Notes from 2016 IESG Meeting with the Board

August 16, 2017, Bethesda Marriott

 

IESG Supporters were thanked for their support. We have a mutually inclusive mission.  We all want a better project. ASAMW status of success was explained.

 

Meet and Greet program. Clark and Balfour Beatty held successful Meet and Greets last year and Grunley will hold one on Oct. 6th. All the other’s expressed interest in holding a meet and greet and will contact Ike for appropriate dates.

 

The Following Discussion items came from the meeting:

  • The biggest challenge continues to be communication. For instance:

    • Change Orders: Subs and Generals need to communicate up-front what the change order process is, what is expected in the submittal, time frame, etc. so that the sub submits an “APPROVABLE CHANGE ORDER.” The Sub needs to be aware of the section of the owner’s contract that deals with change orders.

      • Best Practices related to creating an APPROVABLE CHANGE ORDER

        • Have a copy of the prime contract to achieve a clear understanding of the allowable markup for 1st, 2nd, 3rd tier subcontractor’s, what’s considered to be covered in overhead, how to charge for subcontractor owned equipment versus rentals, small tools, warranty etc. Provide labor hours and material cost breakout for adds and deducts per drawings, and provide copies of drawings that highlight the changes priced.

        • Subs should provide their proposal within the time frame required in the contract.   Proper notice to proceed on change orders as either defined in contract or as agreed upon prior to start of project – Does price and proceed actually mean proceed?

          • Clear notification to GC of long lead time items in Change Order.

          • Subs should reference GC’s “issue number” or subject with their proposals.

        • Subs need to know how to properly break down labor burden

        • Clarify the expectation that Saturday ticket work is overtime

        • Clarify the markup on extras vs deducts

        • GCs must issue Change Orders in a timely manner so they can be billed.

        • Proper notification (flow down) that there is a change

          • GCs should not direct field personnel to proceed with changed work prior to notifying superintendents or project management.

          • GC needs to provide paperwork of changed work to the subcontractor’s main office and Project Manager to be properly tracked and forwarded to the field team and lower-tier subs.  GCs need to be sure to give proper documentation as to where this new paperwork came from (reference number, date, RFI etc.).

    • GCs need to set clear expectations up front and stick by them.

      • GC to issue a defined scope of work and schedule during preconstruction phase of project and upon award of the project.

    • A weekly foreman’s meeting is recommended on each project.

      • Minutes to be sent to project management after every meeting. Usually there is a good start to this in the beginning of the job but it quickly fades off.

    • Schedules need to be updated regularly and the updates included in each weekly foreman’s meeting.

      • Subcontractors need to receive a revised CPM monthly to ensure that they can properly staff the project and have material/equipment available. Short Interval Planners can be used as long as they are in alignment with the CPM schedule.  

    • GCs need to be told as soon as it is known that a sub is not able to meet the labor requirements for the job. This is a growing problem and the GC needs to be aware in order to help.

      • It is best practice for subcontractors to create a manpower forecast on a monthly basis that’s in alignment with the latest CPM schedules.

    • Email is not the best form of communication in many circumstances.

      • Call the GC to discuss major issues, and then send the email to all parties involved.

    • A list of the GC’s responsible leadership should be provided to the subcontractor so that he/she knows who to contact if problem cannot be resolved at the job site level.

      • A list of the subcontractor’s leadership should be provided as well.

  • Each owner is different and has different expectations as to how they view and understand change orders, schedules and many other aspects of the project. Some owners do not comprehend all aspects of a change order.

    • Provide better break downs and all documentation possible.

    • Subcontractors should issue a list of unapproved proposed change orders with every lien waiver and payment application.

    • Refine pending change order list with field personnel to make sure it does not contain line items that are not going to get done.

  • Manpower is a growing challenge. Per above, subs cannot hide their labor concerns from the GC. The project team needs to find a solution so that the overall job is successful.

    • As stated above, it is critical for the subcontractors to receive current project schedules on a monthly basis to ensure that their manpower forecast is accurate.

  • Software and IT – There is not a clear solution to the concern that every owner, GC and subcontractor has their own software.

    • Talk during the preconstruction phase about the software being used and make sure it is tweaked properly to the corresponding sub and limit the blasting emails from the software during working hours

  • Certified Payroll reporting is a challenge, particularly if there are independent contractors included in the report. GCs are willing to do training in this.

  • It was acknowledged that some GC’s contract provisions protect subs from a non-performing subcontractor. We need to work together to make sure one sub does not hold up the job or payment to all other subs.

  • Subs should be aware of the GC’s relationship with the owner as well as the GC him/herself. A proper vetting of the GC/Owner team will help determine how to bid the job.

  • Poor drawings are a huge problem in the industry. It is not fair, particularly to the subcontractors.

    • GCs need to provide expectation for narrative/clouded drawings

    • Poor drawings take more time to price. Subcontractor must make clear proposals of work included and excluded. Proposals should include all work included in a GC scope of work (if provided) and specify differences.

  • Safety

    • Report and document incidents immediately.

    • GCs providing copies of their safety manuals in advanced

      • Follow through with undocumented changes to GC safety policy.

    • Periodic inspections by both subs and GCs

    • GCs should not be directing to perform work when other trades are working above, below or nearby in an unsafe manner

    • One Sub gives a $100 bonus to the foreman for a perfect 10 safety inspection report. Inspections are performed on every job once per week.

  • Better communication between GC personnel internally on what is going on.

  • Prompt payment from GC to subcontractor will solve ALMOST all problems on the job

    • Honest and open communication on status of payment, not ignoring emails

    • Holding up payments to subcontractor holds up payments to vendors which slows down material ordering and slows down the job

  • Subs must hold vendors accountable for delivering within scheduled windows

  • Subs should TAKE PICTURES every day, throughout the day, all the time.   Can never have enough pictures of your work and adjacent work before during and after to get you out of trouble.

  • Subs must be detailed in foreman’s written daily reports. Report any and all problems that happened throughout the day. Write detailed description of the work areas to be located when read at a later time.

     

     

Possible programs to address these concerns:

  • Owners Panel – the GCs will invite their owner clients to better understand how their processes effect subcontractors.

  • Purchasing, estimator and Project Managers’ Joint program. Consider having a “speed dating” set up whereby the Subs meet with each IESG’s personnel for a limited period of time. Have networking opportunities before and after the formal program.

Improving Change Order Processes - 2016 IESG Notes

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