Understanding and Managing Project Costs Session 8

1. Understanding and Managing Project CostsSession 8

2. Review of Session 7 • Subcontractor performance can impact cost by: • adding labor costs due to delay • not accomplishing work anticipated • requiring additional work by your crews • defaulting or refusing to do work An AGC Construction Learning Tool

3. Review of Session 7 • Management can reduce cost impact by subcontractors • during the bid period • during the buyout of subcontracts • before subcontract work begins • while the subcontractor is on the job • before the subcontractor leaves the job An AGC Construction Learning Tool

4. Unanticipated Costs and Their Impact • Costs not anticipated in estimate • From a variety of sources, but can be reduced by positive jobsite management • Knowledge of regulations • Plans to avoid accidents and occurrences • These costs come directly from anticipated profit An AGC Construction Learning Tool

5. Safety-related Losses • Direct Costs: • Lost time for employees injured • Lost crew time due to disruptions • Damaged equipment, material, in-place construction • Investigation costs An AGC Construction Learning Tool

6. Safety-related Losses • Indirect Costs • Low productivity • Higher workers comp rates • Higher EMR, resulting in higher rates, and indication of safety program An AGC Construction Learning Tool

7. Example Costs • Workers Comp • Medical costs $ 10,550.00 • Wages costs $ 6,440.00 • Direct Costs: • Crew lost time 512.00 • OSHA fine $ 5,000.00 • Superintendent time $ 1,600.00 • Additional safety training $ 1,280.00 • Total Costs $ 25,342.00 An AGC Construction Learning Tool

8. Example Costs • Crew produces $30.96 profit per day • Cost of accident comes from profit • $25,342.00/30.96 = 818 days • Crew needs to work 818 days or 3 years and 3 months to recover accident costs! An AGC Construction Learning Tool

9. The EMR Advantage • EMR = Experience Modification Rate; factor based on accident claims • Average EMR = 1.0 • Good safety performance: less than 1.0 • Poor safety performance: more than 1.0 • EMR affects Workers Comp rates: • Example: EMR 1.0 has rate of $1.50/hr. • EMR of .6 has rate of $.90/hr • EMR of 1.5 has rate of $2.25/hr An AGC Construction Learning Tool

10. Example Comparison(Total based on 15,000 labor hours) An AGC Construction Learning Tool

11. Top 10 Cited Violations • Guardrails not provided at open-sided floors or platforms • No head protection (hard hats) • Ground fault protection not provided • Electrical path to ground missing (ground plug cut off) • Protective systems not provided at excavation and trenching An AGC Construction Learning Tool

12. Top 10 Cited Violations • Scaffold toe boards/guardrails not installed • Personal protective equipment not used (respirators, etc.) • Stair rails not installed (4+ risers) • Approved containers for flammable liquids not used • Poor housekeeping An AGC Construction Learning Tool

13. Safety Inspectors Look For: • Safety plan for entire site • Presence of a competent person in charge of jobsite safety program • MSDS available on site • Special current emphasis areas, such as ergonomic work habits, scaffolding, trench safety, fall protection. An AGC Construction Learning Tool

14. Safety Inspectors Examine: • Conditions that produce 90% of construction fatalities and accidents: • Falls from roofs and elevated platforms • “Struck by” incidents • “Caught in/between” accidents • Electrical accidents An AGC Construction Learning Tool

15. Superintendent’s Safety Responsibilities • Use a jobsite-specific safety plan • Provide proper protective equipment • Require all subcontractors to submit plans and comply with the jobsite plan • Be sure all workers are oriented to the safety plan and rules • Provide weekly jobsite safety meetings An AGC Construction Learning Tool

16. Superintendent’s Safety Responsibilities • Maintain a chemical safety program, with plan and MSDS • Provide regular jobsite safety inspections • Provide documentation of all accidents • Maintain communication with employees on safety • Use available resources to help An AGC Construction Learning Tool

17. Safety Analysis Activity An AGC Construction Learning Tool

18. Weather Precautions • Securely cover partial construction • Cover concrete with insulating blankets • Install temporary bracing on walls • Install clips and fasteners as systems are installed • Provide temporary heat as necessary An AGC Construction Learning Tool

19. Environmental Liability Areas • Dust generated by construction • Pollution (other than dust) • Noise and vibration • Storm water generated on the site • Site access • Disposal of construction waste An AGC Construction Learning Tool

20. Stormwater Plan Activity • Areas to examine: • Construction access • Truck wash-down areas/Concrete truck wash-out • Schedule for site work • Sediment ponds and traps • Filtering of storm water • Soil stabilization • Slope protection • Temporary drainage channels and piping • Pollutant control • Protection of nearby stream An AGC Construction Learning Tool

21. “Hot” Personnel Policies • Sexual discrimination and harassment • American with Disabilities Act (ADA) • Requires that accommodation be provided to disabled employees • Alcohol and drug policies and programs An AGC Construction Learning Tool

22. Tool Loss Program • Administer tool inventory program: • Record all tools received by and shipped from jobsite • Implement tool checkout procedure • Monitor tools out for repair • Remove tools from inventory when taking them out of service • Prohibit any tools from leaving the jobsite An AGC Construction Learning Tool

23. Theft/Vandalism Program • Necessary site fencing • Guards/night watchman • Guard dogs • Security lighting • Alarm systems An AGC Construction Learning Tool

24. Using on the Job What You Learned Today • Jobsite assignment: Examine your project for areas where these losses can occur: • Safety • Environmental areas • Personnel management • Criminal activity An AGC Construction Learning Tool

25. Using on the Job What You Learned Today • To get ready for Session 9: • Read Session 9, Cost Control Strategies • Be sure you understand these concepts: • Identifying trends for cost overruns • Strategies for optimizing project profitability • The use of changes for appropriate cost increases • Backcharging subcontractors for appropriate affected costs An AGC Construction Learning Tool

26. An AGC Construction Learning Tool