52
Chapter 19
Construction Project Leadership
Review Questions
1. Why do you feel there have not been any books written specific to construction
leadership?
2. Who is one of your favorite famous political, military or sports leaders? Why them?
3. Of all of the ‘traditional’ leadership theories, which one applies to construction
leaders the best?
1. Develop an inner-circle diagram similar to Figure 19.2 above for: a) Project
Manager, b) CEO, c) Project Engineer, d) the Client, and/or e) yourself
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2. Looking back at Figure 19.1, how do you see the circles over-lapping with respect to:
a) construction CEO, b) Project Engineer, c) Structural Engineer, d) Journeyman
Carpenter, and/or e) yourself?
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Case Studies
Following are a few select cases chosen from “Who Done It? 101 Case Studies in
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Chapter 5
Preconstruction Planning
A client has selected a general contractor to perform preconstruction services and to
eventually enter into a negotiated contract to build a $20 million shelled office building.
Case 61: 20% VE
The owner has reported that this general contractor’s GMC is over their budget and has
asked for value engineering (VE) ideas. The owner needs to cut over 20% out of the
estimate. Is this possible? Should contractors volunteer to lead the VE process? Do
architects embrace this process? How should the owner and contractor deal with
potential revision items that the architect does not embrace? Is the VE process
“cheapening” the project? What liabilities has the contractor assumed by proposing
changes? How do VE changes get incorporated into the contract?
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Chapter 6
Subcontracting
Case 44: WINDOW BIDS
You have received three window-wall subcontract bids. The low bid of $500k was from
an unsolicited subcontractor. They did not fill out your prescribed bid forms. They
neither acknowledge nor deny the bid documents or addenda. You know nothing about
this firm. Their bid does not state any exceptions or qualifications regarding their
proposal. The second bid of $600k is from a glass firm which you have worked with prior
on other sites, but not successfully. The quality of their work was fine, but they battled
with your office with respect to contract issues. They were short-listed and requested to
bid on this project. They filled out your bid form, but their proposal came with an
extensive list of exclusions, assumptions, and qualifications. The third bid was also from
a glazing firm whom you had solicited a proposal from. They are a local firm but you
have not worked with them prior. Their bid is exactly per your prescribed bid form. They
do not state any peripheral qualifications or exceptions. Their bid is $700k. Your pre–bid
budget was $600k for this area of work. What do you do? How would your answers differ
if this were a) a lump sum competitively bid job, or b) a negotiated GMP job?
Case 45: GLAZING SCHEDULE
You, as the GC’s PM, have a problem glazing subcontractor. They are behind schedule.
They refuse to work overtime to catch up. The subcontractor has submitted several
unsubstantiated change order proposals (COPs) that have not yet been approved and they
are threatening to stop work. They have switched out both the project manager and the
superintendent since the project started. They are not staffing the project according to
their planned and committed manpower. You are not getting along personally with the
subcontractor’s current project manager and have resorted to communicating only
through email. You are receiving pressure from the field to resolve the problem and get
the glazier to perform. Your supervisor has indicated that it is your responsibility to solve
the problem. What do you do? What could you have done to prevent these problems from
occurring? What recommendations can you make to a general contractor’s subcontractor
management system to prevent these types of situations?
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Case 83: CARPENTER CLASSROOMS
This project includes new classrooms and training workshops for the carpenters’ union
apprentices. The general contractor has bid the project lump sum and is approximately
90% through the schedule. GWB is being taped and finishes begin to arrive on the job.
On a recent walk-through the owner and the design teams realize that several items are
not exactly as they had anticipated. The gray carpet is actually black. The plywood
wainscot in the warehouse area is CDX (construction) grade, not AC (finish) grade. The
design-build sanitary waste pipe in the ceiling space between the two floors is ABS
(plastic) and not cast iron. It minimally meets code and will be noisy. The gates on the
fence are swinging and not rolling. The interior wood trim is hemlock and not oak. There
are many other examples of these types of surprises. The contract requirement for
preparing submittals was generic and although it did list a few items to be submitted, it
did not list everything. There were conflicts in the documents. The contractor has chosen
the most inexpensive materials wherever possible, and is now basing their argument on
document inconsistency. The architect is recognizing that there were inconsistencies, but
is pleading to the contractor that if there were questions, they were to ask with an RFI, or
a submittal could have been used to verify their intentions. It is now too late to make
changes and the owner will have to “live–with” these conditions. Using these or other
specific material examples, show how project management tools could have been used to
prevent these surprises. How could each of the parties improve their performance? Is this
a way to achieve repeat negotiated work for any of the parties? If there had been a
withholding of funds by the client, who would win the dispute?
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Chapter 8
Project Start-Up
Case 63: EARLY MOBILIZATION
A general contractor had previously submitted a budget of $14 million to the owner of a
medical office building (MOB) project. The budget was based on 70% design documents.
The contractor was selected based on the experience of its project team and its approach
to the project. The contractor had been given a pre-construction services contract for
$20,000 to join the owner’s project delivery team. The contractor participated during the
balance of the design phase of the project, performing value engineering and
constructability analysis, and providing input to the construction drawings. During the
last two weeks of the preconstruction phase, the general contractor mobilized on the job
site. The owner neither directed nor stopped them from doing so. The terms of the
contract had not yet been finalized. The contractor set up the site camp, brought
temporary utilities to the site, and began the initial surveys and layout. The construction
drawings were issued and incorporated all of the team’s input, along with the city permit
comments. The general contractor then prepared a $15 mil Guaranteed Maximum Cost
(GMC) estimate based upon these revised documents, which exceeded the previous
budget by $1 mil. The owner was extremely upset and would not listen to explanations or
reasoning why the estimated costs increased. The general contractor was asked to move
off of the site. When the GC requested to recover the additional $15,000 they had
incurred for the two weeks on the site, the owner refused payment. Should the general
contractor have mobilized on to the site? Why would they have been motivated to
mobilize without a contract? Does the GC have any recourse for payment? What steps
would you suggest for both the owner and the general contractor now? If the GC was
entering into a lump sum contract, would their actions have been different and why?
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Chapter 10
Communications
Case 69: ARCHITECT’S ADMINISTRATION
This project is a $4 mil elementary school remodel that was bid lump sum. There are
numerous conflicts in the documents, many of which are associated with matching new
to existing work. The project manager for the general construction firm has become
frustrated with the lack of paperwork from the architect. The architect appears to have
run out of construction administration funds. Some of the problems and responses to
request for support are listed below.
Responses to the RFI process include: “I don’t want a written question, just give me a
call”
The architect will answer written RFI’s with a verbal
He will not meet in the field and review actual conditions
Written responses quite often just indicate “see the plans or specifications”
Submittals are late being returned and they often do not include any disposition
The architect misses many weekly construction meetings, showing up at some late
and leaving others early
He never brings his meeting notes and does not acknowledge ever receiving them
He is also not reviewing change orders in a prompt fashion
What should the project manager do to resolve this issue? What could the school have
done to prevent this from happening? What risks do both the general contractor and the
school incur if this situation is left unchecked? What risks does the architectural firm
incur?
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Chapter 11
Progress Payments
Case 53: CARPET BANKRUPTCY
Your firm has not worked with this $500k carpet firm before. You, as the GCs PM,
originally decided to bond them but were surprised that their bond rate was 4% of
contract value. They have submitted several change order proposals for both increases in
scope and discrepant documentation. Most of these are pending processing due to one
reason or another. The quality of their work is fine. They are supporting your schedule.
You have recently received multiple material men’s notices and pre-lien notices from the
carpet subcontractor’s suppliers. The subcontractor has indicated that they are solvent
and do not have any cash flow problems. You have just discovered that the chief
executive officer of their firm has left. You have made a few calls and have caught wind
that they may be going bankrupt. What do you do? What contractual recourse do you
have? Should you hold up future payments? Should you notify your client? Will the third–
tier suppliers come after you for payment? Can they? Assuming the subcontractor sells
their receivables to a collection agency will they also come after you? What adjustments
to the system can you recommend to prevent this situation from happening in the future?
Case 74: SUPPLIER’S LIEN
You feel that you practice very pro-active lien prevention procedures. On this project you
received material men’s notices from your fire protection subcontractor. Each month you
received proper conditional lien releases. At the completion of the job you received an
unconditional lien release and exchanged it for the fire protection subcontractor’s
retention check. One month later you received word that a lien has been filed by a third
tier piping supplier from out of state for material they supplied to a piping fabricator for
your subcontractor. You did not know this third tier supplier existed. You paid the fire
protection subcontractor, the subcontractor paid their pipe fabricator, but the fabricator
did not pay the pipe supplier. The amount in question is $40,000. How did this happen?
How can it be resolved most easily? What is the correct and legal resolution? Is the lien
valid? Can the supplier legally remove the pipe? What does the client do now? How are
liens removed? What should you do in the future to prevent this from happening?
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Chapter 12
Cost and Time Control
Case 48: SCHEDULE HOLD
Your firm does $200 mil in annual volume with a home office overhead of 2%. This
particular 18 month project is worth $20 mil and there are 8% jobsite general conditions.
Assume that at exactly the mid-point of the schedule your project was put on hold for one
month due to reasons beyond the contractor’s control such as weather, union strikes,
owner financing, or city issues. Pick one. Using the contract, classes, your text, and
research outside of the classroom, how should the contractor properly deal with this
delay? Discuss issues such as notice, documentation, jobsite administration costs, home
office costs, loss of fee, loss of productivity, and quality and safety concerns. What is the
‘Eichleay Formula’? Prepare a claim for this delay.
Case 78: COST OVER-RUNS
Three months into a lump sum project this project manager has realized that they are
over-running costs on half of the direct work activities. They are under-running on the
other half. The bottom line looks okay, maybe even on the plus side. Is this possible? Can
he do anything about the codes that are over-running? Since the bottom line looks okay,
should he even worry about it? His superintendent does not want to report any single line–
item cost over-runs to the home office and asks you to forecast the original estimate in
each case. How can the PM cover up this situation? What are the ramifications if he does
what the superintendent is asking? As long as the project makes the original fee, does it
really matter how individual cost codes turn out?
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Chapter 13
Quality Management
Case 46: DRYWALL SUBCONTRACTOR
Your drywall subcontractor is not performing in the field. They have not staffed the
project according to their original commitment or to your field superintendent’s
expectations. They are holding up the work of other trades. The quality of the drywaller’s
completed work has been unacceptable and you are constantly on them to improve. You
have asked for the removal of their superintendent (do you have this right?) but the firm
has refused (can they do this?). It is eventually decided by your home office that the
subcontractor must be terminated. How do you go about this process? Is it simple? How
is it documented? Will you get sued for false termination? What does standard contract
language say? How do you protect yourself? Will it be easier to just keep limping along
with them?
Case 87: HVAC UNITS
The general contractor on this project chose not to purchase the Heating Ventilation and
Air Condition (HVAC) equipment from the mechanical subcontractor but rather they
purchased them direct from the manufacturer. The shop drawings were submitted and
were per specifications. The submittal was approved and returned on time. The HVAC
units were delivered on time. The subcontractor installed the equipment after the GC
unloaded the units from the truck and hoisted them to location with their own crane. The
system was completed and on a very hot (design day) day during balancing it is
discovered that the units are not keeping up with air conditioning requirements. The
labels are checked and it is discovered that they are undersized by one third from the
specified units. Who is at fault? How could “active” quality control prevent this from
happening? How is it resolved contractually and physically? How could the general
contractor mitigate these costs?
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Chapter 16
Claims and Disputes
Case 96: PLUMBING CLAIM
During the paper close out of your project, you receive a very well prepared, very
professional claim from your plumbing subcontractor. This subcontractor worked very
well with you throughout the project, although they were not the best with their
paperwork. The quality of their work was acceptable. They received numerous change
orders (worth over 20% of their original bid of $600k) and received approval of the
majority of their requests for extra funds and extra time, after mutual negotiation. They
signed your change orders. The plumbing project manager you have worked with
throughout the project has been relocated and refuses to return your calls. You are now
only hearing from their attorney. Assume a standard AIA GC-Subcontractor agreement.
Their claim has the following planks:
a. Discrepant documentation resulting in extra costs: They received change orders for
this work but usually at somewhat reduced value than what they requested. They request
an additional $60k for this cause
b. The cumulative effect of multiple change orders: This has resulted in extra costs of
$100k associated with loss of productivity and increase in jobsite general conditions
c. Schedule compression resulting in loss of productivity: They request an additional
$90k for this issue
d. Extended schedule that caused additional field and home office costs of $110k
e. Their accounting records indicate that their actual costs ($1.08 million) over–ran their
final contract value ($720k) by 50% ($360k)
96.1 Take the subcontractor’s position: Why are you right? Use your project
96.2 Take the general contractor’s position: Why are you right? Use your project
96.3 Be objective: How will this be resolved? What should you, as the GC’s PM, have
done to prevent this? What changes can you propose to the general contractor’s change
order and contract modification system to minimize these types of late, after the fact
claims?
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Chapter 17
Project Close–Out
Case 98: CLOSE-OUT DOCUMENTS
A general contractor has successfully completed building a shipping-and-receiving
facility. This project was initially procured as a competitive bid lump–sum project. This
was a fairly simple $10 million, 100,000-square-foot tilt-up concrete facility. Total
construction time was seven months. The owner, contractor, and architect have all
worked well together throughout the project. All payment requests have been approved
and paid on time. All change orders have been negotiated and incorporated into the
contract. This owner apparently will have other similar projects coming up throughout
the country and is interested in hiring the general contractor on a negotiated basis to
provide all of their construction needs. The contractor has combined the last progress
payment request for $100,000 with a request for retention release of $250,000 for a
$350,000 final payment request. The general contractor moved their project manager off
the project during the last month of the schedule and has turned over the close out of the
project to a new project engineer fresh out of school. The project engineer has had a
difficult time getting the close out documents together, especially the operation and