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Our "blog," short for Web log, is an ongoing mix of facts, snippets, observations, opinions and analysis. Comments are welcome and, in fact, encouraged!

July 2006

	Galloway

Quit Griping. CII Has Your Answers
By Dr. Patricia D. Galloway
July 31, 2006

We gripe about productivity, cost overruns, schedule delays and tight margins. We ask for best practices and consistency in CPM scheduling and project cost accounting. Company Executives scratch their heads as to how to better train and educate their engineers and construction workforce. Managers wonder how they stand against similar industry metrics and ponder as to whether there is a better way to perform the work. Risks are increasing and parties look at how they can better allocate that risk. Field superintendents are trying to improve their safety records increase craft efficiency. These concerns are critical to improving the construction process to reduce wasted capital that could be better utilized on building needed infrastructure.

The Construction Industry Institute (CII) is actively seeking solutions to these concerns. I attended its annual meeting in San Diego last week. About 550 executives and project managers from some of the world’s leading owners and constructors attended to listen to research project results and comment on proposed solutions. CII was formed in 1983 as the result of a five-year Business Round Table study concerning the wide variety of problems that the industrial sector was experiencing. Some 22 founding companies and the CII research center formed at the College of Engineering at the University of Texas, Austin enabled what has become an organization for applied research, which can be immediately implemented and benchmarked in the member companies.

Some of this year’s topics included Ethical Leadership, Front-End Planning, Transparent Metrics, Safety Models, Leading Indicators for Project Outcomes, and Risk Allocation, Intense discussions ensued where these industry leaders debated and offered suggestions towards improving the construction industry. In consideration of joining CII, I talked with other members and quizzed them on whether they truly thought the investment, both in money and personnel time commitments was worth it. A resounding YES!!!

With CII, why is the construction industry still faced with numerous multi-million dollar disputes, bids that barely contain margins enough to survive, safety issues, cost and schedule overruns and a lack of the value of project management processes and controls? Is it because the CII membership is not known to the industry as a whole? Is it because CII industry members have not widely disseminated and implemented the information and tools it has gained through its membership? Is it because non-members cannot see the value and/or just simply do not want to make the monetary and personnel investment that is required? While I have no answers, I do know that the information provided at CII is some of the most thought-provoking material I have seen in years. I have seen that those companies that implement and apply CII solutions have bettered their bottom line and become more competitive. I see executives taking a broader, more global view of the world and what is required to accomplish the work. CII is the one organization that has truly contributed to the betterment of the construction industry. Isn’t it time for all of us in the construction industry to stand up and recognize that if we want improvement that we have to devote and dedicate our time and invest in the necessary research? Can’t we see that in the end, the return on investment will more than pay for itself?

How to Save Million$$$
By Dr. Patricia D. Galloway
July 25, 2006

Expert Review Panels can provide tremendous value provided the Owner listens and acts upon what the panel has to say. Their use is becoming more popular as infrastructure projects become larger and more risky. This week I attended a reception for the newly constituted Expert Review Panel for the Seattle Alaskan Way Viaduct Project. They certainly have a challenge ahead of them as the Project is one of the most controversial given the decisions to be made relative to simply replacing the existing viaduct with a similar roadway or replacing the existing above-ground viaduct with a tunnel along the entire waterfront area at significant cost, but with huge environmental benefits and reducing the current eye sore and noise pollution to the residents that reside along the waterfront.

So-what are the issues an Expert Review Panel reviews? Funding, budget, conceptual design, alternative means and methods, and risks associated with the project. Panel members are typically chosen due to their experience and expertise in the particular type of project being designed and constructed. They come from varied backgrounds including construction, design, financing, and government. Their role and responsibility is to review and critique interim work products from the project team, primarily in the initial phases of the project, in order to ascertain whether the concepts being proposed are doable, possess certain risks, are constructable and can be performed within the budget constraints. As is the case with the Alaskan Way viaduct, review can also include how viable the funding program is to actually construct the project? All are critical questions to which the Expert Panel shares their own experiences and knowledge to assist the Owner in the decision-making process.

Often, however, I have seen where great minds have been brought together to solve great challenges and yet the Owner fails to execute on the opportunities presented. For instance, I sat on an Expert Review Panel in Detroit, Michigan for a combined sewer overflow tunnel project. Our panel constituted some of the best in the industry including a designer who had done these projects his entire career, to a contractor who had built tunnels in some of the most risky and difficult situations, to a prior Owner of a major City deep tunnel storage system, to myself who has looked at the risks of these types of projects all over the world. We critiqued the conceptual design and offered suggestions and alternatives as to how the District could avoid potential risks that if not handled properly could result in later costly disputes, similar to what the District had already experienced. However, despite the knowledge offered, the Owner did not apply the suggestions made, would not share with the panel the information from prior jobs gone bad and did not retain the same designer to do the final design, despite all the work that had been accomplished in the conceptual design phase. Thus, the Owner incurred the loss of a great opportunity at a great cost to the public taxpayer.

A little money spent up front could save millions later on. Expert Review Panels can add tremendous value-but only if an Owner is willing to take an open perspective and think out of the box.

Is Ethics Dead in Project Controls?
By Dr. Patricia D. Galloway
July 20, 2006

I am currently involved in a power plant dispute. In reviewing the contractor’s schedules throughout the project, it became evident that the changes being made were not simply revisions to reflect change orders or site conditions, but were deliberate changes to logic, activities, sequencing and durations-all for two goals: (1) hide delay that was contractor caused to maintain contract completion and (2) to change the critical path of the project to put Owner caused delays on the critical path.

Manipulations include reducing durations on future activities, deleting logic ties between activities to eliminate the dependency on the completion of a prior activity to show on- time completion, adding logic ties to force a longer sequence, adding or deleting activities “for convenience”, and constraining an activity’s dates to force a specific start or completion date, changing the true critical path.

In the past 5 years, I have seen an increase in schedule manipulation in order to shift delay responsibility and hide contractor delay. With the increased sophistication of computer software scheduling programs and the increased skills of a good project controls individual, the “tools of the trade” have in many respects become the “tricks of the trade”.

With only “thin” margins available to them; some Contractor’s Project Controls staffs are playing games with the Project Controls information. Contractors often use two sets of Project Controls information; either to deceive or to truly obtain the Project Controls information it needs to accomplish the Project. Similarly, where the Contractors have failed to win this game of brinkmanship with Owners, they resort to taking on their significant subcontractors or vendors in a similar manner. So today we are faced the era of “gamesmanship.”

Webster’s dictionary defines a professional as being a person who is “characterized by or conforming to the technical or ethical standards of a profession.” Engineers, for example, are a recognized professional by this definition. The “Professional Engineer” designation is recognition that you have demonstrated an ability to apply engineering that the public can rely upon to protect people and property. So-what does our industry do to “police” the project controls profession-or should anyone in that profession realize its ethical obligation to portray the truth and nothing but the truth? Or is it that ethics is simply dead in project controls? If the time which was spent in developing the manipulations was put into communicating with the Owner to resolve issues, maybe we would see less litigation and more money spent on building the needed infrastructure for tomorrow.

Jeff Rubenstone is a recent graduate of the College of William and Mary, where he majored in history. He is pursuing a career in journalism and is based in Sparkill, N.Y.

Where Does Competition End and Unethical Insults Begin?
By Jeff Rubenstone
July 17, 2006

It has been a rough year for Tampa-based PBS&J. Chief Financial Officer W. Scott DeLoach resigned last year after the discovery of accounting irregularities, into which deeper investigations revealed embezzlement of $36 million. For a highly visible company a little bad press is inevitable, but that may only be one source of damage. PBS&J staff have hinted at a whisper campaign among competitors, faint rumors of wagging tongues.

Competition is always fierce, and knowing when a line has been crossed is not so easy in today’s market. So would it be ethical for the firm's competitors to highlight this scandal to potential clients during a competition for work? It is public information that could give a competitor an edge, but is it wrong for an engineer to kick another when he or she is down?

Professional engineers are bound by their states’ ethical codes and by ethical guidelines outlined by the various engineering societies to which they may belong. The National Society of Professional Engineers and the American Society of Civil Engineers both feature such ethical codes. According to the tenets of this engineering bushido, members of the trade at all levels are expected to conduct themselves with a certain degree of honor in their professional life.

So, is it ethical for a competitor to snidely point to PBS&J’s recent misfortunes when marketing themselves to a potential client? According to the NSPE ethical guidelines: "Engineers shall not attempt to injure, maliciously or falsely, directly or indirectly, the professional reputation, prospects, practice, or employment of other engineers. Engineers who believe others are guilty of unethical or illegal practice shall present such information to the proper authority for action."

Respect your fellow engineer, don’t try to be a vigilante. Pretty cut and dried.

But as in other legal codes, the accepted interpretations of the rule are often more important than the words themselves. Volumes of case studies and opinion have been written about the engineering ethical guidelines. As a result the true path for the ethical and virtuous engineer is sometimes more Zen than rote memorization.

In a relevant case study offered by the Online Ethics Center for Engineering and Science at Case-Western University, an engineer sent out a promotional letter that focused on a competitor’s perceived flaws. In its decision, the Board of Ethical Review concluded that it was unethical for an engineer to call attention to another’s problems for his or her own gain, and found justification to "hold competition among engineers to a plane of dignity, respect and honor."

An optimistic view of human nature, but it dodges the pesky question of where exactly to draw the line.

Then again, in the real world the correct balance between legitimate competition and civil decorum is always elusive; a slippery slope that goes in both directions (wouldn’t that make it a slippery peak?). Ignore civility, and competition will devolve into tedious muckraking and slander, harming everyone involved. Strictly enforce broad ethical standards, and the industry will face accusations of monopolistic practices, placing their own interests over those of their clients or the general public.

Yet perhaps there is a third option, where these samurai engineers can accept the spirit of the rules instead of getting lost in their language. They may even realize that it is in their best interest to actively balance their competitive lust with mutual respect.

Just because it’s fun to kick someone when they’re down doesn’t mean it’s okay.

Light Rail Transit-Today’s “Hot” Construction
By Patricia D. Galloway
July 5, 2006

Looking for something new and exciting in construction? Then start getting involved in Light Rail Transit Projects. Having been involved in several LRT projects and spending this past week on two major U.S projects, I see LRT as the current answer to moving more people in less time with less impact to the environment. With the increasing populations around the world combined with congested roadways, decaying infrastructure and pollution concerns, public transportation is looking better and better.

LRT is fun, exciting and provides opportunities in contracting strategies typically not taken on public works projects. LRT projects can be designed and constructed in a variety of options employing innovative concepts and emerging technologies. LRT projects bring the engineering disciplines together a concept not often practiced in the United States. LRT projects require a multi-discipline team approach, meaning the project is not merely a civil engineering project, but an infrastructure systems engineering project involving civil, mechanical and electrical engineering teams. Community Outreach programs require diverse teams, employing both men and women and engineers and non-engineers. The size of the projects typically requires a Joint Venture or consortium of contractors. The public need for such systems allows avenues to be opened up for Public Private Partnerships (PPP) and/or Design/Build/Operate Projects where the government or quasi-government entities can meet the public demand while at the same time securing the necessary private financing to fund that demand. The opportunities are endless and the need is vast.

However, LRT projects are not without risk. Risk allocation is one of the most crucial aspects of an LRT project. Why? Because there are so many variables that must be dealt with including third parties (utilities), design, and government codes and standards. For instance, if the Project is a design-build contract, typically the Design-Build Contractor assumes the risk of working with third parties, coordinating the design assuring compliance with governmental codes and standards. In contrast, in the traditional design-bid-build contract, the Contractor assumes that the design is 100% complete and that the Owner and its Designer have coordinated all third party comments, coordinated conflicting codes and standards, and have accurately located all underground utilities that may be encountered. Party conduct is also an issue as most public works projects have typically been let on low bid. Newer concepts of Design-Build and “Best Value” may not be known to the individuals overseeing the works, thus inflicting potential interferences on the Contractor. When these risks are not adequately considered, cost overruns and delays are often encountered with the public unfortunately footing the bill. LRT appears to be the answer to moving people in the future provided it doesn’t get derailed in the process.

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