Shop Talk About Renovations
- By Michael Fickes
- November 1st, 1999
What do architects and construction project managers talk about when the client is out of earshot? We thought it would be informative to eavesdrop. So we got together with Paul Marston, president and CEO of the Atlanta-based project management firm of Richmond Sterling, and Steven Foote, SAIA, a principal with the Boston-based firm of Perry Dean Rogers & Partners, Architects. Both have handled numerous renovation and new construction projects for colleges and universities across the country.
We gave them a topic -- renovations on college campuses -- and asked them to discuss key issues related to the success of such projects. Here is what they had to say.
CP&M: It is easy to think about campus building renovation in ways that have become standard. Converting an old residence hall into an office building, for example, has become common practice. What new ideas for building renovation have you come across?
Marston: We recently handled a project for Piedmont College in Demorest, Ga. The nursing department needed a new facility. The square footage requirements were not large, only 14,000 square feet. The college found an existing space in a 30-year-old, three-story building with an apex roof, and we tucked the department within the triangular section of the roof structure.
Foote: I think that’s a tremendous example of innovative renovation. If you can put something into a volume of unused space, you can achieve tremendous economies.
CP&M: Economy, of course, always arises as a construction issue. How can facilities administrators pursue economy without producing results that look stingy?
Marston: I often talk with clients about three construction issues: time, budget and quality. In making decisions about renovations, you can play these three ideas against each other to get the kind of result you want. For example, the Columbia Theological Seminary in Decatur, Ga., wanted to renovate a 30-year-old building with a slate roof. A major question in this renovation was whether or not to remove the slate roof and install asphalt shingles. Saving the roof would cost more in terms of immediate outlays. But, in terms of life cycle costs, keeping and renovating the slate could produce a roof that would last decades. We decided to use the slate, a higher-quality decision that required a higher budget.
CP&M: Was that a difficult decision for the client?
Marston: When we first examined the question, the cost differential was substantial, about $65,000. That was unacceptable to the client. Still, the slate roof was part of the style of the campus, and campus administrators wanted to keep it. We worked hard on reducing the cost differential. Eventually, we got it down to where it would cost about $22,000 more than the asphalt shingle roof. At that point, the budget became palatable.
It took two months to work this out. By taking the roof off of the critical path, we played another issue: the schedule or timing against budget and quality to get a desired result.
Foote: When I talk with clients about economy, I talk about three issues as well: budget, quality and size. It is possible to control any two of these three issues. The third issue will be a result of decisions made about the first two. For example, you may want a 20,000-square-foot building, and you may have a budget of $5 million. Given those facts, I can tell you the quality of the resulting building.
To give you a real example of this, I can think of a renovation commission in which our assignment was to develop a column grid inside an existing building to support a new use requiring heavier floor loading. In the process, we noticed that this three-story building was tall enough to house another floor. When we built the column grid, we added structural details that would enable the college to build another floor later. In other words, we controlled the scope and quality of the project, and these changes affected the budget.
CP&M: Given the interplay between budget, quality, time and size that you’ve both spoken about, what can a facilities manager do to enable the building team -- architect and construction manager -- to avoid cost overruns?
Marston: In a renovation, exposures that can produce cost overruns are different from those in new construction. How can you contain that exposure so no one gets hurt? The architect looks at the as-built drawings and makes an educated guess at what is there. The probability, however, is that the architect won’t capture it all. So when you go into the marketplace, how do you manage the project so that the contractor doesn’t get into trouble because things weren’t seen? It’s a difficult question.
Foote: We just finished a renovation for the College of Wooster in Ohio, in which we asked the owner to allow us to do a careful but extensive demolition package before we completed the contract documents and before any serious estimates were put into place. Under this plan, the client paid for the removal of walls, floors, old plumbing fixtures and so on. When the dust settled, the design details and cost estimates could be developed more clearly. In this case, we found that the total cost of the project came down, because we removed a lot of the uncertainty associated with renovations with the early and separate demolition.
I don’t think this is done often because it requires a client to put money in place to which they are committed before getting a guaranteed number for the total project.
Paul, as a project manager, at what point in the development of documents are you comfortable in attempting to publish a GMP (guaranteed maximum price)?
Marston: The further along the documents, the more secure the price. There is no doubt about that whatsoever. But there is also some tension in this process that affects both the design and construction sides. I have found it useful to get some kind of response from the marketplace when the documents are one-third to halfway complete. Perhaps at that point, the figure cannot be considered a GMP. In letters of invitation, I’ve asked for a bottom number that will form the basis of the GMP, to be agreed upon at some future point in the development of drawings. By doing that, we can bring a construction manager on board and proceed with a team approach. Then we lay down a GMP.
At the beginning of the process, we may have set a goal that the GMP will fall within some percentage of the earlier number. But even this number comes before the drawings are complete.
Foote: This is always an issue for architects, as you might imagine. My sense is that it is impossible or at least highly unlikely that anyone could formulate a decent price based on drawings that have not yet been made. Inevitably things are put on paper that the estimators could not foresee.
Another problem is that many clients do not realize that GMPs are always geared to a certain set of drawings with a certain date on them, and when a new set of drawings comes out, a new GMP is offered. Understandably, a client will always remember the lowest GMP mentioned during this process, even though the latest drawings carrying a higher number have altered the work in dramatic ways.
So this is a difficult thing to do, unless the contingencies are generous. Worse, it also tends to raise the specter of what is sometimes erroneously called value engineering, which can quite often mean reducing scope or quality rather than adding value.
While I like the process of assembling a GMP that you describe, I counsel clients not to accept GMPs until the contract documents (not the schematics) are 50 percent to 75 percent complete.
We did this on the Wooster project I mentioned earlier. By separating the demolition package and waiting to issue the GMP until the contract documents were 50 percent complete, the project moved smoothly from start to finish.
Marston: This is one of the tugs-of-war that goes on. When do you put up a GMP and ask the client to buy? On one hand, an architect would like to involve a contractor fairly early to pull in the estimating expertise. On the other hand, the earlier you bring in the contractor, the more difficult it is to manage the economics of the project.
As Steve already mentioned, the less the architect has got on the drawings, the more the contractor will put in as a contingency. On the other hand, the more complete the architect’s drawings, the lower the contingencies and the more the architect is exposed if, upon completion, the project goes over budget. The point is, you have to be careful in thinking about when to get feedback about whether or not what the architect has drawn fits the purse.
I would also like to respond to Steve’s comment about value engineering. Certainly, value engineering is a misused phrase. Changing the granite floor finish in a lobby design to carpet is not value engineering. It is cost cutting.
But there is a role for true value engineering. I think we managed value engineering well in the Columbia Theological Seminary project where we found a way to preserve the slate roof by reducing the budget differential between renovating the slate roof and replacing the slate with asphalt shingles.
CP&M: Let’s summarize this discussion by talking about how a client -- a facilities manager -- might better manage a project.
Foote: I think they can learn to ask more questions about available options. For example, one question I would love to hear more often from clients is: What is the ideal amount of time needed to build this project? Compare that amount of time with the schedule we have proposed.
In my experience, this question always leads to a productive discussion. Take what’s happening today, for example. Because so much construction is underway across the country, many building materials are in short supply. If a client wants to pack a lot of construction into a summer between classes, material shortages may make it necessary to pay a premium to meet that schedule. On the other hand, extending the schedule to ensure reasonable material costs may reduce the budget substantially.
Marston: This may sound strange, but I know of projects that have gone over budget simply because the client in one way or another lost focus on the budget.
In the college market, clients are more than a single entity or person. The entire college is the client. Department heads can get into the process, with one department head asking for something and another asking for something else. None of these requests by itself may involve more than a couple thousand dollars. But an accumulation of requests can lead to a loss of focus on and control of the budget.
So it’s important for the person or small group controlling the project to review budget issues week by week, to think about exposures to costs during the past week, and to assert control as soon as it becomes necessary.
Foote: Another approach to this problem is to give authority to the professionals consulting on the project -- the architect, project manager and construction manager -- to act as lightning rods when need be. I believe that one of the things we are paid to do is to deliver hard messages when necessary.
Marston: I think it is also important for clients to know the marketplace. Who are the contractors? Who is doing what in the market right now? What company has the good project managers? What are those people doing right now? The success of a project depends to a great extent on a couple of people: the project manager who will do the purchasing and the field superintendent who will manage day-to-day work. I always focus on those two people within the context of the company from whom I’m going to buy a project.
Foote: I agree. This is true of architectural firms as well as construction management firms. Just because you hire a firm to design a project doesn’t mean that you’ll be working with the people in that firm who did another building that you admired when you were interviewing them.
And, when you hire a construction management firm, you are buying the experience of the people in the firm, not stacks of building materials or inventories of tools. You are buying the talent of the people working there.