Best CM Practices for Risk Mitigation Management: Part 2

Photo of construction review on-site

Distinguishing a “Difficult Project” from a “Troubled Project”

 

Difficult Project

We have come to commonly associate one or more of the following attributes with “difficult projects:”

  • Excessive number of RFIs
  • Differing site conditions
  • Numerous design revisions
  • Defective work
  • Posturing
  • Late payment
  • Projected late completion
  • Formalized claims

Troubled Project

The following indicators are far more alarming, since they affect the interaction between the owner’s team and the general contractor.

  • Performance extends beyond the revise contract period; accrual of liquidated damages
  • Excessive number of open change orders
  • Change Notices with no formal response from the owner
  • Informal business practices
  • Low employee morale
  • Executives calling the plays
  • General contractor circumventing the owner’s Construction Manager (CM) (dealing directly with owner)

May we conclude from the aforementioned lists that the parties’ inability to resolve conflict and acrimony amongst themselves is what differentiates a “troubled project” from one that is merely difficult?

Fairness and Trust

The Construction Industry Institute has carefully studied and reported on what each of us also knows in his heart and head — what is common sense — that relationships are built on trust and transparency. Conversely, relationships break down when one party believes the other is deceitful, secretive, or contributing to one’s own detriment.

In a troubled project, each party prepares its own list of grievances and perceived cost impacts without sharing it. Each holds the expectation that it is entitled to credit/reimbursement. This festers into resentment, lack of cooperation, and even animosity. How does an owner build back the trust between the players and convince the contractor to come to the table to continue seeking solutions to the project’s troubles?

While the topic of trust might seem cliché, it is important to explore parties’ actions that erode trust; trust is essential to the success of all intervention measures suggested later in this series.

In the next installment of this series, we will explore the root causes of a troubled project.

 


 

This is an 8-part series called Leveraging for Realignment: Best Practices for Troubled Projects, originally presented at CMAA National Conference.

Contributing authors: Shawn Paroline, SAIC; Mike Kenny, San Diego County Water Authority; Dan Fauchier, The Realignment Group; Jim Linthicum, San Diego Association of Governments; Chris Brasco, Watt, Tieder, Hoffar & Fitzgerald, LLP