SUMMER 2013

VOLUME II, NO. 2

The Journal of Professional CM/PM Practice

Woodrow Wilson High School,

Washington DC

At MWH Constructors, we have

earned our reputation as a
trustworthy contractor. Our level
of honesty, professionalism,
ethical behavior and integrity
demonstrate how much we value
our clients and staff.
STRATEGIC SERVICES:
COnSTRuCTIOn MAnAGER-AT-RISk
PROGRESSIVE DESIGn-BuIlD
COnSTRuCTIOn MAnAGEMEnT

HONEST.Work

mwhglobal.com

TABLE OF CONTENTS

TABLE OF CONTENTS
6

KNOWLEDGE MANAGEMENT
IN THE AEC INDUSTRY
Research shows most organizations have no structured
KM program. But who can afford to let a seasoned manager
leave without trying to capture all of that employees knowledge
and experience? Heres a guide to launching KM in your organization.

10

ENHANCING INNOVATION IN THE EPC INDUSTRY

The Construction Industry Institute has studied
barriers to innovation, and the study leader,
Prof. Paul Chinowski of the University of Colorado,
discusses some of the results here. Learn what
deters real innovation and what attitudes have
to change to open the way to improvement.

16

COMBATTING WASTE, FRAUD

AND ABUSE IN CONSTRUCTION
Detailed contract documents, careful oversight, third party
testing and review of all paperwork are among the keys to
combatting these enemies of your project budget.

INNOVATION
Brains have become more important than brawn
to successful construction, and the best brains focus
on innovation. How can we make innovation a true
competitive edge for our organizations and an
asset to our clients?

ON THE COVER: WOODROW WILSON

HIGH SCHOOL, WASHINGTON, DC

DEPARTMENTS
5 FROM THE CHAIR
9 LEGAL CORNER
14 TOOLS OF THE TRADE
24 FINAL WALKTHRU

Advisor Summer 2013

PHOTOS BY ROBERT CREAMER

20

TABLE OF CONTENTS

CONTRIBUTORS
Chairman of the Board
Mike Potter, PE, CCM
President and Chief Executive Officer
Bruce DAgostino, CAE, FCMAA
Editor
John McKeon
Associate Editor
Kenzie Mahla

ROBERT BALDWIN, CCM

Robert Baldwin, CCM, Assoc. DBIA, is an associate with
Jacobs Associates providing claims and dispute resolution
consulting services to the greater construction industry.
He has 15 years of project management experience in large
and small construction organizations, and has worked for
developers, contractors, and a large public owner.

Design and Marketing

TGD Communications, Inc.
Advertising Sales
Alex Perroy
TGD Communications, Inc.
advisor@tgdcom.com
CMAA is a construction industry
association of 11,000-plus firms
and professionals who provide
management services to owners
who are planning, designing, and
constructing capital facilities
and infrastructure projects.
The Mission of CMAA is to promote
the profession of Construction
Management and the use of
qualified Construction Managers
on all capital projects and programs.

Advisor Summer 2013

Advisor, published bimonthly

by CMAA, reports on and follows
the industry as a service to
its members. Submission of
articles, ideas, andsuggestions
is appreciated andencouraged.

7926 Jones Branch Drive, Suite 800

McLean, Virginia 22102-3303 USA
Phone: 703.356.2622
Fax: 703.356.6388
Email: info@cmaanet.org
Web: www.cmaanet.org
CMAA Copyright 2013,
ISSN 1084-75327
Reproduction or redistribution
in any form is forbidden without
written permission of the publisher.
CMAA members receive this
newsletter as a member benefit.
For advertising information,
contact TGD Communications
at advisor@tgdcom.com

PAUL S. CHINOWSKY
Paul S. Chinowsky is Mortenson Professor of Sustainable
Development in the Department of Civil, Environmental
and Architectural Engineering, University of Colorado.

DOUGLAS SCHNEIDER
Douglas Schneider is deputy inspector general for the
City of New York. He regularly reviews contractor and
Construction Management projects, change orders and
cost estimates for validity and cost correctness, in an
effort to eliminate waste, fraud and abuse.

EDWARD BOND, JR., CCM, FCMAA

Edward Bond, Jr., is CEO of Bond Brothers, Inc., in Everett,
MA. He is a fellow of CMAA and the Society for Marketing
Professional Services, as well as past president of SMPS,
past chair of the Construction Manager Certification
Institute, and current chair of the CMAA Foundation.

TABLE OF CONTENTS

FROM THE CHAIR

WHOM DOES CMAA REPRESENT?
It seems a simple question, but the answer has major ramifications for the
Associations future. The Executive Committee has discussed this, and it was
the subject of the full Boards annual strategic planning exercise at the recent
Leadership Forum in New Orleans, led by Bill Heitz, CCM, of Heery International.
The fact is, Construction Management today is being practiced very well by an
ever-wider range of professionals in increasingly diverse settings. Accelerating
this trend is the increased use of alternative project delivery methods, including
the growing acceptance of Integrated Project Delivery.
CMAAs current membership represents most every type of CM provider, Agency CM,
CM-at-Risk, general contractors and others. It was not always so. In the early years,
CMAA membership consisted largely of general contractors. The Associated General
Contractors and the American Institute of Architects, in fact, were among the prime
movers in CMAAs founding. These members began to drift away later on, as CMAA
increased its stress on CM as a separate professional discipline and to promote the
Agency CM business model.
Today, we need to identify and communicate the benefits of professional CM for
all stakeholders in the modern, multi-party project environment. What does the
CM offer the owner? The designer? The general contractor? The financiers? And
how are these values realized in a design-build setting, or CM-at-Risk, or IPD?
Weve always been delivery system neutral, and weve always believed that
owners should have maximum flexibility in choosing the right system. The
Board of Governors of the Construction Manager Certification Institute (CMCI)
has taken pains to maintain that in qualifying for the CCM, Responsible-in-Charge
experience can be gained while employed by a general contractor, as long as the
CCM candidate worked in the best interest of the owner and project.

MIKE POTTER, PE, CCM

Mike Potter is in charge of RK&Ks
Construction Management and
Inspection division. RK&K has
led large CM teams in managing
multi-billion dollar programs,
and Mr. Potter has taken the
lead in substantially expanding
RK&Ks reach into new geographic
markets and new services. His
CMAA experience includes serving
as chapter president, contributor
to CMAA publications, teaching
Professional Construction
Management courses, and
chairing/contributing to various
Board committees.

Society needs big improvements in the design, construction, and operation of

capital projects of all kinds. To respond to this challenge, we need to learn from
the market, maintain an open mindand tell our story, loudly and confidently,
at every opportunity.

CMs, and CMAA, can be leaders in implementing Integrated Project Delivery. We

can take the lead in helping owners and contractors make wise, appropriate use
of technology. We can guide large projects through complexity and help assure
that even modest projects are executed with high efficiency and quality.

Advisor Summer 2013

The crux of the whole matter remains our Standards of Practice and Code of Ethics.
Professionals who apply these two guides should be part of CMAA. But to realize
the growth potential represented by this definitionin membership numbers,
programs and impactwe have to work even harder at maintaining our relevance
and reaching out to these audiences.

TABLE OF CONTENTS

Knowledge Management
in the AEC Industry:
Whats the Holdup?
By Robert Baldwin, CCM

Advisor Summer 2013

The recent state of the economy put many organizations in

a position of lost revenue, layoffs, and an uncertain future.
During these trying times, construction organizations need
to find every competitive advantage possible. Construction
is no longer only about tools that are only used to
pre-plan tasks and develop detailed schedules; employees
need to become knowledge workers. In order to make this
transition, AEC organizations need to take the management
of their knowledge assets seriously and develop a more
structured approach.
Organizations cannot afford to let a project manager
with 10 or 15 years of experience walk out the door
or retire without first having somehow captured all of
the valuable experience and knowledge that employee
gained on the job. However, research conducted within
the AEC industry in the United States shows that most
organizations are not actively pursuing a structured
Knowledge Management (KM) program. The process
involved in creating and actively managing a KM
program is more than can be examined in this short
article. However, this introduction to KM looks at its
benefits and briefly discusses some keys to overcoming
common barriers to getting started on the successful
implementation of a KM program.

What is KM?
The definitions of KM are vast, but a general definition
states that KM is any process or practice of creating,
acquiring, capturing, sharing, and using knowledge,
where it resides, to enhance learning and performance
in organizations. Simplified, KM is the process of creating
value from an organizations intellectual capital.
Within KM there are two main components of knowledge:
tacit and explicit. Tacit knowledge, the information that
is stored in peoples minds, is difficult to see, share, copy,
and manage. Think of trying to explain to someone in
writing how to ride a bicycle. Explicit knowledge, on the
other hand, is easily codified and appears as company
policy, procedures, and processes that are easily
documented and communicated to end users.
The benefits of a successful KM program include reduced
project time and cost, increased safety, improved quality,
competitive advantage, and employee development.
Such a program also allows the capture of tacit knowledge
assets of employees before they have left the company
and provides a framework for creativity and continuous
improvement. KM is a resource available to every
construction company, regardless of size, and is critical

TABLE OF CONTENTS

Barriers and Strategies to

Getting Started with KM
While estimates vary, most KM systems implemented
in practice fail to achieve their original goals. Thus, properly
rolling out KM to an organization is critical. A company
looking to implement this system should first evaluate
the current state of its organization and structure. Before
it begins to go down the path of KM, the company culture
must be prepared to accept and operate a KM system in
order for it to succeed. Culture has been frequently cited
as the number one barrier to KM; without a culture based
on continuous learning and personal advancement at
every level, KM will fail. Unfortunately, the construction

Thus, lack of leadership is frequently cited as another major

barrier to KM. Without executive support, implementation
will go nowhere. Once leadership is established, process
can be developed, communication enhanced, education
programs introduced, and finally, a culture established.
The failure to follow this path could lead an organization
to expend significant resources without putting in place the
proper foundation on which to build the KM organization.
Establishing a KM organization does not happen overnight,
and how mature the organization is in its current state
will help determine the next steps moving forward in the
creation of a KM organization.

Advisor Summer 2013

With benefits such as these, it doesnt make sense for

a construction organization not to actively manage its
knowledge assets. However, much of the research from
the past 10 to 15 years suggests that mainstream United
States construction organizations are slow to embrace KM.
Those that do will differentiate themselves from their peers
and lead the industry into and beyond the 21st century.

industry has always struggled to foster a culture built

on sharing knowledge. This may be predominantly due
to many in the industry seeing knowledge as power.
They are therefore reluctant to share that knowledge.
Also, it could be due to the nomadic nature of project
teams. Regardless, an evaluation of the maturity of an
organizations current learning culture must be conducted
to establish a baseline understanding of where to start.
From there, the organizations maturity can be looked at
as a progression. The first phase of this progression reflects
the need for leadership to champion the KM initiative
within the organization.

for carrying out projects successfully, choosing the

right projects, and preparing an organizations next
generation of leaders.

TABLE OF CONTENTS

Knowledge Manager
There are different methods of managing a KM program
and they have different names. However, they are
all trying to accomplish the same goal: Create an
organizational culture of learning, trust, and sharing.
A highly recommended option for overseeing a KM
initiative is the assignment of a dedicated Knowledge
Manager. A Knowledge Manager may be part of the
Project Management Office (PMO) or a standalone
resource, depending on the size of the organization.

Advisor Summer 2013

Once a culture accepting of KM is established, a

determination of what knowledge is important to the
organization must be made. Goals of a KM system should
be directly tied to a companys business goals, and the
determination of what knowledge must be obtained is
part of creating a strategy for implementation. For most
organizations, the challenge is not a shortage of knowledge
(for most of us there is too much knowledge out there,
leading to analysis paralysis), but streamlining what
knowledge is most vital to the organizations business
goals and how easily accesible it is. KM strategies are
much more likely to be successful if implemented when
there are explicit interactions between KM initiatives
and specific business goals.
The AEC industry wants to see the data that support
decisions and has been historically slow to adopt to
new technologies or new ways of thinking. KM has been
recognized as a high priority by upper management;
however, prior to committing resources to a project,
management wants to see what benefits the company
will recoup from the investment. Early adopters have
moved forward with KM based on good faiththey
know that KM is relevant to their long-term enhancement.
Also, there are numerous benefits that may not be directly
correlated to specific cost or time savings. These early
adopters are the pioneers who will reap dramatic benefits,
and it will take their competitors considerable time to catch
up. In order for KM to be accepted as a viable methodology,
a mental shift needs to occur in the industry to recognize
that this is a people business and that we are selling (or
for owners, buying) professional services. To be successful,
organizations must demonstate to their clients the
added value their people bring to the table. KM can help
accomplish this.

PMOs are established within organizations to manage

processes for the handling of projects, training, and
competence development within project management.
Their existence is a sticking point for many AEC
organizations because PMOs require dedicated overhead
resources, something our industry is highly averse to
allocating. Knowledge Managers run into similar sorts of
resistance. The cry frequently heard in the industry is We
need our people to be billable! However, forward-thinking
organizations with a well-functioning PMO are shown to
experience half the cost and time overruns of those without
one. To ensure this success, the Knowledge Manager should
represent senior project management experience and
enjoy respect throughout the organization. The Knowledge
Manager would act as a control, or clearinghouse, for the
entire organization, ensuring that procedures and processes
related to KM are followed, and most importantly, that the
knowledge being captured is accurate and relevant. Having
the wrong knowledge is worse than not having any at all.

Summary
Executing a KM program is no small task, and establishing
a culture of learning appears to be paramount prior to
attempting to implement a KM program. For some, this
could be a slow, five-year transformation. A company
culture that is supportive of KM can only be obtained
with strong leadership that not only asks for KM, but
supports it through investment of company resources.
Companies must look at their employees and look beyond
the traditional perspective of project management that
is focused extensively on creating schedules, budgets and
managing project controls. Rather, they need to determine
how to make that shift to developing employees into
knowledge workers who are in the business of selling
their intellectual capital to their clients. That is what
clients value most and are willing to pay for.

Robert Baldwin can be reached at baldwin@jacobssf.com.

TABLE OF CONTENTS

LEGAL CORNER
BRIAN G. LUSTBADER, ESQ.
Mazur Carp & Rubin, P.C.

Protection of Neighboring Property during Construction

When this need for protection arises, the Construction

Manager or the developer employing that CM must
enter into a formal agreement with the neighboring
property owner for the requisite license to enter onto the
neighbors property. If the effort to reach agreement fails,
then the developer or CM must apply to court to obtain
that license. Because adjacent neighbors often use this
situation as an opportunity to exact exorbitant funds,
figuring that they can hold up an entire development, it is
important to understand the underlying legal principles to
assess what might occur if negotiations fail and a court is
asked to intervene.

Underlying Legal PrinciplesCompeting Property Rights

The adjacent neighbors rights include the ability to use
his or her property without interference, that is, free from
trespass, and also free from damage caused by others. The
builders rights are equally meritorious. The other property
owner, the builder, is entitled to develop and build on it
as he or she sees fit, subject only to non-interference with
neighbors. The courts balance those competing rights,

Terms to Include in License Agreements

Based on these principles, terms that are usually included
in the license agreement between the builder and the
neighbor include at least the following:
1. Builder to provide the neighbor with its plans both for the
protection work and the construction generally, together
with a schedule of the work to be performed;
2. Builder to pay the neighbor a license fee, often with a
penalty if the protection work runs later than set forth
in the schedule;
3. Detailed contact information for both parties, for
routine needs as well as emergencies;
4. Builders agreement to repair all damages, plus
appropriate insurance and indemnification; and
5. Confidentiality, as the builder usually will not want
other neighbors to know the terms agreed upon.
Despite the thorny issues involved, with persistent
negotiation and, if necessary, recourse to court, a
compromise license agreement should be reached
that is reasonably fair to both sides.
BRIAN G. LUSTBADER
Brian Lustbader is an attorney at the firm of Mazur Carp
& Rubin, PC. He is a practical transactional negotiator and
draftsman specializing in construction contract drafting
and negotiation; alternative dispute resolution, including
mediation and arbitration; and litigation. Brian Lustbader
can be reached at blustbader@mazurcarp.com.

Advisor Summer 2013

In the urban setting, such protection almost always

requires entry onto the neighboring property to perform
many functions; for example, to underpin adjacent
structure(s), to probe and reinforce party walls, or to
cover over and thereby protect roof structures such as
chimneys or skylights. No matter how meritorious the
purpose, however, entering onto someone elses property
constitutes a trespass. Therefore, unless the neighbor
grants the builder a license to enter upon the neighbors
property, the builder simply may not do so.

for example, requiring the neighbor to grant access, but

limiting the time period and the physical intrusion and
requiring the builder to pay for or remedy all damages
caused by its work. In some cases, the courts will require
the builder to pay for the neighbors engineers and other
professionals, obtain insurance coverage, and, in addition,
post a bond, and/or pay a license fee to the neighbor for the
period the protection is in place. The latter payment would
be to compensate the neighbor for the extent of its loss of
use of its property, whether complete or partial, over the
time period required for construction.

The Golden Ruleto love ones neighbor as oneself

applies directly in construction. Whether building new
or renovating, the law requires that the party engaging
in that construction see to it that all adjacent structures
are not damaged by that construction; in effect, to treat
it as if it were ones own. Toward that end, all municipal
jurisdictions have rules and regulations requiring various
forms of protection.

TABLE OF CONTENTS

G
N
I
C
N
A
ENH

N
O
I
T
A
INNOV
in the EPC Industry

10 Advisor Summer 2013

By Paul S. Chinowsky

To stay competitive, engineering, procurement, and construction

(EPC) organizations must approach innovation with a focus on internal
investment and cross-industry adoption. To motivate the EPC industry
to move robustly in this direction, the industry must challenge the
tradition-bound elements of the industry culture and manage its
adoption of innovation.
Recent research by the Construction Industry Institute, the Charles
Pankow Foundation and others provides evidence that a significant gap
exists between an effective approach to innovation and the industrys
current approacheven that of the most progressive EPC-based firms.

TABLE OF CONTENTS

The research team analyzed the

results of the literature review and
the data from a survey to determine
the main enablers of and barriers to
innovation. This analysis provided the
following findings, among others:
Innovation is a foundation of
the organization culture. An
organization cannot be innovative
without having a culture of
innovation. Specifically, this means
that the value of innovation must
be acknowledged throughout the
organization. Additionally, cultural
norms must be in place in the
organization that encourage
and facilitate innovation.
Budget allocations must be made
in support of innovation. Innovation
requires organizational support.
Integral to this support is the regular
dedication of budget resources to
innovation pursuits; such budget
allocations should be more than
simply added contingency on
individual projects.
Staff allocations must be made in
support of innovation. Along with
budget allocations, appropriate
allocations of staff are crucial
to innovation. Specifically,
organizations should make a
priority of tasking individuals
with identifying opportunities
for innovation on their projects.
Processes should be put in place
to support innovation. A key
element of innovation success
is the presence of repeatable
processes that are understood
by each individual. Without
such ready-to-deploy processes,
employees will be too busy
achieving traditional project
and departmental goals to
pursue innovation.

A new risk perspective should be

adopted. To innovate successfully,
EPC organizations must change
their risk perspectives. Specifically,
it is crucial for companies to
understand that successful
innovation implementation
involves an additional level of
risk. Understanding and managing
this risk requires a change in
perspective from risk aversion to
risk management. EPC firms tend
to focus risk on a single project or a
single business unit in an attempt
to isolate the entire firm from risk.
The net effect of each firm trying
to isolate itself is to hinder the
mitigation of risk across the entire
system. Innovation risk can be
managed when the focus is changed
from individual projects to multiple
projects. This change of perspective
is the first step to increasing
innovation within the organization.

Current Perspective
From the project managers
perspective, the current structure
of construction project implementation does not support innovation
investment. The traditional view is
that the probability of a negative
result outweighs the potential for
positive gain for an individual project
manager; the worst case, although
unlikely, is catastrophic; innovation
is challenging because it requires
learning and multiple iterations;

and the project bears all of the

risk and cost, while others stand
to capture the gains.

The Economic Model

The decision maker is generally faced
with certain probabilities of achieving
objectives and a certain range of
possible outcomes. (See Figure.)
A project can start with a known
probability of achieving an objective
(represented by the height of the
curve on the y axis) and a known
range of potential project outcomes
(represented by the width of the curve
along the x axis). The ideal situation
for all project managers is to have a
very high probability of meeting their
objectives with very little variance in
potential outcomes (represented by
a tall, narrow curve).
Figure 5 illustrates that, before the
implementation of an innovation, a
project has a known probability of
meeting a cost objective with some
variability in potential outcomes.
The figure further shows that in the
first year of implementation, the
innovation lowers a projects average
cost; at the same time, it shows that
because of the uncertainties and
potential problems that come with
any new technologythe risk of large
cost overruns increases in that first
year. This early risk potential is usually
the wall that blocks organizations
from investing in innovation.

EPC FIRMS tend to focus risk on a

single project or a single business unit in an attempt

to isolate the entire firm from risk.

11 Advisor Summer 2013

Enablers of Innovation

TABLE OF CONTENTS

FIGURE: An economic model of innovation investment

and benefit over multiple generations.

0.30
0.25

Orig

0.20

Yr1

0.15

Yr2

0.10
0.05
0.00
2.00

7.00

12.00
Millions

12 Advisor Summer 2013

However, the figure further shows

that, once the initial learning period
is past and the innovation is used
in a second iteration, the variability
of the cost is greatly reduced and
the risk of large cost overruns
actually falls below pre-innovation
levels. This combination of greater
predictability and lower expected cost
is the desired outcome, but it takes
several generations of implementing
innovations on projects to achieve.
The models suggest that project
managerscaught up in the current
industry practice of considering
innovation one project at a time
have no economic incentive to
innovate, since their risk of failure
will actually go up if they adopt
an innovation. Indeed, for them,
implementing an innovation on a
single project is the equivalent of
one spin of the roulette wheel. Were
they able to, however, these same
project managers would adopt the
innovation in the second generation,
when the benefit would be apparent.

In contrast, because business

unit leaders think in terms of the
many projects their groups plan to
construct, it might be economical for
them to invest in innovation if they
can innovate over a large number of
projects. Entire firms see the many
projects that all of their business
units will construct, and can look
ahead to the future. Their inherently
long-term perspective should
motivate firm leaders to continually
innovate; because the benefit should
be realized over the many projects
on the company horizon, they can
distribute short-term losses to
harvest long-term gains.
Moreover, in the team environment
that is generated from this wider
view of innovation, project managers
are not left to function as individual
gamblers. Rather, the entire firm,
functioning as an innovative team,
absorbs the increased investment,
risk, and uncertainty in exchange for
greater benefits over the longer term.

Changing the Perspective

For an organization to successfully
move from a focus on project-oriented
risk to an emphasis on long-term
risk distribution, management and
individual project managers alike
must commit to the shift. This change
requires the following key elements:
Shift away from single-event
thinking. Moving away from a
single-project focus toward a
project portfolio approach is the
foundation of the economic model.
Indemnify project managers
by creating a syndicate. The
fundamental difficulty with
investment in innovation is project
managers concern that the risk of
failure is worse than any potential
reward an innovation might
bring. To change this perspective,
the organization should focus
on establishing a collaborative
environment in which project
managers understand that single
instances of underperformance

TABLE OF CONTENTS

PROJECT MANAGERS caught up in the current

industry practice of considering innovation one project at a timehave no
economic incentive to innovate, since their risk of failure will actually go up
if they adopt an innovation. Indeed, for them, implementing an innovation
on a single project is the equivalent of one spin of the roulette wheel.

Experiment frequently and

learn continuously. By cultivating
an atmosphere that encourages
curiosity, experimentation,
and learning, organizations
can slowly alter their risk
perspective and enhance their
opportunities for successful
investments in innovation.
Work for owners who value
innovation. Owners or other
employers who demand
compliance to unilaterally
defined requirements seriously
inhibit innovation within their
organizations. Progressive
owners and contractors could
collaboratively spread risk
for the benefit of the entire
system, rather than try to
isolate themselves from risk
through contractual language.
Owners could also demand
innovation on projectsmuch
in the way they have demanded
safetyand then support those
demands by establishing an
innovation-friendly culture,
just as they have done to
create injury-free workplaces.

Although these elements are not

the only ones that will contribute
to a change in the industrys risk
perspective, they are the building
blocks on which construction
organizations can increase their
risk tolerance and reap greater
benefits from innovation.

This article is excerpted and adapted

from Enhancing innovation in
the EPC Industry, published by the
Construction Industry Institute.

Paul S. Chinowsky can be reached at

paul.chinowsky@colorado.edu.

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13 Advisor Summer 2013

will not result in commensurate

penalties. This type of syndicate
perspective will favor company
success over individual
achievement.

TABLE OF CONTENTS

TOOLS OF THE TRADE

The USMRF is an organization dedicated to sharing the
legacy of the Marine Raiders, the first special operations
unit in the U.S. Military. The new school is a way for the
USMRF to honor the citizens of Tulagi, who fought bravely
alongside the Marine Raiders in WWII and ultimately
helped to defeat the Japanese in the Pacific Islands. The
USMRF is fully funding the project, but has contracted out
all Construction Management services to Construction
for Change and its project manager, James Lloyd.
James arrived on the islands in February and it quickly
became clear that the wood and concrete structure that
USMRF and CfC were planning to build would not last more
than 15 years due to termite damage. As evidence, James
relayed the story of the Tulagi hospital that was built by
AusAID, the Australian governments overseas aid program.
While it is a beautiful and functional facility, the hospital
has been so ravaged by termites that AusAID now has to
rehabilitate it, just over a decade after its construction.

Engineering Hope in
the Solomon Islands

14 Advisor Summer 2013

A half century after it was a major battlefield,

Tulagi in the Solomon Islands is now home to
a new school built with the help of retired U.S.
Marine Raiders and the latest electronic and
communications technologies. And, a CMIT
played a key role in the project!
How do you build in a place where termites are eating
away existing public infrastructure? This is the challenge
for James Lloyd, a carpenter from the UK, who was sent to
the Solomon Islands to build a two-story school building
for the children of Tulagi Island. James is a volunteer project
manager for Construction for Change (CfC), a Seattlebased non-profit organization that provides Construction
Management services to organizations working to end
poverty worldwide. He will stay in the Solomon Islands
as long as it takes to complete the project.
Tulagi residents and the U.S. Marine Raiders Foundation
(USMRF) spearheaded the construction of the school.
Construction Manager-in-Training Zach Archer of
Washington State Department of Transportation is part
of a team advising James and supporting the project
from a distance using a variety of technology tools.

As a way to get around the termite problem, James started

exploring advanced building technologies and other
materials available on the island. He soon learned about the
Tongs Corporation located in Honiara, the capital city. About
a two-hour boat ride from Tulagi, Tongs is a Chinese-owned
building supply store that started manufacturing prefabricated steel structures a few years ago. Tongs innovative
structures are ideal in places with chronic termite problems
and are slowly gaining popularity in the capital city. Until
now, there has been nothing like it on Tulagi Island.
Pre-fabricated steel means that the new school building
will now be substantially stronger and last three times
longer than any existing structure on the island. It is also
much more eco-friendly than the original wood and cement
design and will therefore generate less waste. Moreover,
steel is easier to keep level and plumb relative to bowed
timbers; and it is much faster to build with less need for
power tools, which are not readily available on Tulagi.
Technology is playing a major role in the construction of this
school in other aspects as well. While James is a skilled and
competent project manager, he cannot do it alone. Back in
Seattle, James has a team of architecture, engineering and
construction (AEC) experts who are guiding him through the
process. Among them is Dan Wachtler and Andy Marshall,
former CfC project managers, who have helped to finalize
the design, estimate costs and draft the project budget,
and now serve as mentors to James. Also critical to this
team is CMAA member Zach Archer, CMIT, then with Turner

PHOTOS: JASON KOENIG, J. KOE PHOTOGRAPHY. HTTP://JKOEPHOTO.COM.

TABLE OF CONTENTS

Construction and now with Washington State DOT. He is

taking a major role in advising James based on his broad
range of experience in the construction industry. James
communicates with his team of construction consultants
primarily via email and Skypehe has fairly reliable internet
service on the island using his personal laptop.

and potentially serve as a model for future building projects

on the island. This last point was very important to the
Marine Raiders. In their words, The Marine Raiders are all
about firststhey were the first to use Navajo code talkers,
they were the first to use war dogs, and now, they are the
first on Tulagi Island to build with steel.

With respect to design modifications, James is doing it the

old-fashioned wayhe is redlining a hard paper copy of
the blueprints, construction documents and renderings
designed in CAD. To ensure these documents are not
destroyed due to travel and weather, everything was
printed on all-weather paper produced by Rite in the
Rain, a Tacoma-based company and paper supplier for
the U.S. military. Still, Construction for Change is in the
process of streamlining the design process and eventually
will go paperless. Earlier this year, Bluebeam Software
generously donated Bluebeam Revu, an AEC inspired
platform that allows for PDF creation, mark-up and editing
for a paperless workflow. It will revolutionize the way
Construction for Change manages its projects.

In addition to steel, the use of internet, Skype, waterproof

paper, Bluebeam and other technologies means that James
is now able to leverage the U.S. based AEC consultants
combined experience to troubleshoot any potential
problems. Without these technologies, mistakes are harder
to catch, potentially setting the construction team back
months and wasting limited resources in the process. On
a larger scale, it allows CfC project managers to travel to
some of the most rural, isolated places around the world
to build schools, hospitals and other needed facilities. The
need is large, but Construction for Change will continue
to empower communities like Tulagi to reduce poverty
by creating quality, sustainable infrastructure.

James is on track to finish the construction of the 32m x 8m,

two-story school building by mid-June. The new steel design
has eliminated the so-called termite problem and added
30+ years to the buildings life. As a one-of-a-kind structure
on Tulagi, the building process will teach local construction
workers how to assemble pre-fabricated steel structures

Construction for Change (www.constructionforchange.org)

partners with local organizations to build schools, medical
facilities and other critical infrastructure where it is needed
most. In doing so, CfC empowers rural communities to
create opportunities and break the cycle of poverty.

15 Advisor Summer 2013

Tulagi, in the Solomon Islands: A remote

location? Not so remote, thanks to the
portfolio of technology tools applied in
building a new school for young islanders.

TABLE OF CONTENTS

16 Advisor Summer 2013

COMBATING

WASTE,
FRAUD &
ABUSE
IN CONSTRUCTION
By Douglas Schneider

TABLE OF CONTENTS

Construction is as old as civilization itself. Shelter is

a vital part of human existence; therefore, housing
and buildings are necessary. These buildings can range
from very simple small structures to large, extremely
sophisticated buildings. Either way, materials and labor
are the two major ingredients. The process of combining
materials and labor resources employs thousands of people
and can be a very satisfying and profitable profession.
Many people make a decent, honest living from the
construction industry. However, there are those that may
seek to cheat and exploit, and there are numerous opportunities in construction for bad actors to deceive others.
One of the most common techniques for bad actors is
the old bait and switch. This is where a contractor tells
an owner that they will use the type of material specified in
the contract documents, but they actually install a cheaper
type of material and pocket the difference between the two
types of material. The good news is that this type of tactic
can be effectively combated by:
Ensuring that the designer uses very specific language
to describe the type of material in the specifications.
This specificity will eliminate ambiguity and set the
stage for ensuring that the owners exact level of
quality of materials for the structure is adhered to;
Diligent monitoring of the work during installation;
Engaging a third party testing company to assist the
owners representative in overseeing the installation
of the work; and
Critically reviewing all paperwork associated with
the project.
As an example, lets look at the installation of a wood
flooring system. The specifications should not state:
Install a tan colored, strip wood floor.
Rather, the specifications should instead state: Install a tan
colored, strip wood floor that is inch thick, has random
length boards that are 4 inches wide, is kiln dried to 6 8%,
is made up of quarter sawn white oak, is stamped by the
Forest Stewardship Council, has tongue and grooves on all
sides of the boards, has shallow, full length dadoes cut into
the bottom of the boards for air circulation, is nailed off with
nails that are installed every 6 inches along the tongue at a

45 degree angle with 2 inch barbed cut nails, is laid over

a 2 mill thick red rosin paper stapled to the subfloor, has a
three coat polyurethane finish and has inch of air space
around the field of the floor (for expansion and contraction
movement) where the floor meets up with any solid object.
This level of detail establishes a baseline of exactly what
the owner intends to pay for and what the owner wants
installed in the building. The lack of ambiguity reduces the
chance of fraud by giving the contractor very detailed and
specific drawings and language to follow. However, even
with detailed drawings and specifications, there remains
a risk of fraud during installation.

MONITORING THE PROCESS

Monitoring of the construction process is critical and
must be undertaken by experienced and perceptive
individuals, often called owners representatives. The ability
to understand how material systems are combined and
installed is an important part of construction monitoring.
There are countless variations of material types, colors,
sizes and shapes that can be installed. As such, a person
monitoring construction operations must be well versed
in different materials such as metals, concrete, wood, glass,
ceramic, fabrics and plastics. An owners representative
must also be extremely perceptive in recognizing what
the material is and what the material should be.

The lack of ambiguity reduces

the chance of fraud by giving the
contractor very detailed and specific
drawings and language to follow.
As an example, if the specification states, Pour a 4 inch
thick 3,500 psi concrete slab with #4 re-bars installed
every 10 inches over a 6 mill vapor barrier, the owners
representative can employ various tactics to ensure that the
contractor is delivering what he / she is supposed to deliver.
First, the owners representative can measure the thickness
of the slab during and after it is poured. Second, the owners
representative can ensure that the concrete is tested by
either a testing company or themselves, in order to ensure
that the specified psi of concrete has been attained. Third,
the owners representative can inspect and measure the
diameter and spacing of the re-bar to ensure that the
correct size, type and spacing of re-bar are being installed.
Lastly, the owners representative can ensure that the
correct thickness and type of vapor barrier is being installed.

17 Advisor Summer 2013

Much has been written about the means and methods

of constructionhow to carry it out and make a profit.
However, also of great importance to the construction
community is ensuring that work is carried out honestly.
This article will explore the basics of how an owner can
fight waste, fraud and abuse.

TABLE OF CONTENTS

All of these activities require the owners representative

to be constantly on-site overseeing the construction
operations while they are taking place, from beginning to
end. The level of trust that the owners representative has
with the contractor will dictate how much time needs to
be spent directly overseeing the construction operations. If
an owners representative knows the contractor is trying to
cheat, then he or she must be on-site literally every minute
that the contractor is working. If the owners representative
has some level of trust with the contractor, then the owners
representative can stop in occasionally to check the progress
of the work. Either way, on-site monitoring of construction
operations is the single most important way of combating
waste, fraud and abuse in the actual material installation.
When an owners representative does witness work
that is deficient, it is imperative to document this finding.
This documentation should be done with time-stamped
photographs (with a scale reference included in the
photograph such as a coin or tape measure), a verbal
discussion with the contractors representative and a
written email or memo documenting the entire episode
from start to finisha description of the deficient work,
what happened, how the deficiency was discovered, why
the work was deficient, who carried out the deficient
work, when and where the deficient work was installed.
Some owners will, and should, require testing companies
to assist in monitoring the construction work. Testing
companies can provide valuable assistance by being
able to carry out specific scientific tests in accordance
with well-established industry standards. It is important
to have the procedure for material testing identified in
the contract documents at the outset of the project, so
that the contractors and subcontractors will be aware
of exactly what is required of them.

18 Advisor Summer 2013

MANAGING PAYMENTS
Once the work is installed, contractors will then submit
payment requisitions. It is important that the contractor
certify and notarize their payment requisition upon
submission to the owner. The payment requisition should
be based on a pre-established schedule of values (SOV) that
is agreed to by all parties before the work starts. This SOV
will delineate, line by line, each of the major materials used
in the construction project. It is important that each of the
major material items also have a corresponding labor cost
associated with each material cost. This breakdown of labor
and material cost for each item will help all parties ensure
an exact cost for each major work item.
Additionally, the SOV can be used as a guideline for unit price
items and be used should there be change orders associated

with the project. The SOV is an important tool to be used in

managing the project and ensuring that the contractor only
gets paid for work that is actually put in place.
An owner should be aware of a common technique used by
contractors called frontloading, wherein the contractor
inflates the cost associated with items that will be installed
early in the project. By doing so, the contractor is able to get
more money up front than they are actually entitled to, and
create a positive cash flow. The owner must be sure to only
approve a SOV that has realistic costs associated with each
and every item.
Along with the SOV, contractors should provide lien waivers
with their payment requisition submission. A lien waiver
should be submitted by the contractor for each of the
contractors material suppliers and sub-contractors. The
lien waiver states that the material suppliers and subcontractors waive their right to put a lien on the project
because they have been paid in full. This is an important
protection tool for owners, helping to ensure that the
contractor will pay its material suppliers and subcontractors.
Many projects have change orders. The owners requirements can change, field conditions may arise, unexpected
subsurface conditions may be encountered or regulatory
requirements may change. Change orders are simply a
change to the original contract documents and they should
be treated by the owner with the same scrutiny as the
original contract. A change order package submitted by a
contractor should be complete and specific, and the owners
representative should monitor the change order work and
its accompanying documentation just as they would
monitor the original contract work and documentation.
Further, the owners representative should always
conduct a constructibility review to ensure that all
of the plans, specifications and conditions within the
contract documents coincide with each other and there
are no mistakes within the documents. The constructibility
review ensures that what the designer envisions can
actually be constructed and it can reduce the amount
of waste associated with the project.
In conclusion, detailed and correct contract documents,
vigilant oversight of the installation of the construction
work, third party testing where required and critical review
of all paperwork can help the owner eliminate, or at least
reduce, the amount of waste, fraud and abuse associated
with any construction project.

Douglas Schneider is deputy inspector general for the City

of New York. He can be reached at dougbuild@aol.com.

VOLU ME I,
NO. 2

The Journal

of Professio
nal CM/PM

Practice

WINTER

Owners and CM/PMs

in the industry.

20 12

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Order your copy of Becoming A Construction Manager TODAY.

19 Advisor Summer 2013

Becoming a
Construction
Manager

Innovation

TABLE OF CONTENTS

20 Advisor Summer 2013

By Edward Bond, Jr., CCM, FCMAA

TABLE OF CONTENTS

Innovation can be defined as a product or service that

allows us to do something better or something we couldnt
do before. This applies to processes, technologies, or both.
An outcome of innovation we hope to see is an increased
effectiveness and efficiency in:
1. Making better decisions.
2. Improving the productivity of an existing process.
3. Accelerating the delivery cycle of projects.

4. Cost plus Time Contracting

5. Design-Build
a. Bridging
b. P3
6. Incentive/Disincentive Contracting
7. Integrated Project Delivery (IPD)
8. Indefinite Delivery/Indefinite Quantity Contracting
9. Job Order Contracting
10. Lane Rental
11. Multi-Parameter Contract
12. Partnering
13. Performance Contracting
14. Warranty Contracting
15. No Excuse Bonus

CMswhats our purpose?

16. Lean Construction

Construction Management (CM) is delivery neutral; its

both a management process and a service business. Yet
theres still a gap in how clients engage in and perceive
the value of CMs. Whats the actual value proposition
that CMs bring to the table?

Looking at how these delivery systems have advanced over

the years, its amazing the speed with which they have
provided better and faster solutions to fill our clients needs.

Over the years, clients have been engaging CMs as

advocates for their projects. Theyve realized its no
longer the brawn of the construction firm that makes
a project successful but the CMs brain. And that brain
is focused on innovation.
The CM is a fairly new player in the construction industry,
having arrived in the 1960s. Since that time, a CMs role
has advanced to become a provider of numerous delivery
models. As professional managers, we create the sparks
that uncover solutions to new problems and challenges.
We innovate.

Innovation surrounds us
In a 2010 McKinsey Global Survey, 84 percent of executives
said innovation is extremely or very important to their
companys growth strategy. Just as the professional field
of management has developed hundreds of different
models to help in better-informed decision-making,
our built environment has responded with innovative
delivery models.
A sample of them include:
1. Construction Management at Risk (CMAR)
2. Best- Value Contracting
3. Build-Operate-Transfer

As part of the collaborative process in developing new

delivery models, we can reach back into the history of
the American Institute of Architects. One of their charges
in 1857 was to promote the scientific and practical
perfection of its members. That involved a cumulative
process of 13 architects dedicated to elevating the
professions standing. And today, collaboration is the
way we work among the disciplines to continue that
individual empowerment and zest for innovation.

Its the message, not the

medium, that matters
For CMs, adopting the status quo would be like
automobile pioneer Henry Ford saying, If Id have
asked my customers what they wanted, they would
have told me a faster horse. Yes, sometimes we have
to lead our clients to innovative opportunities by making
them aware of improvements. Therefore a vital role a
CM plays is providing clients with the best solutions,
having the best impact, for the best value. Accomplishing
this requires using the right resources and mindset.
Remember this: No one person builds our buildings. No
one person makes all the decisions. No one person has
all the answers. Its a collaborative process that involves
increasingly more professionals, especially as the complexity
of projects increases.

21 Advisor Summer 2013

Is innovation the enemy of success or the enabler?

Some companies eat, sleep, and breathe ways to be
more innovative in their practices and projects. If we
view innovation as a cumulative process, then certainly
the Construction Management industry has made
significant strides in its 50-year lifespan.

TABLE OF CONTENTS

Figure 1 Construction & Non-Farm Labor Productivity

Construction & Non-Farm Labor Productivity Index (1964 2003)
Constant $ of contracts/workhours of hourly workers
Sources: US Dept. of Commerce, Bureau of Labor Statistics
250.00%

200.00%
Construction Productivity
Index (1964 = 100%)

Index

150.00%

Non-Farm Productivity
Index (1964 = 100%)

100.00%

50.00%

0.00%
1964

1968

1972

1976

1980

1984

1988

With high levels of uncertainty and complexity facing

our clients, we know traditional delivery models cant
be static. Creating new models and improved tools will
not only enhance decision-making but also improve the
productivity of existing processesand accelerate the
delivery of projects.

Whats under the hood?

22 Advisor Summer 2013

As CMs, where can we find opportunities that might provide

a platform for pushing the envelope of innovation? We can
look to our industry associations, clients organizations,
universities, venture capitalists, software developers,
manufacturers, and more.
And of course, right within our own CMAA is the initiative
from the CMAA Foundation . Along with prominent
owners of capital construction programs, it recently
brought together leading executives from CM and Program
Management firms to discuss what the future might bring.
Common themes running through the discussion were:
A new business model for Construction Management
is emerging and will become the norm over the next
five years;

1992

1996

2000

Clients are more focused on outcomes than output, on

lifecycle than first cost, and on the triple bottom line
of business, environment, and social impacts;
The academic community needs to do a better job
preparing students for this field.
Participants also reviewed the productivity index
highlighting the vast differences between non-farm
labor and field environment construction, where
construction productivity continues to decline.
(See Figure 1) Manufacturing is task trained and
often stationary, while construction is craft trained
and requires teams. Weather conditions and project
uniqueness are strong influencing factors.
Possible solutions to the challenges include:
Moving construction away from site-based,
craft-dominated processes and toward a more
typical manufacturing environment.
Relying more on automation and technologies like BIM
4D/5D modeling, GPS, and radio frequency tagging
Demanding more comprehensive constructability
reviews and risk management practices.

TABLE OF CONTENTS

Chuck Thomsen, FAIA, FCMAA, offered an innovative

perspective. He stated two issues were confronted with
to bring in better results as service providers: (1) getting
the right information from all sources into the process;
and (2) getting the manufacturers and subcontractors
into the design process early.
Of course, laden within these two issues is a plethora
of others dealing with best value, cost/benefit, proven
results, no surprises, and more. These represent
dilemmas that arent easily resolved. As CMs, we
struggle with these issues each day for our clients
and within our own firms.
Yet, how we look at innovation likely determines our
results as a firm. As Sir Winston Churchill once said,
The pessimist sees difficulty in every opportunity,
while the optimist sees opportunity in every difficulty.

How do we build off our past?

Management framework
As we assist our clients in making better decisions, its
helpful to keep in mind these decision-making questions:
What is the objective were trying to accomplish?
What are the alternatives?
What are the risks?
What are the rewards?
Just as BIM offers clash detection, its important to be in
tune with whats working for our firm. What lessons are
being learned on each project that can strengthen the
firm? How can we be more innovative than ever?
Certainly, the buildings themselves are getting smarter.
But are the people who build them?

Edward Bond, Jr. can be reached at

ebondjr@bondbros.com.

A familiar theme is: Clients want it faster, cheaper,

better! The good news is that for those interested in
pushing the pedal on innovation, we do have existing
models to use. We also have clients interested in
exploring new and improved ways.

Outlining the opportunity and benefits of

addressing the issue;
Identifying the outcomes were seeking for
stakeholders;

The Time To Plan Is Now

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But it is necessary to be prepared. Thats why a Minkoff
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build a step-by-step plan to follow, should the worst ever occur.

Project Overview

Whether youre a property owner, property manager,

or an insurance professional, youll find peace-of-mind
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When a 3-alarm fire

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far reaching the roof
and all interior finishes
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destroyed and structural
damage was quite
extensive. The Beacon
Condominium board
immediately formed an
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interviewed a dozen
contractors before
making the decision to
hire Minkoff.

References

Past failed projects

Beacon
Condominium
Washington, DC

Beltsville

In The Works

On Record

WEST
VIrgINIA

Reviewing the expected results.

What are signs that opportunities even exist to bring in
a fresh perspective or a new approach? Several include:

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Outlining the risks and the assumptions

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Listing the pros/cons within each alternative;

strategic design

Throughout the work on

this $3,500,000 project,
Minkoff paid special
attention to restoring
all parts of the building,
which was built in 1912.
As a result of the roof fire
and water damage, all
drywall insulation and
wiring was replaced.
Stripped down to its
masonry shell, with only
the floor joists in place,
the building interiors were
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as the condominium
board opted to finance

Clients who are seeking alternatives

Hampered projects in which options are invited
Risk factors that impact a clients project
Sudden market changes
Regulatory changes
New competitors
Tight economies that are more accepting of
creative options

alex.perroy@tgdcom.com
703.548.0200 x 117

www.tgdcom.com/cmaa

23 Advisor Summer 2013

But just as we develop a business case, we can use the

same process to help uncover options for our clients.
These might include:

TABLE OF CONTENTS

FINAL WALKTHRU

WOODROW WILSON HIGH SCHOOL

PHOTOS BY ROBERT CREAMER

WASHINGTON, D.C.

24 Advisor Summer 2013

Owner:
District of Columbia Department
of General Services
PM:
DCPEP Joint Venture, McKissack &
McKissack/Brailsford & Dunlavey
Design Build Team:
GCS-SIGAL
cox graae + spack architects
with Fanning Howey

TABLE OF CONTENTS

The modernization of Woodrow

Wilson High School, built in 1935
and accorded historic landmark
status during the projects Design
Phase, combined renovation and
adaptive reuse of 305,286 square
feet of existing space plus 71,221
square feet of new construction.
With a final construction contract
value of $97.593 million, the
14-month project was completed
in time for the 201112 school year
and 75th anniversary celebration.

A dramatic central atrium and a rainwater harvesting system

to support irrigation are among the features of the recently
modernized Woodrow Wilson High School in Washington, DC.

Sustainability features include a

green roof, rainwater harvesting
system to supply water for irrigation
and toilets, permeable paving and
high-performance HVAC and lighting
systems. Six new elevators made
the facility fully ADA accessible; new
campus-wide instruction and security
technology are state-of-the-art.

25 Advisor Summer 2013

Management of the owners

contingency budget resulted in
a balance of $600,000. Major
renovations included conversions of
the existing gym into a performing
arts center, and of the existing
auditorium into a new athletic center
with tunnel stadium access, new main
entrance, floor-to-ceiling renovation
of classroom spaces in the core fourstory academic building, and creative
expansion of the schools footprint.
Project scope included construction
of a central atrium with dramatic
skylight roof, seating, and landscaping
that transformed an unused outdoor
courtyard into a focal point for
students and faculty en route to a
renovated cafeteria. For the new 850seat visual and performing arts center,
original wood auditorium seats were
restored and reinstalled, and theater,
music, dance and art spaces added.