1. THE CONCEPT
Construction Management is a process where Fairmile, as the Construction Manager, forms part of the Construction Team early in the life of the Project. Ideally, this occurs at the Pre-Design stage. The Owner can then fully profit from Fairmile’s many years of construction capability and expertise.
Fairmile, as Construction Manager, provides the expertise required to
manage the Project through to completion.
2. THE ADVANTAGES
HIRING DESIGN CONSULTANTS Fairmile’s years of experience in the Construction Industry have brought us into contact with most of the Architectural and Engineering firms in the Lower Mainland. We can match the right designer to any project.
BUDGET and COST CONTROL Most owners will not know the true cost of their project until it goes out to tender. By this time the working drawings are complete and the work is ready to start. If the Project is over-budget, cost-saving changes are difficult to implement. With Fairmile on board early, a Project Budget can be generated and adhered to.
VALUE ENGINEERING As projects become increasingly more complicated, the lack of costing and estimating expertise at the Design Phase can be a major cause of cost overruns. Once the building is designed and working drawings are finished, it is too late to make major changes. Fairmile, as Construction Manager, reviews design work as it occurs to ensure that the client is getting the absolute best value for every construction dollar.
COST SAVINGS With the traditional tendering method, opportunities for cost savings are greatly reduced. The low bidder has little incentive to either generate ideas or pass them on dollar-for-dollar to the Owner.
SUBTRADE CONTROL When a project is tendered in the traditional manner, the Owner has no control over which subtrades the low bidder hires. This is the major cause of poor workmanship. The preferred alternative to this “low bid at any cost” system is Construction Management. Fairmile has developed strong business ties with a core group of Subtrades that out-perform industry standards in terms of quality, price, and schedule.
QUALITY CONTROL The construction industry is made up of many firms of varying capability and integrity. It is becoming increasingly apparent to Owners that Quality Control varies from contractor to contractor. The traditional “low bid” system encourages corner cutting. With Construction Management, the incentive for the contractor to cut corners is eliminated. A common interest is created between both Contractor and Owner to work as a team and not as opponents.
CHANGE ORDERS All projects evolve for varying reasons as they are being constructed. Owner’s needs change, Building Inspectors make demands, and hidden conditions such as soils problems occur. All of these give rise to Change Orders. With a Lump Sum Contract, an adversarial situation immediately arises as the Contractor is now in position to take financial advantage. With a Construction Management Contract. The owner pays only the true cost of the change.
FAST TRACKING With the traditional Design-Tender-Build method, all phases must follow in rigid order. The Project cannot be tendered until the plans and specs are complete and correct or problems immediately arise. The adversarial nature of the Lump Sum Contract deters all parties from working closely as a team to expedite the work. Construction Management allows for substantial overlapping of the phases without putting the owner at unnecessary risk.
TEAMWORK APPROACH The traditional Lump Sum Contract by its nature pits Owner against Contractor. An adversarial situation is inherent. Self-interest dictates that the Contractor who is the low bidder will spend the duration of the job searching for ways to save money and create Change Orders. The Construction Management approach puts all players on the same team, and creates a common interest in making the project goes as smoothly and economically as is practical.
SINGLE SOURCE RESPONSIBILITY Fairmile will take complete
responsibility for the success of the Project, from the Design and Construction
stages through to the end of the Warrantee Period and beyond.
3. COST CONTROL
Cost Control is of prime concern to all Owners. They are inclined to think of the traditional tendering process as producing the lowest cost project and providing protection against cost over-runs. For a number of reasons these assumptions are not true: 1) All bidders must carry contingencies in their bids to cover risks such as weather, cost increases, subtrade delays etc. 2) Any errors or omissions in the Plans and Specs will generate costly Change Orders. 3) The Lump Sum Contract allows the General Contractor to mark-up and pass on a subtrade’s Change Order. This has the effect of encouraging, rather than discouraging, subtrade Change Orders.
With Fairmile as Construction Manager, about 70% of the value of the
Project is subcontracted out at fixed prices to the trades before the project
gets in the ground. A further substantial percentage of the cost
is in material that is competitively priced. Only a small portion
of the cost of the work is variable. These remaining costs are directly
under Fairmile’s control and generally come in on or under budget.
4. PENALTY / BONUS CLAUSES
On many Construction Management projects Fairmile has incorporated Penalty
/ Bonus clauses that provide strong incentives to bring the Project in
under the budget. These provide a 70/30 allocation of the under-run
or over-run to the Owner and Contractor respectively.
5. GUARANTEED MAXIMUM COST
An alternate to the Bonus/Penalty Clause is the “Guaranteed Maximum
Price” concept, where Fairmile commits to a maximum price for the project.
6. CONSTRUCTION MANAGER’S DUTIES
Fairmile, as a full-service Contractor, will be responsible for the following Construction Management Duties:
-Defining the client’s requirements
-Provide site assessments in regards to costing
-Recommend Architectural and Engineering consultants
-Assist in arranging financing
-Assist in Design and Planning
CONSTRUCTION MANAGER’S DUTIES (Cont’d)
-Recommend Construction methods and materials
-Provide Budgets and updates to same
-Provide Schedule and updates to same
-Set up accounting and cost control systems
-Ensure adequate insurance coverage
-Tender and award Subcontracts
-Tender and award material supply contracts
-Provide onsite construction labour force
-Attend site meetings with owner / consultants
-Schedule and supervise all trades
-Provide for all safety / WCB requirements
-Quality Control assurance
-Review and approve Subtrade / Supplier invoices
-Ensure compliance with Plans and Specifications
-Review and approve Subtrade change orders
-Ensure Municipal inspections occur when required
-Ensure good relations with adjoining owners
-Obtain Municipal sign-offs
-Obtain as-builts and manuals
-Administer one-year warranty period
7. CONSTRUCTION MANAGER’S FEE
Fairmile’s fee is based on a percentage of the Project Costs. This fee, however, is converted to a fixed dollar amount as soon as the Project Budget is set.
Project Value Construction Management Fee
Under $500,000 8%
$500,000 to $1,000,000 6%
$1,000,000 to $2,500,000 5%
$2,500,000 to $5,000,000 4%
$5,000,000 to $10,000,000 3.5%
Over $10,000,000 3%
8. FEE ALLOCATION
Design and Planning Phase: 20%
Permitting and Tendering Phase: 20%
Construction Phase: 60%
9. RECENT FAIRMILE CONSTRUCTION MANAGEMENT PROJECTS
1999 Spectrum Tenancy $2,100,000
1999 Deere-Hitachi/BCR Properties $6,500,000
1998 Production Court Phase III $11,700,000
1998 Staples Distribution Warehouse $3,500,000
1998 Cantest Base Building $1,200,000
1998 1224 East Pender $3,800,000
1997 Langley Fire Hall $2,800,000
1997 United Flower Growers Phase II $6,000,000
1997 A R Thomson Ltd $1,200,000
1997 BCR Properties (Wajax) $3,000,000
1996 Production Court Phase II $7,500,000
1996 Olympic Parkade $ 900,000
1995 Fairmile Road Residence $1,700,000
1995 H Y Louie (Main Dist. Centre) $3,100,000
1994 King Geo. Way Residence $2,000,000
1994 Sinclair Dental Supplies $1,600,000
Construction Management, with the proper controls and with a reputable
and experienced Contractor, is a superior alternate to the traditional
Design-Tender-Build system. Over the years Fairmile has proven, project
after project, that savings in both time and money accrue to the benefit
of the Owner. Over and above this, Construction Management by Fairmile
results in a building that surpasses the Owner’s high expectations.