Self-Taught MBA: Filling the Void of Cost Overruns
The most common source of cost overruns comes with items omitted. Learn to spot the voids, and develop a systematic approach to avoid them.
A project manager’s job begins with building the building in his head, dividing the construction process into the trades required and in what order. Next, he confirms the sales estimate, following up with subcontractors and materialmen to develop a hard-cost budget and a project schedule. And then, an important step often overlooked: figuring out what’s missing.
Omissions Cost Money
The most common source of cost overruns comes with items omitted. Therefore, a project manager must insist that all subcontract bids include a detailed scope of work. What’s included and what’s not. Study it.
A reference to the blueprints may seem like good cover, “Per plans and specifications,” but few plans include every detail necessary for construction, and rarely assign responsibilities. This often results in gaps in the building process, that no man’s land, whereby no trade does certain work.
Some common areas of assignment vagary include special blocking, bath fan ducting, Ufer ground placement, flashing under siding, and the unfailing, “…it’s not my job,” the cleanup.
Analyzing with great care what each trade involves, the project manager must identify as many voids in the construction process, and negotiate with the trades to fill them.
For example, the electrician includes a light/fan combination in all baths. He nails the fixture in place during the rough-in phase, wires it up, and he’s done. The mechanical contractor shows up to run ductwork, and asks if you want him to vent the bathrooms fan as well. Suddenly, you realize nobody included this work in their scope, neither the electrician nor the heating and air-conditioning guy. You’re stuck paying for the extra, and it’s an additional expense you cannot pass onto the homeowner.
The same can happen with more subtle areas of the project, for example, if you’re building a net-zero type residence, and the drywall must be sealed with adhesive or a gasket to the register boot flashing – who installs this? Drywall contractors typically only look at square feet of interior wall and ceiling surface when bidding, and likely have not included this air-sealing detail in their scope of work.
Many times, a general contractor will have a punch-out guy to do all the odd jobs left undone, and this works well. Nonetheless, unless you conscientiously plan to bridge the voids between trades, it’s easy to overlook work left undone, and then you must come back and tear out finished work to retrofit the omission. Rehabbing as you build!
A simple solution is to build a check-list of often overlooked items and trade conflicts you can use as a mnemonic device while reviewing plans and bids.
Your table might look something like this:
|Range fan||Ducting||Appliance guy|
|Fireplace||Makeup air ducting||HVAC|
|Fireplace||Makeup air flashing||Fireplace guy|
|Ufer ground||Rebar placement||Electrician|
|Eve vents||Placement||Insulation guy|
|Eve blocking||Caulking||Insulation guy|
|Nail plates||Plumbing||Punch-out guy|
|PVC roof penetrations||Provide flashing||Plumber|
|PVC roof penetrations||Paint pipe||Roofer|
Each time you run into a new gap in the process, you add that item to your list and make sure it does not fall into the inter-trade void again.