Both project owners and builders are working to capitalize on the booming market after the Great Recession. They are tackling multiple projects at the same time, which is stretching their bandwidths. Plus, the market is moving at a faster pace amid significant shortages of qualified subcontractors and skilled workers as well as cost increases. The result is a marked increase in risk to all involved. Following is a brief overview of the top six common obstacles facing managers of multiple construction teams. Keep these risks in mind in order to minimize and mitigate them.

Clear communication

Good communication is a challenge in most large organizations. Naturally, it is critical that the builder be able to depend on its on-site construction team. What the team tells the builder impacts proper contract performance and compliance, the schedule and correct project wrap-up. The detail of what is communicated by each site’s project team to the contractor’s leadership will dramatically impact project profitability, and often determines it. Managing multiple project teams demands clear communication between leadership and each team.

Proper protocol

Having a multi-site protocol, and consistency with that protocol, is another common obstacle. When site teams are consistent and building projects with the same method and dependability, the leadership can focus on the important “real issues” because the small ones are avoided or are less time-consuming. Builder protocol is then bolstered by effective quality assurance/quality control, resulting in fewer corrections and call-backs, resulting in streamlined performance and efficient scheduling. If a consistently applied protocol is not established, builders will spend a significant amount of time trying to unravel the daily – and most often avoidable – concerns at multiple project sites.

Verification

Failure to “trust but verify” that the work in the field is properly performed and that the field conditions are as required leads to reactionary decision making and “fire drills,” resulting in avoidable time and expense due to increased corrections, requests for information, and warranty call-backs. This challenge of field condition verification is increased for many multi-site builders due to the increased level of coordination required for the work and pace of multiple projects. Too often, pure necessity requires that leadership simply “take the word” of construction teams that may not have the builder’s “big picture” vantage point. Even the best employees may shift their focus to their site and their deadline, and not fully appreciate the oversight required among multiple projects. Builders can avoid many conflicts by consistently verifying work across project sites.

Schedule management

Time is money, and juggling staffing and scheduling at multiple project sites can tax even the best builder. Most companies manage their schedules by either allowing on-site project managers or leads to create and manage the schedule, or having a central management of the schedules in one location. Both can work if the communication is accurate and verification is ongoing. In practice, builders are better served using common scheduling software that can be centrally monitored and coordinated across multiple projects, utilizing their assets with the “big picture” in mind.

Documentation

Project documentation is critical to: 1, know what was built, 2, maintain what was built, and 3, respond to and defend against potential claims. In many litigious jurisdictions, unless the owner intends to maintain ownership of a project (and manage the asset appropriately), at some point in the project’s life the work may need to be defended. Whether in sale due diligence or litigation, proper documentation of quality is the second line of defense (after building it right), but with multiple sites in progress at one time, keeping accurate records for each project is imperative. Proper documentation for each site may be the difference between a successful defense, making a strategic nominal monetary concession, or suffering a loss and liability exposure.

Transition management

and warranty services

Gone are the days of the “tail light” warranty, when responsibility for defects ended when the owner saw the contractor’s tail lights driving away from the project. Many states’ statutes of repose or limitation extend time to litigate against a builder from four to 10 years on all non-observable defects. Given this risk, when a builder is managing multiple projects it is crucial that a project is properly transitioned from the builder before it moves the project team to different project sites. If each project is transitioned correctly, the warranty operations will be managed smoothly and project documentation will be efficiently closed at each project site, minimizing end-of-project discrepancies or disputes.

Tamara Boeck is an attorney in the construction and design practice group of Stoel Rives LLP. Contact her at 916-319-4678 or 208-387-4256, or tami.boeck@stoel.com.

Dwain Bateson is president of Bateson Consulting Services. Contact him at 775-745-9917 or dwainb@batesonconsulting.com.

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It has been said that “you can identify a person’s priorities by taking a close look at their calendar and their checkbook.” We find this to be true with individuals and businesses in the construction industry as well. We all spend time and money on those things that are important to us. If our priorities are shortsighted or not as informed as they could be, however, we can be caught miserably unaware.

Having served owners, developers and general contractors for over 50 years collectively, the two of us recognize that this same concept driving priorities unintentionally undermines the best laid plans of the industry. In practice, we have discovered that only a select few companies actually look at the whole industry, “dirt to done” and everything in between, to make intentional changes to minimize risk, adopt proactive actions to better the quality and reduce the opportunity for disputes, and develop policies and procedures that focus on best practices and best brand quality, with a view to minimizing claims or litigation.

Don’t be surprised that the companies we are discussing are those that are already focused on solid work and good products with competitive pricing. Yet, as good as they may be, their system still breaks down without a front-to-back integrated plan that proactively recognizes the risk and consistently manages the process.

In our collective experience, the majority of industry companies, regardless of size, tend to reactively leave the back-end business risks (such as claim, dispute and litigation risk) on the back burner until they see the lawsuit. Unfortunately, even then, to the extent they can, they off-load that “problem” to the insurer – all too often with much less insurance coverage than they expected.

These companies, as with the vast majority of their peers, have been focusing on the front-end approach to projects: plans, permits, build-out and moving on to the next project. Few companies focus on the longer-term aspects until they have to respond to a dispute. Until then, proactive risk management is simply not an actual priority.

Over a decade ago, we worked on a team for a client that was frustrated with the number of warranty claims, the “sausage-making” nature of the process, and ultimately, the litigious nature of the industry. It was our given goal to develop a process so that when the project was completed, the subsequent owner could objectively be confident that it had received a quality project at a fair price, one that had been inspected and documented, and ultimately transitioned with attention to crossing the “t’s” and dotting the “i’s.” Importantly for the integrity of the process, all of these procedures were outside the control or authority of the direct construction team. No longer was the alleged fox guarding the henhouse, and no longer were any completion bonuses issued unless and until the project passed the internal verification process. We were all held accountable as a team.

The net results of this focus were projects that our client has been able to stand behind for over a decade, in meetings with investors, subsequent buyers and the occasional, inquisitive and aggressive lawyer. Equally as important, in the past decade with this and several other clients, we have seen the bottom-line business benefits resulting in reduced insurance premiums (by as much as 30 percent); increased quality brand recognition; reduced timelines for design, approval and construction; and greater resale value and valuation of the projects that were held for a period of time following completion (and dramatically reduced warranty and callback work for the contractor and subcontractors). Ironically, this strong team approach to risk management by our developer and owner clients has resulted in more efficiencies for the contractor and subcontractors as well, reducing avoidable warranty or defect callbacks and chargebacks, along with their own reduction in insurance premiums as they likewise demonstrated the improvement in their underwriting risk. When we have had an unavoidable dispute, there has also been a reduction in those costs, often down to 10 to 15 percent of the industry average.

As Henry Ford so appropriately stated, “Quality means doing it right when no one is looking.” In the same vein, purposeful risk management in the construction industry is that same quality when no one is looking, but verifying that it occurs throughout the project from “dirt to done” and every step in between.

Tamara Boeck is an attorney in the construction and design practice group of Stoel Rives LLP. Contact her at 916-319-4678 or 208-387-4256, or tami.boeck@stoel.com.

Dwain Bateson is president of Bateson Consulting Services. Contact him at 775-745-9917 or dwainb@batesonconsulting.com.

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