# Presentation: 746269

## Fort Worth Grantee Conference 2005

**Fort Worth Grantee Conference 2005**

**Construction Management and Monitoring**

## WELCOME

- Presentation by Phil Jones, ICF Consulting
- _[pjones](http://www.hud.gov/utilities/intercept.cfm?mailto:pjones@icfconsulting.com)__[@](http://www.hud.gov/utilities/intercept.cfm?mailto:pjones@icfconsulting.com)__[icfconsulting](http://www.hud.gov/utilities/intercept.cfm?mailto:pjones@icfconsulting.com)__[.com](http://www.hud.gov/utilities/intercept.cfm?mailto:pjones@icfconsulting.com)_
- 301- 588-3215

## INTRODUCTIONS

- Name
- Organization
- Types of construction activities/responsibilities
- Problem you would like to address

## Agenda

- Cell phones off?
- Purposes and challenges
- Program design
- Codes and standards
- Inspections
- Specifications

## Agenda

- Working with architects and other consultants
- Costs
- Procurement and contractor selection
- Construction process oversight
- Monitoring systems

## Strategic Decisions: Program Design

- Does our design facilitate quality construction and regulatory compliance?
- What are the needs in the community?
- What role will the grantee and others play in the construction process?
- Do we have clear written procedures?

## Designing Our Program 

- The type of program a grantee runs will vary with respect to:
- Level of funding received
- Level and skills of staffing
- Availability and capacity of contractors, subrecipients and CHDOs

## Grantee Roles During Construction

- A grantee can act in a variety of
- 	roles including:
- Developer
- Hands-on Construction Manager
- Lender/Approver
- Contract Administrator

## HOME Rules- Property Standards

- Property Standards that apply include:
- State and Local Standards
- Codes
- Housing Quality Standards
- Rehabilitation Standards
- Model Energy Code
- Handicapped Accessibility
- Site and Neighborhood Standards

## Other Federal Requirements

- Fair Housing and Equal Opportunity
- Handicapped Accessibility
- Employment and Contracting
- Environmental Review
- Flood Insurance
- Lead-based paint
- Labor Standards

## Other Federal

- Debarred Contractors
- Conflict of Interest
- Acquisition and Relocation
- Section 3

## Codes and standards Strategic questions

- What codes and standards apply and how?
- How do we ensure meeting standards and regulatory requirements?
- How do we balance quality and costs?
- How do we adjust to changes and continuously improve?

## Type of Codes and Standards

- There are a number of different codes and standards that may apply to our construction program, including:
- Housing Standards
- Building Codes
- Rehabilitation Standards
- Methods and Materials Specifications

## HOME Requirements

- Follow state or local housing standards
- Follow local code or a national code
- Adopt and use written rehabilitation standards
- Applies to all types of construction projects

## Housing Standards

- Set conditions for health and safety
- Serve as basis of inspection of existing properties
- Provide _minimum_ standards for quality
- HUD Section 8 HQS
- Model property standards
- Locally developed standards

## Building Codes

- Used to evaluate new construction
- Designed for specific trades and systems
- Structure, plumbing, electric, HVAC, fire & safety
- Developed by model code organizations
- Adopted locally with modifications

## Other Federal Codes and Standards

- The following may be applicable:
- accessibility requirements
- lead-based paint regulations
- historic preservation
- energy conservation
- manufactured housing standards

## Rehab Standards or Materials and Methods

- Set standards for rehabilitation work
- Go beyond housing quality standards
- Specify materials and methods
- Developed locally or for each large project
- Required by HOME Program

## Balancing Quality and Cost

- Housing standards and materials and methods specifications should reflect balance
- Weigh up-front and back-end costs:
- Long-term maintenance
- Durability
- Installation
- Efficiency

## Ensuring Compliance with Codes and Standards

- Provide regular training
- Monitor periodically
- Be prepared to revise policy

## InspectionsStrategic Decisions

- Who should conduct inspections?
- When and how often should inspections be conducted?
- Are inspections focused on areas of high risk?
- Do staff have adequate skills and diligence?
- How does management know that inspections are done correctly?

## Types of Inspections

- Initial Inspections
- Progress Inspections
- Final Inspections
- Monitoring Inspections

## Inspections

- Initial inspections
- Homeowner or rental rehab/Reconstruction
- Detailed interview and checklist
- Homebuyer Assistance Only – Existing
- Detailed checklist
- New Construction
- Site review checklist

## Progress Inspections

- Progress inspections should be conducted regularly:
- at prescribed intervals
- whenever a change order
- complaint by owner/tenant/neighbor
- prior to covering over (e.g., wiring and plumbing before drywall)
- at all draws
- unannounced times

## Scheduling Inspections (continued)

- Final inspection- work completed and payment requested
- following punch list completion
- Monitoring Inspection
- prior to warranty expiration
- to assess satisfaction

## JOB PROGRESS REPORTS

- Work performed
- List trades on site
- Take photos
- Materials delivered
- Delays or problems
- Weather
- Non-conforming work

- Who is present for inspection
- Job site discussions that involve corrective measures
- Any code inspection problems
- Anticipated scheduled deliveries

## A Systematic Approach to Inspections

- Staff should adopt a consistent and systematic approach to inspections.
- Good procedures include:
- Checklist of inspection items
- Carrying appropriate tools
- Room by room approach to interior
- Exterior--all structures and grounds
- Developing simple schematic drawings for work items

## Monitoring Lead Hazard Reduction

- Required forms
- Know protocols
- On-site, in process inspections
- Tenant protection and effective clean up is most critical
- Is clearance adequate?

## Monitoring Accessibility

- Checklists for
- Architectural Design Review
- On-site review

## Inspector’s Skills

- Technical Knowledge
- Analytical Skills and Problem Solving
- Interpersonal and Conflict Resolution Skills
- Familiar with the Goals/Standards of Program

## Common Inspection Dilemmas

- What do we do when:
- The inspector finds incomplete or deficient work
- The homeowner is unwilling/unable to make all recommended repairs
- The inspection finds issues the program is not designed to address

## Monitoring Quality of Inspections

- Regularly check project files
- detailed notes of inspections
- dates and times recorded
- signed job cards in file
- detailed punch list items
- pictures documenting record

## EVEN IF YOU ARE NOT AN EXPERT – YOU CAN INSPECT MANY ITEMS FOR QUALITY AND APPROACH!  GET INVOLVED!

## SpecificationsStrategic Decisions

- What formats are used?
- What process should we follow to develop and review specifications?
- Are we focused on areas of high risk?

## Monitoring Specifications

- Clearly written with drawings
- Addresses code deficiencies
- Specific measurements and material quantities
- Detailed line items for bidding
- Organized by room and by trades
- Specify responsibilities and quality level
- Provide performance reference standards
- Bid alternates and additions

## Design Review

- Needs of Residents
- Owner’s Perspective
- Maintainability
- Neighborhood Context
- Accessibility Requirements
- Historic Preservation
- Requirements of Other Lenders/Funders

## Tools Needed

- Staff must be prepared
- a thoroughly documented inspection
- standardized specifications
- a system to evaluate and add appropriate specifications
- information about availability and costs of materials

## Computerized Systems

- Advantages of Computerized Work Write-Up Systems
- Search the web, colleagues
- Popular systems

## Large Projects: Evaluating Plans and Specs

- Architect’s plans should include:
- Floor plans
- Front, rear and side elevations
- Foundation plans
- Plot plan, position of structures on lot

## Large Projects: Evaluating Plans and Specs (cont.)

- Architect’s plans should include:
- Typical cross sections
- Structural & engineering details
- Major systems plans (HVAC, plumbing, electrical)
- Detailed written specifications
- Grantee should provide feedback at early stages

## CostsStrategic Decisions

- Are we using an effective method ?
- Do we employ other cost control measures?
- How do we assure up-to-date information?
- Do we balance effort and risk?

## What are cost estimates used for?

- Cost estimates are required for HOME and CDBG-funded projects
- Certify cost reasonableness
- Accurately budget program resources
- Aid in evaluating contractor bids

## Types of Cost Estimates

- Square Foot Estimates
- Line Item Estimates (a.k.a., component or assemblies estimates)
- Quantity Takeoffs

## Tools

- Cost Estimating Manuals
- Databases
- History
- Current informal price comparisons

## Monitoring Soft Costs

- Developer’s fees
- Architect's and engineer’s fees
- Environmental impact/soil studies
- Professional services
- Construction management
- Lender fees and construction interest
- Marketing

## Monitoring Soft Costs (continued)

- Appraisals, title searches, transaction fees
- Temporary relocation costs
- Building permits, utility hookups, zoning review
- Syndication costs (LIHTC)
- Cost Contingency

## Monitoring Hard Costs

- Labor
- Materials
- Machinery

## Other Factors Affecting Costs

- Federal Wage Requirements
- Relocation Costs
- Contingencies and Emergencies
- New Lead-Hazard Reduction Regulations

## Cost Control Measures

- Establishing cost schedules
- Line item bids
- Unit pricing
- Change order restrictions
- Bid alternates
- Using contingencies effectively

## Developing an Effective Cost Estimating System

- Up-to-date information
- Timeliness
- Relevant information
- A high level of detail
- Skilled and diligent estimators

## Using architects

- When is an architect needed?
- What are the architect’s roles and responsibilities on projects?
- How should architects be selected?
- How should an architect’s performance be monitored?

## Architectural Services

- Service provided throughout project
- Design preliminary and final plans
- Evaluate existing site and building conditions
- Research codes and zoning
- Prepare construction documents
- Assist with contractor bidding
- Reviews change orders
- Monitor construction
- Can also be hired for specific tasks

## Architect RFP

-  RFP should be specific
- Description and scope of project
- Location and special site considerations
- Proposed work schedule - completion date
- Sources of financing
- Codes and regulations

## Architect RFP (continued)

- Architect evaluation criteria:
- Firm’s capacity
- Licenses and insurance
- Professional and client references
- Qualifications of proposed staff
- History of litigation
- Familiarity with program objectives
- Experience with similar projects

## Contracting with Architect

- Will A/E investigate existing conditions?
- Will the A/E provide all professional services to complete the work?
- Will A/E coordinate other work?
- Who is liable for damages due to defects?
- If redesign required who pays?
- Can we rely on the architect’s cost estimate?
- Use of standard forms?

## Contracting with an Architect (continued)

- Grantee should review contract to ensure grantee is protected
- Liability and other insurance
- Fixed limit of costs
- Ownership of drawings
- Schedule - consequences
- Termination
- Dispute resolution

## Monitoring Performance

- Grantee monitoring tasks:
- Meet with project team members
- Review preliminary and final designs
- Ensure community review and acceptance
- Developer performs day-to-day oversight:
- Reports to grantee on regular basis
- Grantee approves payments

## Strategic Procurement and Contractor Selection

- Is our procurement method efficient, effective and in compliance?
- Are we attracting quality contractors?
- Are we providing technical assistance?
- Do we need probation, suspension and debarment procedures?

## Procurement Requirements

- Requirements depend upon who is responsible
- Developer - large projects
- Program - rehabilitation
- Property owner - rehabilitation
- Rules provided in 24 CFR 85.36

## Procurement Requirements

- Who makes critical decisions?
- Grantee bidding - Federal requirements apply
- Developer or property owner - rules do not apply
- Grantee can impose requirements
- Should follow similar practices

## Sample Practice for Rehabilitation

- Grantee:
- Prepares cost estimate and sets a range
- Limits bidding to selected contractors
- Determines acceptable bid range
- Advises during evaluation
- Property owner:
- Evaluates bids
- Selects contractor

## Bid Analysis

- Common problems
- Bids outside of acceptable range
- Only one bid received
- No responsible bids received
- Evidence of collusion

## Recruiting Contractors

- Advertisements, meetings, on-site
- Technical assistance
- Disadvantaged firms – MBE/WBE
- Normal sources
- Feedback
- Payment and other processes

## Screening

- Experience
- History of work quality
- Recent client’s satisfaction
- Financial capacity
- Licensing
- Insurance

## List of Contractors

- Maintain list of pre-screened contractors
- Advertise periodically for new contractors
- Bid on rotating basis or invite all
- Limits bidding to quality contractors
- Facilitates evaluation of qualifications

## Performance Enforcement

- Bonding and letters of credit
- Letter of credit best for small contractors
- Retainage
- Insurance
- Formal dispute resolution procedures
- Four-step process
- Suspension and debarment

## Construction OversightStrategic Decisions

- How good are our contracts?
- What will be the level of involvement of the grantee in oversight?
- How will disputes be addressed?
- Is close-out well-managed?

## Construction Contract

- General requirements
- Responsibility for taxes, permit, fees, notices
- Schedule
- Scope of work
- Payment schedule

- Warranties
- Change orders
- Contractor representative
- Site conditions
- Dispute resolution
- Responsibility for labor and materials

## Other Key Requirements

- Conflict of interest
- Bonding or letter of credit
- Equal opportunity
- Labor laws
- Minority/Women-owned businesses
- Section 3

## Pre-Construction

- Meeting with all parties present
- Communicate goals and clarify roles
- Identify deadlines and basic procedures
- Payment
- Change orders
- Inspections
- Davis-Bacon

## During Construction

- Job-site tension
- Lack of communication
- Excessive requests for additional information
- Excessive change orders
- Delays
- Poor quality
- Overruns
- Theft

## Close-Out

- Verification of close-out
- Cost certifications
- Warranties and guarantees
- As-built drawings
- Owner’s manuals
- Release of liens
- Final payment when all complete

## Disputes

- Grantee establishes procedures
- Explain to contractor and owner early
- State in contract
- Professional arbitration
- Less expensive than legal action
- Legal action is last resort

## Review of Strategic Decisions: Codes

- What codes and standards apply and how?
- How do we ensure meeting standards and regulatory requirements?
- How do we balance quality and costs?
- How do we adjust to changes and continuously improve?

## Review of Strategic Decisions: Inspections

- Who should conduct inspections?
- When and how often should inspections be conducted?
- Are inspections focused on areas of high risk?
- Do staff have adequate skills and diligence?
- How does management know that inspections are done correctly?

## Review of Strategic Decisions: Specs

- What formats are used?
- Which team members are involved and how?
- What process should we follow to develop and review specifications?
- Are we focused on areas of high risk?

## Review of Strategic Decisions: Cost

- Are we using an effective method ?
- Do we employ other cost control measures?
- How do we assure up-to-date information?
- Do we balance effort and risk?

## Review of Strategic Decisions: Contractors

- Is our procurement method efficient, effective and in compliance?
- Are we attracting quality contractors?
- Are we providing technical assistance?
- Do we need probation, suspension and debarment procedures?

## Review Strategic Decisions: Oversight

- How good are our contracts?
- What will be the level of involvement of the grantee in oversight?
- How will disputes be addressed?
- Is close-out well-managed?

## Monitoring Systems

- Measuring and feedback methods for staff and program performance
- Risk analysis and time management
- Letting the end result drive the system
- Ongoing desk and on-site reviews
- Managerial participation

## Getting Involved

- PAPERWORK HAPPENS IN YOUR OFFICE
- CONSTRUCTION HAPPENS IN THE FIELD
- ENJOY THE OPEN AIR AND THE FUN OF BUILDING!