Unfortunately, fewer owners (62%) rate it project, where design errors are often sources of great sometimes adversarial culture of a design-bid-build to design errors (75%). to design-bid-build is viewed as most impactful related Ranking third overall, the use of a team-based alternative D U from the owner to manage with the least disruption. therefore merit closer involvement by and leadership Mitigating the Seven Top Factors That Cause Uncertainty forOpportunities Performance Improvement these four issues: fourth overall the owner to the specificissue inquestion ranks Having an appropriate contingency dedicated by Report SmartMarket ■ ■ ■ ■ related to it. reluctance to implement extraordinary measures (79%) over owners (65%), its importance. all three parties, typically least directly affected. average is pulled down by architects (67%), who are directly contend with the cost impact on a project. The (76%), of perspective between contractors (96%) and owners construction budget) when they occur. these will be managed (re: professional time as well as (74%), a top rating from more architects (83%) than owners A Design errors (73%) earns consistent ratings across Unforeseen conditions (79%) shows a similar diversity Owner-driven changes (79%) not surprisingly garners se of B of se se of of se edi esign-Bid-Build aving an an aving I ccelerated schedule (70%) is again led by contractors t scores lowest (47%) with contractor-caused delays, c ated to to ated highlighting the need to discuss in advance how understandable because contractors have to T IM eam-Based eam-Based , two areas where a model-based process is and is seen as especially relevant to App indicating a general consensus on Sp ro e p This probably stems from the c riate Contingen riate ifi A reinforcing owners’ relative lternatives to to lternatives c

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practices mitigate uncertainty on projects, see page 58. spite of the outstanding benefits. which quantifies the low general awareness level in Construction supported by the findings published in the Mc rather than informed negative judgment. This is scores returned for lean likely reflect unfamiliarity keeping commitments in an open and integrated process. planning, etc.), and its focus on all parties making and powerful schedule-oriented elements of lean (e.g., pull accelerated schedule. mitigating factor for uncertainty caused by an design and construction practices as an effective Half (48%) of the respondents identify the use of lean U collaborative environment. liability and reward are shared among participants in a structures such as integrated project delivery, where a constructive dialogue related to alternative team seen as an opportunity to engage with owners in to other members of the project team, it can also be desire by owners to avoid and transfer risk and liability owners (78%). relatively well for design errors (71%), especially among with less than six in 10 overall (59%), but it is rated team for problems created by this factor scores high In sixth place overall, shared liability across the project Pra Proje the S Risk Mitigating for Strategies Additional construction processes. and suppliers engage in integrated, model-based project uncertainty, see page 49. hared hared se of of se For more information about how lean construction Compared with all the factors, the relatively low Although this findingcould be interpreted as a For more information on the value of B www.construction.com c ti c L ean ean L es ia c Lean Construction SmartMarket Report,

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have to watch that.” no one’s really responsible. everyone shares responsibility, start sharing responsibility. When also finds “gaps ... occurring as we that aren’t always productive.” He a room, time is spent on things time. When you get 10 people in people together, it takes more as well. “Any time you bring multiple respectful.” But there are drawbacks They’re starting to be a little more there that might be just as tough. is tough, there are other jobs out realize that even though their job smarter. They’re all starting to resolution, they’re all getting work together and do the conflict ever. Now as we watch the groups really looked at each other’s work, and builders have typically “never Miller came to realize that designers going to take.” cost and predict how long it was project delivery to be able to predict recalls, “We went into integrated the U. integrated project delivery ( reduces fieldchanges.” duplicative efforts and “definitely This avoids uncertainties caused by best-suited for them in advance. assign responsibilities to the parties integrated approach whereby teams the design intent.” He favors an that will be employed to achieve regarding exact means and methods can’t read the contractor’s mind installed in the field, and the designer through shop drawings and the work contractor defines the final outcome However, through that process One of the leading proponents of

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I © Anton Grassl/Esto Managing Uncertainty and Expectations in Building Design and Construction case study T I have otherwise undermined them. managing uncertainties that could expectations, holding to them and a set of strategies for establishing process that generated a culture and the project’s success to a delivery manager unanimously attribute Health got a lot right. the best thing delivery ( committed to an integrated project saying to himself when he at Maine than I “ a Culture Cultivating again in a heartbeat.” newly completed standard, Maine a list of measurable items: by any and 100% owner satisfaction across level, over 90% in-state workforce, LEED Report SmartMarket must be crazy!” ’m going to do it a different way T O Under the $20 million $20 in million added value, 100% satisfaction. Alfond Center MaineGeneral’s for 10Health: months early, he biggest project of my life, and wner, architects and construction I -H ’ve ever done a project before? C G target exceeded by a full IPD in value-added savings, returned to the project schedule, some $20 million en months ahead of eneral Health, remembers ) process. “But it was IPD I Project Delivery (IPD) Is Key to Success ’ve ever done. Project Culture Fostered by Integrated contract, team G C A MaineGeneral Medical Center’s Alfond Center for Health for Center Alfond Center’s Medical MaineGeneral eneral Health’s huck Hays, lfond C enter for I ’d do it CEO Construction Hill McGraw local labor and local subcontractors; maximizing the employment of and adding value to the outcome; bringing the project in under budget conditions of satisfaction, such as IPD A Quality for Project Expectations one another. members waived their right to sue just solve the problem.” energy spent finding fault, and you protecting your turf, you release the take our armor off. When you’re not TRO aligned to the project good. structure generated, in effect, a firm into the project costs. and rolled the insurance premiums covered everything and everyone, umbrella insurance program that IPD incubated the advantages of the integration of the project team and and construction completed the environment throughout design S says M s a road map for the project, the C “ documents articulated a set of process. I RT o-location in a Big t’s an inspiring way to work,” Jung|Brannen. “ E , architects to the project with llen Belknap, president of August T hey put into place an

50 a , M ,

I t allowed us to T R a he insurance oom www.construction.com ine

schedule. and completing the project on process improvement techniques; rooms and products, and standardization in prototypical better; using evidence-based design, achieving staff, safety and cost. patients and families, physicians, making in pursuit of these objectives: priorities or “lenses” for decision- says down and walked away from,” generated B efficiencies, for example, and maximize spatial and procedural user groups in lean processes to team engaged interdisciplinary and expectations on track. with stakeholders kept quality communication and consultation an iterative process of every decision. the priority lenses were applied to mission and guiding principles, and with a reiteration of the project Jung|Brannen. groups to approve. of key project components for user mock-ups and full-scale mock-ups “ T I hroughout the project, t wasn’t something you wrote S teve T LEED E he team identified five I vers, principal at M models, cardboard E

S very meeting started ilver certification or LEAN T

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case studycontinued

Schedule and workflow, and weekly work stats Project Facts In construction manager Robins plans signaled any aspect of the

ction and Figures

u & Morton’s 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. onstr

C the Alfond Center for Health’s 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 firm’s record.T he team completed advantage of prefabrication which Robins & Morton esignand

D 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 ilding

u 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 Maine’s 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 xpectationsin B planning to develop the project implementation team had full ■■Project: $312,000,000 E 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.O nce 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

ManagingUncertainty and in design. Issuing architectural schedule and cost. drawings ahead of engineering ■■ Schedule: Completed 10 months early inevitably entailed what Evers Cost calls “pain points,” which the team The IPD structure motivated all ■■In-state Labor Force: 91% managed by staying staffed up parties to control project costs. “A lot through construction to coordinate of our fee was at stake,” says Robert as issues arose. Gambrell, senior vice president at Early involvement of Robins & Morton. “It drives people updated estimates and worked out subcontractors boosted the drawing to help solve a problem—not out of solutions to maximize value within schedule, saving time on design greed, but out of pride, because your budget. The concept of a change development by allowing project partners expect you to perform.” order became irrelevant, and the details to be generated as shop The subcontractors’ presence at contingency pool went unspent. drawings. Subs also collaborated the co-location site gave the team a As a result of the integrated in developing the construction strong handle on costs, and allowed process, the design and construction schedule, so that it represented what a process of Target Value Design, of the Alfond Center for Health the trades themselves had said they as opposed to after-the-fact value became, says Belknap, “not so could do. Daily stand-up meetings engineering. Every two weeks the much managing uncertainty, as onsite facilitated coordination team downloaded design changes, maximizing opportunity.” n

McGraw Hill Construction 51 www.construction.com SmartMarket Report Managing Uncertainty and Expectations in Building Design and Construction data A ■ ■ ■ ■ ■ ■ ■ ■ O contingencies. perspectives on the share of projects that carry As can be seen in the chart at right, there are differing Contingencies With of Projects Percentage contingencies, owners were asked: appears frequently throughout the research. mitigating factor for many of the aspects of uncertainty The topic of budget contingencies as a potential Contingencies as a Means of Mitigating Uncertainty forOpportunities Performance Improvement owners’ contingencies. contingencies and how frequently they are aware of contractors were asked how often they establish To contrast with those responses, architects and Report SmartMarket ■ ■ ■ ■ ■ ■ ■ ■ carry a contingency. at least some portion of the projects they work on one of their projects. report report the same. their projects carry contingencies; 32% of contractors their projects. For architects, only 42% report that all their projects. contingencies on at least some portion of to separate project risks establish contingencies contingencies with the project team Far fewer architects and contractors have them on all Nearly all architects and contractors (99%) report Most owners (81%) have contingencies on every On average, almost all owners (97%) have How frequently portions of contingencies are allocated If they employ a standard risk management process to How frequently they share information about How frequently they have contingencies wners r To baseline the current practices related to c hite c ts and Contra and ts c tors McGraw Hill

Construction

(By in Conducted the Contingency FiveLast Years of a That Included Percentage Projects 76%–99% 100% 2014 Construction, Hill McGraw Source: 2_ Contingency No ProjectsIncludeda 1%–25% 26%–50% 51%–75% 1% 1% 1% 3% 3% 11 Owners Contractors Architects 4% www.construction.com 7% 7% P 8% _PerformProjsIncludingContD1D2_#01 9% layer) 14 15 18 % % % 25 29 % 32 % % 42 % 81 % Opportunities for Performance Improvement

Contingencies as a Means of Mitigating Uncertainty continued

a Owner Communication With Teams Percentage of Projects on Which Owners t a

d About Contingencies Inform Design Team or Build Team About As can be seen in the chart at right, the existence of Contingencies (According to Owners) on i contingencies is often held confidential by owners, which Source: McGraw Hill Construction, 2014 may explain the disparities in the frequency with which Design Team Informed truct firms report that their projects have contingencies (see s Build Team Informed page 52). on ■■ C 51% of owners always tell their architect, but only 37% 100% always tell their general contractor. 51% and ■■ n On the opposite end of the scale, 25% of owners say 37% they never tell their architect, and 37% say they never 26%–99% tell their contractor.

g Desigg 8% ■■On average, owners share contingency information n i 10% d with their architects a little over half the time (58%) and il u with their contractors 43% of the time. 1%–25% B n 16% s i s Allocation of Contingencies 16% on The processes for establishing and managing i contingencies vary significantly for owners—24% have 0% ctat a standard risk assessment process to determine a level 25%

xpe of contingency for a particular project, and only 37% 37% E allocate a contingency into separate project risks.

and As can be seen in the chart below, among those who y allocate for separate project risks, unforeseen site or nt i construction issues typically receives, on average, the largest allocation (30%), with owner/scope changes (20%) 3_2_Improve_ContingInform_D7_#01 rta e and design issues (20%) trailing. nc The findings about contingencies offer an important g U g n opportunity to bring a great deal more structure and gi process to contingency setting and management in a ana constructively collaborative environment. M

Allocation of Contingencies by Owners (According to Owners Who Allocate Contingencies Into Separate Risks)

Source: McGraw Hill Construction, 2014 More Than 40% 21%–40% 11%–20% 6%–10% 5% or Less

Owner/Scope Changes Unforeseen Site or Construction Issues Design Issues Requiring Clarication 2% 4% 9% 14% 18% 27% 31% 13% 15% 42% 16%

22% 22% 43% 22%

Median: 20% Median: 30% Median: 20%

McGraw Hill Construction 53 www.construction.com SmartMarket Report 2_13PerformPercentContingencyD9_#02 Managing Uncertainty and Expectations in Building Design and Construction data Data: project delivery]. There’s not a I started doing this two years ago. and main sub-trades. “We only the design team, general contractor including contingency numbers with sharing his entire project budget, a radically different approach by couple weeks will get filled.” weeks to float on theschedule. Those “ use contingencies. more information) members ■ ■ ■ that money.” it up when he says, “ Black, University of Chicago, about them with project teams. most say they do not share details Although they have contingencies, a Contingency About Team Project the Telling G All of the Owner Advisory Contingencies Mitigating Uncertainty Data Findings Owner Insights on team why be a constant fightwith the design Report SmartMarket t’s kind of a twist on ■ ■ ■ I the desert.” the last glass of water they have in success. success. the project within that cost, it’s a the project cost. a contingency is seen as [part of] “from an inside-the-owner’s view, design builder has.” outside of what the contractor or carries “a project contingency and causes a cost issue.” at you that is not even in the code inspector’ who throws something or what we call ‘the aberrant unforeseen condition in the field, relies on contingencies for “the Chuck Hardy, GS John Moebes, Crate & Barrel, Don Vitek, Whirlpool, roup (OA t’s like saying you have a couple Moebes, Crate & Barrel,

Owner Advisory Group Insights on Opportunity for Improvement Data I S G ’m not letting them use o they’ll track that like it’s , see page 60 for Hardy, GS I A f they manage , I IP adds that found it to D [integrated A always , agrees:

takes

sums Boyd McGraw stick.” But he is still learning how to contingency more as a carrot than a their profit to acapped level. back to them, which can increase draw it down, a percentage of it goes that they all draw down. “because it’s one bucket of money team to set the shared contingency complexity, he then works with the that address project size and bucket.” bucket as well as a shared team “maintains a separate owner’s When setting contingencies he everyone’s just blissfully in the dark.” doesn’t reveal that contingency, then But responsible. When the owner Not accountable. We’re accountable. suddenly made them responsible. bit more nervous because we But would like that level of transparency. we can’t exceed that, budget to do a store and made it clear money we had in the pro forma showed them exactly how much shift in attitude. “The first time we project contingency.” how it’s coming out of our overall how that’s affecting our number and something, we’re showing everyone omission, or unbought scope or is moving. our number is and how that number showing everybody exactly what savings on risk and reward, but we’re three-party contract with shared even further on his Hill Eric Miller, Sutter Health, He says this creates an interesting Construction I “ think it made them all a little From an inside-the owner’s view, a contingency success. So they’ll track that like it’s the last S manage the project within that cost, it’s a is seen as [part of] the project cost. If they tarting within guidelines S glass of water they have in the desert. o if there’s an error or

54 IP

D projects. I thought they I www.construction.com f they don’t goes S o I use ahead of them, the desired results. “ calibrate this kind of incentive to get Most of the OA Contingency of Subcategories they’ll ignore it.” for it. just moving the money around.” “We’ve tried to, but then you end up separate categories of risk. subdivide the contingency into isn’t negligence, you’re wasting an architect for something that errors and omission claim against understand that if you try to make an design contingencies. “They don’t process required regarding there is often an educational manager for a third-party client, that metric will change.” a big renovation or something, then Of course if it is an unusual project, enough, we typically carry three. two, but to make sure we have years, and the actual is less than been tracking this for the last few them not to use it all, though. “We’ve that occur on any job.” He expects and omissions type change orders field to manage the normal errors staff] construction managers in the amount and give that to our [internal take 3% of the construction contract non-negligent design issues. “We carries a contingency specifically for Jerry Lea, Hines, Moebes, Crate & Barrel, When Hines acts as a development I f I put it too far ahead of them, G I can get them to run members do not however, always I f I put that just ” says,

Data: Owner Advisory Group Insights on Opportunity for Improvement Data continued

a your time. Unless they are truly “Some owners just is a simple matrix of uncertainty t a negligent in the standard of care in factors that might cause problems d don’t understand the the industry, you’re going to have to business well enough and estimates of their cost impacts. on i pay for whatever that thing is. We’re to get that they need He assigns a probability to each doing a project right now where I am a contingency.” one based on the specifics of the truct struggling to get them to understand particular project, then calculates a s that minor coordination is just a fact risk score. He uses the risk score to on

C of life and they’re going to have to 50 cents of. So, on those jobs our determine the right contingency for pay for it. Some owners just don’t change orders are less than 1%.” He each project. and ■■ n 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. “I’ve creates a customized contingency He also carries a separate got contractors around the country management plan when the budget g Desigg construction contingency “for the who have heard about this, and is developed that reduces by phase n i d risk of being a general contractor, they’re saying, ‘Cut me in on some through design, and again through il

u and being responsible for all the of that.’ And every time we’ve done the riskiest parts of construction.

B subs and delivering the project on it, we spend less than half of the ■■ n John Moebes, Crate & Barrel,

s i s time. I explain that it is not the risk for [3% budgeted] contingency, and the assigns a contingency quickly

on errors and omissions in my drawings general contractor has gotten a nice “for the sort of project we’ve built i because I have my own contingency fee increase. We started out at 2.5%, 20 or 30 times” and then adjusts ctat to deal with that.” But he uses market and today we’re tracking between it for special conditions. “With a

xpe pressure to keep their pencils sharp. 1% and 1.5%. So if I can take the 3% seasoned team, I might reduce it a E “When the contractor bids to us, I that’s in my budget, and off-load that little bit, or dial it up for a new team

and tell him, ‘If you need a contingency, risk to the contractor for 1% to 1.5%, member, an unusual design or a y include it in your price and tell me I’ve done a pretty good job.” location with high seismic [activity] nt i what it is.’ And he’s in competition, or aberrant inspectors.” n so he’s got to think about how much rta Standard Process to e contingency to add that won’t cost Establish Contingency nc him the job.“ The Owner Advisory Group varies in g U g Recently he has developed a how they establish contingencies. n gi way to have contractors also take ■■Craig Russell, Disney, says his on the risk of errors and omissions contingencies are totally project- ana

M in the drawings, without an IPD specific. “Our projects aren’t the contract. “Anytime you can create most technically complicated an alignment of interest, then you’re things in the world, but they’re very more likely to succeed. So, for any complex from the standpoint of issues that aren’t a legitimate scope the number of moving parts and change, instead of contractors just disciplines and details. We’d love passing through the subs’ claims for to say [our process of establishing additional cost, I say, ‘I’m going to contingencies] is scientific, but it give you a separate 2% contingency ends up being a wonderful blend of to cover those kinds of costs. And science and art.” at the end of the job, whatever isn’t ■■Chuck Hardy, GSA, on the other spent, I’ll 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

McGraw Hill Construction 55 www.construction.com SmartMarket Report Image courtesy of Crate & Barrel Managing Uncertainty and Expectations in Building Design and Construction case study I portions of the work. sum contract for the remaining contractor is hired under a stipulated bid-build method, where a general followed by a traditional design- the design process. an integrated approach early in and key specialty contractors with contracting between the owner process utilizes multiple-prime D Rendering of Rendering a to new scheduled open Crate Fall & 2014. store Barrel in Sarasota,Florida, the uncertainties on projects. schedules, while reducing many of significantsavings on budget and says the company has realized construction for teams, John Moebes, director of design teams and construction hierarchical relationships among Report SmartMarket Utilizing Design-Build-Bid to Minimize Uncertainty ubbed “design-build-bid,” the I n bypassing the traditional throughout the United retail projects at locations a new method for delivering n 2008, C rate & Barrel deployed C rate & Barrel, T hat phase is S tates. tates. Construction Hill McGraw process,’” he adds. could improve on if we rejigger that certain elements of our buildings we process and said, ‘We think there are the traditional approach, the owner pursued was structural steel.“ impact on a project’s critical path. contractors that could have a direct C used on many without the three-party contracts project delivery ( wanted to embrace an integrated manager. Moebes said the company an architect as well as a construction traditional contracting between it and stores. is no prototype design for entire common elements are used, there of its stores is unique. recognizable brand and look, each rate & Barrel targeted specialty A “We looked at the design-bid-build

O lthough ne of the first opportunities I n the past, the company used Crate & Barrel Crate United State United C rate & Barrel has a IPD

IPD 56 projects. ) ethic, but

A lthough www.construction.com s I nstead, I n can be involved, modeling M brace frame locations. and roof-framing plan, including preliminary foundation, upper-level design model and establishing a to begin reviewing the schematic the structural engineer is released E Process Design In-House the overall concept. and obtain internal approvals of in-house to show design intent prepares a schematic design model to you.” your time and money to deliver that fabricator. the general contractor and the steel then you start a new process with “ side and engineering side,” he says. up with a structure from the design works with an architect and comes Y arly in the process, From there, other key disciplines ou wait until that process ends, T hey are taking part of C C oncurrently, rate & Barrel EP , continued Crate & Barrel United States

case studycontinued

exterior skin and other critical tons. Crate & Barrel claims that its including shipping in its process components. The teams work structural steel costs dropped 38% reduces costs and improves ction

u 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 onstr

C 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 doesn’t do that very well. esignand

D 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, ilding

u 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 owner’s model to develop higher streamline something or make and ship it. You might ship via barge levels of detail. it simpler.” or train. That’s a retail approach to Although Crate & Barrel has early Because SteelFab and its shipping that saves money.” n

xpectationsin B and direct engagement with key engineering partners have worked E engineers, the company expects with Crate & Barrel regularly for stats those engineers to have an ongoing more than six years, Rutherford Project Facts relationship with fabricators. says the team has a relationship and Figures Moebes says this presented an initial that helps reduce uncertainty. “It’s Owner challenge because most structural amazing how little conversation Crate & Barrel engineers aren’t 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, you’re by the engineer] wasn’t particularly always on the same wavelength.” practical and they would have to Rutherford says that SteelFab Budget Benefits

ManagingUncertainty and spend extra time on it,” he says. is now regularly part of the early After instituting its “Since engineers aren’t [typically] design development process for design-build-bid delivery partnered with fabricators, they don’t Crate & Barrel projects. “We’re on method, Crate & Barrel’s 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 and come up with best-value designed, planned and evaluated ■■ Structural Steel: -38% 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 and gave them better profitability,” a project.” ■■ HVAC: -55% 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

McGraw Hill Construction 57 www.construction.com SmartMarket Report Managing Uncertainty and Expectations in Building Design and Construction Sidebar: W expectations. aim at project uncertainties and lean construction takes dead and improving predictability, is waste to an owner. he says. “ construction but for operations,” the critical drivers; not just for a project, you are able to determine early in the business case stage for “ Collaboration expectations. align and schedules tighten predictability, improve have tools helped and of practices of a variety use the through communication and Collaboration uncertainties. project reduce to aim methods construction of lean users out waste of projects, driving By Lean Processes to Reduce Uncertainties and practices. using a range of principles team players early and often, process, lean seeks input from key predictable scheduling. more accurate budgets and more benefits, including reduced errors, team members can reap significant includes early engagement of key says a collaborative strategy that director of lean strategy at HK and construction period.” facility, so you minimize that design business need and want to use the and construction. “ while considering the flow of design that addresses the needs of owners is a key element of the lean process at Balfour Beatty out,” says Bevan Mace, vice president you are to add value and drive waste engage a full team, the better situated Report SmartMarket I n the lean strategy, the earlier you Bernita Beikmann, principal and Mace says value stream mapping Lean D esign and construction A out of projects by driving waste increasing value ith the goal of highly collaborative C onstruction. I f you’re involved T hey have a

S , Construction Hill McGraw make decisions. understanding of when they need to together and an owner who has an everyone from the team working schedule perspective if you have “ overcome constraints,” she says. conversations you need to have to and need adjustment. determine if schedules are slipping percent completion of plan to look-ahead planning and measures conflicts, the system does regular setting milestones and identifying during construction. significantly reduce uncertainties such as the chance certain design detail, there’s a better contractor on the constructibility of a have a conversation with a drywall it—it’s forbidden,” she says. “ talk to the people who are building you often don’t get a chance to value. “ effective when trying to drive subcontractors can be particularly between the design team and key those decisions.” information that they need to make owner] asking questions about the T of integrated building solutions at the complications with building it.” fulfilling thatwithout understanding focusing on the owner’s needs and can afford, as opposed to us just they want for a price that the owner urner Y “ Beikmann says engagement James Barrett, national director ou can accomplish more from a L ean allows you to have the C O I can give the owner what onstruction, says lean tools, n a traditional project, L ast

P T 58 lanner system, can hat includes [the

I n addition to www.construction.com I f I they will deliver it.” to deliver something when they say is a reflection of someone’s ability P L hindrance to achieving schedule. that uncertainty is the greatest nature of the buildings and systems, jobs have gotten more complex by the uncertainty between trades. he says. “ drive out uncertainty of outcomes,” T and warehouse complex in O Results foot facility two months early. track to deliver the 350,000-square- tighten the schedule and put them on credits for enabling the team to used on the project, which P D 1,000 square feet. 7.1 per 1,000 square feet to 3.9 per the number of punchlist items from continuous improvement, reducing various turnovers, they focused on team progressed through the L savings at the time of P project team of N quality tracking metrics. critical punchlist milestones and finalization by utilizing of applying exas, ean addresses that. Using ast erry erry lanner, [percent of plan complete] revention esign. n a 1.9-million-square-foot retail ortheast “With T urner has also seen the benefits P C lanner T rabb delivered $3.6 million in urner created a L L ast T ast G he biggest challenge is P T eorgia Medical rogram using the P S arget Value P lanner is also being ystem to develop lanner, you’re trying to T urner, H G T M P arget Value A D GA unchlist P s the esign. contract T N L C and urner ast ast enter orth orth n A T s he Managing Uncertainty and Expectations in Building Design and Construction Methodology:

who qualified. by an online survey among those to screen respondents followed 2014, using an initial phone module between T sought to explore the following: achieve target representation by: D from Mc U. building construction projects in the and related costs experienced on investigate the levels of uncertainty Managing Uncertainty and Expectations Study Research 95% confidence interval. margin of error of +/-5.5% based on a research. contractors—took part in this owners, 82 architects and 78 general across three firmtypes—155 315 construction professionals Participants Survey Mc T he research was conducted his study was conducted by odge • • • • • • • S Quota groups were established to T G . More specifically, this research Mitigation factors Mitigation that players use Expectations of team Expectations Owner Owner Project Type: sectors used Contingencies to account Primary Project Type:Primary commercial Causes and of uncertainty Firm Firm Type: architects, to compensate and construction and process construction members during the design multifamily multifamily and retail) and other (amusement, hospitality, office and (hospital non-hospital), healthcare include education, for uncertainties or or institutional their impacts GCs GCs and owners he sample list was drawn raw Hill D G atabase. A T raw Hill pril 22nd and May 27th, he total sample size has a C onstruction to C onstruction’s

McGraw Screening Screening ■ ■ ■ ■ ■ Hill ■ ■ ■ ■ ■ renovation projects: organization for new building and criteria for responsibility at their and fulfills one of the following five years is $10 million or more, construction projects over the last total value of all company’s building (with architect as lead) firm. engineering or multidisciplinary at architecture, architecture/ (with contractor as lead). contractor or multidisciplinary firm is general construction/general and Owners: and renovation projects: their organization for new building following criteria for responsibility at five years, and fulfills one of the in construction value in the past building project over $10 million Has worked on at least one Architects, General Contractors, Owners: Architects and General Contractors: GC: Architect: • • • • • • • • • • • Construction Currently Currently employed (but not in BIM BIM Involvement: at least some Working knowledge Working of knowledge factors that with Familiarity multiple projects Client on responsibility all projects Direct project involvement Owner Owner Firm Size: across three At least 80% of firm’s construction Working of knowledge factors that with Familiarity multiple projects Direct project involvement with with such experience utility industry) utility the automotive or energy/public impact project uncertainty size categories and and institutional were a of combination commercial projects over the last three years impact project uncertainty C urrently works at firm that A C pproximate average urrently works

C riteria 59

www.construction.com

■ ■ ■ ■ ■ ■ by the following variables: also include references to differences three player groups, periodically we I Analysis the in Variables Used Analytic n addition to the analysis by the ■ ■ ■ ■ ■ ■ past five years. average total project value in the 2013 billings. in 2013. D detailed technical requirements. that are systems-intensive with highly customized design solutions Projects: Architect Firm Size: General Contractor Firm Size: Owner Company Size: Percentage of Highly Complex Owner Project Type: Type of Primary Project: • • • • • • • • • • • • • • • • • • • efined by total value of projects Respondent’s Respondent’s company is Respondent knows Respondent if company At least of some proportion firm’s $100M+ $100M+ (n=69) to (n=27) $50M <$100M $10M (n=59) to <$50M (Includes Others (n=45) (n=31) Office (n=31)Healthcare Education (n=48) Institutional (n=214) (n=101)Commercial $5M+ $5M+ (n=31) (n=49) <$5M (n=46) $50M+ (n=30) <$50M 100% (n=76) 51%-99% (n=137) <=50% (n=102) headquartered in headquartered the U.S. uses uses BIM software highly highly complex projects in the last five yearsare hospitality and retail.)hospitality amusement, multifamily,

D efined as involving D SmartMarket Report SmartMarket efined by D efined by

Managing Uncertainty and Expectations in Building Design and Construction Methodology: Charles of GSA Chief C C past president of the Board of the is a current board member and I L AIA Workplace G Buildings and University for Assistant Boyd articles throughout the data. ARRA R Buildings and construction for served as the director of design this position in 2011, Mr. Hardy a member of the the university. Mr. Black is currently manages design and construction at University comments appear in expand upon the findings. examples from their experience to on the survey results and offered owners shared their perspectives commercial office and retail. amusement, manufacturing, government, healthcare, hospitality/ different building types: education, of recognized leaders from seven C Under Boyd Black’s direction the O in July and 90-minute telephone interviews Owner Advisory Group Mc Report SmartMarket ndustry eadership egion, where he led the agency’s harles Hardy serves as onstruction apital reen Building wner A G

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LEED S an Director John Craig improve project performance. and digital document review to tools, building information modeling I is recognized as a leader in the use of and use of workflow technology. He he oversaw the firm’s development & Farrell associate principal at projects. and manages all capital construction as the director of construction in 2006 Crate Chief C Walt Delivery John Moebes joined Don C sits on the board of the operations teams. He also currently W addition, he shares responsibility for R functions for Walt installation and project management design, engineering, production, Director, Program G performance management for the on a global basis, resourcing and major expansions for the company for developing new facilities and/or million. He is currently responsible projects to date exceeding $750 and design and development operations, analysis, transactions, of real estate management, including D Whirlpool nternet-based project management raig esorts esorts projects around the world. onstruction on Vitek has worked in all aspects lobal DI ’s legal, contracts, facilities and

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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 Owner’s 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.

Founding Partner Construction Owners Association of ProducedAIA Large with Firm support Roundtable from America: www.coaa.org Premier Industry Partners Construction Users Roundtable: www.curt.org Mechanical Contractors Association American Institute of Architects: www.aia.org of America: www.mcaa.org Autodesk: www.autodesk.com National Electrical Contractors Association: www.neca.org Design-Build Institute of America: www.dbia.org Sheet Metal & Air Conditioning Contractors’ Industry Partners National Association: www.smacna.org The Associated General Contractors Other Resources of America: www.agc.org BIMForum: bimforum.org Graphisoft: www.graphisoft.com buildingSMART alliance: www.buildingsmartalliance.org Lean Construction Institute: www.leanconstruction.org Charles Pankow Foundation: www.pankowfoundation.org Research Partners International Risk Management Institute: www.irmi.com American Subcontractors Association: www.asaonline.com National Institute of Building Sciences: www.nibs.org Construction Management Association National Institute of Building Standards of America: cmaanet.org and Technology: www. nist.gov ■ Design and Construction Intelligence SmartMarket Report www.construction.com

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