Understanding and Managing Project Costs Session 7

1. Understanding and Managing Project CostsSession 7

2. Review of Session 6 • Labor Cost is the combination of wages, fringe benefits, and taxes • Labor cost variances are caused by: • Environmental conditions • Management errors • Subcontractor delay • Supplier delay • Owner/Architect delay • Unforeseen delays An AGC Construction Learning Tool

3. Subcontractor Delay • Subcontractor not available for work activities • Subcontractor not prepared for the work activity • Subcontractor without appropriate labor or size of crew • Subcontractor performance of defective work An AGC Construction Learning Tool

4. Subcontractor Delay • Late inspection of subcontractor’s work • Unsafe subcontractor work practices • Subcontractor disruption of work activities An AGC Construction Learning Tool

5. Cost Impact by Subcontractors • Exclusions, non-covered work • Additional non-compensated work by subcontractor • Additional work required by your crew • Subcontractor default An AGC Construction Learning Tool

6. Managing Subcontractors During the Bid Period • Cover all areas with subcontractor bids • Exclude non-responsible subcontractors • Carefully analyze subcontractors and their relationship to the work • Note:The bid period is short and chaotic. Estimators try to avoid problems, but some slip through. An AGC Construction Learning Tool

7. Managing Subcontractors during “Buy-Out” (prior to award of subcontracts) • Include all subcontract work in the project subcontracts • Don’t duplicate work in subcontracts • Include all special clauses and requested exclusions in subcontracts • Write scope statement to be understood by field management An AGC Construction Learning Tool

8. Managing Subcontractors during “Buy-Out” (prior to award of subcontracts) • Supply the subcontractor with the following information: • List of submittals and shop drawings required, and when they are required • Construction schedule showing their work • Notification of pre-construction meeting An AGC Construction Learning Tool

9. Managing Subcontractors Prior to the Start of Their Work • Meetings • Notify of all applicable meetings • Provide meeting minutes • Update on progress and changes • Advise on schedule progress • Conduct an on-site orientation meeting An AGC Construction Learning Tool

10. Subcontractor Orientation • Jobsite storage of material and equipment • Location for trailers • Jobsite access, parking • Jobsite security issues • Subcontractor’s schedule • Coordination with other work • Safety program • Introduction to key jobsite personnel An AGC Construction Learning Tool

11. Activity: Subcontractor Orientation • Topics for Orientation: • Jobsite access • Storage of material • Schedule for work • Weather protection • Coordination with other work • Safety • Jobsite security • Clean-up • Communication channels An AGC Construction Learning Tool

12. Activity: Subcontractor Orientation • Subcontracts to Examine: • Structural steel, joist and deck erection • Roofing, roof insulation, and flashing • Building electrical • Building plumbing • Overhead doors • Windows/storefront • Painting An AGC Construction Learning Tool

13. Managing Subcontractors While They Are on the Job • Meeting at start of work between superintendent and subcontractor foreman: • Quality of work expected • Coordination with other work • Expectations for clean-up • Hours of work • Security aspects • Safety program • Access and equipment usage An AGC Construction Learning Tool

14. Documenting Subcontractors • Document subcontractor activity • Document material delivery to site • Document when subcontractors are not available • Document in reports and with photographs An AGC Construction Learning Tool

15. Changes to Subcontracts An AGC Construction Learning Tool

16. Managing Subcontractors Before They Leave the Jobsite • Discussion between superintendent and subcontractor foreman: • Inspection of work, plan for remedial work • Work remaining to be completed, plan to complete it • Acceptance of finishes by other subs • Cleaning of work, and waste disposal • Protection of work in place An AGC Construction Learning Tool

17. Managing Subcontractors Before They Leave the Jobsite • Discussion between superintendent and subcontractor foreman: • Delivery of spare materials and parts • Delivery of O&M materials and instruction • Schedule for any additional work • Arrange for completion of punch list work An AGC Construction Learning Tool

18. Activity: Case Study, Subcontractor Management • Building envelope needs to be complete by October 7 to avoid interference with Tenant Improvements Contract • Read subcontractor action descriptions • Discuss, in groups, what could have been done to avoid the problems An AGC Construction Learning Tool

19. Activity: Case Study, Subcontractor Management An AGC Construction Learning Tool

20. Using on the Job What You Learned Today • Jobsite Assignment • What costs have subcontractor problems caused on your project? • Who had to pay for the costs? • What delays were caused by subcontractors? What costs due to delay? • What portion of your time do you spend managing subcontractors? • Would communicating your expectations reduce subcontractor problems? An AGC Construction Learning Tool

21. Using on the Job What You Learned Today • To get ready for Session 8: • Read Session 8 • What risks are being taken with your current job? • What costs can occur from these risks? • How are the risks being managed on your project? An AGC Construction Learning Tool

22. An AGC Construction Learning Tool