Managing Risk from Gaps in Your Project

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Experienced project developers know that managing risk on a major project involves initial planning, design, construction, and commissioning. These tasks call for different skill sets, so it is tempting to think of them as separate. But these tasks need to be coordinated to prevent troublesome gaps from appearing. The following examples illustrate this point.

Planning vs. Design

Suppose one consultant creates a planning document for a convention center that describes project spaces and functions in general terms and includes sketches of a distinctive design element, a grand staircase. Then an architect is retained to complete the design and prepare documents for use by the contractor. A risk of gaps arises if the planner assumes that the architect will check the plan for code compliance but the architect assumes the planner has already done this. Perhaps the planner has sized the meeting rooms for a particular capacity without clearly documenting this assumption. The owner and architect may have different expectations. The change in capacity, which may not be recognized as a change, may affect other parts of the design, such as the exit routes and toilet facilities. Another risk arises with respect to the grand staircase. The architect may not feel free to change what is largely an artistic creation, and so may neglect to check the staircase for code compliance.

Design vs. Construction

Mechanical, electrical, plumbing, and fire sprinklers are commonly designed by the architect only in general terms, with details to be supplied by the specialized contractors performing the work. Ironically, the transition from general definition to detailed design can become more risky if the architect provides extra information. The architect may think it is helpful to list a particular model of hot water heater to show the capacity she has in mind, but the trade contractor may interpret this as a prescriptive specification and adopt it without analysis of alternatives. The owner may not get the best possible design.

Contractor vs. Contractor

Gaps can show up during construction as elements of missing scope. One contractor will detail the steel frame of the building, another will form and pour floor slabs, and a third will design and install the window wall. But the window wall needs to be attached to the building by steel anchors that are attached to the building frame, penetrating through the floor slabs. Who will detail the anchors, the steel detailer, the concrete contractor, or the window wall installer? Someone needs to do that work to ensure that the steel frame and the concrete floor slabs are built correctly. Failing to assign that scope of work can create a costly delay. A problem of this kind arose during construction of the downtown Seattle Library. A distinctive architectural feature of that building is the grid of diamond shapes that wraps around the facets of the building’s roof and walls. The architect intended that the grid pattern should be continuous but geometrically this was not possible everywhere, so someone had to decide where the grid pattern would continue and where it would be interrupted. When construction began, it was discovered that no one had undertaken this coordination task. The design team expected the steel detailer to do this work while the steel detailer expected that the design team would provide direction. The issue was not trivial: wrapping the grid around the facets of the building required creation of a sophisticated computer program.

Contractor vs. Supplier

Procuring materials for a construction project can be a complex task, particularly on a site with limited space for material storage. The contractor must communicate the material requirements in time for procurement or fabrication of what is needed. Then the supplier must prepare the materials for delivery in a way that facilitates construction, ensuring that materials needed first are delivered first and that all materials are safely packaged and clearly labeled. The materials must be insured in transit and arrangements must be made to either store or place the materials when received. Some of the potential gaps in the process may be addressed by using standard terms (such as the “Incoterms” created by the International Chamber of Commerce) that define which party bears the cost and risk during different phases of material delivery. Other potential gaps remain, however. The supplier may expect that its trucks will be unloaded within an hour upon arrival, but the contractor may expect more flexibility than this. Again, the contractor may not realize that significant space will be required to unpack and inspect the materials for conformance with the design requirements.

Construction vs. Commissioning

Commissioning can present complex problems for the contractor. Equipment like air handlers can be checked in a preliminary way when installed, but they cannot be fully tested until the complete system of ductwork and room dividers is in place and permanent project power is available. At that point, though, air blowing through ducts may damage newly painted surfaces, so testing needs to be coordinated with other activities. The problem becomes more complex if the project includes unusual or sophisticated equipment. A convention center may have complex computer controls for security, a stadium may have sophisticated audio-visual equipment, or an industrial facility may use proprietary technology as a key part of the process. In such cases, the specialty supplier may need to visit the site to perform an initial inspection, then a later test of the equipment’s function in isolation, and finally a test of the equipment as a component of the completed building systems. There is a risk of gaps if these various activities are not coordinated with other work being done on the project.

Addressing Gaps

As illustrated above, gaps present risk, but this risk can be managed. First, each stage of the supply, delivery, installation, and testing process needs to be thought through so that potential gaps can be discovered and addressed. Second, the project participants need to maintain constant and clear communications about the status and plans for the project. Such communications can be incentivized by provisions in the relevant design, supply, and construction contracts, but contracts alone will not prevent problems, though they may help to fix responsibility after problems occur. No one person or entity, acting alone, can avoid the risk of gaps. All project participants can contribute by careful planning and by keeping open lines of communication so that coordination problems can be addressed quickly and efficiently when they arise.

Originally published as “Teamwork is needed during each stage of a project: supply, delivery, installation, testing” on September 6, 2018, by the Seattle Daily Journal of Commerce.

Key Contributors

Karl F. Oles
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