Posts Tagged ‘real estate development’

Flat Fee Construction: An Opportunity for Innovation

March 3, 2010

When you hear construction and The Great Recession in the same sentence, you wouldn’t expect it to be good news. But I read an article today in the Wall Street Journal that has me brimming with excitement over what the future holds for our industry.

Given a choice between going out of business or keeping their construction businesses alive, contractors are striking flat fee deals with banks to build/finish the houses of failed development projects.  Sure, the contractors quoted in the article mention that such contracts “help stop the bleeding” but how long would you expect any business to continue to work just for the sake of keeping the lights on? The strongest contractors will innovate in order to improve (create) their profits.

Where will the innovation come from? Well, I hope jobsite technology gets a good, hard look (OK, I’m biased). But you can’t predict these things. Maybe it’s more efficient use of materials or labor, new contract structures or creative insurance policies. Who knows? Every penny gained through innovation goes directly to the bottom line. Now’s the time to try things!

Given the large inventory of unfinished work in the now infamous markets of Florida, Arizona, California and Nevada, flat fee contracts with banks offer contractors a solid alternative to the bare-knuckled bidding wars that are taking place for government projects. Contractors in these markets can work in familiar territory to improve themselves.

What about you? What are your recession-inspired innovations?

Is Boost in Mfg a Leading Indicator to Construction Rebound?

January 4, 2010

Stimulus spending is said to be behind today’s reported jump in manufacturing spending. It occurs to me that we may be witnessing the stimulus “mouse” working its way down the belly of the construction “snake” as projects progress down the path towards groundbreaking. We’ll know in the coming months if the snake fully digests its meal.

Miscommunication Between Owner and Contractor Can be Dangerous

June 5, 2009
The Croc Slot

The "Croc Slot"

February 7, 2009

We launched the new Geedra website today.  If construction touches your life in any way, please pay us a visit.


13 “What if” questions for General Contractors to Ponder

December 15, 2008

What if?

  1. What if you were a General Contractor?
  2. What if you radically changed your approach to construction quality?
  3. What if you had a quality system that applied universally to all of your jobs instead of individually to each project?
  4. What if you could improve the performance of the “C” and the “D” project teams so that they performed more like the “B” team?
  5. What if you had the ability to monitor and investigate ongoing work for any of your jobs from any computer anywhere in the world?
  6. What if you had a library images and supporting data covering every critical installation your crews built over the years?
  7. What if you provided your clients with daily progress reports complete with easy-to-use dashboards and images from the jobsite?
  8. What if you could identify defects from you sub contractors within 24 – 48 hours from the time they occurred?
  9. What if you could immediately share defect-related information with your subs so that they could complete repairs while their crews were still on site?
  10. What if you could manage all of your defects so that you had complete traceability from detection through repair and acceptance?
  11. What if you could easily assign responsibility for trade damage with photographic evidence?
  12. What if at the end of every project you could turn over a complete database to your clients that chronicled the complete construction history of their building?
  13. What if? Such a system were available?

What if?

Everything is Temporary on a Construction Site

August 15, 2008

In a scene from Moonstruck Loretta’s father played by Vincent Gardenia in a rather exasperating moment proclaims “Everything is temporary!”  Truer words were never spoken, especially when it comes to a construction site (ironically, Gardenia’s character is a plumber.)

Everything in a construction site is temporary. The obvious – office trailers, porta-potties, etc. And the not-so-obvious – quality systems and business relationships.

In this setting, why would any principle project partner invest financially in an enduring quality system that becomes as important to the building as the foundation?   It just doesn’t pencil out.  As a result, I’ve seen contractors who use standalone spreadsheets (created from scratch by the Quality Manager) to record the conditions on $150 million projects.  To put this in perspective, imagine how absurd it would seem for a factory with a $50 million operating budget to similar ad-hoc documents.

It’s ultimately up to the fiduciary partners (banks and insurers) who have a longer term interest in the success of the building to demand better. Improved systems for recording and monitoring construction operations add significant value to a building  during its construction by providing a means to reduce defects. The payoff for such systems would continue over the useful life of the building as the details of construction remain fresh and accessible years after the last sections of temporary fencing having been hauled away.

Building Airplanes vs. Building Buildings – Part 3 (The Missing Link)

July 3, 2008

So far in this series of posts I’ve discussed the well-orchestrated construction of airplanes as compared with the improvisational construction of buildings in Part 1. In Part 2 I explored the differences in inspection and monitoring for the two processes. In Part 3 I’ll discuss Construction Verification‘s role in providing project partners with the means to drive their defect rates down significantly, perhaps to levels that compare favorably with those of aircraft manufacturers.

When it comes to the development of process systems, the biggest advantage that Boeing or Airbus have over a general contractor are volume and duration. When you are planning on building thousands of aircraft over a period of ten or more years, you can justify a sizable effort in developing a sophisticated process instructions that describe the installation of every wire, nut and rivet. The payoff for this intensive process development comes in the form of reduced defects, lower rework costs and of course, safer aircraft.

In construction neither owners nor general contractors can benefit from high volume or long duration as aircraft manufacturers can. While construction partners can invest in their own individual management systems, there is no economic payoff for them if they invest in systems that govern the movement and monitoring of individual contributors on a construction site. Why pay to develop specialized process instructions for every construction operation on a building when you can’t apply that information to your next building? That is, of course, if there even is a next building? Expenditures in systems development, testing, training and implementation cannot generate a positive return on investment during the time line of a single project.

Construction Verification, however, can make up for lack of process control available to the building constructor. By monitoring all significant building systems with images and data, CV offers a contractor the means to evaluate critical operations in near real time. Thus, afford him the ability to make corrections early before work is covered, averting costly rework in the process. Early detection can also reduce the quantity of errors as timely process or design changes can reduce multiple instances of the same problem.

By recording the Construction Verification data in a database, the contractor has the power to investigate quality defects like never before. If the contractor suspects that any particular error might be “the tip of the iceberg,” he can confirm or refute his fears without leaving his desk by searching the data base for multiple instances of the same defect. For example, if there concerns about quality of the roofer’s work the contractor can zero in on all work performed under division code 075000 to view every significant membrane roofing operation without leaving his desk.

With this type of information at his fingertips, the contractor can take advantage of his improvisational environment to enact process revisions on the fly.  With a few barks into a radio, process corrections can be conveyed to the superintendent and on down the line within minutes. Try that in an airplane plant.