Open, inclusive communication mitigates risk in the construction industry.
Issues causing delays, budget overruns, and disappointing final products — collectively called risk — result from the many fragments of the building industry not working together from the beginning of a project and not communicating effectively during construction, according to industry leaders gathered at a recent Construction Institute forum.
“Having a dialogue going through the entire process will mitigate risk,” said Tony Amenta, principle-in-charge of Hartford design firm Amenta/Emma Architects P.C.
The multiple teams working on a construction projects — the property owners, architects, general contractors, and subcontractors — each have their own responsibilities but are all dependent upon each other to successful complete their portion and the overall project.
When failures and misunderstandings arise, the strain put on the individual players increases the risk of an unsatisfactory outcome.
“Documents that are supposed to be 100 percent complete are not that,” said John Cistulli, senior director of global construction and facilities engineering for Bristol sports broadcaster ESPN. “It creates a level of risk that is uncomfortable for me as an owner.”
When a design document, for example, is not complete, the general contractor or the subcontractor is left to guess the intention for the project. That puts the contractor at risk of being wrong and increases the possibility of a budget overrun for fixes.
“Lacking complete documents leads to change orders, leads to disputes,” said Bill Flynn, vice president at Hartford specialty firm Electrical Contractors Inc.
Schedule compression is a major issue for the quality of work performed by a contractor. When a project is delayed from the beginning and the completion date isn’t modified accordingly, then contractors have less time to finish their aspect of the project. That leads to more staff hours and increased budget costs.
“You can’t have everything, and we sure aren’t going to eat those costs,” said Al Gogolin, senior vice president at the New Haven office of contractor Skanska USA.
The different styles of project delivery create their own risks. The low-bidder system keeps initial costs low for the owner but also brings on the lowest paid — and possibly least experienced — contractors later on in the process. The construction manager at risk system leaves the general contractor with the most responsibility of executive the project successfully. Design-build projects put that onus on the architects.
Other risks on construction projects include unrealistic expectations based on a project’s budget and timeline; owners restricting designers and contractors’ procurement process; limited funding on public projects; and a lack of involvement of all the necessary parties.
“Owners have to manage the risks by making sure there are no unreasonable requests once the project has been substantially designed,” said Nancy Win-Alderson, director of global operations Americas for pharmaceutical firm Pfizer, Inc.
The first solution to mitigating risk is to bring all of the project’s players together as early in the process as possible. That way everyone knows each other and their expectations. If there is a problem in the design or a concern about the execution, then it can be managed before it impacts the project’s costs, timeline, or final product.
“It is really an establishment of a culture where we take certain risks and identify those early on in the project,” said Stanley Hunter, projects executive for the Hospital of the Future at Springfield, Mass. provider Bay State Health. “Risk is part of what we do. It is part of the project.”
Project owners also need to rope in those who will use the project when complete, particularly the building managers who know how the facility will operate once construction. Ultimately, the cost of operating a building is 30 times the cost of constructing it, Win-Alderson said, and the operators should have input from the beginning.
“We are all here thinking we are experts, but the reality is we are all short on the project,” Win-Alderson said.
New technology and approaches are helping to mitigate risk, Cistulli said. Building information modeling takes design plans to the next level by incorporating a facility’s entire elements early in the process, but all the key players must be involved — especially mechanical and electrical subcontractors — to avoid problems in the execution phase.
“We need to drive deeper into the management tree to develop stakeholders in each project,” Cistulli said.
