FAQ

• Proper cleaning and a move toward utilization of “green” supplies and material

• Systematic and proactive Preventive Maintenance (and not just the HVAC…that is only one component of a complex commercial structure)

• Proactive Capital Reserve Account planning

• Life Cycle analysis and planning

• Development of a systematic painting plan

• Proper facility scheduling – This is a key element of stewarding the facility…they were meant to be used

• Sustainability implementation (“Greening” up the facility)

• Vigilant monitoring of operational costs

• Implementation of energy saving processes

• Proactive cataloging of facility components and tracking of work orders and service requests

1. How much do you plan to outsource? This is fundamental and clearly will impact the size and skill set of your internal team?

2. What functions do you expect them to do on a daily, weekly and monthly basis?

3. Will they also be responsible for set up and tear down of rooms?

4. Who will directly manage the daily activities of the staff?

5. Are you planning to have a full time facilities “manager” or “maintenance” people? There is a huge difference between the 2 skill sets?

6. What is your plan for capital reserve accounts?

7. Do you plan on using a room scheduling software program? If so, will it be web based or run on your local server? What do we want the tool to do for us?

8. Do you plan on using a facilities management software program? If not, how will you track work requests, work orders, historical data, vendor performance, vendor insurance, reoccurring PM, Etc.?

9. What is the Current Replacement Value of your facilities? We would suggest that your systems and processes should be defined before you determine how to staff. Your systems/process and methodologies, coupled with the costs associated, need to be the foundation of any facilities management program…then staff accordingly. As part of that process, you need to determine the type of Preventive Maintenance you plan to perform in-house or outsource. To help you can download “best practices” for a preventive maintenance program. This is not an “end-all” form, but will help get you started.

PROS -

1. The Construction Manager fills the “role” of the general contractor so you do not have the added cost of a general contractor and a 4th party construction manager. This can net a savings to the project…and who would not like that.

2. In most states and municipalities, the church can not pull their own building permit, so the construction manager must also be a fully licensed general contractor in order to obtain the permits, so the church is retaining a true construction profssional and not just a paper pusher or a firm that is only functioning at a 30,000 feet level. The construction manager is a highly qualified professional that is as qualified…and maybe more…to manage the complexity of a large commercial project. An added benefit is that the construction manager has the liberty to use the best practices from general contracting, Design/Build, Design/Bid/Build (as their is a very thorough bidding process of the Trade Contractors) as well as the Do-it-Yourself approach.

3. The church is actively part of the selection process of all subcontractors and vendors and actually has direct contracts with the “trade” contractors. This eliminates the “middle man” issues and allows the church to see and know exactly what they are paying for. In addition, if there are discounts available for early payments (typically considered “net 10″ discounts) the church benefits from these discounts and not the general contractor.

4. If there are any aggregate net savings on the project, the owner receives 100% of the savings. Every construction delivery method has a “Risk and Reward” equation that must be navigated by the church. In CM Agency, there is a much higher reward element…thus a potential for a higher risk. A major component of the potential savings is driven by the fact that Trade Contractors are attracted to the relations that are established in this delivery because they get paid on a more timely basis thus they give better numbers for various reasons to start the project. This along with other factors play a significant role in the savings component.

CONS -

1. There is no cap or “Not to Exceed” in the contract. There is potential that the project could go over budget during the construction process. This is the “risk” factor that was discussed above. There are a few components that need to be implemented to assist in mitigating this potential. First, the Construction Manager should fix their fee as well as their “General Conditions” (these are things like the cost of the field personnel (i.e.superintendent), project managers, job trailer, etc. By doing so, the risk is limited to the Trade Contractors scopes. If this is implemented, the Construction Manager has a shared risk as well. If the project goes over budget or over schedule, the construction manager will be negatively impacted. Also, if the construction manager is doing their job in the pre-construction phase of the project, then the risk of “scope creep” and cost overruns should be greatly reduced.

2. The Trade Contractors (also referred to as “Multiple Prime Contractors”) are all contracted directly with the church which means that any failure by a sub becomes a church issue. In an “agency” arrangement, the church has a significant role in selecting the Trade Contractors. The best construction mangers will do an in depth vetting and qualification process of all of the Trade Contractors and then present their recommendations to the church. In this manner, the church has not only input, but complete buy-in of the selected Trade Contractors. This is also part of the Risk and Reward equation. As part of this vetting process, decisions will be made as to the potential risks and reward of selecting certain Trade Contractors…so…there is joint ownership of the selection.

3. In the same light of #2 above, the warranty for the Trade Contractor’s work product is directly with the church. All warranty is between the church and the Trade Contractors. In our process, we will actually lead all of the warranty related work and be the representative for the church during the warranty period. The church should never feel like they have been abandoned. Now…we need to reiterate the Risk and Reward elements. If a Trade Contractor were to go out of business, then there is the potential that the church could be impacted by added costs. But these are some of the discussions and decisions that are part of the vetting process. If the church elects to hire a Trade Contractor that has the lowest price…and has iffy credit…and whose longevity is in question, just to save $x…then that is part of the risk component. We are not saying that making that selection is wrong…but do it with eyes wide open as there is potential risk later…be smart.

PROS:

1. There is a Guaranteed Maximum Price (GMP). This is the primary Pro to this method. In this format, comperio C3 provides a GMP to the church prior to starting construction. This is usually provided after the permits have been obtained, but before the physical construction has ensued. The clear and obvious advantage to the church is that there is a “top end” to the project. This is similar to obtaining a “lump sum” contract with regards to the “risk” factor.

2. Like Construction Management “Agency”, there is a competitive bidding process of the trade contractors and vendors. Given the governance of many churches (those whose bylaws require a multiple bidding process), this approach meets that criteria by implementing a rigorous bidding process….but, unlike the “Design/Bid/Build methodology, the church has direct significant impact on the selection of the trade contractors vs. a general contractor imposing their own plan and agenda for the project.

3. There is still shared savings for the church. In this type approach, the risk and reward equation has been adjusted slightly. The risk has been greatly reduced for the church…but greatly increased by the construction manager. In light of that, the “reward” portion of the equation is also shifted. In most cases, there is a shared savings clause that allows the church/owner and the construction manager to share in any aggregate savings in the project. This helps to compensate both parties for their proportional amount of risk and also provides a significant motivator to the parties to look for savings opportunities. The shared savings percentage may vary from project to project, but a 50/50 split provides the best reward and motivation for all parties involved.

CONS:

1. There is potentially less savings for the church…but…there is also less risk. Again, refer back to #2 at the beginning of this section.

2. The construction manager is placed in a slightly different position than construction management “agency”. In the “At Risk” format, the construction manager is not only looking out for the church, but must also be more cognizant of the GMP and how it could impact their business if they miss the GMP and end up coming out of pocket to complete the job. This adjustment in the relationship can realign the construction managers willingness to take certain risks.

3. The church has less input on the trade contractors selection. While they still have a significant role in the selection process, the construction manager will have the “last say” on the trade contractor and vendor selection…as they are now assuming all of the risk for the trade contractors performance. I hate to sound like a broken record (or CD for those in the readership younger than me)…but….RISK and REWARD.

4. The contingency of the project becomes part of the GMP. We always recommend that a church set aside a certain amount of contingency. In a recent article in Christianity Today’s YOUR CHURCH magazine entitled “Accounting for Rising Construction Costs” (page 16), it was made very clear that you need to account for and fund a contingency…and possibly 2 (one for inflation and one for project adjustments). In the “Agency” relationship, the contingency is held by the church and used based on the need of the project with input from the church and construction manager. In the At-Risk format, the contingency is rolled into the GMP thus giving the construction manager the discretion to use the contingency as deemed appropriate for the betterment of the project. The unused portion of the contingency is then calculated as part of the aggregate savings of the project and split accordingly between the parties as part of the “shared savings”.

PROS -

1. There is a party designated primarily as the Church’s advocate with the mitigation of almost any self-interest in the project. Their primary interest is in the well being of their client. Now, many contractors and design professionals will say this is exactly what they do…and that may be the case for some, but in many cases, they have a slightly tainted perspective as their fee and profit is based on their participation and success of their part of the project.

2. The design professional and contractor may also have an advocate (if the CM is functioning in an IPD type manner). If the CM is truly looking out for the best for the project…then they should be able to serve as the construction/design “translator” for the entire team. We believe churches need a translator as they generally do not understand “construction-ese”. The CM can do a lot to reduce the amount of misunderstandings.

3. Again, if the process is implemented in an IPD methodology, the CM can become the voice of reason with the rest of the team. Projects are subject to human error as well as system failures and there will be issues. The best projects we have been involved with are those where “cooler heads” prevail during these times of challenge and conflict. The CM can fill that void.

CONS -

1. There can be added cost to the project. If the contractor and the design professionals are all getting a reasonable and fair fee, then the cost of the CM may be added cost to the project. This is not always the case as a good CM should be able to help the team to reduce the potential of cost overruns as well be the catalyst for proactive value management initiatives to actually reduce scope or cost.

2. If the CM is trying to justify this added fee by busting knuckles or getting a pound of flesh from the other partners, then an adversarial tenor can ensue…thus creating an “us and them” relationship which is not healthy for a project.

3. If the CM sees their role as the Gatekeeper for the church and does not want the rest of the team to communicate directly with the church (or each other), then there will be a sense of isolation from the church and the other team. This is not the best for a project. In many cases, the potential best ideas of the team do not get shared or shared at the right time. Now, with that said, it is important to keep the whole team informed , so copying and communicating in a proper manner is important…but if the communication gets bogged down through a tight conduit of communication that has to flow only through the CM, there can be challenges.

We have developed a Capital Reserve Account Calculator that you can download at XXXXX (insert the link to this on our resources page). It is critical to understand the future costs of capital expenditures and plan accordingly.