College Construction Management Programs

There is a debate within construction management programs in colleges and universities spanning the last three decades as to how much engineering should be taught as opposed to construction management.  Because there is more combined subject-matter that could be taught than will conveniently fit within a 4-year degree program, there has and still is a tension between two approaches.  One approach favors more technical education in mathematics, engineering, and the basics of architectural design, while the traditional construction management approach favors classes in estimating, planning, scheduling, cost-control, jobsite safety programs, finance, and project management.

Over the last decade or two, college construction management programs that previously tilted toward a more engineering based focus…are now shifting back towards a greater emphasis upon pure construction management, to meet the demands of the industry.  Large building construction companies are telling colleges they want new graduates coming out of construction management programs to have more skills in project management, and to possess a familiarity and facility with the latest building construction design and project management computer software.

One of the real-world realities that enters into this mix and that requires common-sense consideration, is that high-rise skyscrapers in New York City, for example, are built…in their entirety…without any tradespeople onsite ever having to differentiate or integrate calculus equations as part of their work.  Massively complicated structures are built from the ground up with only the occasional tradesperson applying simple 3-4-5 trigonometry to check the accuracy of the square-ness of their interior wall layout.  The most complicated mathematical computations performed onsite are probably done by the surveying crew.  A large gulf exists therefore between the technical design that occurs in an office environment, and the practical assembly of building components that takes place on the actual building site.  The information that connects the design to the construction is the design calculations, translated into project documents usable by the building tradespeople working onsite, known as the plans and specifications.

The idea that the general contractor’s onsite construction supervision staff would perform complex engineering calculations that displaced the engineering design performed by the project engineers and architect of record, would be a dangerous development.  The last thing the general contractor and subcontractors on a new building construction project want to do is to assume part of the liability for the building’s design.  There has to be a clear separation between design and construction.  Even in the design-build contractual arrangement, we want qualified licensed designers performing the actual design work, with valuable practical input from construction experts.  We do not want half-qualified and partially trained people designing the structural elements or the mechanical systems for even the simplest buildings, no matter how sophisticated the building design computer software is.

How then does this relate to the question of the proper balance between engineering and project management in construction management college programs, especially with the proliferation of highly developed design software systems today?  Where should responsible educators draw the line in crafting curriculums that match the needs of employers and at the same time provide the foundation for professional growth after graduates enter the workforce?

New Home Price Affects Final Quality Approach

The price range of the new house determines the final approach taken to achieve a quality product.

For high-end luxury new homes the various subcontractors directly related to visual quality…the subcontractors for painting, finish carpentry, finish plumbing, drywall, tile, and flooring…to name a few…will not allow the jobsite superintendent or anyone else to make repairs to their work.  In this price range…these subcontractors obtain work through word-of-mouth referrals based upon their reputation…so they take full ownership over the quality of their finished work.

I once worked as the project manager/onsite superintendent on four multi-million dollar houses in Newport Coast, Southern California.  At the completion of the first house, I asked the painting contractor for a small amount of flat wall paint so that I could do minor touchup myself instead of adding these items to an already massive punchlist for a 10,600 square-foot house.  He humorously told me that I cannot touch his work…even the flat wall painting…which was a departure for me coming from a previous background in tract housing where the sheer volume of the number of houses needing final prep precluded getting the painter to touchup every last smudge on the walls.

The opposite approach is found in the economic low-end of production tract housing and condominiums…where the various subcontractors cannot financially afford to do perfect Steinway or Stradivarius workmanship and still make money.

As a superintendent in this price range I learned that it was easier and less time-consuming…after all of the punchlist repairs were made by the subcontractors…to do final prep repairs myself along with assistant superintendents and customer service staff…in order to aim for zero-item homebuyer walkthroughs.

Newly constructed houses in the middle price ranges require some middle ground mix of subcontractor pickup repairs plus some amount of builder prep-crew final touches to achieve final acceptable quality.

In my opinion, people in building construction who say: “the subcontractors should be able to make their final pickup repairs to produce low-item homebuyer walkthroughs” are leaving out the important qualifying information as to the price range of the houses being discussed.

Final quality is not an apples-to-apples comparison when house prices can range from $200 thousand to $10 million.

Projects that Finish Late Lose Money at the Back-End

One of the considerations for new housing projects large and small…large tract housing projects or single-family spec houses…is that construction loan interest becomes larger at the tail-end of the project.

Construction loan interest costs…which are fixed monthly expenses…which must be paid to avoid a loan going into default…are calculated on the total amount of funds that have been disbursed through the loan…and are therefore a growing unpaid balance until the property is sold and loan balance paid off.

At the beginning of the construction the disbursements out of the construction loan are relatively small compared to the total loan amount…and thus the interest costs are also relatively small.

But the vigilant management of time and the sense of urgency in prosecuting the work should never let-up from start to finish…because time gets more expensive as the construction progresses and disbursements accumulate.

This is one reason why constructability analysis based upon recorded past lessons learned is a proactive investment in preventing construction problems that cause delays in time.  Unanticipated design and construction problems that arise throughout the course of the actual construction…that cause work stoppages…and that dovetail with other adverse events like bad weather or materials procurement problems…should be analyzed in terms of their loan interest costs at the tail-end of the project…or the current costs to accelerate the work to catch up on the schedule.

Paying two or three months of loan interest costs at the end of the project for a high-end luxury house that has a loan balance of several million dollars outstanding because the structural plans had problems requiring re-design and resubmittal to the city/county for plan check…resulting in a work stoppage 14 months ago during the concrete and structural steel phase of the project…translates into the most expensive loan interests costs because they are calculate on a near fully disbursed construction loan.

The same concept applies to tract housing, custom homes, and apartment projects.  Time is money…whether in construction loan interest or lost rental income…when projects are completed late.

The point of this post is to suggest that the value of preventive constructability analysis upfront…can be viewed in hindsight as huge when looking back on the costs of a project that finished late.

The value of mistake prevention looking forward at the start of a new project is difficult to calculate…how can the avoidance of a future potential problem that was eliminated ahead-of-time…that did not occur…be evaluated in terms of dollars.

The idea that diligence and urgency is an approach that should be applied uniformly and universally throughout the duration of a housing construction project from start to finish…is a concept that is reinforced by the accelerating accumulation of loan interest costs as the work progresses.

Out-of-pocket Expenses and the Construction Loan

While working as the vice-president of construction and onsite project manager for the construction of four high-end houses in Newport Coast in Southern California…the construction lender could not entirely cover the hard-costs for houses having sales prices of $6.75 to $12.5 million…each house exceeding their loan limits.

We therefore capitalized (owner’s equity) 18-1/2% of the upfront costs of the construction budget, paying out-of-pocket for the concrete work and part of the lumber costs.  The idea here is to postpone the disbursement of construction loan funds to a later point in time during the construction…so as to start the clock for loan interest costs beginning part-way into the total project duration…rather than paying interest on construction disbursements for the entire duration of an 18-month construction schedule.

I also worked for nine years as a construction manager for a bank.  Several savvy single-family builders manipulated their construction disbursements to minimize loan interest payments.  Even though the construction budget lines itemized on the construction loan document have the required funds for each category of the work…the borrower is not required to withdraw/use funds for every budget line-item during the course of the construction.

Some borrowers would complete and sell the new house, close escrow and pay-off the loan…yet still have unused funds in several categories like HVAC, flooring, landscaping, supervision, and builder’s fee…thus not paying interest on the funds leftover in these line-items.  This is a perfectly acceptable approach by the builder/borrower…using out-of-pocket funds for some activities rather than taking disbursements that come with loan interest costs.

The construction lender is required to adequately “fund” the new construction project…but the borrower is not required to use all of the funds itemized in the budget.

What is the Sweet-Spot Economically for Self-Perform Crews?

For the high-end, custom and spec homebuilder…there is a sweet-spot compromise between maintaining a mix of economical subcontractors plus in-house, self-perform tradespeople…as opposed to manning the jobsites with the optimum number of workers in order to complete each house on schedule.

I once worked for a homebuilder who maintained on the payroll over 50 people in seven different building trade specialties…plumbing, electrical, finish carpentry, painting, concrete flatwork, audio/video, and general labor…plus independent subcontractors in the other trades such as framing, drywall, HVAC, roofing, and flooring, for example.

The idea here…to self-perform some of the work…was to economize on labor costs, eliminate some profit and overhead that would otherwise go to subcontractors, maintain continuity of ways of doing the work and quality of workmanship, and exercise direct control over the self-perform crews in terms of scheduling and timely customer service repairs.

On the surface, these are in theory all excellent reasons to build and maintain a large self-perform workforce…but in practical application it is very difficult to keep self-perform crews busy for a 40-hour a week paycheck…and at the same time keep all of the jobsites manned at the optimum rate to complete the construction on time…within the tight constraints of a fixed and rigid numbers of detached houses being built at one time.

The duration lengths of time and the move-ons and move-offs for each building trade differ radically over the course of the construction of any house…but is especially complex for high-end luxury houses…spec or custom.

The only way to keep everyone busy yet also fully manned on every jobsite would be to have tradespeople who are capable of working in two or three or even four different specialty trades…which is not realistic.

The result of not being able to fully man each jobsite every day using mostly self-perform work crews…because of their specialization and the differing time durations needed for each construction activity…produces a result that some jobsites will sit empty for several days or more waiting for the needed crew to finish on another of the homebuilder’s houses a few streets away.

What seemed economical at the front-end of building the homebuilding company may not be so economical if construction loan interest costs for not completing houses on time…or dissatisfied customers must wait for their house to be completed two or three months late…as a result of the practice of the impossibility of fully manning every jobsite using predominantly self-perform crews that are inadequate to successfully fill the daily jigsaw puzzle of pieces needed.

Decision Bottleneck for Builders Regarding Interior Design

For the high-end homebuilder doing a combination of custom homes having a homebuyer client, and “spec” houses (short for homes built on the speculation they will attract a buyer)…and having an in-house interior designer or design group of two or more people…the inevitable and almost universal challenge will arise…of the single decision-maker at the top of the company becoming a decision bottleneck.

For the small-sized custom-home and spec builder this is not usually a big problem.  It stands to reason that the owner atop of the homebuilding company makes the aesthetic/artistic decisions regarding the myriad of small and large architectural and interior decision decisions…in coordination with the architect and clients as the case may require…that affect the bottom-line economics for each individual project and thus the success and solvency of the company.

However, when the size of the successful homebuilding company expands…it can reach a point where decisions that are repetitive should be standardized so as to minimize the number of individual decisions to a manageable quantity…otherwise the single decision-maker at the top of the company can quickly become a bottleneck of unaddressed lingering questions and issues that adversely affect the construction schedule.

This is best done in the proactive mode…long before a crisis emerges.

For example, if a medium high-end homebuilder always uses as standard a 3-1/2 inch wide casing around interior doors and windows…and often has wood paneling wainscot from the floor to mid-way up the walls in various hallways and rooms…then the wall-framing returns at each rough door opening should be a minimum of six inches whether or not this is called out on the plans.  Six inches minus 5/8-inch for the thickness of drywall leaves enough space for the door casing and wall wainscot…wood or ceramic tile…for the door casing to fit without it have be cut to a narrower width.  This should be standard knowledge in the field…repeated on project after project without having to ask the question…except in the exceptional cases where the homebuyer or the house itself requires larger width casing.

For a kitchen floor plan layout that is repeated every third or fourth house…the dimensions from the kitchen sink wall and from the kitchen range wall…to the repetitive sized island cabinet… should be standardized…so that the plumber and the electrician already know where to come up through the concrete slab with their pipes and conduit.

If the kitchens all have potfillers (water pipe coming out of the wall with swivel arms and a handle-valve for adding water to pots and pans directly at the kitchen range top) above the kitchen ranges…the height in inches above the rough floor elevation should be standardized.

In secondary bathrooms, the location, size, and dimension in inches above the rough floor for the shampoo niche rough framed opening…should be standardized.  The layout and dimensioning of the various valves for the bathtubs and showers should be standardized.  The width and the length of the inside dimensions of the minimum sized secondary bath should be standardized…so that a 2’-8” doors opening in front of a toilet does not hit the toilet.  The height of sconce lights and the top of mirrors in secondary baths should also be standardized.

These and twenty-five other things can be standardized long before a successful homebuilder grows to the point that the decision-maker at the top of the company becomes an information bottleneck.

In-House Interior Design

One of the pitfalls of having an in-house interior design person or small group within the office staff for a high-end custom homebuilder…is that if many of the architectural decisions and most of the interior design decisions are managed from within the homebuilding company…the homebuilder then also owns the myriad of “internal” RFI’s (requests for information)…which if not addressed in an organized and systematic way can quickly snowball into questions and issues that delay construction operations in the field.

The standard, arms-length arrangement of owner/architect/general contractor divides up the varied duties, roles, and responsibilities into relatively clear lines of demarcation.  Questions from the construction regarding the design plans…or requests for missing information in the plans and specifications…which arise during the course of the construction…are handled through RFI’s from the general contractor to the architect and/or structural engineer, for example…which are then individually monitored for timely response by the general contractor.

RFI’s which have not been answered that might adversely affect the construction schedule are communicated to the owner…often during the weekly owner/builder meeting…the owner then contacting the appropriate design professional regarding the particular question or issue.

The point here is that if the owner (“spec” homebuilder and/or custom homebuilder) is also generating a large portion of the architectural information…moving walls, changing layout, moving interior doors, etc., and all of the interior design information (prior to finding a homebuyer or in coordination with a homebuyer)…then the owner/homebuilder and the designer…parties one and two in the standard arrangement described above…become combined into one unit and there is no outside entity to send questions to other than internally to itself.

The procedure of sending an RFI to the design team and expecting a prompt reply…no longer exists.

In this arrangement…which seems on the surface to be beneficial in some areas such as keeping the artistic decisions consistent with the opinions of the homebuilder and his or her in-house staff…and the ability to better control the homebuyer client without the influence of a third-party, outside interior designer having contrary opinions…must be accompanied by a serious and thorough internal system of policies, procedures, control spreadsheets, and regularly scheduled office staff meetings to insure that field questions are being answered as quickly as they would otherwise be if sent out to an outside design team of the architect and engineers.