Lecture 3 Project Organization Part 1

1.040/1.4011.040/1.401Project ManagementProject Management

Spring 2007Spring 2007

Project Organization Part IProject Organization Part IDelivery SystemsDelivery Systems

Dr. SangHyun [email protected]@mit.edu

Department of Civil and Environmental Department of Civil and Environmental EngineeringEngineering

Massachusetts Institute of Technology Massachusetts Institute of Technology

Project Management Project Management PhasePhase

FEASIBILITY

CLOSEOUTDEVELOPMENT OPERATIONS

Fin.&Eval.Risk

Estimating

Planning

DESIGNDESIGNPLANNING PLANNING

Organization

OutlineOutline Project ParticipantsProject Participants

The OwnerThe Owner The Design TeamThe Design Team The Construction TeamThe Construction Team

Project Delivery Systems (Most Common)Project Delivery Systems (Most Common) TraditionalTraditional Pure Construction ManagementPure Construction Management Construction Management at RiskConstruction Management at Risk Design / BuildDesign / Build Combination – Build / Operate / TransferCombination – Build / Operate / Transfer SummarySummary

The Owner: Internal The Owner: Internal StructureStructure

Capital Projects Officer: Capital Projects Officer: Strategic PlanningStrategic Planning Financial Officer: Financial Officer: Financial PlanningFinancial Planning Owner’s Project Manager:Owner’s Project Manager: Tactical Level Supervision Tactical Level Supervision Owner’s Inspector: Owner’s Inspector: Operational DecisionsOperational Decisions End Users: End Users: Directly or Indirectly Directly or Indirectly

Represented Represented Source: Peña-Mora et al., 2004

The OwnerThe Owner

Typical InterestTypical Interest To achieve an efficient product delivery mechanism with a To achieve an efficient product delivery mechanism with a

simple structure of responsibility simple structure of responsibility

reduce schedule and cost, increase quality, reduce claims, reduce schedule and cost, increase quality, reduce claims, increase innovation and constructability, and increase increase innovation and constructability, and increase flexibility in both their capital investment and the construction flexibility in both their capital investment and the construction process)process)

Perfect Owner?Perfect Owner? The one whose only requirement is some respect for the The one whose only requirement is some respect for the

budgetbudget

The one that knows exactly what needs to be done and howThe one that knows exactly what needs to be done and how

Public & Private OwnersPublic & Private Owners Public OwnersPublic Owners

State, Municipal or Federal Government, DoD, DoEState, Municipal or Federal Government, DoD, DoE Usually Large ProjectsUsually Large Projects Very Well-Defined Procedures Very Well-Defined Procedures Careful Project Financing (Political accountability)Careful Project Financing (Political accountability)

Private OwnersPrivate Owners Ranging from Real Estate Developers to One-Time Ranging from Real Estate Developers to One-Time

ProjectsProjects Usually Smaller Projects (occasionally Larger Projects Usually Smaller Projects (occasionally Larger Projects

also)also) More Informal ProceduresMore Informal Procedures Usually More Innovation, Cost-Efficiency and Usually More Innovation, Cost-Efficiency and

FlexibilityFlexibility

Public-Private Public-Private PartnershipsPartnerships

Hybrid Owner From Contractor’s and User’s Hybrid Owner From Contractor’s and User’s ViewpointViewpoint

Basic Modes (and Variations):Basic Modes (and Variations): Gov’t Contracts Operations & Maintenance of Gov’t Contracts Operations & Maintenance of

Existing Facility with a Private EntityExisting Facility with a Private Entity

Gov’t Sells a Facility to the Private SectorGov’t Sells a Facility to the Private Sector

Gov’t Contracts a Company to Build-Operate-Gov’t Contracts a Company to Build-Operate-Transfer a ProjectTransfer a Project

The Design TeamThe Design Team The ArchitectThe Architect

11stst Contact of the Owner Contact of the Owner Usually in Contract with the OwnerUsually in Contract with the Owner Selected by “Competition” Based on Qualifications or Selected by “Competition” Based on Qualifications or

Selected based on Personal PreferencesSelected based on Personal Preferences Fiduciary Relationship in which one party, the owner, Fiduciary Relationship in which one party, the owner,

places special trust, confidence, and reliance in and is places special trust, confidence, and reliance in and is influenced by another (the architect) & vice versainfluenced by another (the architect) & vice versa

The Engineering TeamThe Engineering Team Structural / Transportation / Geotechnical Engineer Structural / Transportation / Geotechnical Engineer

Usually Subcontracts (or Houses)Usually Subcontracts (or Houses)

Environmental EngineersEnvironmental Engineers Mechanical EngineersMechanical Engineers Electrical EngineersElectrical Engineers

The Architect - ExampleThe Architect - Example Cesar Pelli & Associates Cesar Pelli & Associates

ArchitectsArchitects Established in 1977Established in 1977 Estimated number of employees: 80 Estimated number of employees: 80 Works with corporate, governmental Works with corporate, governmental

& private clients& private clients Designs public spaces, museums, Designs public spaces, museums,

airports, laboratories, performing art airports, laboratories, performing art centers, academic buildings, hotels, centers, academic buildings, hotels, office & residential towersoffice & residential towers

AwardsAwards AIA 1989 Firm AwardAIA 1989 Firm Award AIA 1995 Gold Medal AwardAIA 1995 Gold Medal Award

Signature projectsSignature projects Petronas Towers – Kuala Lumpur, Petronas Towers – Kuala Lumpur,

MalysiaMalysia Citi Group Tower – London, UKCiti Group Tower – London, UK Visit website on Visit website on www.cesar-pelli.comwww.cesar-pelli.com

for complete list of projectsfor complete list of projects

Source: www.cesar-pelli.com

Petronas TowersAmong tallest buildings in the world452 m Above Street Level

http://www.cesar-pelli.com/

The Engineering Team - The Engineering Team - ExampleExample ParsonsParsons

Established in 1944Established in 1944 100 % employee owned engineering & 100 % employee owned engineering &

construction companyconstruction company Estimated number of employees: 9,000Estimated number of employees: 9,000 Delivers design-build projects to Delivers design-build projects to

governmental & private clientsgovernmental & private clients Specializes in: Aviation, bridges & Specializes in: Aviation, bridges &

tunnels, commercial & industrial tunnels, commercial & industrial facilities, education & healthcare facilities, education & healthcare buildings, environmental structures, buildings, environmental structures, roads & highways, rails & transitroads & highways, rails & transit

Landmark projectsLandmark projects Baiyun International Airport – Guangzhou, Baiyun International Airport – Guangzhou,

ChinaChina Pierce County Tacoma Narrows Bridge – Pierce County Tacoma Narrows Bridge –

Washington, USAWashington, USA Dominican Republic National Strategic Dominican Republic National Strategic

Master Plan for Construction– Dominican Master Plan for Construction– Dominican RepublicRepublic

Visit website on Visit website on www.parsons.comwww.parsons.com for for complete list of projectscomplete list of projects

Source: www.parsons.com

Baiyun International Airport -Covering 13.5 square km (8.38 square miles)-Capable of handling 25 million passengers and 186,000 aircraft operations annually

http://www.parsons.com/

The Construction Team: The Construction Team: The Contractor’s Project The Contractor’s Project

ManagerManager Oversees Entire Project but Mainly Deals with:Oversees Entire Project but Mainly Deals with:

Owner RelationsOwner Relations

ScheduleSchedule

ClaimsClaims

Cost and Budget IssuesCost and Budget Issues

Major Engineering Issues related to ConstructionMajor Engineering Issues related to Construction

Subcontractor IssuesSubcontractor Issues

SafetySafety

Quality ControlQuality Control

The Construction Team: The Construction Team: EstimatorEstimator

Quantity Take OffQuantity Take Off

Item Description Drawings Dimension 1 Dimension 2 Units Total SFCA1 SF 2119

1 B1Bottom Forms S-04, S-12 (40'0") 4 18" SF 240Side Forms S-04, S-12 (40'0") 4 28" SF 373




First Floor Level

Formwork For Beams

Error & Omissions are typical in quantity take-off’s, but they cost Error & Omissions are typical in quantity take-off’s, but they cost real moneyreal money


PricingPricing

Source: Clough et al., 2005


BiddingBidding


The Construction Team: The Construction Team: SchedulerScheduler

Produces and Maintains Job Schedule with the Produces and Maintains Job Schedule with the Help of the Engineers and SuperintendentsHelp of the Engineers and Superintendents

Early Involvement in the ProjectEarly Involvement in the Project

Dealing with Multiple Interfaces (Owner, Dealing with Multiple Interfaces (Owner, Designer, Superintendents)Designer, Superintendents)

Excellent Understanding of the Construction Excellent Understanding of the Construction Technology and Technique Behind the Technology and Technique Behind the ScheduleSchedule

Continuously Modifying the Schedule Continuously Modifying the Schedule

The Construction Team: The Construction Team: Scheduler Work ProductScheduler Work Product

The Construction Team: The Construction Team: SuperintendentSuperintendent

General SuperintendentGeneral Superintendent

Oversees All Operations of Building the ProjectOversees All Operations of Building the Project

Coordinates Subcontractors and Various Field Coordinates Subcontractors and Various Field SuperintendentsSuperintendents

Deals with Craft UnionsDeals with Craft Unions

The Construction Team: The Construction Team:

SuperintendentSuperintendent Field (i.e., Assistant) SuperintendentField (i.e., Assistant) Superintendent

Oversee Their Specific Field (i.e., expertise) Oversee Their Specific Field (i.e., expertise) Operations (e.g., Utility, Earth Support, Concrete, Operations (e.g., Utility, Earth Support, Concrete, Mechanical, Equipment)Mechanical, Equipment)

Direct the Crews that Work in This AreaDirect the Crews that Work in This Area In Charge of:In Charge of:

Time SheetsTime Sheets SchedulingScheduling PlanningPlanning SafetySafety Quality ControlQuality Control SubcontractorsSubcontractors

The Construction Team: The Construction Team: Field Superintendent Work Field Superintendent Work

ProductProduct


Daily Labor Time CardDaily Labor Time Card

The Construction Team: The Construction Team: EngineerEngineer

Project EngineerProject Engineer Oversee All Engineering and Administration Functions of Oversee All Engineering and Administration Functions of

the Projectthe Project

Work closely together with project managerWork closely together with project manager

In Charge of:In Charge of: Owner RelationsOwner Relations

Submittals, RFI’s, ChangesSubmittals, RFI’s, Changes Leads problem identification, definition, analysis, solution generation, Leads problem identification, definition, analysis, solution generation,

solution implementation and pay requirementssolution implementation and pay requirements ClaimsClaims

Cost ControlCost Control

SubcontractorsSubcontractors

The Construction Team: The Construction Team: Project EngineerProject Engineer


E

Monthly Payment Request


Field EngineerField Engineer

Daily Reports of ActivitiesDaily Reports of Activities

Measure Quantities of Work CompletedMeasure Quantities of Work Completed

Help Superintendents with Planning and Ordering Help Superintendents with Planning and Ordering Permanent MaterialsPermanent Materials


Resident EngineerResident Engineer

The Owners Representative on the Job SiteThe Owners Representative on the Job Site

Makes the Decisions for the Owner and the Owners Makes the Decisions for the Owner and the Owners EngineerEngineer

The Construction Team: The Construction Team: SubcontractorSubcontractor

The term refers only to the contractual The term refers only to the contractual arrangement not to the scope of workarrangement not to the scope of work

Company X performs 2 contracts; one for Owner A and the Company X performs 2 contracts; one for Owner A and the other for Contractor Bother for Contractor B

Contractual obligation to the original contractor not Contractual obligation to the original contractor not the ownerthe owner

Responsibility ChartResponsibility Chart


BOARD OF DIRECTORS

PRESIDENT

B. Blank

Executive

SECRETARY - TREASURER

S.Smith

Insurance Surety BondsCollections Tax Returns

SECRETARY - TREASURER

K.Lee

Owner Relations Labor RelationsContract Negotiations Safety

EXPEDITORW. White

Shop Drawings Delivers

ASSISTANT PURCHASE AGENT

M. Millar

Invoices Stores and Inventory

PURCHASING AGENTB. Brown

Purchase Orders Subcontractors

COST CLERKM. Moore

Project Costs Cost Records

PAYMASTERJ. JonesPayroll

Personnel Records

ACCOUNTANTJ. Johnson

Board of Accounts Disbursements

WAREHOUSEW. Wright

Material Inventory Small Tools

EQUIPMENT SUPTG. Green

Repair Shop Parts Inventory

PROJECT MANAGERM. Millar

Time and Cost Control Project Pay Requests

OPERATIONS MANAGERW. Williams

Project CoordinationEquipment Scheduling

TAKEOFFS. Strong

Quantity TakeoffBid Invitations

COST ESTIMATORD. DavisCosting

Price Quotations

CHIEF ESTIMATORK. King

Bid Bonds Proposals

Responsibility MatrixResponsibility Matrix


Traditional Design Bid Traditional Design Bid BuildBuild

Owner

General Contractor

Subcontractor Subcontractor Subcontractor

A/E

Contractual RelationshipCommunicational Relationship

Source: Peña-Mora et al., 2002


Hire a Design Professional in Charge of the Hire a Design Professional in Charge of the Preparation of the Design and Contract Preparation of the Design and Contract DocumentsDocuments

Usually Competitive Bid or Negotiation with Usually Competitive Bid or Negotiation with ContractorsContractors

Contractor in Charge of the Delivery of the Contractor in Charge of the Delivery of the Completed Project (May Decide to Subcontract)Completed Project (May Decide to Subcontract)

The Contractor is the Only One Responsible of The Contractor is the Only One Responsible of the Execution of the Workthe Execution of the Work


Sequential Construction Process Sequential Construction Process Lump Sum Bid Commonly Adopted whereby Owner Lump Sum Bid Commonly Adopted whereby Owner

assigns Project Risks to the Contractor: built-in assigns Project Risks to the Contractor: built-in adversarial relationshipadversarial relationship

Trust-based Collaborative Relationship between A/E Trust-based Collaborative Relationship between A/E (Chosen on Qualification Basis) and Owner(Chosen on Qualification Basis) and Owner

Different Participants’ Interests:Different Participants’ Interests: Owner: Quality and Value Product, Delivery Schedule, Site SafetyOwner: Quality and Value Product, Delivery Schedule, Site Safety Contractor: Profit, Construction Time, Relationships, ReputationContractor: Profit, Construction Time, Relationships, Reputation A/E: Profit, Aesthetics, Relationships, Quality, RecognitionA/E: Profit, Aesthetics, Relationships, Quality, Recognition

Advantages of the Traditional Advantages of the Traditional MethodMethod

Well Known MethodWell Known Method

Cost Already DefinedCost Already Defined

Good Contractual Protection for the OwnerGood Contractual Protection for the Owner

Owner Not too Involved in the actual Owner Not too Involved in the actual Construction ProcessConstruction Process

Disadvantages of the Disadvantages of the Traditional MethodTraditional Method

Generally, Design not Reviewed for Generally, Design not Reviewed for Constructability Before Construction (i.e., Constructability Before Construction (i.e., contractor’s small role in the design phase)contractor’s small role in the design phase)

Sequential and Linear Process which Prevents Sequential and Linear Process which Prevents Task Overlapping and Implementation of Time & Task Overlapping and Implementation of Time & Money Saving StrategiesMoney Saving Strategies

Few Interactions among the ParticipantsFew Interactions among the Participants

Construction can’t Start until Design is CompleteConstruction can’t Start until Design is Complete

Campus Recreation Center Campus Recreation Center East, UIUCEast, UIUC

Source: http://www.acta.org

Groundbreaking : October Groundbreaking : October 20032003

Facility Opened: March, 2005 Facility Opened: March, 2005 Architect: VOA Associates Inc.Architect: VOA Associates Inc. General Contractor: William General Contractor: William

Brothers Construction, Inc.Brothers Construction, Inc. Cost : $22 millionCost : $22 million New additions and New additions and

renovations include 110,000 renovations include 110,000 sq. Ft of activity space sq. Ft of activity space

Aquatic center with temp. Aquatic center with temp. controlled pool, waterslide controlled pool, waterslide and waterfalland waterfall

3 court gymnasium3 court gymnasium 1/8 1/8 thth mile, 3 lane track mile, 3 lane track

Campus Recreation Center Campus Recreation Center East, UIUCEast, UIUC


OwnerUniversity of Illinois Board of

Trustees

Architect of RecordVOA Inc. of Chicago

(Illinois)

General ContractorWilliams Brothers Construction

Inc.(Peoria, IL)

Design ArchitectHughes Sterling Group

Associates(Virginia)

SubcontractorsMechanical, Electrical, Fireproofing, Painting

Owner’s Representative/CMUI Facilities & Services

User GroupDivision of Campus Recreation

Communication Contractual



Project Delivery SystemsProject Delivery Systems TraditionalTraditional Pure Construction ManagementPure Construction Management Construction Management at RiskConstruction Management at Risk Design / BuildDesign / Build Combination – Build / Operate / TransferCombination – Build / Operate / Transfer SummarySummary

Pure Construction Pure Construction ManagementManagement

Owner

Trade contractor

C/M

Trade contractor

Trade contractor


A/E



The Owner hires, based on qualifications, both a The Owner hires, based on qualifications, both a Design Firm and a Construction Management Design Firm and a Construction Management Firm before the beginning of the construction of Firm before the beginning of the construction of the Projectthe Project


Owner in Fiduciary Relationship with the PCMOwner in Fiduciary Relationship with the PCM

PCM as Facilitator/Mediator in Conflicts PCM as Facilitator/Mediator in Conflicts

PCM Generally Paid a Fixed FeePCM Generally Paid a Fixed Fee

Advantages of Pure CMAdvantages of Pure CM

One Trusted Common Reference Point for One Trusted Common Reference Point for Construction: The CM Construction: The CM

Great Flexibility in the ScheduleGreat Flexibility in the Schedule

Great Flexibility for ChangesGreat Flexibility for Changes

Small Financial Risks for PCMSmall Financial Risks for PCM

Disadvantages of Pure Disadvantages of Pure CMCM

Participants Must All Be Cooperative and have Open Participants Must All Be Cooperative and have Open CommunicationCommunication

All Parties Must Be Committed from the BeginningAll Parties Must Be Committed from the Beginning

Small Incentive for CM (they get paid anyway)Small Incentive for CM (they get paid anyway)

High Risk of Loss of ReputationHigh Risk of Loss of Reputation

Central Artery / Big DigCentral Artery / Big Dig

Source: http://www.bigdig.com

Central Artery / Big DigCentral Artery / Big Dig Most Complex Highway Project in American HistoryMost Complex Highway Project in American History at that time at that time The Project Consists of Building 161 Lane Miles of Urban Highway – The Project Consists of Building 161 Lane Miles of Urban Highway –

About Half Underground in a 7.5-Mile CorridorAbout Half Underground in a 7.5-Mile Corridor Planning for the Central Artery/Tunnel Project Began in 1982Planning for the Central Artery/Tunnel Project Began in 1982 Congress Approved Funding and the Project's Basic Scope in April Congress Approved Funding and the Project's Basic Scope in April

19871987 Construction Schedule: 1991 - 2006Construction Schedule: 1991 - 2006 Estimated Cost: $14.624 BillionEstimated Cost: $14.624 Billion Section Design consultants: 100Section Design consultants: 100 The CA/T Consists of 118 Separate Construction Projects & 26 The CA/T Consists of 118 Separate Construction Projects & 26

Geotechnical Drilling ContractsGeotechnical Drilling Contracts During Peak of Construction (1999-2002):During Peak of Construction (1999-2002):

Work Completed per Day: $ 3 Million Work Completed per Day: $ 3 Million Workers on Job Site: 5,000Workers on Job Site: 5,000


Central Artery / Big DigCentral Artery / Big Dig


MTA - Massachusetts Turnpike AuthorityMTA - Massachusetts Turnpike Authority B/PB – Joint venture of Bechtel & Parsons B/PB – Joint venture of Bechtel & Parsons

BrinkerhoffBrinkerhoff

OwnerMTA

C/MB / PB

Trade Contractors


Section Design Consultants

Construction Management Construction Management at Riskat Risk

Owner

Trade contractor

C/M

Trade contractor

Trade contractor


A/E


Construction Management Construction Management at Riskat Risk

Contractual Relationships between CM and Trade Contractual Relationships between CM and Trade ContractorsContractors

CM usually Guaranteeing Maximum Price (GMP) CM usually Guaranteeing Maximum Price (GMP) to Give the Owner Security that the Project Will to Give the Owner Security that the Project Will Be Built within BudgetBe Built within Budget

Advantages CM at RiskAdvantages CM at Risk

Reduced Owner’s Risk for ConstructionReduced Owner’s Risk for Construction

Disadvantages CM at Disadvantages CM at RiskRisk

Owner takes responsibility for design defects / Owner takes responsibility for design defects /

omissionsomissions

Owner may not have full control on contract Owner may not have full control on contract

changes as desiredchanges as desired

The GMP is A Defined Price for An Undefined The GMP is A Defined Price for An Undefined

ProductProductSource: CII., 1997

Albert and Barrie Zesiger Albert and Barrie Zesiger Sports and Fitness Center, Sports and Fitness Center,

MITMIT

Groundbreaking : October Groundbreaking : October 20002000

Occupancy : 2002 Occupancy : 2002 Designed by the Designed by the

Architectural Firms of Roche Architectural Firms of Roche & Dinkeloo and Sasaki & Dinkeloo and Sasaki Associates Associates

CM @ Risk: Turner CM @ Risk: Turner Construction Co.Construction Co.

Cost : $45 millionCost : $45 million Olympic-class 50-meter pool Olympic-class 50-meter pool An 11,000-square-foot An 11,000-square-foot

Fitness CenterFitness CenterSource: http://web.mit.edu/evolving/projects/zesiger

Albert and Barrie Zesiger Albert and Barrie Zesiger Sports and Fitness Center, Sports and Fitness Center,

MITMIT

Source: http://web.mit.edu/evolving/projects/zesiger

OwnerMIT

Trade Contractor

A/EKevin Roche-John

Dinkeloo & Associates

Trade Contractor

Trade

Contractor


CM @ RiskTurner Construction

Design-BuildDesign-Build

Owner

Sub contractor

Sub contractor

Sub contractor

Contractual RelationshipCommunicational RelationshipInternal Relationship

Construction Function

Design Function

D/B Entity



The Owner hires a Design/Build Firm that will The Owner hires a Design/Build Firm that will complete both Design and Constructioncomplete both Design and Construction

This firm can be a Design/Build Firm but also This firm can be a Design/Build Firm but also a Joint-Venture Firm of a Design Firm & a Joint-Venture Firm of a Design Firm & Construction Firm for this specific projectConstruction Firm for this specific project

The Design/Build Firm hires subcontractorsThe Design/Build Firm hires subcontractors


One Contractual Team Responsible for Design and One Contractual Team Responsible for Design and Construction FunctionConstruction Function

Owners put More Emphasis on Schedule Owners put More Emphasis on Schedule

Owner with Enough Knowledge about Design and Owner with Enough Knowledge about Design and Construction to Establish the Initial Parameters, Construction to Establish the Initial Parameters, Review Proposals and Monitor the ProcessReview Proposals and Monitor the Process

Advantages of DBAdvantages of DB

Allows fast tracking Allows fast tracking

Good interactions among Design & Construction Good interactions among Design & Construction participants participants

Easier incorporation of changes in most casesEasier incorporation of changes in most cases

Good for complex projectsGood for complex projects

Disadvantages of DBDisadvantages of DB

Pricing isn’t possible at the beginningPricing isn’t possible at the beginning

Risk of sacrificing quality to protect profitRisk of sacrificing quality to protect profit

May take a direction that the Owner does not May take a direction that the Owner does not really wantreally want

Lack of checks and balancesLack of checks and balances

Alameda CorridorAlameda Corridor

A 20-mile Railroad Expressline A 20-mile Railroad Expressline that Connects the Ports of Los that Connects the Ports of Los Angeles and Long Beach, CAAngeles and Long Beach, CA

Construction Schedule: 1997-Construction Schedule: 1997-20022002

Estimated Cost: $2.4 Billion Estimated Cost: $2.4 Billion Alameda Corridor Alameda Corridor

Transportation Authority Transportation Authority Governing Board Constituted of Governing Board Constituted of Seven MembersSeven Members

The Alameda Corridor Consists The Alameda Corridor Consists of 25 Construction Projectsof 25 Construction Projects


Alameda CorridorAlameda Corridor


OWNERAlameda Corridor

Transportation Authority (ACTA)

Program ManagerAlameda Corridor Engineering Team

Retondo Junction

Design EngineerHDR, Inc. &F.R.Harris

Construction Manager Lim & Nascimento Eng’g

Corporation

ContractorShimmick Construction Inc.

& Obayashi Corporation

Mid Corridor

Design EngineerParsons Transportation

Group - HNTB

Contractor Tutor – SalibaCorporation

Henry Ford Avenue

Design EngineerParsons Transportation

Group - HNTB

Construction Manager Parsons Brinkeroff

Construction

ContractorShimmick Construction Inc.

& Obayashi Corporation


Modified CM Modified CM Design/Build:Design/Build:

Design SubcontractedDesign Subcontracted

OWNER

CMDESIGN/BUILDER

ARCHITECT/ENGINEER

SUB-CONTRACTOR

SUB-CONTRACTOR

SUB-CONTRACTOR

SUB-CONTRACTOR

Modified CM Design/Build(CM Serves as Design/Builder and Subcontract Design)

Source: Potter, 1995

CM Oversight CM Oversight Design/BuildDesign/Build

CM Oversight Design/Build(CM Provides Agency Oversight on Owner’s Behalf)

OWNER

DESIGN/BUILDCONTRACTOR CM

SUB-CONTRACTOR

SUB-CONTRACTOR

SUB-CONTRACTOR

SUB-CONTRACTOR

Source: Potter, 1995

Combination– Combination– Build/Operate/TransferBuild/Operate/Transfer

Facility financed, designed, built, and operated by Facility financed, designed, built, and operated by a private developera private developer

Legal way to “lease” to a concessionaire for a Legal way to “lease” to a concessionaire for a fixed time period government-owned/ fixed time period government-owned/ government-built facilitiesgovernment-built facilities

Concession that at the completion of the Concession that at the completion of the concession period, the facility is “returned” to the concession period, the facility is “returned” to the original owner (government agency)original owner (government agency)

The government may guarantee a level of service The government may guarantee a level of service & pay if it is short& pay if it is short

Either agreed-upon price or as payment for the Either agreed-upon price or as payment for the concessionconcession

Designed to take advantage of lower cost or “tax Designed to take advantage of lower cost or “tax free” funding provided by governmentsfree” funding provided by governments

The Channel Tunnel, England-The Channel Tunnel, England-FranceFrance

Source: Winch, 1998

A 50 Km undersea / underground A 50 Km undersea / underground tunnel connecting England to tunnel connecting England to FranceFrance

Infrastructure consists of two Infrastructure consists of two main tunnels and one service main tunnels and one service tunnel (located in the center) tunnel (located in the center)

Construction Schedule: 1987-Construction Schedule: 1987-19941994

Estimated Cost (1987 Dollars): Estimated Cost (1987 Dollars): $9.1 Billion $9.1 Billion

Actual Cost on Completion (1994 Actual Cost on Completion (1994 Dollars): $21 Billion Dollars): $21 Billion

Eurotunnel, a consortium of Eurotunnel, a consortium of Channel Tunnel Group (British Channel Tunnel Group (British Contractor) and France Manche Contractor) and France Manche (French Contractor) is the owner (French Contractor) is the owner and operator of the channeland operator of the channel

The English Channel Consists of The English Channel Consists of Multiple Construction ProjectsMultiple Construction Projects

The Channel Tunnel, England-The Channel Tunnel, England-FranceFrance

Source: Winch, 1998

Four Main Delivery Four Main Delivery Systems: Systems: Relationships Between Relationships Between

ParticipantsParticipants

Design-Build

Owner

General Contractor

SubcontractorSubcontractorSubcontractor

A/E

Traditional Design-Bid-Build

Owner

Trade contractor

C/M

Trade contractor

Trade contractor

A/E

Pure or Agency Construction Management

Owner

Trade contractor

C/M

Trade contractor

Trade contractor

A/E

Construction Management at Risk

Owner

Sub contractor

Sub contractor

Sub contractor

Construction Function

Design Function

D/B Entity


Internal Relationship


Advantages of the 3 Most Advantages of the 3 Most Common Delivery Common Delivery

MethodsMethods

Type of contracts Trad

ition

al Ap

proa

ch

Desig

n Buil

d

Cons

truc

tion

Man

agem

ent

AdvantagesLegal and contractual precedent XCost determined before contract commitment XFast-tracked construction allowed X XMinimum owner involvement X XCost benefi t f rom competition X XNegotiation with quality contractor for unique expertise X XAllow adjustment to new conditions without changing agreement X XSingle fi rm control of design/ construct process X

Adapted from: Gould & Joyce, 2003

Disadvantages of the 3 Most Disadvantages of the 3 Most Common Delivery MethodsCommon Delivery Methods

Type of contracts Trad

ition

al Ap

proa

ch

Desig

n Buil

d

Cons

truc

tion

Man

agem

ent

DisadvantagesDesign does not benefi t f rom construction expertise XDesign construction time is the longest XAdversarial relationship owner/ designer vs contractor XContract agreement aff ected by changes XFew checks and balances XCost control occurs late in project XContract amount may be complicated by continual contractor negotiations XContract agreement aff ected by unforeseen conditions X

~x~x

~x~x

Adapted from: Gould & Joyce, 2003

CM @ Risk, DB, & DBB - CM @ Risk, DB, & DBB - ComparisonComparison

Adapted from: CII, 1997

Study Study conductedconducted by CII (Construction Industry by CII (Construction Industry Institute) on 350 construction projectsInstitute) on 350 construction projects

Provides industry with considerations to aid in Provides industry with considerations to aid in delivery method selectiondelivery method selection

Key project data for projects under a certain Key project data for projects under a certain delivery system were collected. These include:delivery system were collected. These include: Design & construction cost growthDesign & construction cost growth Design & construction schedule growthDesign & construction schedule growth Construction Speed (Sq. Ft./Month)Construction Speed (Sq. Ft./Month) Quality / Turnover: startup difficulty, call backs, Quality / Turnover: startup difficulty, call backs,

operations & maintenanceoperations & maintenance



Design & construction cost growth = 100 * (Final Project Cost – Contract Award Cost)/ Contract Award CostDBB has highest cost growth at 4.83 percent DB has lowest cost growth at 2.17 percent

Design & construction schedule growth = 100 * (Total As Built Time – Total As Planned Time)/ Total As Planned TimeDBB has highest schedule growth at 4.4 percent DB & CM@R have zero schedule growth



Construction Speed (Sq. Ft./Month) = [Area / (Total As Built Construction Speed (Sq. Ft./Month) = [Area / (Total As Built Time in Days/30)] Time in Days/30)]

DB & CM@R have median in 8,000 to 9,000 square feet per DB & CM@R have median in 8,000 to 9,000 square feet per monthmonth

DBB has median in 5,000 to 5,500 square feet per monthDBB has median in 5,000 to 5,500 square feet per month



Quality / Turnover (after Quality / Turnover (after construction): startup difficulty, call construction): startup difficulty, call backs, operations & maintenancebacks, operations & maintenance

Responses are sought with great Responses are sought with great objectivityobjectivity

Reponses are from facility ownersReponses are from facility owners

Quality is represented on a scale of 1 Quality is represented on a scale of 1 to 10 to 10

Higher scores represent lower Higher scores represent lower difficulty in start-up & fewer call difficulty in start-up & fewer call backsbacks

DBB provides least quality levelDBB provides least quality level

Lecture 3 Project Organization Part 1

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