Above: The O'Fallon Corporate Building is one of approximately 30 buildings in which Construction Strategies serves as program manager. Construction on the three-story, 100,000-square-foot building started in August 1998 and was completed in March 1999.
Getting results
Construction program management is advantageous in a variety of construction projects. Following are client examples illustrating how program managers delivered results to area construction jobs.
Construction Strategies Inc.
One recent building that used CSI as program manager was PRC Investments on Manchester Road. The owners had been renting space, but wanted their own building. The firm’s attorney and real estate agent invited CSI into the project during site selection.
“The first choice site had issues regarding soil compaction and drainage,” Striler explains. “CSI staff offered solutions and cost factors related to those matters as well as suggestions about other sites. Armed with facts about their choices, the client selected one of the other sites that better suited their needs and budget.”
CSI does not hold any of the contracts related to a construction project, but Striler says his firm assists in preparing detailed customer contracts for each client. “Our contracts are very owner protective, but not onerous,” he explains. “We customize the contract for each phase of the project right down to details about code compliance.”
Wellington/CPM
For Wellington, the Compton Hill Reservoir Project had three unique elements: 1) replace two 33-million gallon-per-day water tanks without disrupting the neighborhood; 2) define constraints on budget and meet the estimates; and 3) complete the project before April 1999. As program manager, Wellington’s firm helped with site logistics planning and consulting with engineers and designers.
“We developed a plan to address all the neighborhood needs and the city’s needs for budget and timing,” Wellington continues. “We were straightforward with the owner, in this case, the City of St. Louis, about the challenges. The $20 million project was completed four months early and within one percent of the projected budget.”
Landmark Contract Management Inc.
One of Landmark’s first projects is also one of its most visible, the Universal Studios Florida theme park. Landmark’s services to the developer included planning, implementation, scheduling support services, document control, dispute resolution and claims management, field coordination and change management, as well as construction management.
Landmark is also working with Francis Howell School District in St. Charles County. “Value is a major factor for schools; bond issues can be tough to pass,” Hornburg points out. “Landmark has helped the school district with demographic and population studies to determine needs and construction services that delivered the lowest cost-per-square-foot schools in Missouri, recognized as one of four governor’s Award-winning school districts.”
For another Landmark client, time was the key issue. Station Casinos in Kansas City and St. Charles wanted to be the first opened with newly legal slot machines. Landmark’s program management techniques allowed the client to open quality slot areas within 30 days of the new law taking effect.
The price is right
In most cases fees for construction program management are determined on a lump sum based on the number of hours and months the program management firm expects to invest in the project.
“Normally, we put ourselves at risk as well,” Striler says. “My fee doesn’t change just because the client selects a more expensive style of brick. My job is to keep the project going according to the owner’s priorities of schedule, budget and quality.”
Wellington adds, “Using the fixed fee or guaranteed maximum price puts the owner at ease. Whether it’s a tight budget or tight time schedule, we assume the risk and assure the owner that all project requirements will be met.”
Hornburg agrees, “Fees for program management vary widely depending on the number of locations, length of project and specific services requested. Expect fees to be quoted as a lump sum. It is common for total fees to be about 3 to 5 percent for full program management and 1 to 2 percent for inspection only. The percentages will be smaller for very large projects, of course.”
Foundations for success
Because program management is a relatively new niche in construction, learning about a firm’s staff, experience, process and benefits is the start of building a partnership.
“All team members are at fault when a project is over budget,” Striler states, adding that the key component to success is an objective program manager who creates a process for the building project and continues it across the board from the needs analysis to selecting the general contractor to interviewing the onsite project manager and supervisor.
“The ability to create a relationship between the owner and program management firm is key,” Hornburg says. “You may not be able to do that with just a half-hour presentation and interview. Take time to get acquainted. Ask for a list of all clients within the last three years, not just a few preferred references.”
“Owners should expect forthright communication from their program managers in reference to the pros and cons of project decisions. These decisions should be documented and tracked through management information systems,” Wellington states. “The selection of a program manager should be based on familiarity with a specific project type, and the company’s track-record in providing the services required for the project.”
Wellington emphasizes the importance of a thorough review of the program manager’s qualifications with special focus on project-specific experience and client service. “The ultimate goal is building a relationship between the owner and program manager that fosters a team-oriented environment, perpetuated by a high level of trust.”
Hornburg, Striler and Wellington agree that success in using program management is reduced cost for each construction project. They advise viewing program management as an investment, which should save an owner far in excess of the fees.
“The greatest opportunity to affect the cost of a project is at the beginning, when many choices are being made about the site, the design, the materials and the schedule,” Hornburg states. “If a program manager is appropriate, bring him or her in as part of the plan. Hiring a program manager after making the critical early decisions is more like hiring an inspector or traffic cop.”
Cheryl Walker is a St. Louis-based free-lance writer.
