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PROJECT MANAGEMENT THE COMMON SENSE

APPROACH

BY

HOWARD CAIRNS JAMISON Ph.D.



TABLE OF CONTENTS

1.0 REQUEST FOR PROPOSAL..............................................................................................................1

1.1 INFORMATION H ANDLING AND DISTRIBUTION ........................................................................................11.2 READING SPECIFICATIONS...................................................................................................................11.3 FORMAL QUESTIONS DURING PROPOSAL PREPARATION.......................................................................2

Letter of Transmittal ........................................................................................................................... 41.4 REQUEST FOR PROPOSAL FROM SUBCONTRACTORS............................................................................5

2.0 ESTIMATING .......................................................................................................................................7

2.1 PREPARING THE ESTIMATE..................................................................................................................7Estimate Form.................................................................................................................................... 8

2.2 IMPORTANCE OF KEEPING CLEAN LEGIBLE ESTIMATES .........................................................................92.3 ESTABLISHING TRACKABILITY DURING THE ESTIMATE .........................................................................102.4 ESTIMATING SYSTEMS ......................................................................................................................11

2.4.1 The Decimal Estimating System ................................................................................................. 122.4.2 The Crew Estimating System...................................................................................................... 132.4.3 Computerized Estimating Form................................................................................................... 14

Electronic Estimating Form .............................................................................................................. 16

2.5 ITEMS TO BE AWARE OF DURING ESTIMATING.....................................................................................232.6 ESTIMATING FORMATS AND THE WORK BREAKDOWN STRUCTURE.......................................................24

2.6.1 Work Breakdown Structure ......................................................................................................... 242.6.2 Company Specific Formats......................................................................................................... 252.6.3 Changing Formats Quickly.......................................................................................................... 26

2.7 RECEIVING ESTIMATES FROM SUBCONTRACTORS ..............................................................................282.8 FINAL PROPOSAL..............................................................................................................................29

3.0 PRE-CONSTRUCTION PREPARATIONS........................................................................................32

3.1 IN-HOUSE PRE-CONSTRUCTION ACTIVITIES .......................................................................................323.2 PRE-CONSTRUCTION MEETINGS WITH THE OWNER ............................................................................33

Operational flow chart ...................................................................................................................... 35

3.3 PROJECT DOCUMENTATION...............................................................................................................363.3.1 Meeting Minutes.......................................................................................................................... 36

Sample Meeting Minutes.................................................................................................................. 373.3.2 Issues and the Issue Log ............................................................................................................ 41

Issue Log ......................................................................................................................................... 453.3.3 Filling in the Issue Detail Form.................................................................................................... 46

Issue Record .................................................................................................................................... 503.3.4 Correspondence ......................................................................................................................... 513.3.5 Filling in the Correspondence Log .............................................................................................. 51

Correspondence Log ....................................................................................................................... 553.3.6 Phone Log................................................................................................................................... 56

Phone Log ........................................................................................................................................ 57

3.3.7 Filling in the Phone Log............................................................................................................... 584.0 SCHEDULING ...................................................................................................................................61

4.1 INTRODUCTION .................................................................................................................................614.2 NETWORK LOGIC AND THEIR RELATIONSHIPS.....................................................................................644.3 DURATIONS AND RESOURCE ALLOCATION..........................................................................................674.4 MILESTONES ....................................................................................................................................694.5 UPDATING SCHEDULES .....................................................................................................................694.6 CRITICAL P ATH METHOD ...................................................................................................................71



5.0 CONSTRUCTION PHASE.................................................................................................................74

5.1 PROJECT M ANAGEMENT DURING CONSTRUCTION ..............................................................................745.2 FILING SYSTEM.................................................................................................................................785.3 SUBCONTRACTS ...............................................................................................................................845.4 PURCHASE ORDERS .........................................................................................................................865.5 PROJECT DOCUMENTATION...............................................................................................................90

5.5.1 Introduction ................................................................................................................................. 905.5.2 Meeting Minutes.......................................................................................................................... 905.5.3 General Correspondence............................................................................................................ 92

Sample Project Memo...................................................................................................................... 935.5.4 Schedule Updates....................................................................................................................... 945.5.5 Operating and Maintenance Manual Information ........................................................................ 945.5.6 Project Journal............................................................................................................................ 955.5.7 Material Control Sheet ................................................................................................................ 97

Material Control Sheet ..................................................................................................................... 995.5.8 Change Orders ......................................................................................................................... 1005.5.9 Project Safety............................................................................................................................ 105

5.5.9.1 Toolbox Safety Programs................................................................................................... 1065.5.9.2 Safety Documentation Systems......................................................................................... 106

5.6 CONSTRUCTION DELAYS .................................................................................................................1075.6.1 Excusable Delays ..................................................................................................................... 107

5.6.2 Comprehensible Delays............................................................................................................ 1095.6.3 Concurrent Delays .................................................................................................................... 1095.6.4 Critical Delays ........................................................................................................................... 109

5.7 OPERATION AND M AINTENANCE M ANUALS .......................................................................................1105.8 PUNCH LIST....................................................................................................................................1105.9 PROJECT CLOSE OUT .....................................................................................................................1115.10 FINAL BILLINGS.............................................................................................................................1115.11 PROJECT M ANAGER CRITIQUE ......................................................................................................112

6.0 SUMMARY.......................................................................................................................................113



Introduction

The objective of this dissertation is to provide a didactic paradigm for anyone

controlling projects. For this purpose we are using the word project to mean any

undertaking requiring concentrated effort. These projects can range from putting

together a complex computer program including its implementation to executing a

multi discipline construction project. This document should serve as a guide to assist

any Project Manager in correctly putting together the paperwork on a project.

Through proper documentation and correspondence, it is possible to help avoid

litigation. This by itself will not circumvent legal proceedings however, with extremely

well organized documentation and letter formation it will make litigation matters less

painful to deal with.

This document will deal with construction projects. To utilize this system for other

disciplines of project management it may be necessary to modify the terminology

however, all of the fundamentals remain the same.



1.0 Request for Proposal

1.1 Information Handling and Distribution

When a proposal is received several things should be done with it to

facilitate its distribution and protection. First, a reproduction should be made of

all the original documents. The original is then filed in an appropriate folder,

one dedicated to that specific project. All original documentation and

information received for the project should be filed in the same folder. Only

copies should be distributed to the team members assisting with the

construction of the proposal.

1.2 Reading Specifications

Reading of specifications requires practice and experience. Review the

contract for legal statements. These statements could include indemnification

clauses or, hold harmless clauses. Often missed during the first reading, is a

requirement for special insurance, penalty clauses or performance guarantees.

An inexperienced estimator often overlooks this item. If the estimator does not

completely understand a term or statement within the request for proposal, a

copy of the section should be made and reviewed with their immediate

supervisor. If the supervisor finds nothing out of the ordinary, he or she should

initial and date the estimator’s copy of the proposal. This affirms that the

supervisor has examined these requirements and is satisfied that the required

obligation is currently being met or can easily be fulfilled. The supervisor is

1



expected to perform this task for two reasons. First they have acknowledged

that the estimator has requested guidance and they have given it; secondly,

they are reinforcing the importance of documenting everything. The company

supervisor should not hesitate when being asked to initial something that they

have reviewed or approved. Additionally, the staff is learning the importance of

being sure that their answers and/or guidance are correct. This internal form

of discipline also trains employees in the true limitation of their positions’

authority.

1.3 Formal Questions During Proposal Preparation

In the event that the supervisor is not confident that the company has or

is capable of obtaining the required insurance, the following should occur. This

section or any other section not completely understood should be forwarded to

someone associated with the firm who has the knowledge and the resources to

correctly respond. This request for assistance should be sent under a letter of

transmittal. It is important that any persons assisting the company need to be

aware of time constraints for the proposal. Requesting a response date should

do this.

If insurance requirements or any other stipulations are needed, time will be

necessary to contact the proper authorities and request quotations for the

additional insurance or assistance.

2



On one occasion, as a fledgling estimator, I was faced with a

requirement of a five million-dollar umbrella coverage, with the term “per

occurrence”. After going to the owner of the company with a question

concerning this, several meetings were set up between the insurance company

and the principles of my company. This insurance was not available for one

project; it was insurance that covered the company on all of its projects.

Therefore, there was a considerable financial impact that needed to be

assessed and a management decision made. The company subsequently

decided that it would be prudent to carry this additional insurance. After one of

the meetings with the insurance company representative, I was fortunate

enough to have him take the time necessary to explain what the words per

occurrence and aggregate meant. This neophyte estimator thought that

aggregate was just the stones within concrete!

For this dissertation there will not be a lengthy discussion on reading

technical specifications. The most important advice that I can give is this.

Read the specifications!

The following Example shows a Letter of Transmittal.

3



LETTER OF TRANSMITTAL

From Date

Project

LOCATIONATTENTION

RE

TO

Gentlemen:

WE ARE SENDING YOU HEREWITH DELIVERED BY HAND UNDER SEPARATE COVER

VIA ______________________________ THE FOLLOWING ITEMS:

PLANS PRINTS SHOP DRAWINGS SAMPLES SPECIFICATIONS

ESTIMATES COPY OF LETTER __________________________________________________

COPIES DATE OR NO. DESCRIPTION

THESE ARE TRANSMITTED AS INDICATED BELOW

FOR YOUR USE APPROVED AS NOTED RETURN ________CORRECTED PRINTS

FOR APPROVAL APPROVED FOR CONSTRUCTION SUBMIT _________ COPIESFOR _______

AS REQUESTED RETURNED FOR CORRECTIONS RESUBMIT _______ COPIESFOR ______

FOR REVIEW AND COMMENT RETURN AFTER LOAN TO US FOR BIDS DUE

REMARKS

SIGNED

4



Occasionally additional information is wanted from the owner or the

owner's representative. When clarification is necessary a request for

information should be submitted to the owner or the owners representative.

Timely responses should be requested. If the owner or the owners

representative does not respond quickly, then a letter requesting additional time

for preparing the proposal is fitting. In the event that extensive explanations are

needed pertaining to specifications, then requesting a time extension along with

the request for information is recommended.

1.4 Request for Proposal From Subcontractors

If the project is one of a turnkey nature, proposals from subcontractors

will likely be necessary. When referring to a project as turnkey this means that

one company will be responsible for the complete project from conception

through completion. This means hiring all subcontractors, engineers or any

other subcontractors required to properly complete the project. It is important

that the subcontractor receive all specifications that pertain to their work. It is

also equally important that they receive a copy of the general specifications,

along with any terms and conditions presented within the documentation.

Subcontractors will be held accountable for all the general conditions in a

project as well as the primary contractor. When subcontracts are issued it will

be important that all of the original documentation from the request for proposal

be referenced. If the subcontractors have not been given copies of the terms

and conditions then, the contractor requesting the subcontractors’ proposal has

5



been negligent. To avoid negligence there is a common practice in the

industry for contractors to have a bid room. Within this room a subcontractor

can view all documents that were obtained from the customer. This will assist

the contractor in avoiding a possible litigious situation however, it can still

become an issue if the contractor did not formally issue, under a letter of

transmittal, all the information required for the subcontractor to accurately and

informatively prepare their proposal. It is not always incumbent on the

subcontractor to search out these documents. When communicating with

potential subcontractors, all documentation should be sent under a transmittal

letter. Keeping track of the documentation from the onset is the key to avoiding

litigation.

6



2.0 Estimating

2.1 Preparing the Estimate

When a request for proposal is received the next step is to secure

pricing to perform the work described. Estimating a project is the frontline for

all companies. Any mistakes or misunderstandings at this phase can, and

usually does, have serious ramifications. Over the years, it has been my

experience that when a project has a questionable beginning, the ending often

has catastrophic financial results.

The estimates often become an issue, if a project goes to litigation.

Rarely is the estimate the most profound document in the case, but there are

times the estimate is the most displayed document of the case. Mistakes in

judgment can be shown and adequately demonstrated with some estimates.

When it is shown that a mistake was one of judgment, then the contractor will

rarely receive any financial compensation. In some states proving

mathematical error can relieve a contractor from the liability of the bid and of

the bid bond. However, the insurance company that posts the contractors bid

bonds will not remain positive if this type of occurrence is repeatedly presented.

The following example shows a simple estimating form.

7



ESTIMATE FORM

QUANTITY SHEET

PROJECT

LOCATION

DESCRIPTION QTY UNITCost

LaborProd

UNITTotal

LaborCost

TotalCost

8



2.2 Importance of Keeping Clean Legible Estimates

Occasionally there is a tendency for estimator's to haphazardly write

notes around the estimate forms. It is important that these notes be clearly

written, not only for litigation purposes but, also for a clearer conveyance of

information between the office and the field personnel. Many companies have

an estimating division and a separate division for implementing the project. In

this circumstance clean clear notes are imperative. When an estimate is

completed it should be easily understood by anyone experienced in that

discipline. This is important because if other estimator’s are called upon for

assistance they need to clearly understand the original estimator’s intent.

It is not unusual to work on private estimates for a company and then

have no communications for six months. Without warning, their project

becomes urgent and construction must begin immediately. When the

indecipherable notes are retrieved from the estimate file, the long spiral

downward begins. In the unfortunate event that a project does go to litigation,

all of the team members performing the estimate and project management will

then be forced to produce these indecipherable notes. This often causes a

great deal of personal embarrassment for the staff. Opposing, attorneys often

will point out the sloppy estimate pages and notes trying to further their

argument that the contractor was not in control from the beginning. Although

this is not a true litigation matter, the degradation of character for the employee

9



may need to be dealt with for several years after the litigation. Clear and

concise notes are important and essential.

2.3 Establishing Trackability During the Estimate

A significant task while constructing the estimate is keeping in mind that

once a project is underway tracking must be performed. In order for tracking to

be most effective, the smallest incremental unit must be used as the baseline

measurement. This will assure the most accurate tracking system. This type of

tracking is referred to as actual vs. estimated. The estimator needs to keep the

estimate broken down adequately so that the tracking system will be easily put

into place. Additionally, company history can begin to be accumulated. This

history will not only serve as a comparison between the estimated and actual

numbers but it will serve as a model for future estimates with similar work units.

I have seen many estimator’s forced to re-estimate projects so that they could

accurately put together an accounting sheet for tracking. This activity is a

complete waste of company resources. All estimates should be prepared so

that they are essentially ready for the tracking system.

Some proposals require specific unit breakouts. When this is

encountered, the original estimating work breakdown structure should be

formatted so that an easy transference from the estimate units to the proposal

units can be performed.

10



2.4 Estimating Systems

There are several styles of estimating. In this paper I will not form a

judgment on any type, but rather comment on how they are constructed and

some of the pitfalls associated with them. The most important statement to be

made when it comes to estimating is to be consistent. Occasionally, a

company may decide that standardization of estimating procedures and

estimating formats should be established.

My company has been contracted in the past to supply computer

software for the estimating departments. The standard approach that we take

is to sit with each of the estimator’s and defined how each performs their

individual estimates. Then a very basic spreadsheet is constructed that visually

looks similar to the forms that the estimator currently uses. Then over time the

introduction of automation for repetitive activities is offered. This is usually a

lengthy process however, each time it has proven successful. After the

estimator’s initially become comfortable with how the system works they quickly

begin requesting additional functionality.

Modifying the way an estimator performs their job needs to be done very

slowly, disruptions in this process can have devastating effects. If the estimator

is comfortable using a decimal estimating system then that is the system that

they should utilize throughout the entire proposal. It has been my experience

that when mixing a crew estimating system and a decimal estimating system,

11



without performing the proper conversions, these estimates usually become

confusing and mathematical errors occur. Regardless of which type of system

the estimating is performed with, it is imperative that the base numbers be

clearly defined.

2.4.1 The Decimal Estimating System

The decimal estimating system consists of units assigned hours

to install. The basic formula is as follows:

Units X parts of an hour = hours required.

A decimal estimating system basically assigns labor values to

each item being installed. These labor hours are defined by decimal

parts of an hour hence, the name decimal estimating system. A basic

example of this would be the installation time required to install one 2

inch copper to copper sweat valve is .75. This equates to 45 minutes.

There are several publications displaying decimal estimating

systems, many also include a crew estimating system on the same line.

Estimating by means of the decimal system eliminates any conversion

required for tracking purposes. When the estimate has been performed

by means of a decimal system, there is no additional breaking down of

the numbers required for tracking purposes. By the essence of the

12



decimal system the estimate has been performed at the smallest

incremental number.

2.4.2 The Crew Estimating System

The crew estimating system establishes a basic crew

complement in order to perform the work. A crew is a group of people

and equipment required to perform this work. An example of an

excavation crew would be.

•

1 laborer,

• 1 operating engineer,

• 1 plumber.

The equipment required for this work would include.

• Pickup truck

• Backhoe

• Hand tools

All of this labor and equipment would then be calculated for the costs

associated. This cost would then be divided into an hourly or daily cost

for estimating purposes.

The crew estimating system requires that all of the crews be

established. This is accomplished by putting together each of the crafts

or people involved with their associated costs. Once a crew is

established then a rate and productivity factor can be established.

13



Depending on personal preference the estimator may work with hours to

complete or days to complete. I have seen estimators use months as a

form of measurement however, I do not recommend this. If a task is to

be tracked during a project, months is not an easy measurement for

deciphering productivity. Arguments on both sides of this issue have

occurred and they have often been long and intense. If the crew

estimating system is utilized at some time it must be broken back into a

decimal system in order to perform tracking. This is a pitfall in the crew

system however, if the estimators and Project Managers are aware of

the conversions needed, it should not become a problem.

2.4.3 Computerized Estimating Form

The previous estimating form displayed was a simple hand written

very rudimentary system. The following estimate form shows a more

advanced system. This system will automatically find items from a

database and bring them forward to the active estimate sheet. Taxes

are automatically calculated and carried to the total line item cost. A

summary page is generated and a graph is displayed which represents

the actual costs associated on the project. There is a column for the

work breakdown structure, which will be discussed in section 2.6.

This estimating form allows the estimator to change the hourly

rate for employees. Also the system will facilitate individual markups on

14



labor, materials, subcontractors, other and, equipment. This is done

because there is a different risk assessment on each project. Marking

the cost of a project up based solely upon the total cost is not prudent in

a tight market. The contractor needs to evaluate each item on the risk

that it inherently carries.

The following is a simple electronic estimating form with labels truncated

for ease of printing.

15



Electronic Estimating FormBid

BY: Howard C Jamison

JOB 1820 ProjectLOCATION new absorber

QUAN PRODUNIT LABOR LAB MATLABOR MAT MAT WBS Item Description COST RATE HOURS DAYS COST COST TAX TOTAL

Administration

Admin Mobilize 1 200.00 16.00 16 1.00 560 $200.00 $12.00 212

Admin Project management 1 1200.00 120.00 120 7.50 4200 $1,200.00 $72.00 1,272 Admin Training of client personal 1 200.00 16.00 16 1.00 560 $200.00 $12.00 212

Absorber work

Absor Test the absorber with nitrogen 1 140.00 16.00 16 1.00 560 $140.00 $8.40 148

Absor Bottel handeling of nitrogen 10 15.00 0.50 5 0.31 175 $150.00 $9.00 159 Absor Lithium bromidehandling 20 X 1.50 30 1.88 1050 Absor Fill absorber with lithium bromide 1 400.00 16.00 16 1.00 560 $400.00 $24.00 424 Absor Install drain valves on the new

absorber 2"1 300.00 16.00 16 1.00 560 $300.00 $18.00 318

Absor Start up and test new absorber 1 400.00 40.00 40 2.50 1400 $400.00 $24.00 424

Rigging

Rig Recieve the equipment in the riggeryard(25/ton)

1 X X

Rig open wall behind pumps and close 1 500.00 24.00 24 1.50 840 $500.00 $30.00 530

Rig seporat the unit as needed 1 200.00 32.00 32 2.00 1120 $200.00 $12.00 212Rig Reconstruct the unit onsite 1 500.00 80.00 80 2800 $500.00 $30.00 530Rig modification to pumps for access 1 450.00 32.00 32 1120 $450.00 $27.00 477

Rig Crain for unloading 1 X X

Rig Deliver the unit into the mechanicalroom 1 100.00 60.00 60 3.75 2100 $100.00 $6.00 106

Piping

Piping Conderser Supply 1 1200.00 32.00 32 2.00 1120 $1,200.00 $72.00 1,272Piping Condenesr return 1 1200.00 32.00 32 2.00 1120 $1,200.00 $72.00 1,272Piping Chilled water supply 1 1200.00 32.00 32 2.00 1120 $1,200.00 $72.00 1,272

Piping Chilled water return 1 1200.00 32.00 32 2.00 1120 $1,200.00 $72.00 1,272Piping Bottel handeling of nitrogen for

testing piping10 15.00 0.50 5 0.21 175 $150.00 $9.00 159

16



Piping Dress out pumps 2 3800.00 75.00 150 6.25 5250 $7,600.00 $456.00 8,056Piping Steam piping 1 5800.00 80.00 80 -5.00 2800 $5,800.00 $348.00 6,148Piping Condinsate piping 1 2400.00 40.00 40 -5.00 1400 $2,400.00 $144.00 2,544

Piping Allowance for connections to newmain with valves

1 1800.00 40.00 40 5.00 1400 $1,800.00 $108.00 1,908

Piping Allowance for repairs to existngsteam system

1 4500.00 120.00 120 5.00 4200 $4,500.00 $270.00 4,770

Electrical

Ele Control pannel work including 110for pannel

1 220.00 40.00 40 2.50 1400 $220.00 $13.20 233

Ele Flow switches and other smallcontrols

1 80.00 8.00 8 0.50 280 $80.00 $4.80 85

Ele Power from existing to the starter 1 4500.00 100.00 100 6.25 3500 $4,500.00 $270.00 4,770Ele Power from the starter to the

motors1 250.00 16.00 16 1.00 560 $250.00 $15.00 265

Ele Power to the pumps 2 3200.00 40.00 80 5.00 2800 $6,400.00 $384.00 6,784

Subcontracts

Sub Demolition 1 XX Sub Electrical 1 XX

Sub Insulation 1 XX Sub Painting 1 XX

Equipment

Equ Starter 1 X2500.00 $150.00Equ absorber 1 65000.00 X $3,900.0

0Equ Pumps 2 X3000.00 $360.00

Equ Cooling Towers 1 15000.00 X $900.00

cooling Tower

CT Pricing for the cooling tower is froma previous bid

1 7169.00 137.00 137 8.56 4795 $7,169.00 $430.14 7,599

proposal called 1820 new tower

Total Hours

Labor Material Costs 1447 50645 53,434

17



JOBMARKUPS

Bid # 35.00

JOB 1820 Project Run Date: 05-Aug-98

LOCATION newabsorber

TOTAL GrossEstimator: Howard CJamison

HOURS COST Margin PROFIT SALES

LABOR 1447.00 $50,645 30.00% $21,705 $72,350

MATERIAL $53,434 20.00% $13,358 $66,792

EQUIPMENT $93,810 25.00% $31,270 $125,080

OTHER $0 20.00% $0 $0

SUBCONTRACTS $90,000 16.00% $17,143 $107,143

BOND $0 $0

TOTALS 1447 $287,889 22.48% $83,476 $371,365

Special Notes: See c29 for details on the pump problems

LABOR

MATERIAL

EQUIPMENT

OTHER

SUBCONTRACTS

18



The following explains the previous estimate form.

WBS

Work breakdown structure. This column is used for sorting

information. Usually this column is used for type of work being

performed. In the previous example rigging is separated by Rig

therefore, the computer system can easily combined all of the rigging

activities for the project then, summarize the costs associated. By

performing this simple operation it is possible to compare pricing

received from potential subcontractors for work that the company has

planned on performing in-house.

Item Description

This is a brief description of the activity to be performed.

Quan

Quantity is the number of the units that need to be installed.

Unit Cost

This is the unit price, it is directly proportional to the quantity.

19



Prod Rate

Production Rate is the decimal part of an hour required to perform

the unit installation. In this example I have used the decimal system. If

a crew production was used it would be entered in the same column.

Labor Hours

This column shows the total labor hours required to install each

unit. This is calculated by multiplying the quantity times the production

rate.

Lab Days

Labor days required to complete the unit installation. In this

particular spreadsheet the total hours divided by 16 equals the labor

days. A default value of two is used for the calculation, in this particular

type of work there are usually two man crews. This calculation is

performed so that when the estimate is turned into a schedule the

duration for each activity has already been calculated during the

estimate. I have left this column visible for this dissertation however,

during the preparation of a normal estimate this column can be hidden

until the project has been awarded to the contractor. This would be

done to keep from confusing the decimal system with the crew system.

20



Labor Cost

The system allows for entering a labor rate. The labor cost is

calculated by multiplying the labor hours times the labor rate.

Mat CostMaterial cost is calculated by taking the quantity times the unit

cost.

Mat Tax

Material tax is also a variable that the estimator enters in. In this

particular estimate the tax rate is calculated on six percent.

Mat Total

Material total is the some of the material cost plus the material

tax.

Equipment Cost

When using this spreadsheet by entering the code Equ in the

WBS column the system automatically then takes the unit cost and

places its into the equipment cost column. Additionally, the material tax

column is also utilized. For this particular estimate is a Pennsylvania

customer therefore, equipment is taxed.

21



Sub

Subcontractor pricing. This column stands alone and uses no

other columns for calculations.

Other

The other column also stands alone and uses no other columns

for the calculation.

Line Total

The line total is a calculated field, it sums the labor cost, material

total, equipment, sub and, other columns.

The summary sheet shows all of the costs in the appropriate

location. Each of these costs can be marked up individually. At the end

of the summary sheet the total percentage of the job is displayed. Then

the profit column is calculated followed by the sale price for the project.

The graph is a representation of risk. Labor is the most risky of

the headings therefore, by reviewing the graph it is easy to see the

percentage of risk that each job holds. This graph also becomes a guide

for "normal" projects. When a contractor performs a specific type of

work on a regular basis, this graph will show certain percentages on a

regular basis. By reviewing the graph it is possible to tell that a project is

22



different then the "normal". It is important to state that this is a guide,

knowledge of each individual bid needs to be obtained by the estimator.

2.5 Items to be Aware of During Estimating

The following items are often overlooked when putting together an

estimate. Some of these items can have serious financial ramifications if they

are not included in the proposal. Local municipalities may require specialty

permits also inspection visits may be required before the next phase of work

may begin. Special permits are often required for crane operations. Streets

sometimes need to be closed for public access, this usually requires the local

police department to direct traffic and quite often to place barricades.

Sometimes however, it becomes the responsibility of the contractor to take care

of barricades and sometimes even traffic patterns. When this type of issue

goes to litigation, the first question asked is whether the local municipality was

contacted and their procedures followed.

When working in a client’s plant they often have specific procedures

required for outages of existing services. (Electrical, chilled water, heating

systems) When this is encountered, it is imperative that the estimator

researches the company’s requirements. If the client can not be without these

services, then allocating funds for temporary services will become the

responsibility of the estimator

23



2.6 Estimating Formats and the Work Breakdown Structure

2.6.1 Work Breakdown Structure

The work breakdown structure is a format that is utilized in the

construction industry under various names. Essentially, this is the

development of a hierarchy system for assigning project responsibility.

The estimate should always separate work that your direct manpower

will be responsible for versus activities that subcontractors will perform.

By using separate estimating sheets for each discipline this is easily

accomplished. When using a computerized estimating system this

separation of responsibility is easily sorted by work breakdown structure.

The separation of work is needed so that a risk to reward margin can be

properly assigned. Additional, Company policies need to be reviewed so

that the estimates will carry burdened or unburdened costs depending.

Burdened or unburdened costs are issues such as insurance, union

benefits and, per diem costs. Some companies prefer that these types

of costs be shown separately from the estimate while others, consider

burdened costs as the basis for estimating. Company supervisors

should have a very clear understanding of company estimating

procedures. Where will the costs of project management be placed?

Often companies carry this as a line item, other companies utilize

overhead and profit for this issue. There is no right or wrong way to

allocate these costs, it is only wrong when they are not allocated.

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2.6.2 Company Specific Formats

Every estimator utilizes a specific format for estimating. Each

company has a specific format required for estimate reviews. Many

companies have unsuccessfully tried to force estimators into utilizing

some pre-printed or predetermined format. This action is usually self-

defeating. Estimating is an art form. There is no exact science involved.

The word itself in the American Heritage dictionary states.

es·ti·mate ( µ s"t…-m³t") v. tr. es·ti·mat·ed es·ti·mat·inges·ti·mates 1. To calculate approximately (the amount, extent, magnitude, position, or value of something). 2. To form an opinion about; evaluate: "

While an author is yet living we estimate his powers by his worst performance "

Samuel Johnson n. ( -m ¹t) Abbr. est. 1. The act of evaluating or appraising. 2.

A tentative evaluation or rough calculation, as of worth, quantity, or size. 3. Astatement of the approximate cost of work to be done, such as a building projector car repairs. 4. A judgment based on one's impressions; an opinion. [Latinaestim³ re aestim³t-] es ti·ma tive adj. es ti·ma tor n.

Synonyms: estimate appraise assess assay evaluate rateThese verbs mean to form a judgment of worth or significance. Estimate

usually implies a subjective and somewhat inexact judgment: difficult toestimate the possible results in advance; could only estimate the size of the

crowd. Appraise stresses expert judgment: appraised the furniture and worksof art before distributing them to the heirs. Assess implies authoritative judgment in setting a monetary value on something as a basis for taxation:assessing an apartment on the amount for which it is likely to be rented. Assayrefers to careful examination, especially to chemical analysis of an ore todetermine its quality, fineness, or purity: cut a minute piece off the ingot to

assay it. In extended senses appraise, assess, and assay can refer to anycritical analysis or appraisal: appraised his character and found him wanting;

assessing the impact of higher taxes on lower-income households; has no

method for assaying merit. Evaluate implies considered judgment inascertaining value: evaluating a student's thesis for content and organization;used projective tests to evaluate her aptitudes. Rate involves determining therank or grade of along someone or something in relation to others: Will history

rate Picasso above Renoir?

Therefore, the art of estimating is subjective at best.

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2.6.3 Changing Formats Quickly

When new estimating styles are introduced quickly, the balance

can be upset for the estimator. It is not unusual for the estimator to over

estimate several of the tasks on a project, conversely they will under

estimate other tasks. When the final analysis is performed there is a

leveling or balance formed between these two extremes. With the

introduction of new estimating formats these balances are often tipped.

Introducing new estimating systems can be done successfully however,

it must be done in a very slow systematic way. The most important

ingredient is the willingness for each estimator to assist the company by

slightly modifying their individual styles.

The following example is offered. A Company working in a local

refinery within the Philadelphia Pennsylvania area was requested to

perform an estimate for piping installations. The estimate was not in the

format that the estimating department was familiar with. This particular

work breakdown structure separated requirements for hanging piping,

placing supports, placing the piping itself, performing the welding

required at each joint location and installing valves. The estimating

department utilized a long supported pricing structure, which worked out

to be a cost per foot for their company to install this type of system. The

estimator had grown accustomed to this type of procedure. Now when

faced with a new format he tried to work with numbers that he was

26



familiar with. In order to check his numbers he took the total linear

footage of pipe and divided that by the cost. A number near their

normal unit pricing was the net result. When upper management

performed their analysis of the estimate, they also requested total linear

footage of pipe and applied their known format. Everyone was satisfied

that the project was priced properly.

The estimator overlooked several things. The specifications

clearly stated that the contract was not for the complete installation of

this system but, individual component parts would be awarded and the

owner reserved the right to issue separate purchase orders to different

contractors for these individual component parts. Also, it was stated that

these quantities were for estimating purposes only and that the actual

project would not be tied to these quantities. The contractors were

guaranteed a minimum quantity of work. After the owner completed their

analysis, they awarded pipe placement and valve installation to our

example contractor. Their pricing for this activity was approximately half

that of all the other contractors. Their unit pricing for placement of

hangers was extremely high so they were not considered. Also, their

welding pricing was higher than the competition. This contractor

subsequently went out of business. Once the litigation began and the

estimates were brought into play along with the specifications that were

issued, the ruling came out that it was a mistake in judgment and not

27



misrepresentation by the owner. In this particular case everything was

well documented by both sides. This was caused by the introduction of a

completely new estimating format in my opinion.

2.7 Receiving Estimates From Subcontractors

All pricing received from subcontractors must be documented. Often

placing these subcontractors on a single electronic worksheet and placing

names and pricing across from each serves several purposes. First, this sheet

should be made as all the requests for proposal are sent out to each of the

subcontractors. Once the pricing is in it will show how they all compare quickly

and easily. Next it will verify that all of the pricing has been secured. One

major thing that needs to be looked at with subcontractors is in their written

statements. It must be verified that they have included the entire scope of work

and, that they have made allowances for any general conditions on the project.

Frequently potential subcontractors will exclude sections of the specification.

This makes the estimator's job arduous. It is necessary to ferret out any

exclusion or the inclusion of specifications that the subcontractor is not required

to carry. It is also recommended that when estimates are received, a checklist

to ask the subcontractor be pre-printed. On this check sheet is a question

asking the subcontractor if they have made allowance for the special

requirements called for in the specifications. An example is that all contractors

and subcontractors must be licensed in the local municipality. Between utilizing

an oral checklist and receiving the subcontractor’s proposal it is possible to

28



cover all of the requirements quickly and effectively. Recording this information

onto a computerized spreadsheet allows a quick comparison between all of the

proposed subcontractors.

Whenever possible, before the final proposal is presented, meetings

should be held with the subcontractors. These meetings are the estimator’s

last chance to verify that the subcontractor has completely included all of the

requested scope of work. Clear concise meeting minutes should be taken and

distributed to all parties immediately afterward. This can prove invaluable later

during the project execution. It is not unusual to request that everyone receiving

copies of the meeting minutes return a signed form stating that they have read

and agree with the meeting minutes or, that they add their comments.

In the event of any litigation, these are mitigating factors for your

defense. Documentation from the onset of a project will only serve you well.

2.8 Final Proposal

It is imperative that more than one person reviews the final bid

document. Analyzing a document that you wrote is often very difficult. Your

mind sees what you meant rather than what you actually wrote. Some things to

lookout for when finalizing bid forms are:

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• Make sure all the appropriate company information is completely

filled out.

• Verify that all bid bonds and other necessary paper acquired from a

third party is there, and filled out properly, and signed as well.

• Double check numbers to make sure that sale prices have been

forwarded to the final documents and not estimated cost numbers.

• Make sure all estimate numbers are shown both numerically and

written long hand. Example $35,000.00 (thirty five thousand dollars)

• Verify that all signatures have been obtained and are located in the

correct location.

• If any attachments are required such as time and material rates or

special insurance, bonds, they should be attached.

• If duplicates or triplicates are requested make sure each of those are

also correct.

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• Make a copy for the job folder. Asking the owner at a latter meeting

for a copy of your proposal is very embarrassing.

Many bid documents come with pre-printed envelopes. If the company

decides to utilize a different type of envelope other than those sent, it is

important that any information placed on the original be properly and accurately

transcribed. Checking with the owner before utilizing something other than what

is issued would be strongly recommended. When calling the owner for this

information make sure you get the person’s name whom you spoke with and

document this conversation exactly as it happened.

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3.0 Pre-Construction Preparations

3.1 In-House Pre-Construction Activities

After the contractor has received the contract, but prior to actually

beginning work on the site, is when the serious preparations need to be made

and documentation put into place. Depending on the size of the project there

should be several in-house meetings to determine who will handle the project

and what the information and authority chains will look like. Complete

schedules will need to be formulated. It should be noted that these schedules

are not always capable of being finished until several conversations with the

owner or owner's representative has taken place.

Subcontracts need to be finalized. Purchasing of large equipment, as

well as long lead-time items need to be negotiated. Reviewing the company's

ability to staff the project needs to be reviewed along with any labor pools that

are available. Often companies neglect to talk with local labor pools about

upcoming work. Usually the questions that are asked are only about the

current employment situation. Long-range thinking needs to commence as

soon a project has been awarded.

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3.2 Pre-Construction Meetings with the Owner

A meeting with the owner should follow the award of a contract. At this

meeting there should be a written formal agenda. Additionally, any questions

comments or concerns that the contractor has should be delivered prior to the

meeting. This agenda should be submitted to the owner with adequate time for

them to prepare answers. If the owner has their own agenda, this allows them

the time required to merge their agenda with the contractors.

All personnel who will be involved with the owner should attend this

meeting. This should include all superintendents, foreman, and any other

management level people for the project. It is recommended that the

employees who are non-essential to the pre-construction meeting arrive in the

beginning for introductions. Once the introductions have been completed,

these personnel can leave. Persons will relate better during a project if they

know each other.

Any special insurance certificates or bonds should be hand delivered at

the pre-construction meeting if they have not previously been sent. Special

requirements that the owner has requested in the form of written documentation

should also be delivered at this time. It is not uncommon but certainly not

necessary for the contractor to receive the official purchase order and contracts

at this first meeting.

33



During this meeting with the owner it is important to understand the

goals that the client is looking for from this project. Sometimes the objective is

to construct a building, however, the goal is the implementation of the system

within the building. Understanding what your clients’ goals are can save a

contractor from possible litigation, not to mention generating additional income

in the future. Fully understanding the clients’ time frame is important at this

meeting. This needs to be taken into account before the finalizing of any

construction schedules can be completed. It is important to note here that

many times you need to listen to the client's words but also hear everything he

is saying. Often what the client says is not exactly what they are looking for.

With careful conversation, an astute individual may be able to understand what

the clients’ goals or needs actually are.

The contractor personnel organizational chart should be presented. The

chart should include all persons engaged in the project. Here is an example of

a simple organizational chart.

34



Operational flow chart

Project Manager

Engineer Purchasing

Owner

Job foreman

Company CEO

CAD

These meetings are the beginning of the working relationship and open

frank communication needs to be established with a certain amount of caution.

Remember that even though the two parties are working together, some

of their objectives are contrasting. The contractor is interested in making as

much money as possible but the owner is interested in saving as much as

possible. Both are looking for a first-class installation. There are many

commonalties that they share; however, the fundamental financial issues

maintain a slight wedge between them.

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3.3 Project Documentation

3.3.1 Meeting Minutes

Every meeting related to the project must be documented through

the means of recorded minutes. These meeting minutes need to be in

an organized format that is followed throughout the project. They can

serve as a checklist, if put together properly. There are several formats

that will serve adequately for this function. The numbering scheme on

the left side represents the meeting number and then the item number.

The first meeting begins naturally with the number one. Each different

item discussed is assigned a number. Do not put multiple tasks under

one number. If between meetings one of the items in a multiple task

listing was completed, there is no way to clearly display this separation.

The objective is to have numbers for each task.

The following is a sample of actual meeting minutes from my files.

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Sample Meeting Minutes

HOWARD C. JAMISONPROJECT MANAGER

ABCConversion Project1234 Market Street

Date: June 05, 1998 Construction Meeting No. #2

Attendance: ABC HCJ CompanyMark Smith (Supervisor of Plant Op.) Howard C. Jamison (PM)Gerry Smith ( Project Manager)Tom Smith (Maintenance Group)

____________________________________________________________

The purpose of this meeting was to review the progress of the construction. Thefollowing was discussed:

Old Business:

1.2 Outstanding is a pump proposal for the hot water system of the building, whichBob will stay with until that proposal has been presented.

** ABC has requested that the pump and VFD pricing for the hot water pumpsP13 and P14 be provided to ABC by no later then 6/12/98, so that a

determination can be made on how they want to proceed before the heatingsystem is needed.

1.4 Manufacturer is going to put in a proposal for a 5-year extended warranty in thenear future to assist ABC.

1.7 If the call becomes a warranty issue then there would be no subsequent billingand Manufacturer will absorb all the costs. If on the other hand, the problemturned out to be something that was not a warranty issue then Manufacturerwould submit a bill at their normal billing rates for the repair.

** ABC would like details on the warranty, precisely what is not covered with thenew system that we are putting on. In previous conversations it was stated that

non-warranty items would then be charged. They would like to fully understandwhat would not be a warranty issue, if Manufacturer were called in for service.

1.11 Removal of tubes from site is by ABC. There was a discussion on how andwhen they will need to be removed. ABC is going to have a conversation withtheir internal group to be sure that this will happen.

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1.16 Gerry stated that he would like to have the engineer onboard now for the ASHRAE 15 issues. Bob Tool responded with 'We are working on it and weshould have an engineer selected in a short period of time.

1.18 The following MSDS sheets were requested to be forwarded to ABC: Locktight,Cleaning Solvents and refrigerant 123.

1.31 ABC has expressed an interest in taking the brass parts out of the pump fortheir recover unit.

1.33 There was a discussion about Variable Speed Drives and how the bucketswould be reused or replaced.

1.35 HCJ will submit prices with VSDs for pumps P13 and P14 in the near future.

New Business:

2.1 A detailed review of the schedule was looked at and an understanding of what

the schedule was portraying was given to everyone at the meeting.

2.2 Currently we are having some problems with the condenser gaskets.Manufacturer is in the process of making these new gaskets so that we will beable to stay on schedule. It is our intention to begin charging the unit latertoday, so that by next Wednesday we will be able to begin the retubingprocess.

2.3 ABC has requested that the 500-ton unit be the third machine that is converted.

2.4 In the event that ABC decides to do the hot water pumps, 13 and 14, refer toissue 1.2, they must be completed by October in their entirety.

2.5 HCJ will perform unloading tubes from the truck to the lay down area on theremaining tubes. ABC does not want to do this portion of this work. They do notfeel that it was agreed upon that they would do that work. They agreed to bringthe tubes upstairs and the old tubes out, not to unload.

2.6 HCJ stated that the old tubes need to be out by next Tuesday, so that we willbe able to begin demolition of Chiller #1. We will need the new tubes deliveredupstairs between June 12th and 19th, so that we will have room to work on theTriStar when that comes in on the 19th.

2.7 We need the lay down area cleaned by June 19, 1998 for the new TriStar.Currently the old tubes are being stored in the lay down area. This will need to

be cleaned in its entirety to facilitate the disassembly of the new TriStar.2.8 When the new TriStar is scheduled to be moved to the mechanical room, there

will be a need for coordination of the elevator with ABC's people.

2.9 HCJ requested to schedule a meeting with Honeywell, Manufacturer and ABC,so that all the issues that were not resolved in the previous meeting aboutcontrols could be brought to the table and resolutions begun immediately. ABCwill get back to us on when would be a good time. Currently they feel that a

38



Tuesday would be good because there are technicians scheduled on site everyTuesday.

2.10 HCJ is obtaining a price for epoxy coating and that pricing should be availablewithin the next week or so.

2.11 There was a discussion on the epoxy and whether it would actually be needed.It was explained that with the deterioration that is currently present over the last25 years, that within another 20 years of the same deterioration the tubeswould probably begin to fail between 15-20 years. By putting the epoxy coatingon they should be able to increase the longevity of the machines. There needsto be a detailed analysis of the cost of the epoxy coating, whether this will be aviable option.

2.12 Next meeting, there is no scheduled date. This meeting will be determined asnecessary. Everyone will be notified before the meeting if they wish to attend.

______________________________________________________

The above is a transcript of our last meeting. Should you differ with the contents,please notify us immediately, as this becomes the official record and the basis onwhich we will proceed.

HOWARD C. JAMISON

Project Manager

Distribution: Ed Smith **=Information subsequently providedMark SmithGerry SmithTom SmithBob Smith

Sample meeting minutes

39



In the previous example, each item is clearly broken out into

individual numbers. First the meeting number is shown followed by the

item number. The previous meeting minutes always serve as the guide

for old business. Any conversations that were documented between

meetings are shown as an asterisk. By utilizing this numbering scheme,

several things become easier. For one, you can always tell when an

item was brought up onto the table. Secondly, if you need to track the

disposition of a particular task it is easy to follow through the meeting

minutes. Additionally if any software is used for tracking purposes,

utilizing these numbers will make it very easy to follow the progress of

each item.

If notes are placed into a computer system, tracking is simplified.

By utilizing keyword searches it is possible to find various related

conversations. Using a standard word processing program with the

ability to find usually suffices but if the company requirement is for very

detailed searches, a database program serves best.

Working as a consultant for attorneys, we have put together many

claims. The primary function in preparing the case is to go back and

reconstruct what transpired during the project. If throughout the project

meticulous notes and records are kept significant financial savings can

be realized. By beginning each project with this type of meeting format,

great headway is made toward protecting the company during litigation.

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3.3.2 Issues and the Issue Log

During projects many items become issues. An issue in a project

is anything that was not anticipated during the estimating stage. There

may or may not be financial concerns associated with issues. Some

issues require an extension of time for the contracts, other issues were

oversights during the estimating stage. Keeping track of issues

becomes very important if litigation occurs. Issues should be listed and

tracked individually. During meetings issues should be brought to the

table so that they are documented within the meeting minutes. Many

times contractor's neglect to bring up these types of issues at the regular

meetings; thereby, they fail having formal documentation that the issues

exist. The following is an issue.

During construction of a small building, the engineer reviews

drawings and decides that the doorway should be adjusted left 2 feet.

The wall has not yet been constructed so, there appears to be no impact

or issue. The mason modifies the door two feet left as requested.

Several days later the sheet metal contractor arrives onsite and now can

not place the prefabricated duct work because there is now a door lentil

where there was scheduled to be only a block wall. The sprinkler

system contractor arrives later and finds that there is ductwork exactly

where his sprinkler head goes. He also prefabricated everything based

41



on the original drawings. This example clearly shows how one minor

modification that should have no impact can have substantial

ramifications. This particular instance occurred on a project several

years ago. The final outcome was that the contractors did not receive

additional payment. The engineer entered all of these changes into the

meeting minutes. The contractors had no documentation for the change.

When the judge reviewed the case it was his determination that ample

time was provided for each contractor to state their case before their

fabrication was delivered. When having a conversation with the affected

contractors, they were asked if they had noticed these notes in the

meeting minutes. Their common response was that they do not read the

meeting minutes. They did not take the time.

In this example the engineer did properly document the

modification that he was proposing. Because no one responded to his

modification until after the fact, they were found negligent. This

particular instance did not cause any serious financial damage. It did

however prove that by entering the information into meeting minutes

there was a clear decisive change and everyone had time to respond.

Take a moment to review the last paragraph of the meeting minutes that

I have submitted to this documentation

42



“The above is a transcript of our last meeting. Should you differ

with the contents, please notify us immediately, as this becomes the

official record and the basis on which we will proceed.”

Issues should be handled in a specific manner. There should be

an issue log. Contained in this issue log is the date that the issue arose,

a brief description of this issue, and a unique identifier for this issue.

The disposition of the issue should also be listed. The disposition of an

issue will change as the project continues. The following shows how to

utilize the issue log:

• No: This column is for the chronological number of the issue

beginning with number one.

• Issue Code: This is a unique identifier for everything that relates

to this issue. All documentation that follows regardless of whether

it is letters or bills will carry this issue code so that they can easily

be distinguished from the other documents.

• Description: This is a brief summary of what the issue is about.

• Date Open: When an issue is first discovered, the date of this

discovery is placed into the date open box.

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• Date Closed: When in issue is completed. The date that this

issue was finished is entered into this box.

There are issues that are taken out that will not amount to

anything once some preliminary research is completed. This is not

unusual. The issue should follow the same course as an issue that has

serious impact. Entering a date closes the issue. This form also serves

as a reminder of what issues were opened and what issues have not

been closed

The following page shows an issue log form.

44



Issue Log

No.ISSUECODE Description

DATEOPEN

DATECLOSED

Sample Issue Log

45



The Issue Log also serves as an executive summary. Each has

its own documentation. Contained within this documentation are all of

the related details. It is important that documentation also be put into

place for notification of issues between the contractor and the owner.

The following example shows a detail issue report. In this report it is

meaningful to go into expanded details about the issue. Generally, one

issue will have an effect on many different subcontractors or companies.

When this occurs it is important to fill out detailed sheets on each

instance where there is an effect. If the contractor is forced into litigation

this information is very helpful. When sending correspondence to

anyone about an issue that has a possibility of becoming a change order

or a possible litigation item, it is important to send that issue under a

separate cover. The issues should be addressed individually and no

other job business is included. This increases the paperwork for the

contractor; however, throughout the project it will clearly separate the

issues from other job-related items.

3.3.3 Filling in the Issue Detail Form

• Type: This is for any designator that the company would like to

utilize. An example is financial for an issue that has financial impact

or a scope issue. This area is capable of being searched once the

issue has been placed into software.

46



• Description: This is a brief summary of what the issue is about.

• Date Open: When an issue is first discovered, the date of this

discovery is placed into the date open box.

• Issue No: This column is for the chronological number of the issue

beginning with number one. This information is obtained from the

issue log form.

• Date Closed: When in issue is completed.

• Issue Code: This is for a unique identifier for everything that relates

to this issue. All documentation that follows regardless of whether it

is letters or bills will carry this issue code so that they can easily be

distinguished from the other documents.

• BIC: Ball in court. Whose responsibility is it to perform the next task?

Generally in our office we utilize a three initial designator for

everyone's name. Mine is HCJ.

• Issue disposition: This refers to what impact the contractor thinks the

issue will have. Below are some classic examples.

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Proposed change order (PCO)

Change order (CO)

Change in condition (CIC)

Request for proposal (RFP)

Extra work order (EWO)

Within original scope of work (INS)

Out of original scope of work (OTS)

•

Each company will need to word or abbreviate according to their

particular needs.

• Final disposition: The final disposition of the issue should be listed

here. This space serves for good history acquiring information. If an

issue does become a change order, the final disposition information is

beneficial to the contractor. This information over a period of time

allows the contractor to accumulate a history on this particular client’s

actions. If this particular client historically issues between 10 and 15

change orders for each project and they collectively average five

percent of the original contract value as a minimum, then it is

statistically correct to assume that this pattern will continue. Armed

with this information a contractor can hedge a price for new work.

(This is a risky way to proceed knowing your client will give you the

best information.)

48



Some issues have no effect and are handled by the

contractor. Most of the time an issue has some effect on the project.

Many contractors neglect to request a time extension along with each

issue. Most projects today are run under very tight time constraints,

along with associated penalties for lack of completion. When issues

arise that require additional time, contractors do not routinely formally

request extensions. Many times an extension is requested orally but

there is no documentation. Speed memos are an excellent way for

field personnel to document such changes. Speed memos come with

three copies. The field personnel keep one, one is delivered to the

office and the third is delivered to the client. When a conversation

occurs between the field superintendent and the Owner or Owners

representative leading to an agreed extension of time, sending a

speed memo will serve as adequate documentation later, if litigation

occurs.

Issues should be clearly shown in all documentation by the

issue code (the unique issue identifier).

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ISSUE RECORD

TYPE: ____________________

DESCRIPTION ___________________________________

DATE OPENED: ____________ ISSUE NO. ________ DATE CLOSED: __________

ISSUE CODE: _____________ BIC: ________ _________ _________ __________

DETAILS OF ISSUE

ISSUE DISPOSITION _____ _____ _____ _____ FINAL DISPOSITION _______

PCO PROPOSED CHANGE ORDER INS WITH IN ORIGINAL SCOPE OF WORK

CO CHANGE ORDER OTS OUT OF ORIGINAL SCOPE OF WORKCIC CHANGE IN CONDITIONRFP REQUEST FOR PROPOSALEWO EXTRA WORK ORDER

Sample Issue Detail Report

50



3.3.4 Correspondence

All correspondence for a project needs to be tracked and

identified. This becomes an essential task when the attorneys enter into

the project. Experience has shown that performing this activity on a

daily basis affords several advantages to the contractor. When these

forms are filled out electronically it allows for quick retrieval of specific

documents. If these documents are required for court, retrieval is easy

and inexpensive for the contractor and the attorneys.

The main purpose of this document is to keep a chronological

order to all correspondence whether the document was sent or received.

Each document, when entered into the file will receive a number

on the bottom right hand corner. (The location of this number is not

important what is important is that this number be placed in the same

location all of the time.)

3.3.5 Filling in the Correspondence Log

• Date: The date is representative of the day a letter or package is

received in the office. It also represents the day a letter or package

is sent from the contractor's office.

51



• Type: The type refers to the type of document that is being sent or

received. In my company we utilize the letter L for a letter or F for a

fax. The company selects all these. It cannot be stressed enough

that whichever nomenclature is utilized, consistency is the most

important issue. Everyone in the office needs to understand how to

fill in this form.

•FR/TO: From/To column makes searching for a document easier.

Using this column makes it easier to search if it is know that the

document being searched for was sent from the contractors office.

• Num: Each document is assigned a chronological number.

Occasionally a document is placed out of sequence by mistake. In

this event, we insert a duplicate number with the letter "a" after it.

This resolves the problem of keeping things chronological. However,

it is important that this not be a regular practice. If the company goes

to litigation, this would be suspect.

•

Description: The description field is for keywords to assist in finding

documents. After the log has been computerized, keyword searches

are very quick and efficient.

52



• S/R: Sent or Received stands for whether the document was sent

from the contractor's office or received from elsewhere. When

searching for a document that was sent from the office this will

eliminate all of the Received Documents immediately making the

search faster.

• BIC: Ball in court. Who is responsibility it is to perform the next task.

Generally in our office we utilize a three initial designator for

everyone's name. Mine is HCJ.

• Action: The Action refers to the next action that is needed based on

the letter or document. An example would be that a response is

needed for the letter just received. In the action box would be rsp,

meaning response.

• Date Req: The Date Required is the date that the action needs to be

completed. This will also serves as a tickler for activities that need to

be completed.

• Compl: The Completed section is for the date the required action was

actual completed.

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The last four columns on the form are only used if there are

actions required. This also makes it easier to see all of the actions that

need to be concluded or that has been accomplished. This serves well

when someone calls and wants to know why their questions have not

been answered. With a quick form review, you can tell them that it has

been completed and mailed on a certain date or, that the response

should be out on a certain date. If a response was necessary, then the

document that was prepared and sent out will have a new entry on the

form as well as an activity Completed Date.

The next form shows a typical correspondence log:

54



Correspondence Log

DATE TYPE FR/TO NUM DESCRIPTION S/R

55



If this form is used frequently on a project then the

computerization should be updated every few days. On some

small projects this form may never need to be computerized. This

is a judgment call by management. This form as with all of the

forms presented are designed to assist the contractor not to

burden them.

3.3.6 Phone Log

The phone log is used to keep records of all phone

conversations in the proper time sequence. Often persons can

remember details of conversations, but remembering the proper

time sequence is often not possible. Utilizing a phone log helps

prevent confusion about time frames as they relate to phone

conversations. Additionally, they provide some formal

documentation to support the position.

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PHONE LOG

Date of Call _____________________________Time of Call ___________________

Company _______________________________Issue__________________________

Name of Caller___________________________Phone (_____) ______- __________

_______________________________________Fax (_____) ______- ___________

DISCUSSION ______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

CALL BACK ____ FAX DOC. ____ SEND LETTER ____ SEND DRW. ____ OTHER ___

______________________________________

_____________ ACTION COMPLETED

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3.3.7 Filling in the Phone Log

It is important to understand that every line does not

necessarily need to be filled in on this form for every call. Personal

judgment needs to be exercised for the level of detail that should

be shown.

• Date of Call: The date that the call was received or placed.

•Time of Call: If a project appears to have potential problems,

being accurate with the time is a good recommendation. If

litigation occurs this level of detail will show the Managers

expertise in their field. This will also help the legal team

immensely in establishing more precisely when activities

occurred.

• Company: This is the name of the company that the call has

been received from or placed to.

• Issue: This line relates to any issue that may be already

logged. If this phone call is the beginning of a new issue then it

is important that the issue log be filled out and the issue detail

form be completed. This space should hold the issue code,

which is the unique issue identifier.

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• Name of Caller: This is self-explanatory

• Phone: This is used for entering the phone number or fax

number of a new caller.

• Discussion: Details of the discussion need to be placed into this

section. Often if the call is long there may be additional pages

required. When having conversations it is advantageous to

abbreviate your writing. After the call has been completed

these abbreviations can be expanded to clearly show the

contents of the call.

• Continue #: If a conversation exceeds the space available in a

typical Phone log, the continuance of the information should be

labeled then, in the event that the pages become separated

they can easily be reunited in the file.

The next section is action required. This section becomes

very helpful as a reminder; this document should be placed in the

project manager's ‘to do’ bin and acts as a tickler file, reminding

the project manager that before this document can be placed into

the job file it must be completed. Each company should determine

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the actions that are listed on the form. We will not review each of

them separately.

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4.0 Scheduling

4.1 Introduction

Scheduling a project is one of the most important tasks that does

not receive the attention that is deserved. To illustrate the importance of a

schedule, I offer the following question.

If you were planning a trip across the country by car, would you

embark on that trip without a map? A well-constructed schedule will

clearly act as a map for the project. It is also important to clearly

understand the purpose of a schedule. A schedule is considered as a

live document, meaning that it does not remain stagnant but rather

changes constantly. Often clients receive copies of schedules and

anticipate that every activity is started and completed precisely as shown.

I have found over the years that it is important to educate people who

receive copies of the schedule. They need to clearly understand that this

document is a guide or plan of action and, that it will be followed as close

as possible; however, it will be changing constantly throughout the

project.

By preparing a network diagram, and by carefully constructing the

network logic, a project can be developed on paper or on a computer

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system. By having the network logic carefully constructed many ‘what if’

questions can be asked about the project. Reality tells us that the owner

wants the project completed quickly, with as little cost as possible. By

constructing a model on the computer system, it is easy to play ‘what if’

scenarios. Additionally, after the network logic is properly constructed

allocating manpower to each task, it will show the manpower

requirements through histograms. When the 'what if' scenario is placed

into the computer system, the financial impacts, as well as manpower

requirements will clearly be shown. This representation can not be

utilized alone. Experience is required to understand whether the

information in the computer can be executed pragmatically. An example

of this is: there are eight sinks to be installed in one bathroom and by

accelerating the schedule it will show that this activity could be completed

in one day, if five men were to work on it. Practicality clearly shows us

that most bathrooms would not be capable of providing adequate space

for five men and all their equipment along with all of the materials

required. Experience is by far the most important guide when using

schedules to assist the project manager. The keyword is assist. The

computer can only perform mathematical equations. While its ability to

assist is incredible, it also has the ability to create catastrophic results.

In the 1970s there was an introduction of a scheduling system that

professed to be able to schedule all equipment and manpower more

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efficiently than any Project Manager. This system was brought onto a

local project in the Philadelphia area. This project was in the hundreds of

million-dollar range. On the project there was a local joke about the hiring

and firing practices. The Company decided to allow the computer to

make decisions on manpower requirements. It was not unusual for 100

people to be hired on Monday and 150 to be laidoff on Wednesday. Then

on Friday the hiring would begin again. Additionally, equipment was

rented and returned at alarming rates. There was no consistency to

anything on the project. These dramatic movements caused by the

computer were allowed to run the project for a few months. After the

company realized that this was not practical, they returned to more

conventional methods. Unfortunately, they abandoned the entire

program and much of the systems capabilities.

In the 1980s scheduling programs came out that had an ability to

do what was called ‘resource leveling’. Resource leveling allowed the

computer to smoothly predict manpower increases and declines. The

system slowly developed the ability to start and stop activities allowing for

certain over allocation and under allocation of resources. The systems

had become more intelligent along with the owners learning that this was

a tool not the Bible. After resource leveling was introduced it was

possible to look at smooth flowing histograms. Unlike my story about our

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misled contractor whose, histograms looked like the Himalayan

Mountains.

4.2 Network Logic and Their Relationships

Network logic is the backbone of a good schedule. Without

properly preparing this logic, the information that is handed back from the

computer system is useless. When preparing the project schedule it is

imperative that this logic be entered clearly and concisely each time.

Most companies will construct templates for normal installations. These

templates show the logical relationships between activities. An example

of the logic is the classic stop start. This most fundamental logic step

states that one activity must be completed in its entirety before the next

activity can begin. The following diagram demonstrates this.

Set equipment onto newconcrete pad

Form concrete pad and pour.

This relationship shown as a network logic diagram clearly states

that the activity form concrete pad and pour must be completed before

the activity set equipment onto new concrete pad can occur. This is a

very true and logical statement.

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However, this statement is not correct in its purist form. If the

concrete were to be poured at 11 o'clock in the morning it would not be

practical to set the piece of equipment onto the new concrete at 11:15

because; needless to say the equipment would sink into the concrete.

Therefore, this statement is not completely correct even though it is

logical. Under most circumstances it is required to allow concrete to cure

for a minimum of 24 hours. In some circumstances this time frame must

be increased depending on the strength required for the concrete by the

specifications. Therefore, it is necessary to change our logic to show

reality. This can be accomplished by two methods. First method would

be to add an additional activity called concrete curing. Or, we could

utilize logical relationships with a lag. By using the same diagram and

adding a 24-hour lag, the scheduler and the computer will understand the

logical connection and make adjustments to the schedule. The following

diagram displays the 24-hour lag addition.

FS

24h

Set equipment onto newconcrete pad.Form concrete pad and

pour.

The next logical connection states that when one particular activity

finishes the related activity can finish.

65



By the computer system allowing us to add this type of logical relationship

it greatly reduces the time required to construct the schedule.

The next logical connection is a finish to finish relationship. This

relationship states that one activity must be completed before the next

activity can be completed. A practical representation of this would be to

allow a painter to finish the walls of a building along with the electrician

placing the final faceplates. This would be a finish to finish relationship.

Again however, the paint should be allowed to dry before the electrician

can place the cover plates. So, we will utilize the logical lag within the

system parameters.

FF 3h

Complete painting

trim

Install finish face plates

The system will just as easily accept negative lagging if it is

necessary. There are additional logical connections, which we will only

described without going into detail.

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• Finish to Start

• Finish to Finish

• Start to Finish

• Start to Start

These are the primary relationships that all schedules are based

upon. Most programs have the ability to add additional constraints when

needed. An example of a constraint would be a delivery date. In the

computer system as on the project, activities occur on these specific

dates. This logical connection will lock the activity in that time frame and

move other activities that do not have constraints.

4.3 Durations and Resource Allocation

After the network logic has been constructed, it is then necessary

to assign durations to each activity, along with resource allocation.

Simply stated we need to tell the computer or the paper schedule how

long each activity will take to complete. Once a duration has been

established then resource allocation can be completed. Then a finial

model of the project can be developed. Resource management becomes

one of the most difficult activities for the Project Manager. When the

contractor is very small with only a few employees, it becomes imperative

to schedule each individual. This is because there are usually several

ongoing projects. For this type of situation a strong recommendation for

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computerizing scheduling is in order. Most software programs today

have the ability to handle multiple projects from one resource table.

These programs allow you to schedule one resource (meaning an

individual or piece of equipment) across several projects. When the

histogram reports are generated, they will clearly show any conflicts.

Unfortunately, this is where project management becomes difficult, all of

the customers want their task completed where it originally appeared on

the schedule. Reality will dictate that something will have to be

rescheduled. This only serves to more clearly demonstrate that a

schedule is a live constantly changing document.

Resources have costs associated with them. The computerized

scheduling system will allow for hourly, daily, or weekly costs to be

entered. Therefore, with a duration assigned to each activity and a

resource supplied with costs, it is now possible to present a financial

model for the accounting side of the organization. The importance of this

should not be understated. Every industry requires money to operate,

when the money is gone, usually, so is the project. By utilizing the

scheduling tools it becomes possible to predict cash flow needs. Also, by

entering in monthly billing expectations both inflow and outflow of cash

can be managed. The company's financial team should be given the

opportunity to review and offer input on these projections. Often, with

minor scheduling adjustments using project float, the cash flow can be

68



adjusted. By using float there should not be any impact on the project but

it can make a tremendous difference for the accounting department.

4.4 Milestones

Milestones are activities that represent a significant point in time

and have a known duration. Activities or tasks that indicate a start or end

of a series of activities can be identified as milestones. Milestones can be

adversely affected by task durations. When placing task durations it is

important to insert milestone requirements. By placing these activities

with constraints and watching the float, it becomes possible to more

accurately predict any possible conflicts. Occasionally, conflicts will occur

that make it necessary to work additional hours. By showing this

additional time on the schedule, the associated costs can be clearly

calculated. When a schedule is constructed properly and monitored on a

regular basis, these types of issues can be circumvented.

4.5 Updating Schedules

Utilizing a computerized scheduling system allows quick accurate

updates to the schedule. By performing these updates the schedule will

always be current and capable of assisting in decision making. If

activities are completed ahead of schedule this will usually allow for other

activities to occur sooner then originally scheduled. This may also have

an impact on resource allocation. By updating frequently on a project

69



new manpower and equipment requirements can be continually projected

and managed. We have not yet discussed the critical path however, it is

necessary to mention that changing activity completion dates and

durations will have impact on project float. Once float begins changing

the critical path of the project may begin to change.

As tasks are completed they can be taken off of the schedules that

are printed and disbursed among the project teams. This begins to

illuminate clutter in the paperwork. This also allows the team to stay

focused on upcoming events rather than seeing longer lists of completed

activities.

From the onset of a project if updates are performed and properly

distributed, the owner will be shown clearly that the document is live and

that change occurs regularly. This will reinforce to all concerned parties

that the dates originally given will fluctuate. An important note here, when

I speak of fluctuating dates this does not refer to milestone constraints.

These tasks are date driven and should not change unless the owner or

controlling body dictates such an action.

When there are multiple companies or groups involved in a large

project, scheduled project update meetings should be held. Before these

meetings it is recommended to send each contractor a copy of the current

70



schedule. Each contractor should then be requested to mark up the

schedule that they have received and return it before the project meeting

so that its contents can be entered into the master schedule. Having this

information entered into the schedule prior to the meeting will allow for

accurate projections. These meetings all need to be well documented

and, everyone needs to be well informed of changes and potential

impacts to scheduling. During large projects I try and have scheduling

meetings just before or after the weekly progress meetings. Most

projects have the same team responsible for schedules and for daily work

issues. (Usually the Project Manager is responsible for both activities.)

4.6 Critical Path Method

The term CPM stands for critical path method. Today in the

project management field the term CPM and the word schedule have

become synonymous. The following definitions pertain to the scheduling

portion of the Project Managers job.

• Critical path is the series of activities in a project that will take

the longest time to complete.

• Critical activity is an activity that has zero total float. It must

start as schedule and finish on or before its scheduled finish.

71



• Float is the amount of time that the start or finish of an activity

can be delayed without effecting the project finish date.

• Free float is the amount of time that an activities early start can

be delaying without delaying the early start of a successor

activity.

When a project becomes a legal matter the schedule usually gets

introduced and much weight of the decision forming process is carried by

this single document. Good litigators usually display full color graphic

illustrations of schedules. Often documentation that is presented will be in

the form of support for the schedule. This form of presentation is relatively

easy for a lay person to understand because it will show time and

responsibility all with simple clear lines. These graphic representations

will show float and critical activities. Histograms are often shown as well,

because they are also very visual for the juror.

If a schedule is put together properly and the comparison to the

estimate is on going then, the contractor has the ability to clearly show

the clause and effect of any delays or work disruptions. This information

can assist the legal team enormously by showing precisely when some

change in the project rhythm occurred and the effect of this change.

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As schedules are updated, recalculating is important. Some

computerized schedules do not recalculate automatically and it is

therefore necessary to manually begin this process. When critical

activities are completed ahead of schedule, other activities will become

critical. The experienced scheduler will run reports showing float

available after each recalculation. This will provide information on the

next group of activities that most likely will become critical. This

information in the hands of an experienced Project Manager will facilitate

actions that can prevent unwanted critical lines.

Many programs now allow the scheduler to force activities to be

displayed as critical. When this is done in court, the only way to discredit

the presentation is to show how this has been done. Additionally, the

proper critical path needs to then be shown. Many litigators who

understand how to manipulate schedules will make activities critical that

were not truly critical during the project. If a company is unfortunate

enough to run into someone with this ability, the only defense is having a

very knowledgeable scheduling professional assisting your legal team.

Additionally, by having all the proper documentation presented

chronologically through meticulously maintained logs will serve to

discredit anyone trying to manipulate schedules.

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5.0 Construction Phase

5.1 Project Management During Construction

Project management, what is it? This question has been asked

many times over the years. There are many humorous anecdotes to this

question. However, the best answer I have heard: Project Management

is hard work.

Project management requires logical thinking and extraordinary

communication skills. It requires carefully laying out the chronological

steps essential to build a future that has been preset by others. Often a

project manager is called upon to create someone else's dream. Most

importantly the project manager must continually deal with reality. As

problems and obstacles present themselves, this individual is expected to

rise to the challenge keeping emotions under control and the logical mind

functioning.

Project management requires constant vigilance, always watching

the past so that he can better predict the future. Always asking what

remains to be completed and what resources are available to complete

these tasks. As these questions are answered, new questions arise in the

74



Project Manager's mind. What if the equipment does not show? What if

the subcontractor does not show up on time? What if the owner changes

his mind again? While the office continually asks where the costs are

and, where will costs be at the end of the project?

The Project Manager needs a clear definition of purpose. This is

accomplished by having a complete understanding of the work scope,

and of all the tasks required to successfully complete a project. If the

project scope is not clearly defined, it becomes the responsibility of the

Project Manager to clearly define the scope of work and, to reconstruct

the estimate. This activity must be completed so that the baseline of

productivity can be established.

Assuming the project has been properly estimated and the scope

of work clearly defined, the Project Manager is faced with the task of

developing a project plan that will meet all contract time constraints and,

be completed on or under budget. Throughout the project, the manager

should be able to show the project financial status. In the event that a

project may slip with regard to completion time, the Project Manager

should show how to make up that time in the most cost-effective way. It

is important for the Project Manager to identify a schedule slippage prior

to its actual causing project delays.

75



During the project, productivity, cost, and scheduling are all

separate entities. The Project Manager can have a mixture of these

items occurring simultaneously. For example, the project could be on

schedule, but over budget. Putting together the recovery plan falls on the

shoulders of the Project Manager. Learning how to read these signals

becomes very important. Usually when a project begins the manager

should expect that the productivity would be below the estimated amount.

This is primarily because of start up issues. When the job is new and the

manpower unfamiliar, the productivity will lag behind. Likewise however,

during the middle portion of a project productivity is usually at its highest

rate. It is not uncommon to vastly exceed productivity factors. Then, at

the end of the project the productivity once again usually will drop

significantly. Summarizing this paragraph into the following statement

should assist in understanding how a project usually comes together

during the actual working stage. First is the start-up, followed by the

middle of the project, followed by the never-ending end of the project.

Anyone who has ever managed a project from beginning to end

understands the last comment. The anecdote that contractors have used

for years says, "I spend 50 percent of my money to get 90 percent of the

job." It often seems that this is a very true statement.

During schedule reviews, it is important to look for trends. These

trends should be the key indicator that potential problems are arising. It

76



is important to understand that these trends may be very small and

appear insignificant. If a trend begins to show possible project slippage,

the Project Manager needs to react immediately. If the problem is

identified and addressed early enough, it may never surface as a

problem. Not reacting to these small indicators may possibly create large

indicators that everyone around the project will see. The Project

Manager needs to become accustomed to looking at tracking systems

and scheduling systems. The manager should begin to understand what

the warning signs are versus what a normal job blip looks like.

When it is determined that actions are needed, the manager

should implement these corrections. Immediately following this corrective

action, the reevaluation process begins. This should show a trend

correction beginning. If this adjustment does not have the desired effect,

then the next level of management should be alerted and their expertise

called upon. Upper management in the company needs to understand

that their job is to support their people. Occasionally it is necessary to

remind senior management that their function is to assist and train their

underlings.

Periodic projected cost to complete estimates should be

performed. This process keeps everyone informed of the Project

Managers thinking about future productivity. This tool is very useful to

77



everyone in management. Many companies do not perform cost to

complete projections. These should be performed so that a financial

slippage can be seen before it happens. Understanding that profit fade

may occur or is going to take place makes it easier to deal with.

Project Managers can never ask this question enough: What if? A

classic example is when the project is on a very tight time schedule and

the pump is being delivered on Monday. There have been and are

definitely scheduling problems. The Project Manager should begin

asking what if the pump does not show up? The manager needs to have

some contingency plan in mind with all required information and material

to keep the crews productive. Remember that the vendors who supply

equipment and materials have their own problems, your project may not

be that important in their schedule. Murphy does visit projects regularly.

As difficult as this task may seem, keep emotions under control, they will

not resolve problems. The picture of the cigar smoking, pot bellied,

screaming foreman, is humorous in cartoons only.

5.2 Filing System

When any project begins, immediately a filing system should be

constructed. When the request for quotation was received in the office a

file was instantly started to hold all of the original documents. Now when

the Project Manager becomes involved, a new filing system needs to be

78



started. All of the previously shown forms should have locations within

the filing system. I am going to show a sample filing system. This

system is meant as a guide and is not intended to be a complete filing

system. Each discipline may require different file headings. The main

point is that there needs to be a hierarchy. Consistency throughout the

company becomes very beneficial. If every project has the same basic

file design, then as people are called in for assistance with other projects,

the system is familiar to them.

1.0 CONTRACTS AND CONTRACT CHANGE ORDERS

1.01 ORIGINAL PROJECT CONTRACTS

1.05 PROPOSED CONTRACT CHANGE ORDERS

1.06 CONTRACT CHANGE ORDERS ACCEPTED

2.0 ESTIMATE

3.0 BUDGETS

4.0 SCHEDULES

4. 01 NETWORK LOGIC DIAGRAM'S

4.02 ORIGINAL SCHEDULE PROPOSED TO CLIENT

4.03 ACCEPTED BASELINE SCHEDULE

4.10 WEEKLY SCHEDULE UPDATE FIRST WEEK

79



4.11 WEEKLY SCHEDULE UPDATE SECOND WEEK

5.0 SUB CONTRACTORS AND SUBCONTRACTOR CHANGE

ORDERS

5.01 PROJECT MANAGEMENT

5.02 EXCAVATION CONTRACTOR

5.02.1 EXCAVATION REQUESTED CHANGE

ORDER

5.03 PLUMBING CONTRACTOR

5.03.1 PLUMBING REQUESTED CHANGE ORDER

5.04 MECHANICAL CONTRACTOR

5.05 ELECTRICAL CONTRACTOR

5.06 STRUCTURAL STEEL CONTRACTOR

5.07 SHEET METAL CONTRACTOR

6.0 PURCHASE ORDERS

6.01 PROJECT MANAGEMENT

6.02 PROJECT ENGINEERING

6.03 PROJECT TRAINING

6.04 EQUIPMENT STARTUP

6.05 A SPECIAL EQUIPMENT TRAINING REQUESTED

7.0 COST DETAILS

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JANUARY/98

FEBRUARY/98

MARCH/98

APRIL/98

8.0 PROFIT AND LOSS REPORTS

JANUARY/98

FEBRUARY/98

MARCH/98

APRIL/98

8.10 PROJECTED COSTS TO COMPLETE

JANUARY/98

FEBRUARY/98

MARCH/98

APRIL/98

9.0 CORRESPONDENCE

9.01 CORRESPONDENCE LOG

9.02 TRANSMITTAL LOG

9.10 CORRESPONDENCE RECEIVED

9.20 CORRESPONDENCE SENT

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10.0 ISSUES

10.01 ISSUE LOG

10.20 ISSUE DETAILS

11.0 SUBMITTALS AND MATERIAL CONTROL SHEETS

11.01 PROJECT MANAGEMENT SUBMITTALS AND

MATERIAL CONTROL SHEETS

11.02 EXCAVATION SUBMITTALS AND MATERIAL

CONTROL SHEETS

11.03 PLUMBING SUBMITTALS AND MATERIAL

CONTROL SHEETS

11.04 MECHANICAL SUBMITTALS AND MATERIAL

CONTROL SHEETS

12.0 PROGRESS PAYMENTS

JANUARY/98

FEBRUARY/98

MARCH/98

APRIL/98

13.0 MEETINGS MINUTES

13.01 CLIENTS MEETING MINUTES

JANUARY 4, 98

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JANUARY 10, 98

13.02 COMPANY MEETING MINUTES

JANUARY 4, 98

JANUARY 10, 98

14.0 REQUEST FOR INFORMATION SHEETS

15.0 SAFETY

15.01 TOOLBOX SAFETY MEETING GUIDES

15.02 CERTIFICATION'S FOR ACCESS

16.0 SHOP DRAWINGS

With this hierarchy format, it is very easy to maintain an accurate

system for every project. Where additional items may be needed, simply

skip 5 to 10 numbers or more. The format that each company uses can

vary. One of my clients utilizes 200 series numbers for all

correspondence. This system makes it easy to understand that

whenever you enter a pendaflex folder with the 200 series, you will be

looking for some type of communication. Often it is necessary to

implement some trial and error periods. My one recommendation would

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be not to change a system in the middle of a project even if there are

some problems. Take the information that you are learning and

implement it on the next project.

5.3 Subcontracts

Often the Project Manager is required to write subcontracts. This

task is very important and help should be obtained from the supervisor

when beginning this task if the Project Manager is inexperienced. Often

companies become lazy and issue purchase orders to subcontractors

rather then issuing formal subcontract agreements. When the company

has a long history with a particular subcontractor they sometimes avoid

writing contracts and issue PO's. This can have a down side and as a

Project Manager this should be carefully reviewed. Purchase orders

should be written to vendors. Subcontracts should be written to

companies performing labor on the project. A purchase order is designed

for purchasing materials and or equipment. Subcontract agreements are

for employing other companies to perform work on the job. Occasionally,

a manufacturer or vendor may also supply installation of their equipment.

In this scenario, ideally a purchase order should be written for the

equipment and a subcontract issued for the installation portion of their

work. Unfortunately, this does not always work smoothly in the real world

therefore; the best document for the contractor to issue is a detailed

subcontract. In this subcontract all references to supplying of equipment

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should be carefully written. Equipment warranties and labor warranties

are different therefore, when mixing the two in one document it is

important that there is a clear concise separation.

Almost every company has standard subcontract agreements pre-

printed. Some companies have these legal documents on their

computers so that it is easy to fill in the blanks and issue the subcontract.

It is important to put all details in this document. Absolutely no

ambiguous sentences or phrases should appear. This document is a

legal binding contract and, it should be handled as such. When writing

this document there will be a space for details. Fill the space up and, use

an additional sheet if necessary. Every task that the subcontractor will be

expected to perform should be clearly listed. Many Project Managers

quickly write these documents, which is a mistake. When writing a

subcontract, it is recommended to leave the office and go to a local

library. This will eliminate interruptions that generally occur with in the

office environment. I can not emphasize enough the importance of this

single document. Poorly written subcontracts will show up in court and

may have the same effect on the project team as the indecipherable

notes and estimates.

The American Institute of Architects and the National Society of

Professional Engineers offer pre-printed subcontract forms for every

85



imaginable need. They publish a document list, which gives a brief

summary of all the contracts and agreements that they have available.

Additionally they publish a four-binder set of books that have copies of all

the AIA agreements. These binders are supplied as detailed copies of

the contracts. When using the AIA forms it is necessary to purchase

originals from the company. All original AIA contracts have a red line

going through them. This is to assure all parties involved in the contract

signing that the forms are original AIA documents. Occasionally

contractors will enter an AIA agreement into their computers, this

becomes the basis for their writing contracts. When this is done the

contractor is infringing on copyright laws as well as presenting a contract

that may be altered from the original AIA format. AIA documents have

been tested in court. They are an excellent guide and resource for

companies who have not professionally had their own contracts prepared

by their attorney.

5.4 Purchase Orders

Throughout most projects the Project Manager will write many

purchase orders. In the previous section we briefly touched on purchase

orders. Basically we covered that a purchase order should not be used

as a subcontract. Purchase orders like contracts are important. They

should have all pertinent details clearly spelled out. I expect vendors to

perform every bit as well as members of my company. We require

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vendors to deliver on time or ahead of schedule. In order to expect this

performance it is necessary to clearly write out on the purchase order

these demands. When my company has liquidated damages and they

are imposed due to late deliveries, all of the vendors that I deal with are

tied to these damages. In order to do this properly it is necessary, under

most circumstances, to modify the paperwork that the vendor sends to

the company. Most purchase orders or purchase agreements state that

the vendor will not be responsible for consequential damages. This

statement would eliminate their financial responsibility for a late delivery.

Vendors today are being forced to do things that were not standard years

ago just as the contractors are. When selecting a vendor, it is important

to sit down and have a conversation with them explaining exactly what

you expect. If their location and the contractors are distant, this

conversation can occur over the telephone. Written minutes of the phone

conversation should be sent summarizing all of the salient topics of

discussion. This will properly document the oral agreement. An oral

agreement, has the same impact as a written agreement, both are legally

binding.

Many equipment vendors have a warranty that covers parts but

makes no allowance for labor. The contractor is required by this type of

agreement to supply all labor to make repairs are needed on the vendors

equipment. Very frequently there is another clause in the vendor

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purchase agreement which clearly states that the vendor will not accept

any consequential damages caused by their equipment failing. Two

examples: a company purchases a large cooling tower for an air

conditioning system, during start-up the motor fails. Common sense

would state that the vendor should place a new motor into the new

cooling tower. This is not so, in the documentation from the vendor, they

stated that all materials are covered. If the contract does not say labor

and materials then, the contractor is left with the financial burden to make

these repairs.

The second example had much more serious ramifications. The

vendor supplied new tubes for an air conditioning system. One of the

tubes was manufactured incorrectly, subsequently when the machine was

placed into service this tube failed. This failure caused the new

refrigerant to escape into the building chilled water system. The motor on

the system was flooded with water, which caused an electrical short.

After the tube was located it was then removed and replaced with a new

tube. The tube manufacturer had stated in their purchase agreement that

they would not accept any consequential damages. When the contractor

presented the problem to the manufacturer, this manufacturer offered to

supply them with a new tube and offered to replace the one that had

failed. The contractor was left with thousands of dollars worth of repairs

with no easy legal recourse. Make sure that all terms and conditions

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presented by manufacturers are fully read and understood. The best

way to prevent this type of occurrence is to have conversations with the

vendor before placing the order. Experience shows that the lowest price

is not always the best deal.

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5.5 Project Documentation

5.5.1 Introduction

This section will cover several forms of documentation.

Most of these items have been briefly covered previously in this

dissertation.

5.5.2 Meeting Minutes

Meeting minutes are very important documents. At the

meetings all issues of a project should be discussed. When the

contractor receives a copy of these minutes, they should carefully

read the document and be sure that they agree with the delivery of

the information. Many times these meeting minutes supplied by

others arrive with the correct words however, there are slight

implications that would make the contractors viewpoint ambiguous.

When meeting minutes are sent to the company and they are not

completely agreed with, take the time to write your version of what

transpired. This response to the meeting minutes needs to then

be placed into the minutes or an addendum to the minutes should

be issued to all of the parties.

How do I take meetings minutes? This is not an easy

process especially when you also are required to run the meeting.

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Practice makes perfect. I will offer the style that I utilize as a

guide. Write key words or phrases that will remind you later what

was being said. This is the one time during a project that

scribbling notes is acceptable because, the individual taking the

notes will be responsible for clearly placing them into a discernible

format. Keep in mind that the first meeting is the most difficult to

formulate minutes for. If at all possible the office should supply

assistance during this meeting. Additionally, if the company has

placed a fledgling Project Manager in the key position, assistance

should be supplied during this first meeting. There is enough

anxiety offered just being responsible to run the meeting. The

person taking notes should be well versed in the subjects

discussed.

I find that I am more interested in learning about my client

and taking notes detracts from the ability to listen carefully.

Remember, in the beginning of the project we are listening to what

our clients say but we are trying to understand exactly what they

actually mean. Sometimes the words do not properly convey the

desires. Taking notes makes this intense listening difficult. Earlier,

we spoke of indecipherable notes, this is what I produce during

meetings. After the meeting has ended, I will proceed to a quiet

location with my trustee Dictaphone. While the meeting is still very

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fresh in my mind, all this scribble is translated into a format that

can be transcribed by my secretary. Written notes are then taken

back to the office and placed into the correct file. These so-called

notes are retained because occasionally they will jog my memory

in the future if it becomes necessary.

5.5.3 General Correspondence

Remember to use letters of transmittal where necessary.

When writing normal job memos to clients or subcontractors a

standard format is recommended. I utilize a custom made form

which is standard on all of my projects. The salient references

should be the date that the memo is a written, reference a topic

and it is important to include the job name. Then anyone who

should be is carbon copied. Memos should be brief. Verbose

notes will become old quickly. State the information with as few

words as necessary. Be sure to reference everything clearly.

People reading these memos are not always intimately involved

with the project, therefore sentences referring to instances or items

should be clearly stated. After writing the sentences read them

and see if they could stand on their own without knowledge of the

project.

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Sample Project Memo

July 23, 1998

To: Richard Saunders

Reference: Vineland Development Center: Proposal

Cc:

Dear Mr. Saunders

We have issued you the Purchase Order #SVC-055092 in theamount of $1682.00(one thousand six hundred eighty two dollars)per your proposal of 6/30/98. You should receive it in the next fewdays.

If you have any questions please do not hesitate to call us.

Regards,

Howard C. Jamison

When correspondence is received, a good practice is to

respond to every letter or note. This will put your comments into

the record. Whenever correspondence is received that imply or

make accusations it is important that they been responded to in

great detail. Remember not to respond emotionally. Step away

from the problems for a period of time and then, using intelligence,

respond to the accusations. If the Project Manager feels there

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could be long-range implications from these accusations, the

immediate supervisor should be called in for assistants.

5.5.4 Schedule Updates

All schedule updates should be forwarded to all

subcontractors. Even if a subcontractor is not currently on the

project, updates should be forwarded so that they will know

approximately when their activities should begin. When utilizing

computerized scheduling systems it is possible, through the work

breakdown structure to send only pertinent information to each

craft. When a project is fairly detailed with several disciplines on

site, send each craft a specific schedule as it relates to them along

with a complete schedule. Most of the time subcontractors won't

spend the time required to read everything. By having the

computer system breakout the information, the subcontractors

receive the necessary information needed without peripheral

clutter. It is not the Project Managers responsibility to see that the

subcontractors read all documents, however this action will make

the whole project go better.

5.5.5 Operating and Maintenance Manual Information

Even though this activity is not really correspondence,

throughout a project the information required for the operating and

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maintenance manual arrives. I have, therefore placed it into this

section because it is an ongoing paper project. When instruction

booklets and manuals arrive with equipment, it is important to

place these into a maintenance manual file. All equipment will not

come with operation manuals, some only have basic instructions.

Usually, placing installation guides and any other information

supplied by the vendor into the owner's operation and

maintenance manuals will suffice. This process is very arduous at

the end of a job, if it has not been on going. After the vendors have

been paid the most important thing to them is future orders.

Taking time to spend with a Project Manager from a previous order

is not productive in their world, unless of course there is another

pending order. Therefore, requesting additional documentation

before vendors are paid usually makes this task easier.

5.5.6 Project Journal

Every Project Manager Supervisor and Foreman should

keep a project journal. When a new project starts the Supervisor

and field foreman should be given a hardbound book with

numbered pages. They should then be instructed to keep a

journal of everything that transpires on the project. Examples are

who visited the site, what conversations they had, conversations

that occurred with other trades and, what the weather was like.

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The more information that is placed into this journal the better.

Superintendent and Foreman journals should be copied and sent

to the Project Manager on a weekly basis so that early warning

signs can be detected and cost impacts avoided. If the project

goes to litigation, these journals become very important. If the

unfortunate litigation occurs, these journals need to be hardbound

books with numbered pages. This keeps unscrupulous contractors

from adding entries just before discovery. Everyone who is in

management should maintain this type of document. If the Project

Manager is working within the company office, this journal can be

kept on the computer system. Some journals will be brief while

others carry inordinate amounts of detail. These journals also can

serve as models for future projects. After completing jobs,

reviewing these journals will remind the Project Manager of

incidents that happened. The Project Manager always lives in the

past to better predict the future. This journal will greatly enhance

that ability. Keeping names and phone numbers of vendors and

other contacts in this journal sometimes proves very helpful as

well. On one occasion, I had made a sketch in the journal for a

special type of piping arrangement needed. Several years later

the exact same arrangement was needed, the Engineering Co.

wanted several hundred dollars to construct a field sketch. It only

took a few minutes to locate the old journal and the drawing.

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5.5.7 Material Control Sheet

A material control sheet is used on almost every project.

This sheet should contain a list of all items that need to be

purchased. The form lists the project name, location for the job,

the current page number and the number of pages.

• Item - a brief description of the purchase equipment or

materials.

• MFR - which manufacturer was used.

• Order Placed - this is the date that the order was placed.

• Submittals received - if the items being purchased needs to

have submittals approved, this column is filled in

• Submittals to architect - after a submittal is received from the

vendor, it is then forwarded to the architect or the owner for

approval. When this document has been forwarded, the date

that it was forwarded is placed in this column.

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• Submittals approved - when a submittal is returned, it is either

approved or some other notation. Once the submittal is

approved, the date that this approval was received is placed

into this column.

• Order released - many vendors will not release any equipment

until submittals are approved and returned with signatures.

When the approved submittal is forwarded to the vendor, the

date that this happens is entered into this column.

• Order received - there are two columns under this heading,

shop or site. When equipment is delivered, it is either sent to

our shop or it is sent directly to the site. If equipment is sent to

the shop, I also want to know when it was delivered to site.

• Installation complete - this is self-explanatory.

• Comments - this section is used for any notes that people

should be aware of. If a vendor is going to make a partial

shipment, this should be noted. An additional item should be

entered onto the material control sheet so that the second

portion of the delivery will not be lost in the paper confusion.

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Project:Location:

Sub Sub Sub

Part Order mittals mittals mittals Order Expected Order Received

Item Number Placed Received To Arch Approved Released Delivery Shop Site

Material Control Sheet

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5.5.8 Change Orders

Change orders are normal parts of the construction

process. The architects and engineers who put together original

documentation are human beings who do not always foresee

every possible issue. Unfortunately many owners, engineers, and

contractors think that change orders should be avoided at all

costs. There is a certain amount of validity in this statement

however, probably 15 percent of the time spent on change orders

is actually in the pursuit of the guilty. One of the difficulties with

these changes is that often they are a result of quickly put together

requests for quotation documents. This would include oversights,

mistakes in documents or occasionally, completely neglecting

parts of the specifications. Paperwork always becomes a major

part in change orders; these changes have a stigma about them.

The engineering companies think that it makes them look less

professional, the contractor looks at them for additional income,

the owner shakes their head because it will mean additional costs.

So much time is spent trying to point the proverbial finger, simple

change orders often become very arduous undertakings. There

are according to Andrew M. Civitello, Jr. author of Contractors

Guide To Change Orders published by Prentice Hall, ten reasons

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for change orders. There are relatively few causes for all change

orders, they include:

1. Design errors.

A. Contradictions, discrepancies, impossibility's,

inconsistencies

2. Changes in market conditions.

A. Specified products become unavailable.

B. New products become available, offering price

advantages or other benefits.

C. New information becomes available, affecting the choice

of the specified materials.

3. Change in the owner’s requirements.

A. Scope of work change.

4. The uncovering of undisclosed existing conditions.

5. The uncovering of unknown existing (latent) conditions.

A. Unexpected soil variations.

B. Conditions uncovered during alterations in existing

structures.

6. Suggestions to initiate better, faster, or more economical

construction.

7. Change in designer preference.

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8. Discrepancies in the contract documents have described

situations contradicting the intent of the project.

9. Change in external requirements.

A. Building codes.

B. Using agency needs or prefers (public projects).

10. Final coordination with N.I.C. (not in contract) equipment.

A. Space.

B. Mechanical and electrical provisions.

When a change order has been identified, notification

needs to begin immediately. When the first letters are put together

they should include all of the pertinent information so that the

Owner or Owners representative can quickly make an evaluation.

This initial letter should quote specification sections and drawings.

Keeping facts private will not assist the process. There are no

secrets on a construction project, if your arguments are presented

clearly, concisely, and logically they will usually meet with less

resistance. It is important to check the specifications for change

order procedures. Follow these procedures exactly, failure to do

so may exclude the company from receiving reimbursements.

The Project Manager needs to address change orders in a

very logical fashion. When there is some type of ambiguity

between the actual project and the design specifications, issues

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need to be opened. Following the previous format for issues will

begin the change order process. It is not terribly important to

locate the guilty party. What is important is that the proper

sequential documentation of the issue be started and there is a

complete follow through on the paperwork.

When presenting documentation to the Owner or Owners

representative, it is important that this paperwork be as complete

as possible. There are several components that must be

evaluated. First an internal review of the change needs to be

done. The purpose of this review is to see what the financial

impact of the change is. The effort required to pursue the change

order should be directly proportional to the amount of the financial

impact. Determining this amount is a function of first

understanding when the change order began and what activities

needed to be modified, changed, or added. There are direct costs

associated with these items such as labor, material, and any

special shipping costs. There are indirect costs associated also,

these would include project management, office overhead,

preparation for change order requests, general interference with

the project rhythm. It is important to take all of the costs and

present them in a fashion that will show that they are direct costs

due to the changes. This is not unrealistic because in order to

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present the change order, documentation must be done. This

documentation was not part of the original contractor plan. All of

the time spent researching the cause and effect of this change

were not included in the original proposal. One of the items

mentioned is project rhythm. This activity is very difficult to put any

financial value to and even more difficult to prove. This is one of

the phrases that attorneys use when litigation occurs. By placing

references to this in the beginning of a change order, later

assistance is offered to the company attorney if it becomes

necessary. Sometimes, these rhythm delays can clearly be shown

for example. If there were several repetitive tasks that required

one day to accomplish then, after the change, productivity clearly

showed that the same activity was now requiring two days, this

documentation would be clear and irrefutable.

When financing is secured for most projects there is a

percentage allocated as contingency funds. It is not uncommon for

ten percent of the estimated contract value to be held in this fund.

If at all possible do not commence with field labor to perform

change order work until agreements in the form of signed change

orders have been issued. Do not fall prey to the statement "we

will settle at the end of the job." This should never an acceptable

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answer. This is a paraphrase for “you will never receive your

money.”

5.5.9 Project Safety

In today’s project climate, safety has become paramount.

This activity requires diligence from the company owner, Project

Manager, to all of the field personnel. The old accepted statistics

that stated there would always be a certain percentage of

accidents are no longer accepted. Zero accident projects have

become expected. This is achieved through training of all

company personnel regardless of their position. Safety training on

projects today is a standard practice. Many specifications clearly

require that toolbox safety meetings be held regularly and that

each meeting be documented. This documentation requires the

names of all individuals present and the safety materials that were

covered.

Companies that have implemented excellent safety programs also

reap the reward by receiving lower Workers Compensation

Insurance rates. These lower rates also can significantly assist in

preparing estimates by providing a lower hourly rate for each

worker.

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5.5.9.1 Toolbox Safety Programs

Toolbox safety programs can be purchased from

several different safety vendors. These programs clearly

show all of the training requirements for basic construction

needs.

5.5.9.2 Safety Documentation Systems

Today, every accident regardless of the severity or

lack of severity needs to be clearly and concisely

documented. This is done to both protect the employee as

well as the employer.

Larger projects require that safety bulletin boards

be mounted in plain view with documents prominently

displayed.

All projects now require emergency telephone

numbers to be mounted by job trailers or any other

locations that are highly visible. The sizes of these signs

are clearly defined by the OSHA guide.

The material data sheets commonly referred to, as

MSDS sheets are required for every chemical used on a

project. This includes regular house oil to new HCFC

refrigerants.

Failure of contractors to perform these safety

requirements often will have financial Impacts in the form of

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fines. Unfortunately, many of these non-compliance

problems are located after a serious accident has occurred.

5.6 Construction Delays

Construction projects often experience delays due to many different

factors. These delays should be categorized under one of the following.

• Excusable or Not Excusable

•Comprehensible or Not Comprehensible

• Concurrent or Not Concurrent

• Critical or Non-critical

5.6.1 Excusable Delays

Unforeseen or uncontrollable forces cause excusable delays.

This is referred to in legal terms as “Force Majure”. Examples of

excusable delays

Fires

Floods

Intervention by outside agencies (environmental agencies,

historical societies)

Building code Modifications

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These types of delays are not within the control of the

contractor. They are excusable. Usually excusable delays do not

have any financial compensation connected to them. They should

however make an allowance for additional time to complete the

project. This time will usually only be awarded if the item was on the

critical path. If the item has float in the schedule, this is not

substantial reason for a time extension. This issue is not always this

clear. There may be cause for additional costs incurred by the

contractor. An example would be that the delay occurred which lasted

into the next pay increase for the labor on the project. This issue and

issues similar would most likely need to be resolved in the courts.

After the Midwest floods in 1994, the contractor was directed to restart

construction of the telephone system. This was not practical because

even though the floods had subsided the ground was complete mud.

The contractor was subsequently sued by many of the homeowners

due to yard damage caused by the large equipment being used. In

this instance the contractor did receive additional financial

compensation. Primarily this compensation was awarded because

they had been directed to continue work when clearly the work should

have remained delayed. The point of this explanation is that

sometimes reality and specifications will differ.

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5.6.2 Comprehensible Delays

Comprehensible delays are similar to excusable delays in

that the contractor does not cause them. The major differences

between them are, comprehensible should receive additional financial

compensation as well as additional time to complete the projects

provided the task was on the critical path or the additional time

exceeded the float, which will make the task critical.

5.6.3 Concurrent Delays

Concurrent delays are a combination of two different delays

happening simultaneously. An example of this would be a labor strike

simultaneously with a change in the project by the owner. The

problem with concurrent delays are, the court generally will side with

the excusable delay rather than the non-excusable. This means that

if these two problems occurred, it is highly possible that the contractor

will receive no additional compensation. However, additional time

should be granted if any tasks affected were critical.

5.6.4 Critical Delays

Critical delays are ones that will have impact on activities that

are shown to be critical on the project schedule. These delays need

to be properly categorized for responsibility. These are perhaps the

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most damaging delays to the contractor. This type of delay is often

preventable if the Project Manager is asking what if questions

throughout the process. In the unfortunate events of this type delay,

careful documentation is essential.

5.7 Operation and Maintenance Manuals

Operation and maintenance manuals need to be delivered before

a project will be closed. Usually these maintenance manuals should be

delivered before training. This will allow the owners staff to read pertinent

information prior to training. Many projects neglect to construct these

manuals throughout the job. Careful vigilance on the construction of

these manuals is highly recommended.

5.8 Punch List

A punch list is a list of items that have not been completed to the

acceptable standard of the Owner or Owners representative. The project

engineer usually prepares the punch list. When these lists are put

together, it is strongly recommended that the Project Manager walk

through with the engineer. It has been my experience that working with

the engineering firm weeks ahead of the final close out will assist the

contractor in staying ahead of punch list items. Punch list items are

usually a result of poor workmanship or lack of quality controls. With a

solid quality control program in place, most punch list items can be

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avoided. I have seen engineering firms issue punch list items on a weekly

basis. The Project Manager needs to try and avoid this scenario at all

costs. These re-occurring punch lists often become contests between

the contractor and the engineer. There should be an issuance of 1 punch

list.

5.9 Project Close Out

The last item that the Project Manager is usually involved with is

the project close out. This activity has many steps, from delivering

operation and maintenance manuals, performing customer training and,

preparing as-built drawings. Most specifications have a section

dedicated to close out procedures. This section needs to be addressed

and clearly understood. Not following these procedures often delays final

payment.

5.10 Final Billings

Final billings often have meetings associated. Releasing of

retainage is usually negotiated at the ease meetings. Most contracts

clearly show how retainage is to be released. On occasions, retainage is

held for inordinate amounts of time after a project has been completed.

Usually, the contractor not properly delivering all required paperwork

causes this. Specifications often have requirements for sending final

billings, these specifications need to be followed. Unfortunately in the

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current construction market contractors are being awarded projects at

very low margins. Often the retainage is a large part of their profit.

Therefore constant vigilance to the project paperwork should begin the

same day the job does.

Releasing of liens will usually be the last activity on a job. Once all

maintenance bonds and warranty papers are delivered, retainage is

usually released and the final billing is accepted.

5.11 Project Manager Critique

Even when a project has gone extremely well, there is always

room for improvement. It is important when a project is completed that a

critique be performed. This should be strictly a learning process. All of

the people at this meeting should be intimately familiar with the project

and the associated problems. These problems can be from accountants

not receiving information from the field quickly, to certain vendors not

performing properly on the project. Conversations about things that were

performed correctly need to be covered as well. This is an opportunity for

the Project Manager to live in the past to make certain that the future has

fewer pitfalls.

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6.0 Summary

By utilizing this dissertation as a paradigm, it should remind the Project

Manager of important steps that need to be accomplished. Using the

appropriate forms or by modifying the forms presented, a clean, clear, and

concise paper trail can exist on each project. This paper trail should assist the

Project Manager in day to day activities by supplying easily understandable

formats, with logs that will allow quick retrieval of the information sought.

Unfortunately, reality shows that projects do go into litigation. The company

legal team should have a map clearly defined so that construction of the legal

defense should not be difficult to quickly and accurately construct.

The project management team should also have a clear map of the

project so that it is easy to review the history of the project. This history

becomes important when similar situations or problems occur in the future.