Project Management Workshop: Session 2 - Project Startup and Planning

1. ASA PM WorkshopProject Management Session 2

2. Presenters for Session 2 • Jeffrey Bellfield, Scaffold Resources • Owner of Company • 23 Years as a Successful Company • Steve Groth, Chiaramonte Construction • Vice President Operations • Over 35 years construction experience

3. Session 2 topics • Project Startup and Planning • Reading and Understanding Specifications • Communications and documentation • Purchasing • RFI’s and Tracking of Issues • Work-in-Progress Reporting • Completing and Closeout of a Project

4. Project Start Up and Planning • Confirmation of Contract Scope, Terms and Documents • Estimating to PM Transition • GC Kickoff Meeting (procedures, early schedules/site utilization) • Budget/Schedule of values • Procurement • Permits • Submittals • In-house Operations Meetings (Early Kickoff, Preconstruction)

5. Project Start Up and Planning • Typically 75(+) % of PM’s efforts on a successful project are put into the Project Start-Up and Planning Phase • Fail to plan, plan to fail

6. Project Start Up and Planning

7. Project Start Up and Planning confirmation of contract scope, terms and documents CONTRACT SCOPE AND PRICE • Compare to price proposals and negotiation notes. CONTRACT DOCUMENTS • Do we have and/or have access to all the contract documents listed in the GC’s subcontract document? • Conforming the bid set (IF not already done so by estimating) – insertion of addenda drawings, posting of bid RFI’s, etc. • Electronic document file posting and organization.

8. Project Start Up and Planning confirmation of contract scope, terms and documents CONTRACT TERMS • Confirm terms and any riders are per previous contracts with this GC, and/or have been reviewed and amended as required by an officer of your firm.

9. Project Start Up and Planning transition from estimating to project management THE HANDOFF MEETING • Preparation – initial review of pertinent drawings and specifications for your work, along with the proposal and estimate – develop questions for meeting • Meeting – review estimator’s general approach to job, and production rates, access and equipment factors based on approach; get questions and issues (from preparation review) resolved. If contract not yet executed, can scope or price amendments still be made before execution?

10. Project Start Up and Planning transition from estimating to project management ADDITIONAL TRANSITION SUPPORT Detail Follow-Up Meetings – use Estimating as a resource to assist you in getting up to speed faster (at this point, they know the job better than you) • Going through drawings and identifying work elements, special conditions • Estimate breakouts by area, task, etc. that can assist you in Preliminary Schedules and Requisition Schedule of Values

11. Project Start Up and Planning General contractor kick-off meeting INTRODUCTION MEETING • Schedule as soon as possible, include PM and Field managers • Confirm submittal, correspondence, billing procedures (helps keep from doing submittals and Schedule of Values twice) • Obtain/review any baseline or update schedules from GC (helps identify early if disconnect between our bid and their expectation, and assist in preparing Schedule of Values)

12. Project Start Up and Planning budgets / schedule of values BUDGETS • Budget = estimated (or target) COST of performing the project • Creation of budget involves a conversion of the Estimate information to a cost tracking system • Depending on company, this function may be performed by the PM, or by a financial/corporate officer (the PM still needs to understand the budget and cost system regardless)

13. Project Start Up and Planning budgets / schedule of values BUDGETS (continued) Depending on company/industry, budgets and cost reports are developed using different tracking metrics • Labor – by classification (mechanic, laborer), and associated manhours and payroll costs; or by specific cost code task (Wall Formwork, Column Formwork, Place and Finish Slabs) where all classifications working on that element are assigned to that cost code

14. Project Start Up and Planning budgets / schedule of values BUDGETS (continued) • Materials – major items typically tracked by Quantity of units and cost • Equipment – trades heavy on equipment likely to track a time unit (e.g. day, month) and associated cost • Allocation of indirect/overhead elements to the project (versus elements that are part of overall G&A Overhead) This topic will be explored further in Session 4.

15. Project Start Up and Planning budgets / schedule of values SCHEDULE OF VALUES (FOR REQUISITIONS/PAY APPLICATIONS) Primary objectives – GET PAID with POSITIVE CASH FLOW for the project What is POSITIVE CASH FLOW? • Basically the ability to pay your bills throughout the project without having to dip into company reserves or line of credit

16. Project Start Up and Planning budgets / schedule of values SCHEDULE OF VALUES (continued) What are Road Blocks to achieving POSITIVE CASH FLOW? • You are billing at the end of the month in which you are performing the work • Typically at best you will receive payment on that bill 20 to 30 days later (on current commercial projects more like 40 to 60 days) • The Owner/GC is only paying 90% of the billed amounts

17. Project Start Up and Planning budgets / schedule of values SCHEDULE OF VALUES EXERCISE • Painting subcontract = $100,000 • 4 story building with East and West Wing; GC requesting assignment of billing amounts for each floor/wing for schedule cost loading purposes, and requires separate line item for punchlist = 5% of Subcontract • GC prelim schedule shows progression starting 1st floor East, then West, then repeat upward

18. Project Start Up and Planning budgets / schedule of values SCHEDULE OF VALUES EXERCISE (continued) Your estimator did take off by floor, and your estimate program can produce breakout by floor as follows - • 1st floor = $15,000; 2nd Floor = $25,000; 3rd Floor = $20,000; 4th floor = $25,000; contribution to OHP = $15,000; Total Estimate = $100,000 • What is your Schedule of Values for this project?

19. Project Start Up and Planning schedule of values exercise - example • SCHEDULE OF VALUES – PAINT PROJECT XYZ • Bonds and Insurance = $3,000 • Paint Submittals = $2,500 • Mock-Up = $2,500 • Mobilization = $5,000 • Subtotal Upfront Items = $13,000 (est = $0) • 1st Floor Materials = $6,000 (30% of 1st floor items) • 1st Floor East Install = $8,000 • 1st Floor West Install = $6,000 • Subtotal 1st Floor Items = $20,000 (est = $15,000) • 2nd Floor Materials = $9,000 (30% of 2nd Floor Items) • 2nd Floor East Install = $11,000 • 2nd Floor West Install = 10,000 • Subtotal 2nd floor Items = $30,000 (est = $25,000) • 3rd Floor Materials = $4,000 (30% of 3rd floor items) • 3rd Floor East Install = $6,000 • 3rd Floor West Install = $4,000 • Subtotal 3rd Floor Items = $14,000 (est = $20,000) • 4th Floor Materials = 5,000 (30% of 4th Floor items) • 4th Floor East Install = $7,000 • 4th Floor West Install = $6,000 • Subtotal 4th Floor Items = $18,000 (est = $25,000) • Punchout = $5,000 (=5% required by GC) • Total SOV = $100,000

20. Project Start Up and Planning procurement Every organization is different regarding the involvement of PM in procurement. Further discussion on purchasing later in class session. As PM, it is your responsibility to insure • Pricing consistent with estimate and budget goals • Priority of procurement in advance of project installation schedules • Purchased materials/systems meet project requirements • Clear and complete scope of materials/services for LS purchases and any tier subcontracts

21. Project Start Up and Planning permits and jurisdictional REQUIREMENTS Some trades have few or no permit requirements, others (e.g. sprinkler, electrical/fire alarm) have extensive permits and submissions. As PM, your planning process needs to include • Review and understanding of any/all permit requirements and submissions required by your subcontract and local code/jurisdiction • Determination of format required, steps and in what sequence, conservative timetables for each step including review and resubmission if necessary

22. Project Start Up and Planning permits and jurisdictional REQUIREMENTS Do shop drawing submissions to jurisdictional agencies first require Engineer-of-Record review and approval? What types of permit or submission requirements may be required for trades that do not require a trade permit? • Public space (lane closure, parking meter) • Hoisting or temporary elevator • Sediment control

23. Project Start Up and Planning permits and jurisdictional REQUIREMENTS Other potential jurisdictional requirements to look for and address • Prevailing Wage and Certified Payroll (do additional classifications need to be pursued?) • First Source/local hiring requirements • Apprenticeship (Is program registered with jurisdiction? Is a fee contribution required per manhour?)

24. Project Start Up and Planning submittals The Submittal process will be reviewed later in the presentation. As part of the Project Start-Up and Planning Process • Detail review of specifications and project requirements for all submittal requirements of your work • As a best practice, create a Submittal Register listing out all requirements by Specification section (also used to track submissions and approvals/actions) • Identify and prioritize submittals by fab lead times and schedule needs

25. Project Start Up and Planning in house operations meetings Best practice to involve operational personnel (superintendent, foremen, operations manager) as early in process as possible and practical. EARLY KICKOFF MEETING(S) • Review general job approach (access, target and peak crew/equipment requirements) • Review details for how certain materials should be configured and/or submitted for most efficient installation • Review any available GC information and develop your detailed schedule and sequencing (including sequencing with other trades)

26. Project Start Up and Planning in house operations meetings PRECONSTRUCTION MEETING(S) • Include superintendent, foreman(s), Operations Manager • Multiple precon meetings as required based on different phases/operations, or as personnel changes • Review drawing details, subcontract scope, list of approved materials and purchase source, schedule milestones, target production and crew size/make-up • INSURE NO DISTRACTIONS AND SUFFICIENT TIME GIVEN TO THESE MEETINGS – THEY ARE TOO IMPORTANT TO HALF __ __ __!

27. Reading and Understanding Specifications • What are Specifications and Why Important? • Submittal Requirements • Related Specifications, Tricky • Don’t Forget Division 1 – General Requirements • Closeout Requirements • Just Build It Per the Specs!

28. Notices, communications and documentation • What is a notice? • Where to find notice requirements for your subcontract • Typical provisions with notice requirements • What constitutes contractual direction (especially for changes to subcontract price and/or time of performance) • Types of documentation and key elements • Communication types and uses

29. Notices, communications and documentation • A written notification to GC that an event or an action by another party has occurred, or an instruction by GC (or Arch/Engr or Owner thru the GC) has been received by Subcontractor, which has impacted (or may impact) the Subcontractor’s price and/or time of performance, for which Subcontractor is reserving its rights to equitable adjustment.

30. Notices, communications and documentation • This notification typically includes a request to rectify condition, or to provide written confirmation that Subcontractor is to proceed as a change to Subcontract, depending on contract clause for which the notice is being provided.

31. Notices, communications and documentation • Notice provisions in subcontract include both the requirement to provide written notice and the time table in which the notice must be issued to GC. • Time table typically is started from Subcontractor receipt of a document or instruction, occurrence of an event, and/or first discovery of an impact resulting from an event.

32. Notices, communications and documentationwhere to find notice requirements • Subcontract Terms and Conditions (also known as “Boiler Plate”) • General Requirements (attached either by separate exhibit or part of Scope exhibit of the Subcontract) • The Prime Contract (contract between GC and Owner), and any associated General and Specific Provisions that are attached or referenced exhibits • As part of the Specific Scope exhibit (not typical)

33. Notices, communications and documentationtypical provisions with notice requirements • Changes • Delay and/or Suspension of Work • Differing Site Conditions and Encounter of Hazardous Materials • Schedules • Disputes • Substantial Completion of Work • Payment Claims (Liens, Bonds) • Default Termination by Subcontractor

34. Notices, communications and documentationwhat constitutes contractual direction • Depends on what your subcontract says – read the subcontract! • Most contractual direction involves changes (or disputes) to the subcontract • Most subcontracts allow GC to make changes at any time, but almost always it must be in writing to Subcontractor. Those who proceed on verbal instruction carry the entire risk of payment. • Some subcontracts authorize changes ONLY UPON RECEIPT OF SIGNED CHANGE ORDER EXECUTED BY GC. It is a business decision to proceed with change work even if directed in writing by GC in the absence of a signed change order.

35. Notices, communications and documentationwhat constitutes contractual direction • GC provides many types of direction throughout the project. None of theses are directions to proceed as a change to the subcontract unless specifically stated so. • If a GC issues a document (e.g. ASI, RFI response, schedule update) which Subcontractor deems to result in a change to Subcontractor Price and/or Time of Performance, then Subcontractor must give BOTH notice AND request GC’s written directive to proceed with this instruction as a change to the Subcontract, before proceeding with change.

36. Notices, communications and documentationwhat constitutes contractual direction • Many GC’s will respond to Subcontractor’s notice of change by issuing a PCO or PCI number. While this typically is a good indication that the GC is treating this as a change, in reality it is nothing but a tracking number UNLESS it includes that Subcontractor is to proceed with this work as a change to the subcontract.

37. Notices, communications and documentationtypes of documentation and key elements DAILY REPORTS • One of most important documents in event of a claim or issue • Key information includes weather (to support weather delays), specific locations of work (documents specific progress relative to an as-planned schedule), list of equipment (extended time costs), and any specific areas where preceding work is not complete or ready (to document schedule delay claims to, or defend claims from, GC).

38. Notices, communications and documentationtypes of documentation and key elements MEETING MINUTES • Documents and confirms commitments/agreements discussed verbally at meeting (NOTE – if any such agreements revises the Subcontract, you should still provide separate notice and request written direction and ratification to proceed as a change to the subcontract). CONFIRMING EMAILS AND LETTERS • Sometimes this is the only documentation or resolution of an issue from a GC team that refuses or doesn’t put things in writing.

39. Notices, communications and documentationCOMMUNICATION TYPES AND USES CERTIFIED LETTERS • Often required for notices under Disputes, Suspension of Work, Bond/Lien Claims, and Default Termination by Subcontractor, particularly in older subcontracts. EMAILS • Most current boiler plates in subcontracts now include email as a form of written notice. Emails have substantially taken the place of letters, memos and transmittals.

40. Notices, communications and documentationCOMMUNICATION TYPES AND USES PHONE AND IN-PERSON DISCUSSION • While texting and emailing seems to be preference of current generation, direct conversation is still very effective and getting resolution and results • Many people will take tougher stances behind a phone or screen, than they would in person. • Tone of emails and texts are easily misconstrued and misunderstood, causing a reaction that may not be warranted. • You can always document in writing the results of your conversation and hopefully agreement on an issue.

41. purchasing: How to get the right materials on time • Understanding the Project • Understanding Specification Requirements  • Buyout Log • Timeliness, Contractors Schedule • Substitutions • No One is Telling You the Truth!

42. RFI’s, and the Tracking of Issues • What an RFI is • What an RFI is not • Tracking of Potential Issues and Changes • Use of Software

43. RFI’s, and the Tracking of Issues What an rfi is • RFI = Request for Information • Typically means there is missing information, dimension and/or detail that could not be found in diligent review, or a conflict requiring decision. • Depending on how question written, can be very open ended.

44. RFI’s, and the Tracking of Issues What an rfi is not • It is not in itself a basis for claim of extra work, unless you describe in the RFI what you (as a reasonable contractor) assumed as basis of bid based on information available. • It is not a direction to proceed with work as a change to the subcontract. You must give written notice and request for GC written verification and direction to proceed with the response as a change to the subcontract.

45. RFI’s, and the Tracking of Issues tracking of potential changes and issues Best practices include – • Log in of GC RFI’s issued (including those GC RFI’s which were generated from your RFI’s), including notation of date received, whether potential change to subcontract, date of your follow-up request for direction or additional information, date of response, PCO reference if ratified as a change to subcontract, and when posted into field/office set or on computer file set. • A similar log for Architect Supplemental Instruction (ASI’s), “Field Change Instructions”, and other such instruction documents that are not issued as changes to the contract • Establish your PCO number for above items once determined to be changes, and continue to track on a PCO log.

46. RFI’s, and the Tracking of Issues use of software • There are many proprietary, data base Project Management software systems on market that allow linking of tracking lists/logs without duplicate entry. • These can also be very limiting in how information is presented and viewed, vs. “Microsoft Office products” including Excel spreadsheets.

47. Work in Progress Reporting • What is Work in Progress Reporting and Why is it Important? • Initial budget/Actual Budget • Cost projections • Labor • Material • Equipment • Keep it Simple!

48. Finishing and closing out a project • Final Change Orders • Settlements • Retainage • As Builts • LEED documentation • Warranties

49. Finishing and closing out a projectfinal change orders Best practice is to diligently pursue and obtain change orders as you go, so that any final change order dollar amounts are as minimal as possible. Pursue any final change order amounts for payment at earliest possible time after Substantial Completion of your work. Obstacles in obtaining final change orders include – • GC and Owner staff distracted with getting Certificate of Occupancy • GC and Owner now out of contingency and change funding • Loss of perceived / actual leverage now that you have completed your work.

50. Finishing and closing out a projectsettlements (claims, backcharges) Best practice for Final Change Orders apply to Settlements as well. Claims • Do not leave until the end; try to resolve at lowest possible level but get upper management of both parties involved sooner than later. Backcharges • Communicate with GC periodically through job to confirm no backcharge exposures, or if any what they are, and send confirming documentation • Try to resolve/close directly with other subcontractors any claims/backcharges before end of job, especially on a bad job when tendency is survival mode.