The Builder November 2011, Volume 15 Issue 3

A Builders Association Publication

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New York State Of GrindNew York State Of Grind

Lean SceneLean Scene

Hope On FireHope On Fire

Back To The TrumpBack To The Trump

Building Trades Employers Association chief Lou Coletti shares what’s happening on the labor scene in New York City...and how

those same issues could impact Chicago and other parts of the country in the coming years. Page 6

AGC of America Building Division Chair Chuck Greco headlines Builders Association’s Annual Meeting.

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Association’s latest educational seminar: Lean & Green for Project Managers and Superintendents. Page 4

Learn which sectors of the industry AGC Chief Economist Ken Simonson expects some heat from

in the next few years. Page 3

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AGC of America

HeartbreakingCutbacks

Tom Petty music best describes AGC’s stance against continued legislation potentially impacting

construction fi rmsBY STEPHEN SANDHERR

AGC of America CEO

Note: The following editorial appeared recently in the AGC’s Constructor Magazine. Your dues to the Builders Association cover your membership in the AGC of America, the nation’s largest and most effective voice for construction. The AGC continues to fi ght for your business and other construction industry fi rms at the national level.

If you are a fan of the music of Tom Petty, you are probably familiar with his song “I Won’t Back Down.” It’s a song I think about a lot these days as we spend more and more time pushing back against a host of Washington measures that will make life more diffi cult and expensive for our member fi rms.

During the past three years, we haven’t backed down on our efforts to cancel, delay or fi x a multitude of regulatory measures proposed by the Obama administration. For example, the administration wants new stormwater runoff rules that will require contractors to spend money installing an array of devices designed to keep mud from escaping construction sites. AGC led the fi ght against this rule because the Environmental Protection Agency couldn’t guarantee that the required measures would work, nor was the EPA even close to saying how much mud should be allowed to escape from construction sites. Now the EPA has announced it will delay this rule until the agency can prove it will work and defi ne how much mud is allowed to escape sites. While we are glad the EPA is delaying, we want the rule done away with, and we will continue to fi ght it.

At the same time, the administration is pushing its safety inspectors to focus on writing fi nes instead of fi nding ways to partner with fi rms to reduce injuries and eliminate workplace fatalities. The president’s personnel want to force contractors to spend more time fi lling out paperwork to prove they are hiring minorities, women and veterans. They insist on holding employers accountable for the government’s failure to enforce the nation’s immigration laws. And they are making it harder for contractors to work on public projects unless they accept government-mandated project labor agreements.

Meanwhile, we’ve been pushing back against a series of shortsighted budget cuts that disproportionately impact construction while out-of-control entitlement spending continues unabated. Of the $38 billion in funding cuts Congress made earlier this year,

more than $22 billion of the reductions impact construction programs. The problem is that cutting capital investments will only force taxpayers to spend more to fi x broken infrastructure later than it would to maintain it now. This fi scal myopia won’t cut the U.S. defi cit, and it certainly won’t boost our economy.

Now we fi nd ourselves fi ghting for the very existence of a host of federal infrastructure programs. In late July, we had to act to get several billion dollars’ worth of airport construction projects restarted after Congress failed to pass expiring aviation legislation because of a dispute over airline labor policy and rural airport subsidies. However, we continue to educate Congress and the administration on the need to pass a fully funded, six-year surface transportation bill for repairs to our aging highways and bridges.

We’re just fi nishing our long fi ght against a new law set to go into effect in 2013 that would have forced virtually every public agency to withhold 3% of all payments contractors receive for services provided. As we learned from the hundreds of responses AGC members submitted to our recent survey, the new withholding tax would have infl ated the cost of public construction, forced unneeded layoffs and make it more expensive for contractors to raise capital and bond their projects.

Nov. 21, President Obama signed into law the 3 Percent Withholding Repeal and Job Creation Act. The law permanently repeals the requirement that federal, state, and large local governments begin withholding 3 percent of each payment, the culmination of a fi ve-year effort by AGC.

Considering these onerous measures being imposed on already pinched contractors, is it any wonder our economy doesn’t seem to be picking up steam? Until Washington fi gures out that we can’t regulate our way to a more prosperous future, AGC will work to make sure each of you has an opportunity to thrive. We are not going to back down as we rebuild the construction industry and restore economic growth.

Stephen Sandherr speaks at a Builders Association Annual Meeting. The AGC’s CEO has pressed hard on Washington offi cials to create a more business-friendly climate.

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Financial

After a fi ve-year slide in construction spending, it is tempting to believe that the industry will be “back to normal” sometime in the next fi ve years. But it’s more likely some segments will never match their peaks of the last decade, whereas other categories will far exceed past levels.

The rapid growth of shale gas drilling in several parts of the country is likely to produce long-lasting changes in the economy and in demand for some types of construction. Already, the Marcellus shale in western Pennsylvania has led to modest growth in demand for roads, pipelines, hotels and housing. Recently, Dow and Westlake Chemicals have announced multi-billion dollar investments in chemical plants that will make use of Marcellus and other shale gas as feedstocks.

How rapidly the effects spread will depend on the degree of state—and possibly federal—regulation of the hydraulic fracturing (“hydrofracking”) needed to bring the gas up, but growth appears assured.The outlook seems favorable for alternative power construction from various sources, as more states adopt “renewable portfolio

standards” that require utilities to produce or buy power from sources that are not carbon-based.

Whether the facilities that are built use wind, solar, geothermal, biomass, hydropower, ocean currents, nuclear or other sources will vary with the region, technological advances, regulatory and tax incentives. But demand for “clean” power of some kind, and for transmission lines to deliver it to customers hundreds of miles, will keep growing as the economy and population expand and more coal-fi red plants are shut down.Demand for medical facilities is likely to intensify.

Many people assume this is a natural result of the aging of baby boomers. But that is a gradual process and is offset in part by lower demand for obstetric and neonatal facilities.

The biggest drivers for healthcare construction will be the continuing technological evolution of diagnosis and care, along with pressure to reduce costs. Hospitals will need to be rebuilt and more specialized structures erected.

There may be a revival of manufacturing and distribution construction—two sectors that were very hard-hit in the past two years. The disruptions to airfreight deliveries caused by the Icelandic volcanic eruption last year and the threats to global

supply chains this year from uprisings in North Africa and the triple disaster in Japan may convince more manufacturers to base production, or at least inventories, in the United States. High fuel and transportation costs, growing congestion, and a shift in consumer spending toward Internet purchases are encouraging the construction of optimally located and confi gured warehouses and fulfi llment centers.

On the downside, there is unlikely to be enough tax revenue—or will—at any level of government to fund prior levels of public construction. The huge overhang of unsold homes, tighter mortgage lending standards, and possible reluctance of households to commit to buying homes (giving the diffi culty of selling when needed and the uncertainty of making a profi t) will hold down home construction but also help multi-family rental construction. And the shift from brick-and-mortar to Internet retail sales, along with a possible trend toward living closer to central cities, will keep retail construction—especially of big-box stores and shopping centers in far-out suburbs—well below previous peaks.

Contractors who can adapt to these changing markets can thrive in the next fi ve years. But they will have plenty of competition, as the overall ratio of construction to gross domestic product may not reach prior peaks.

What’s In Your Future?You won’t be getting any Olympic work for 2016,

but AGC Economist has an idea of what you WILL be working on between now and then

Ken Simonson

The construction industry lost 20,000 jobs between September and October as the industry’s unemployment rate hit 13.7 percent, according to an analysis of new federal employment data released recently by the Associated General Contractors of America. Association offi cials said the employment drop refl ects continued declines in public sector investments.

“Declining public sector demand for construction, combined with slow growth in private sector demand, is keeping construction

employment mired in a cycle of small gains followed by small losses,” said Ken Simonson, the association’s chief economist. “Boosting investments in key infrastructure and other projects would certainly help with construction employment while the economy continues to recover.”

Total construction employment now stands at 5,525,000, down nearly 0.4 percent compared to September.

Construction Unemployment Climbs Back Up Near 14 Percent

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Building Processes

What Is Lean, And How Can It Help?Association Seminar Covers Benefi ts In Company Time, Effi ciency

BY MARY DEMOSS

What is lean construction, and what obstacles must it clear for widespread use in the construction industry? These questions and more were discussed by University of Wisconsin Professor John Nelson, who presented Lean and Green: Contrasting Fundamentals to Current Practice to Builders Association fi eld personnel in November.

Nelson explained the importance of

both lean and green construction in today’s industry, the similarities and differences between the two and how customer demand is driving the marketplace for each. Lean construction, Nelson said, addresses poor value proposition, meaning clients are expecting more for less.

“Industry performance is not developing with the way most jobsites now operate,” he said.

“Dysfunctional project teams form, there’s confusion between company and

customer loyalty and all of this results in a misalignment of the project goals.

“These factors can greatly impact the manufactured project over time. While green construction addresses critical resource constraints like energy and fuel, lean addresses what’s actually happening every day on the project.”

With a new approach to building comes a new vocabulary, and Nelson addressed the phrases and defi nitions that fi eld personnel will need to get used to in the coming years. Among the items discussed:

Does LEED mean green?Does LEED mean lean?Does IPD fi x communication problems?Does lean fi x chronic productivity problems?

“Lean construction isn’t new tools,” Nelson stated. “It’s a complete shift in philosophy.

“Lean changes the process by eliminating unneeded steps and it’s essential to measure the impact it’s having as you’re going along. Those measurable can include attitude or culture, results, time and money.”

Nelson identifi ed tools that are useful in keeping projects “Lean oriented” at all times, including reverse planning and scheduling, utilizing target valuing, solving the leadership challenge, collaborating but with accountability and consequences, having an effective core team, committing to reliable promising, utilizing value stream mapping, and utilizing set based design. Nelson stresses the importance of using these tools because if not the concept of using Lean construction is diminished.

Nelson reinforced that Lean construction can be successful, but it must be implemented correctly. In order to be implemented correctly the tools of Lean construction must be present and there needs to be accountability, consequences, and measuring at all times of the project. Nelson ended the seminar by expressing the best way to implement Lean construction is through talent and time invested in learning and educating.

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John Nelson’s seminar to Builders Association members covered where lean and green cross paths, and how owners are asking for both with increasing frequency.

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Building Processes

Lean LexiconLean LexiconThe New Jobsite VocabularyThe New Jobsite Vocabulary

ObsoleteObsolete

CPM scheduleCPM schedule

Milestone estimatesMilestone estimates

Project ExecutiveProject Executive

“Preconstruction” phase“Preconstruction” phase

“Submitted for review & “Submitted for review & approval”approval”

Reactive problem solversReactive problem solvers

LeanLean

Pull planning; last plannerPull planning; last planner

Target valuesTarget values

Core Team MemberCore Team Member

Seamless integrationSeamless integration

Submitted for confi rmationSubmitted for confi rmation

Proactive planners and Proactive planners and “followers through”“followers through”

The University of Wisconsin’s John Nelson hammered home his point about lean construction benefi ts during October’s seminar with a very specifi c case study.

Construction of the Wisconsin Institutes for Discovery was intended to be a Lean and Green construction project. The vision for this project’s usefulness and its construction included:

An interdisciplinary research collaboration A town center An Integrated teaching and research communityA national model research instituteA 100 year buildingSustainable designLean project delivery

The initial budget and milestone schedule for the project were drafted in September 2006. Challenges faceing the project team included being an initial reference point, a

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lack of example projects and a struggle to understand exactly what “lean” meant.

Once the project team had a handle on the concepts, though, the project proved successful. LEED Gold Certifi cation was achieved and the project easily cleared many of the lean and green goals it had

Institues For Discovery: A Case Studyset. It fell short of true lean construction, however, as there was no easy way to implement communication terms.

Nelson was quick to point out that, while it fell short of a true lean project, this study provided a base for those perfecting the techniques on later buildings.

Thanks To Our 2012 Double Diamond Sponsor...

Interested in the benefits of being a Diamond or Double Diamond sponsor? View our Sponsortunities brochure online or contact Stacey Kelly at skelly@bldrs.org.

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Lou Coletti of New York’s Building Trades Employers Association speaks with Doug Anderson of Interior Construction Group and MARBA Executive Director Carol Lord duing the reception that followed our labor seminar. On the opposite page, a full room hears Coletti’s presentation on the status of union labor in NYC.

Planning For Change

The New York Plan – and with it Union builders – had been a staple of the construction market in the nation’s largest city for over a century. The document had provided procedural rules to solve jurisdictional disputes and ensure the use of union contractors. Its lifetime saw two World Wars, four Buffalo Bills Super Bowl losses, 11 Star Trek movies and who knows how many Kardashian weddings.

The Plan that had been in effect since 1908 saw its end in 2011 due in part to the efforts of the Building Trades Employers Association (BTEA), the loss of union market share in New York and aggressive tactics by union leaders. In October, Builders Association members were able to hear about the state of union construction in New York City and how it may impact other regions straight from the horse’s mouth.

“It’s a complete breakdown in communication,” said BTEA President Lou Coletti during the Builders Association’s Oktoberfest event. “In the end, we might have gotten some of the things that we wanted, but the head of our Building Trades hasn’t spoken to me since March. That’s not good for anyone who wants to keep building union. Keeping those lines of communication open is still important.

“I would view what we did as a cautionary tale, not an example of what to do. I feel like we were too aggressive in a lot of ways.”

Some of the recent changes in New York were foisted on both contractors and unions by an organized group of owners who demanded that both groups increase the productivity of union construction by 25 percent. Builders Association President Albert Leitschuh made it a point to bring Coletti in to speak to members, and believes that owners could drive a number of changes in the Chicago market, as well.

“It isn’t just about the economy,” Leitschuh stated. “It’s about the potential for permanent change in the way buildings are built and paid for. It’s about the ability to continue to create and sustain good union construction jobs in this area.

“We all know that projects built union are built safer, faster and of higher quality. Our members want to continue building projects with union tradesmen. The reality, however, is that union construction has become increasingly expensive and we can no longer ignore the potential threat posed by non-union competitors in this market.”

Coletti’s organization represents 26 contractor associations and over 1,200 union contractors in the New York area. As talks broke down during the last negotiation session and the BTEA weighed its options, Coletti said the media and owners proved to be valuable assets when it came to getting management’s message out.

“It’s incredibly expensive, but I don’t regret going to the media with some of our issues,” Coletti said. “It got us to their rank-and-fi le, and people started asking questions. Getting your point across to the union members is extremely important, no matter how it gets done. You can’t keep them in the dark on your perspective, because you know what they’re hearing at their meetings. You have to be honest with them about what you want and why it’s important.

“Owners were organized and behind us, and that is absolutely critical. No matter what happens here in Chicago or anywhere else, owners are going to be critical to driving that change. We’ve heard from some about cutting the contractor organizations out entirely. Our response essentially was ‘Go right ahead. You be responsible for withdrawal liability. You go sit with them in negotiations. See how long you last.’”

As for the current state of union construction in New York City, Coletti says there’s still a lot of confusion and change on the way. What it means nationwide could be anyone’s guess, but he doesn’t believe that the changes impacting New York City will stop there.

For now, public work is still solid from a union standpoint in his state, as much of the marketplace erosion he’d discussed had taken place on the private side.

End Of New York Plan Could Make Signifi cant Waves

AssociationAssociation

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““This industry is changing, and it’s happening now,” Coletti said. “The best thing you can do for yourself is to fi gure out how your business can make those transitions. Are you going to shape what happens, or react to what happens?

“Nobody wants to build non-union, but you’ve worked too hard

Enterprise Fleet Management1955 Techny Road, Suite 2

Northbrook, IL 60062Darin Walsh, Regional Sales Manager

847-564-7800; www.efl eets.comEnterprise offers local fl eet management solutions, offering maintenance, acquisition, fi nancing, disposal and more. The AGC of America has partnered with Enterprise Fleet Management to offer members discount prices on fl eet vehicles and comprehensive fl eet management programs.

Sachi Construction, Inc.1510 Midway Court, Suite E204

Elk Grove Village, IL 60007Rohit Patel, President

847-806-3600; www.sachiconstruction.comSachi Construction, Inc. provides general contracting and construction management services. Sachi also performs as a concrete subcontractor. In business since 2001, Sachi can handle all kinds of projects including ground up, renovation, demolition and addition. Previous projects have been in the industrial, commercial, religious, medical and environmental fi elds.

New MembersShefsky & Froelich Ltd.

111 E. Wacker Drive, 28th FloorChicago, IL 60601

Elizabeth Boddy, Senior Counsel312-836-4084; www.shefskylaw.com

Shefsky & Froelich Ltd. is a law fi rm that serves in representing contractors, subcontractors and fi nancial institutions.

Thanks to Howard Strong and Steve Lenz of The George Sollitt Construction Company for referring new members to the Builders Association in 2011. If you work closely with a fi rm you feel would benefi t from Association services, contact Denise Herdrich at 847-318-8585 or dherdrich@bldrs.org.

Association

to build up your company. Something has to change.”The seminar was followed by a Member Appreciation event at

the Oak Brook Hills Marriott Resort. For more information on the New York Plan, the seminar or any labor issue, contact Denise Herdrich at the Builders Association (847-318-8585).

Association

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Boyd Black

Annual Meeting Honor Roll

The University of Chicago’s AVP of Capital Project Delivery and two companies who have made it a point to give back to the communities in which they build will be honored during the Builders Association’s Annual Meeting Thursday, December 15, at the Trump International Hotel and Tower.

The Builders Association is proud to present its Community Builder Award to Boyd Black and Corporate Citizenship Awards to Airtite Contractors, Inc. of Elmhurst and Industria, Inc. of Chicago.

Among this year’s featured speakers is Linbeck Group CEO Chuck Greco, the Chair of the AGC’s Building Division as well as the Lean Construction Forum recently formed by the AGC. Greco will discuss the advantages his business has realized by incorporating lean into Linbeck’s corporate philosophy. Other highlights will include the unveiling of our Builders Education and Training Foundation and our new jobsite safety initiative, SafeSite.

The Builders Association thanks those businesses who have already committed to sponsor this meeting:

Platinum Sponsor Chicago Area LECET/Labor Management Cooperation CouncilPlatinum Sponsor Chicago Regional Council of CarpentersGold Sponsor Conway & MrowiecGold Sponsor Ogletree Deakins Nash Smoak & StewartGold Sponsor Pepper Construction Gold Sponsor Thorne Associates, Inc.Silver Sponsor AthletiCoSilver Sponsor Joseph J. Duffy Company

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The Community Builder Award recognizes individuals who have worked tirelessly to make Chicago a better place to work and live. The Corporate Citizenship Award honors a Builders Association member for its philanthropic contributions and steadfast dedication to community service.

Boyd Black, University of ChicagoThe Builders Association honors Boyd

Black for his contributions to increasing productivity in Chicagoland’s construction community. Mr. Black has helped oversee an unprecedented string of award-winning construction projects at the Hyde Park Campus and is a career-long advocate of innovative project management techniques including green building, Building Information Modeling and lean construction.

Mr. Black joined the University of Chicago’s staff in 2008 after several years managing design and construction projects for the University of Illinois. He has over 30 years of experience as a registered architect and has served on a number of national committees, including his current term as Board President of the Construction Owners Association of America.

Previous Community Builder Award winners:

2006: Mayor Richard M. DaleyEddie Read, United Services of Chicago2007: Illinois Senate President Emil Jones Jr.2008: Martin Umlauf, Chicago Regional Council of CarpentersDr. Wayne Watson, City Colleges of

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Chicago2009: Tom Broderick, Chicagoland Construction Safety CouncilGeri Harston, ACE Technical Charter High School2010: Jeanne Gang, Studio Gang ArchitectsCharles Murphy, Ogletree Deakins

Airtite Contractors, Inc.The Builders Association honors Airtite

Contractors for its outstanding philanthropic commitment, generosity to the community and empowering its employees to make a difference. Throughout the year Airtite has done several projects for Habitat for Humanity, donated to blood and toy drives and worked with One Small Voice - an organization benefi ting children with brain disorders.

Industria, Inc.The Builders Association is proud to

recognize Industria, Inc. for its outstanding commitment to providing career opportunities within the Chicagoland construction industry to veterans. Industria works with its partners in the industry to provide employment for ex-military personnel through programs such as Helmets To Hardhats and Hire A Hero.

Previous Corporate Citizenship Award winners:

2008: Seyfarth Shaw LLP2009: Ujamaa Construction, Inc.2010: Adjustable Forms, Inc.

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Association

HigherEducation

Case Foundation Provides Solid Start For Groundbreaking University Project

Roosevelt University’s soon-to-be-completed educational facility on Wabash Avenue will give it the second tallest educational structure in the nation, and two Chicago landmarks side-by-side (photo credit: Roosevelt University).

Anyone who ever watched Will Perdue play for the Bulls could tell you that “tallest” doesn’t necessarily mean “best.” That being said, Roosevelt University’s new structure downtown is something to be marveled at both in height and quality compared to other educational structures, and it’s a marvel that Case Foundation Company is proud to have played a part in.

When completed in March of 2012, the 32-story, 469-foot-tall structure standing by the National Historic Auditorium at 425 South Wabash Street will be the second tallest university building in the country and sixth tallest in the world. This vertical campus will also hold occupancy for more than 600 students, a recreation center and dining hall to accommodate 300 people at one time, meeting rooms for student activities, a variety of classrooms and space for both science labs and the business college.

The new Roosevelt building will stand beside the historic Auditorium Building completed in 1989, which was one of the tallest buildings in Chicago. Beneath the Auditorium’s iron columns and below the perimeter walls were “wedding cake” style stacked masonry blocks. The Roosevelt Building has more modern foundation - belled caissons. Case Foundation was brought in to drill rock and belled caissons (24 in all) approximately 40 feet deep around the site perimeter to protect the underpinnings of the Auditorium.

“One of the most interesting aspects of the project is how the caissons were designed and installed to number one, avoid hitting the 1968 caissons in the ground and number two, prevent any ground disturbance that would induce further settlement and damage to the historic Auditorium next door,” Case President Robert Schock explained. “Most of the new caissons were placed to miss the Crown Center caissons, which had belled diameters of up to 12 feet, but near the core

of the new building where the loads were greatest, it was not possible to relocate the new building’s columns and foundations to miss the old.”

Therefore, the only solution was to bypass the existing bells and to extend new caissons to rock at a depth of 100 feet.

“Several of the large eight and nine feet diameter caissons in the core were placed closely to the old caissons, which required us to core through the sloping side of the 1968 bells before we could resume drilling down to bedrock,” Schock said, noting that steel casings were advanced into the ground to prevent “squeezing” movement of the soft clay.

“Below 40 feet, the shafts were fl ooded with premixed water-based polymer slurry, which maintained positive fl uid pressure in the shafts as they were excavated down to rock. The reinforcing cages were installed

and the concrete was placed by pump from the bottom up, displacing the slurry, which was cleaned and processed for re-use.”

This type of approach to caissons and other groundwork was relatively new to the Chicago area, but has been used successfully in other markets by Case Foundation in diffi cult ground conditions, giving Schock a number of successful case studies to build from.

“It was a challenging project, but we were fortunate to be working for a great developer and a great contractor,” Schock said.

“It took a strong team to overcome the caissons and the other challenges, including logistics on a very crowed downtown site. We very much enjoyed being part of the team for this beautiful new structure surrounded by some unique Chicago subsurface history.”

Project Spotlight

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Out & About

(Top) Joseph Carini of Johnson & Bell, Ltd. delivers a presentation on liability for jobsite accidents to a packed house of safety professionals at November’s Safety Forum. (Middle & Left) Four Builders Association members were honored with ACE Tech Heroes Awards at the school’s Gala in October, including Clark Construction (represented by Mark Eames), Thorne Associates, Inc. (represented by Dana Thorne), Independent Mechanical Industries and Oakley Construction.

Chicago’s Old Town School of Folk Music will open its new East Building in Lincoln Square January 9, 2012. The facility, constructed by Bulley & Andrews, LLC, features a LEED Gold-level design, 3 new dance studios, 16 new acoustically engineered classrooms and many other state-of-the-art design elements. The Grand Opening and ribbon-cutting ceremony launch a 55-day celebration of the School’s 55th Anniversary.

Other news from around our membership:

Case Foundation Company worked on Best Multifamily Residential Project as named by ENR Midwest’s Best of the Best for 2011 (200 Squared at Lake and Wells), and Bulley and Andrews, LLC worked on Urban Development Award of Merit winner Midway Crossings at the University of Chicago. Bernhard Woodwork has been named the safest woodworking shop in the United States for the second time in three years by the Architectural Woodwork Institute. The AWI is a non-profi t representing nearly 4,000 architectural woodworkers, suppliers, design professionals and students around the world. Bernhard Woodwork President Mark Bernhard accepted the award at the organization’s Annual Convention in Charlotte.Logan Hollobaugh of Ogletree Deakins authored a column in the AGC of America’s Constructor Magazine on managing subcontractor risk and meeting sustainability goals. Partner Ian Morrison of Seyfarth Shaw LLP was quoted in American Lawyer Magazine on Seyfarth’s successful defense of Motorola in a Class Action suit in front of a Chicago Federal District Court judge.

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Folksy Celebration

For Old Town

Member Milestones

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Membership Milestones

11

BY BILL SPRAGINSFMI

Reprinted with permission

Results of team evaluations FMI has performed on partnered projects during the last seven years indicate that trust and the timely resolution of issues are linked in their impact on overall effectiveness of project teams. The evaluations included more than 1,000 industry personnel on 31 ongoing projects of varying types since 2002.

The common thread among the projects is that all maintained consistent, ongoing partnering processes that included conducting these evaluations on at least a quarterly basis through the life of the projects. More than 60% of the projects held quarterly executive-level sessions in addition to the evaluation process. The results suggest those project teams that invest more in the development of the building blocks of trust are more likely to be rewarded in cost savings as it relates to

the resolution of issues.

THE STATE OF TRUST IN AMERICA TODAY

The signifi cance of these results can be further appreciated when viewed in the context of the current state of trust within American society. In his book “The Speed of Trust,” Stephen Covey outlines just how far trust has eroded within our culture, including religion, media, big companies, political parties and in comparison to European countries. Additionally, the number of college graduates admitting to have cheated in an effort to gain acceptance to graduate schools is disturbing.

Moreover, these studies were conducted before the collapse of the economy in the fall of 2008!

The implications of the trust factor for construction organizations and their projects are high, given the uncertain nature and varying conditions associated with most projects, the interpretation of the contractual documents from multiple

individuals, and the sheer number of different organizations involved with any given project. The economic impact of trust on construction projects becomes apparent when one considers the amount of time and money that is lost on projects where low levels of trust exist. The time project personnel spend on nonproductive activities, such as letter-writing and case building, only takes time away from the focus all team members should have — on building the project.

Additionally, the ability to resolve the inevitable issues that will arise, whether they involve owner-initiated changes or fi eld conditions, will impact cash fl ow of the parties involved, as well as save on consulting and legal fees at the conclusion of the project if left unresolved. Therefore, the level of trust has a direct economic impact on the viability of a construction project, which falls directly to the bottom line of owner, designer/engineer and

A Matter Of Trust

FMI Survey Takes A Look At Successful Partnerships, And Which Factors Make Them Successful

Feature

CONTINUED ON NEXT PAGE

contractor budgets.Those organizations and individuals that

can rise above current societal perceptions and are perceived as trusting will not only be viewed as true leaders, but also will hold a distinct competitive advantage within their respective markets.

THE TEAM EVALUATIONFMI measures trust and other

key teamwork variables through a straightforward survey that is administered and compiled online. This evaluation is initiated soon after project-level staff have been assembled and participated in the partnering process. The surveys continue on a quarterly basis. The Team Evaluation has a simple 1 to 5 scale applied to fi ve key areas of team dynamics, including:

CommunicationTimely resolution of issuesCooperationMoraleTrust

A score of “4” refl ects “meeting expectations” in a given area. A score of “5” exceeds expectations, and any score of less than “4” is not meeting expectations with a “1” being the worst. Any area scored below a “4” requires a written comment to ensure participants do not give low ratings without a sound basis. While tracking the score trends is important, the highest value comes from the comments generated. These comments provide senior and project leaders with input to develop tactical responses on any issues identifi ed. The intent of the survey is to proactively identify potential relationship issues while still in a “brush-fi re” mode and apply preventive measures before the issues deteriorate toward a “forest-fi re” level.

The results of the survey are based on the most-recent evaluation completed by a given project. The movements of the scores in issue resolution and trust from project to project remain consistent regardless of a number of project characteristics that include:

Industry sectorProject sizePercent completeProject deliveryGeography (projects included those from the East Coast, West Coast and

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the central United States)Participants in the evaluation were

project-management level and project personnel. Senior off-site leaders did not participate to ensure they played an objective role in reviewing the results of the evaluations and developing strategy to enhance team dynamics.

THE LINK BETWEEN ISSUE RESOLUTION AND TRUST

Since becoming involved with the partnering movement in the early 1990s, FMI has suspected that issue resolution was at the heart of team dynamics on design and construction projects, as successful project teams who resolved their issues on a timely basis normally had very high levels of trust. This has fi nally been confi rmed through these evaluations.

The two lowest scoring areas based on the average of all projects and on any individual project are issue resolution and trust. This is true on the highest performing project teams (those with an overall project average above 4) as well as the poorest performing project teams (those with scores

less than 3). As these two areas rise and fall, so follow the averages in other areas.

The detrimental effect a major unresolved issue can have on team trust and morale is immense. Senior leaders of the two lowest scoring projects in this sample did not get the issues resolved, while their peers on the other higher scoring projects did get them resolved, ultimately bolstering confi dence and trust on those projects. Successful projects gear their partnering processes, regardless of project type, toward resolving real project issues and providing a supporting protocol to do so.

OTHER CONCLUSIONSOther conclusions drawn from the results

of the evaluations:Team dynamics have less to do with the specifi c type of project-delivery method utilized and more with how on-site project leaders and off-site senior management lead their teams. It is they who set the working climate on the project and it is they who ultimately affect the behavior of their teams. Although project delivery

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Students Who Have AcknowledgedCheating To Improve Odds Of Getting

Into Graduate School:75% Business students

63% Law and medical students52% Education students43% Liberal arts students

Source: “Speed Of Trust,” Stephen M.R.Covey; FMI Management Consulting

Organizations:76% observed illegal or unethical

conduct on the job51% have trust and confidence in

senior management36% believe their leaders act with

honesty and integrity

In The U.S.:27% Trust the government

22% Trust the media12% Trust big companies8% Trust political partiesOther downward trends:Healthcare, churches

Trust No OneAs true trust dwindles in our culture – as evidenced by these poll

numbers – that very factor takes on an increased importance when itcomes to jobsite partnerships, according to FMI.

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methods such as design-build and CM-at-Risk have obvious schedule, budget and quality benefi ts associated with them, design-bid-build projects outperformed them in this sample of projects in terms of team dynamics.Smaller projects (less than $50 million) performed the best, indicating that sustained partnering efforts on these size projects can produce superior team efforts. The results indicate project leaders have a wider span of control over team behavior the smaller the project is. As projects get larger, the project leaders’ span of control decreases and they have a bigger challenge in directing the behavior of their teams.As projects draw closer to completion, scores trend higher. Humans are uncomfortable with uncertainty. Projects at an early phase represent a high level of uncertainty as to the potential outcome, given all of the issues that are certain to come. Industry personnel tend to score lower until the end is in sight.

The Team Evaluation has been a part of partnering since the concept’s introduction to the industry in the late 1980s. Yet few project teams have used this consistently as a true management tool to track trends and identify and monitor open issues toward closure. The methodology to get the best, most honest results is to administer and compile the survey in an anonymous forum, allowing participants to provide frank comments without fear of reprisal from peers or senior managers. Enlightened senior managers use the tool to develop actions and communicate with project personnel to improve relationships and project performance.

STRATEGIES TO IMPROVE TRUSTSo which comes fi rst? Results indicate that resolving issues will

promote trusting environments, but what methods of developing trust will translate into getting those fi rst major issues resolved? The following is a starter list of both individual and corporate methods to enhance trust on projects.

IndividualsTalk straight and create transparency in how you communicate with your counterparts from other organizations. This means minimizing surprises and bringing no hidden agendas to the table in meetings.Clarify expectations. Trust breaks down when expectations are not met. Unless you ask what the expectations of others are, you will not know if you can meet them.Deliver results, and exceed the expectations set.Right wrongs. If you made a mistake, admit it and fi x it.Practice accountability, not just of yourself, but of others you work with.Keep commitments. One of the strongest statements you can make about your character is doing what you say you are going to do.

OrganizationsAll organizations should keep the intended outcome of the contract in mind when resolving issues and avoid the use of selective contract language only to their own benefi t. All parties have contractual rights that if implemented may or may not be the best thing for trust, the relationship and the project. Enlightened leaders

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who keep the big picture in mind when resolving issues build the most trusting business climates on projects.

OwnersSelect a project-delivery method most suitable for the given project and then shape the contracts with the other parties to drive behavior that allows the delivery method to fl ourish.Provide reasonable dollar authority to fi eld leaders to keep the project moving as inevitable fi eld issues arise.Recognize how important the construction-administration phase is for the architect/engineer’s interaction with the contractors and ensure there is adequate budget to increase one-on-one face time and properly generate answers and solutions to issues that arise.Plan with and coach the owner as to how the most effi cient construction administration process can be established for the selected project delivery method.Work with the team to establish clear expectations for submissions, RFIs and other key information exchange.Be open to ideas from the contractors on items that will preserve or enhance the quality of the project and will positively impact either the schedule or budget of the project.

ContractorsDevelop big-picture solutions that will help the owner save time and money and further enhance quality, as you enter the project. Develop value-added changes, not just cost-added changes.Do not put the architect/engineer on the immediate defensive by questioning the quality of the documents outright. Remember, you chose to bid/propose on the project based on the documents presented and now you need to become part of the solution.Own up to and be responsible for your own errors, particularly as they relate to schedule. Prematurely defaulting to “impact” and contiguous circumstances as a defense against your own mistakes is an automatic trust buster.Understand your responsibilities in the Quality Assurance/Quality Control arena and do them.

SUMMARYIn order to produce a high-performing team environment, senior

off-site leaders and on-site project leaders must develop solid relationships with their counterparts from the other contractual entities. Optimum relationships are achieved when friendships are developed at these levels of management. When this exists at the senior level, a trusting business environment is more easily transferable to project and fi eld supervision.

The high degree of uncertainty that exists on any project given the constant variable conditions in design and construction is a stressor on trust.

Unresolved issues are the major source of uncertainty; as major issues are resolved, trust and scores tend to move upwards. Therefore, partnering processes, particularly on larger projects, should be focused initially on organizational development, supporting issue resolution protocol, and setting clear expectations for all.

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Membership Benefi ts

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The Builder is published periodically by the Builders Association, a trade association of commercial, industrial and institutional contractors and affi liated industry fi rms dedicated to quality construction in Chicagoland.

2011 Board Of Directors Vice Chairman

Ben JohnstonJames McHugh

Construction Company

TreasurerJimmy Akintonde

Ujamaa Construction, Inc.

Past ChairmanLynn R. Treat

Ryan Companies US, Inc.

Ken Egidi Pepper Construction Company

Leon LaJeunesseCustom Contracting, Ltd.

Mike Mozal Joseph J. Duffy Company

Matt SprenzelInstallation Specialists, Inc.

Brad SwabackJust Rite Acoustics, Inc.

Ray WojkovichBulley & Andrews, LLC

ChairmanHoward Strong

The George Sollitt Construction Company

Jeff Raday McShane Construction Company

2011 Builders Association Staff

President Al Leitschuh

Labor & Membership DirectorDenise Herdrich

Communications Manager Andy Cole

Project ManagerStacey Kelly

Offi ce Coordinator Patty Heier

Communications InternMary DeMoss

Builders Association8430 West Bryn Mawr Avenue

Suite 710Chicago, IL 60631

Phone: 847-318-8585Fax: 847-318-8586

www.bldrs.org

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