Sustainability Blog

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A well established national real estate developer is beginning operations in the upper midwest.

This represents an unusual opportunity for a small  number of design-construction propfessionals to form the core of the new organization.

In general, experienced office-based and field-based management members are needed.

Please inquire through the "contact" page on this web site. (www.wilkinsonadvisors.com ). Alternatively, resumes and cover letters are also welcome to be sent to

Confidentiality is assured.

 

 

Essay: the 30% opportunity hiding in plain sight

By George R. Wilkinson, PE

Scandia, Minnesota

In the early 1950s and after a long struggle, McCarthyism was waning. The American spirit though bruised is intact and on the rise; a good thing because the Russians didn’t hesitate to launch Sputnik after closing the iron curtain on Eastern Europe.

What was that good thing? The US federal government under took to mobilize the intellectual assets of the younger generations to meet the challenge of technology and engineering symbolized by the Russians launching a menacing, volleyball-sized satellite.

I was a direct recipient of that federal initiative. To my surprise I was tagged as a potential learner and was pushed forward in my education. I have never-ending gratitude to the public school system in the State of Iowa.

Well, here we are again nearly 70 years later…. challenged by the Russians in another European regional war and more contemporaneously facing a global climate crisis. I am a lifelong engineer and designer of buildings as well as related components of a man-built environment. Unfortunately, my industry does not score well in it's application of a applied technology to help design and construct solutions to reduce  30% overall cost of energy for buildings in the United States.

Without going to further afield here, I suggest that leveraged solutions lie at the heart of this market society; “market society” means a society that in part runs on raw financial mechanics. Further, these raw financial mechanics are managed and directed by boards of directors, and executives that make financial decisions and provide leadership. This can be viewed as an opportunity.

Anecdotally, over the past several weeks and in my consulting practice, I have watched a series of decisions concerning a large real estate investment which unfortunately could not be more damaging to the environment. Not a single choice seemed to grow from a deep and effective awareness of the consequences of these middle-management decisions. The opportunity is executive investment leadership.

In my industry, organizations who wish to influence these decisions are often “selling” to the wrong parties. While design professionals and contractors are tactically in the middle of these processes, they do not put these processes in motion. Consequently, without these upstream hearts and minds being informed and called to action, our market society fails to mobilize in response to the “Sputnik” of this era.

So indeed, the solution seems to lie in focused public dialogue that ultimately brings investment in the tactics that will meet the climate change head-on. As one of my wise colleagues once quipped: major shifts in societal momentum are often spear-headed by government action. Sadly, last week the federal government failed to act (again). That federal government failure is coincident in time with the local, ill-informed investment choices described above.

Make no mistake, appropriations are essential. However, effective discourse and learning in this market society come first. I hope you will post this letter; I am anxious to see what responses it might provoke.

 

Postscript:

The image at the top of is the post is the new USAA facility in Dallas and is an example the application of innovative and applied building technology: a hybrid steel and timber building. The hybrid uses crosslaminated timber ("CLT") for walls and an efficient steel frame for the roof. The CLT is approriate for the wall and is both energy effective and beautiful. Clearly mission at USAA led the way. Well done!

Also see: https://kalesnikoff.com/projects/cross-laminated-timber-warehouse/ and https://kalesnikoff.com/

 

 

Tuesday, 21 June 2022 01:04

The Essential Management Dilemma

Written by

 

The Essential Dilemma of Managing Building Project  Costs

                                    By George Wilkinson PE, at Wilkinson Building Advisors

                                      06/01/22

 

Executive summary

In a evermore globally competitive marketplace, the US construction industry is lagging behind other nations. This is remarkable considering that in 1955, the United States was the only fully formed democracy, and industrially intact country on the planet. Thus, 65 years later, here we are…. In a horse race to hold a place in the global markets.

I am a small fish in a large pond; an architectural engineering consultant with a great deal of experience. As a result of long practice, I advocate for design-build organizational and contractual frameworks. With those frameworks, sound financial planning and management are always mandatory.

Within that subset, I have devised a change management system called “the Authorization System.”

It is an essential part of the administrative apparatus to avoid disputes that often arise from failed judgement and attention; in essence a lapse in the application of professional ethics.

This essay tells that story I as I see it.


 

Introduction and context

Throughout my career, I have been a design-builder and have believed that skilled application of the design-build process was a reliable path to project success. Success is defined in this case to mean all parties are satisfied with the outcomes whether it be scope, time, or cost.

I have written numerous article blog posts at wilkinsonadvisors.com and in turn on my account at LinkedIn. (see appendix 1 for an abbreviated list) These posts have dealt with many practice issues and can be found at  www.wilkinsonadvisors.com> blog. Thematic among these articles is the issue of cost planning and management as a critical core standard of practice.

Ethics and cost planning and management

In this writer’s view, project management has a fundamental “soft-side” aspect; soft-side being defined as how humans behave. Considering that project disputes and claims often involve contract sums, doing the right thing is often on the table and subject to human error frailty and judgement, thus an ethical consideration.

Project cost planning and management in and of itself has many subsets ranging from predesign planning, feasibility studies, development period budgeting, project design and construction execution, project close-out, and warranty period management. Amid all of these, the issue of change management, is a common flashpoint for disputes

Design-build platform for success

In this writers opinion, a well executed design-build project is far less dispute-prone than a design-bid-build project. I hold this opinion borne of experience for a variety of reasons:

  1. Design and construction are a logical and inseparable whole
  2. Separate silos of design and construction are a risky place to make business deals
  3. A meeting of the minds as to scope, time, and money flow are more easily obtained when the project team has a single point of administrative authority; both design and construction
  4. For the “Owner”(the party who pays the bills) a single point of contract authority lends efficiency and predictability to outcomes
  5. The argument about “who is looking out for the Owner” has been debunked by business history

Cost management and change management

The design build forms of agreement all address change management. I define change management to mean any change to an executed contract; the changes may take any combination of scope, time, and contract sum often including all three. An all too common cause for disputes arising during the construction period is the untimely resolution of change. Apparent change can arise in a variety of ways including:

  1. The Owner directs it
  2. Unexpected field conditions are discovered
  3. There are gaps in the contract documents
  4. There are contradictions in the contract documents

Timely closeout of apparent change is essential to the successful project. However, the compression of interlocking field activities, the absence of project schedule float time, and project management burdens and inefficiencies all oppose timely close-out.

What now?

The three-legged stool

Before we go any farther, it is important to stipulate that change can take many forms and combinations. It can involve the scope of work, the contract sum, and the project schedule. Remember that a change in the work may NOT trigger a change in the price and schedule. Owners are warned however, this neither likely nor common. (As a related aside, some contract forms empower the Owner to issue Contact Change Directives before consensus in connection with schedule and contract sum. Discussion of this broad and contentious issue is outside of the scope of this essay.)

The Authorization System

As a standard of practice, Wilkinson Building Advisors uses and recommends an “authorization system” for change management and its administration. Here are the essential characteristics:

  1. Any party to a contact can initiate a change request (scope, time, contract sum, or any combination)
  2. The design-build manager and the Owner are obliged to respond promptly
  3. Computerized project communication platforms are employed to hasten communication, resolution, and record keeping
  4. Various paths for close-out are built into the system in connection with the change request situation
  • An immediate determination (scope, time, and contract sum or any combination)
  • An agree-to time for the determination
  • A default in the case that the parties can not arrive at a determination

The Archilles heel

The common and root cause of a failed authorization is attempting to close change management at the time an invoice or application for payment is submitted, aka maladministration (in this writer’ opinion). This happens because changes were either not submitted or closed in a timely manner or both. This burden of fault may lie with any combination of 1) the Owner, 2) the subcontractor, or the 3) Project Manager with overall administrative authority.  It is common for subs to default to the Project Manager to initiate change management. This is a cardinal mistake.

This process is not as complex as it may first appear. While indeed compression of construction activities often challenges timely administration, timely action must be a bedrock principle. Reliance on forgiveness built on commercial friendships is no substitute for sound contract administration. In respect to the team consensus that underpins timely contract administration the reader is invited to review “Partnering for the Design and Construction Industry” by Ralph J. Stephenson, still timely today as when it was published in 1996; available on Amazon.

Amid this typical conflict lies an essential discipline that balances the interests of all involved parties

  1. Only contract work is paid for
  2. Parties are contract-bound to scope of work and schedule (in addition to contract sum)

The corollary to these rules is that

  1. The Owner only gets what is agreed to
  2. The design-builder and its subcontractors are paid only what is authorized

In the absence of agreement, there are no winners….


Improved administration and enhanced productivity

View the embedded image gallery online at:
https://wilkinsonadvisors.com/blog/#sigProIdb96f45c7c3

The McKinsey Global Institute (“MGI”) published a seminal document in February 2017: “Reinventing Construction: A Route to Higher Productivity.” MGI asserts that the construction industry is a relatively low productivity industry and slow to improve/change relative to other industries of similar scale.

Editorially, this writer offers a list of principle issues to highlight a few:

  1. Fragmentation of skills and resources
  2. Alliances of convenience to execute one-off projects
  3. Misaligned contract and incentive structures
  4. Paper contracts being substituted for a meeting of the minds

But…….

These are global and intractable issues not susceptible to quick or easy solutions. However, this author’s hands-on experience leads to a conclusion that well managed design-build teams avoid the “soft side issues” (i.e. ethical dilemmas) that are more common in design-bid-build project frameworks.

Within that design-build framework, change management built on the Authorization System described herein is recommend for the path to success.

Appendix 1, a short selection of recommendations and standards of practice found the Wilkinson Building Advisors blog (https://wilkinsonadvisors.com/blog)

  1. Essay to Building Owners, get it right before spending money
  2. SIPs are changing how we build
  3. The choice to build with mass timber
  4. Wood and heat pumps; old made new again
  5. CLT will change construction in the Midwest
  6. For investors, manage your risks, know your costs upfront
  7. Don’t mix up the details in design problem solving

Wilkinson  Building Advisors  ("WBA")  provides experienced lender consulting

  • Project budget review and validation
  • Field observationsa and interim reports as requested
  • Application for payment review both monthly and final
  • Inspection reports as required by the lenders

Our approach

  • Remote or on-site support; seasoned professional knowledge and skills
  • Compliance with lender’s document management process and technology
  • Budget friendly and outcome based; firm fee and schedule proposals

Our credentials

  • George Wilkinson is a p rofessional building engineer with a depth of planning, design, and construction experience
  • In-house administrative support for timely processing of documentaton
Thursday, 26 August 2021 09:47

What are high performance buildings?

Written by

The Foundation

Click Image to Download

The McKinsey Global Institute published "Reinventing Construction: A Route to Higher Productivity" in February 2017.

The premise is that we need a "product" development process not just a one-off project way of thinking and that designing with regenerative assemblies is a professional responsibility to the greater society.

Wilkinson Building Advisors ("WBA") is here when you are ready to do our part in pushing back climate change. By various estimates, "buildings" consume approximately 30% of energy in the United States. The WBA products are a step in the right direction of pushing back climate change with the design, construction, and finance assistance of High Perfomance Buildings.

The Product

Building in a Box(BiB) is an innovative design and construction concept that creates high-performance buildings. High-performance buildings are a repeatable and environmentally sustainable way to engage the traditional design and construction industry.

  • It responds to current climate change crisis and supply chain disruptions
  • It also satisfies user needs for more cost effective and sustainable construction methods.

BiB is intended for design and construction of commercial buildings (branch office, warehouse/industrial space, or freestanding retail use). Buildings are designed from a "kit of parts". Many are manufactured off-site, and then delivered to the construction site for assembly.

Friday, 16 April 2021 14:51

Ethics and the "Shop Drawing" anecdote

Written by

Ethics and the “Shop Drawing” anecdote (an editorial, 041421)

(disclaimer: this document is solely the opinion of George Wilkinson and Wilkinson Building Adviors, and does not represent that of any of its clients or employees)

Ethics: “Moral principles that govern a person’s behavior or the conducting of an activity”

Morals: “Standards of behavior or beliefs concerning what is acceptable”

Professional: “A person competent in a particular activity

(disclaimer: this document is solely the opinion of George Wilkinson and Wilkinson Building Advisors and does not represent that of any of its clients or employees)

Introduction

This is the second in a three part series addressing best practices and ethics in the AEC business community (“Architecture/Engineering/Construction”)

Taken in the broadest sense, construction in the US is a multi- trillion/year industry. Yet in the commercial building sector, how buyers and sellers contract is deeply flawed and the issues are structural and persistent. These flawed processes, often encroach on the boundaries of ethical business behavior. Setting the issue of outright corruption aside, what are some the key characteristics of this situation:

 

  • Sellers of services and outcomes often do not know the cost basis for a transaction during the early stages.
  • Buyers of services and outcomes seldom know what cost basis to expect, particularly during the early stages when budgets are estimated 
  • Reporting of costs and sales prices during and after transaction ∂oes not follow widely accepted business practices.
  • In many cases, the buyers of services lack direct and applicable business experience;  this can often be attributed to infrequent engagement with the market.
  • The market is a cacophony of noise (to the buyer’s ear) as various participants compete to become the center of the project operational whee
  • The professional resources in the construction marketplace are deeply siloed.
  • Design and problem solving methodologies vary widely, and the risks are opaque to buyers.
  • Creativity is often overrated; sometimes proven solutions can carry the day.
  • Design (when needed) is often non-linear; “what if” cycles often are needed to discover an appropriate and effective solution.
  • No service provider silo has earned the right to be the master builder, the defacto “center of the wheel.”

Indeed, this is a tangled web. It leads to common complaints about the design and construction industry: i) it unexpectedly cost too much, ii) the schedule was longer than estimated, and 3) the “product outcome” was a surprise.

Let’s examine this riddle

This author lays blame and potential for constructive change at the feet of the buyers. Afterall, the entity that holds the money has overwhelming influence. Among the issues listed above, here’s what can the buyers do.

  • Look for the horizontal function
  • Recognize the temporary organization
  • Insist on verticals
  • Recognize that facts are facts
  • Insist on normalized costs
  • Embrace the “looks like” discovery process
  • Keep the egos at bay
  • Measure, measure, cut; avoid early time compressions
  • Don’t lose mission in the details

Look for the horizontal function

Knitting together functions across silos is a core managerial requirement. Architects used to claim being the Master Builder.. a huge and nearly impossible task across the current complexities. During the sales cycle, builders, brokers, and design professionals often compete for the buyers attention and commitment.Buyer beware! There is no substitute for demonstrated competency, not just by the firm seeking the business but the actual professionals proposing to do the work.

As service providers (architects, design-builders, et al) and Owners seek to make good business deals, each should vet the other in connection with emerging marketplace imperatives:

• Innovative team communication systems are not optional: eMail is fast becoming dysfunctional, awash is annoying distractions

• Place-based operations need to be scrutinized; old model office environments can be burdensome rather that productive

• The design services “DPE multiplier” needs to be evaluated; layers of partner compensation and build-in overhead can drive shocking numbers, e.g. $160/hr billing rate for an unlicensed intern ($40 in the check after deductions); productive business models are driving down the DPE)

Insist on horizontals

Horizontal organizations in the planning, design, and construction industry (“the industry” for purposes of this essay) are in the forefront on the solution to the tyranny of silos. These organizations make it their mission and value proposition to knit together the pieces into the whole. Further, off-loading unfamiliar duties to horizontals allows the buyer to run their business during the project period.

It is this writer’s opinion that risk management forces in the marketplace have segmented otherwise obviously unified functions. For example, it is virtually impossible to forecast costs and check business plan feasibility withoutan interwining of design and construction skills and knowledge. Construction operations insurance and design liability insurance drive designers and builders into their own well-defended corners.

Recognize the temporary organization

Most businesses engage the planning, design, and construction industry infrequently. Thus, by definition, the “project” organization is temporary. Executive care must be taken to engage and facilitate the right cast; some will be active only during the project period, some will be from the outside. Operational responsibility that will be ongoing after the project period must be considered; vetting qualifications (in addition to aspirations) must be carefully accomplished.

For most organizations, this is no small matter. Skill sets and knowledge basis are fundamentally different during the project period as compared to operations that follow.

But after the project period is completed and the investments are made, operations must carry forward successfully.

Recognize that facts are facts

Examination of actual cost histories is a bedrock standard of practice when budgeting. Buyers must navigate the mine-field of sales price vs cost. Guessing often carries a large margin of error (>30%). Further, cost histories when used as budgeting guides must classify costs is useful ways. The schedule of values documents used in common AIA contract forms can be misleading and often not helpful to either the architect-of-record or the buyers (aka the “Owner”).

This essay advocates a relationship with a fully vetted horizontal: direct experience in similar work including actual cost records; use non-disclosure agreements (NDA)as needed to protect proprietary information.

Insist on normalized costs

The industry commonly uses the Masterformat classification system for contracting. This is the de-facto standard for contracting within the industry (i.e. a general contractor doing a deal with a subcontractor) BUT, the Uniformat classification is system is the best system for classification of costs when planning and budgeting . Thus, Masterformat histories are not maximally useful useless classified as Uniformat. Recently buyers are commonly making the distinction as a best practice.

Unfortunately, deception (or misunderstanding) can buried in the numbers. For example, cost centers and terms such as general conditions, general requirements, qualified costs, owner contingencies vs contractor contingencies, basic services vs addition services, and not-to-exceed cost basis just to name a few. The professional services, project team has a duty to be transparent

Embrace the “looks like” discovery process

As the old saying goes: “beauty is in the eye of the beholder” and that is usually true in the world of building design. In fact, the right look (aka “beauty”) is one of the reasons a buyer hires an architect or interior designer. To the extent the buyer wants to influence “the look”, talk is cheap, imprecise, and usually ineffective. One tried and true approach is to identify (and often visit) examples that embody the look. It’s worth noting that hiring a designer that has a demonstrated history of producing “the look” is a role for the executive buyer.

Keep the egos at bay

For some business leaders, guiding a project is an exciting process; sometimes it is a nearly a personal endeavor; Identity and judgement become inextricably intertwined. Advice to the executive buyer: if you are spending someone else’s money, leave the choices to the carefully selected design professionals and the building committee.

Don’t lose the mission in the tactical details

As concepts expand rapidly into details, the lead buyer is well-advised to establish measurable outcomes and stick to them. “You can’t manage it if you can’t measure it.”

Measure, measure, cut; avoid early time compressions

The old carpenter’s saying is instructive: (paraphrase) measure twice (be sure) and then cut (you can’t go back). This applies to the project planning process. Sometimes finding the right question is elusive; design is often not a straight line process. Later stages of project execution can be well guided by detailed schedules. However, on the front end, take the time as needed.

Epilog: What to do to avoid failure and risk poor decisions

All of the above recommendations address the human decision-making;excellence in professional management as the common theme. When these checkpoints are successfully navigated, the temptations for short-cuts and poor business relationships are reduced and eliminated.

Citations

Also see:

• the “Project Fitness Guidelines” can be downloaded fromwww.wilkinsonadvisors.com. This checklistis a guide for executive decision-makers.

• “Reinventing construction: a route to higher productivity”, McKinsey Global Instititue, February 2017

(disclaimer: this document is solely the opinion of George Wilkinson and Wilkinson Building Advisors and does not represent that of any of its clients or employees)

Introduction

This is the first in a three part series addressing best practices and ethics in the AEC business community (“Architecture/Engineering/Construction”)

In the middle of the last century, various practitioners began to assemble teams of designers and builders under single contracts and the label “design-builders” was coined and applied to these business arrangements. This was a watershed idea provoked substantial protest in special organizations such as the AIA. It was not until the last decade or so of the last century that the AIA recognized the role of design-builders. Since then what started as a revolution has become ordinary. In fact, the language is even changing still, for example "integrated project delivery."

Amid all of these changes and in this writer's opinion, there are several themes: i) value arises when design and construction are closely intertwined in the earliest planning stages of a project, and ii) integrated delivery requires effective interaction between a wide variety of professional disciplines.