U.S. Construction – Improving Efficiency & Competitiveness

Few experts would disagree that there is a lot of room for improvement with respect to the renovation, repair, sustainability, and construction of the built environment(1.).

The importance in doing so lies in the facts that the construction sector has major impact upon our economy and our environment(2.).

Obstacles to measurable improvement across the architectural, engineering, construction, and operations sector (AECO) are equally well documented:

  • Fragments stakeholders: owners, users, designers, builders, suppliers, manufacturers, operators, regulators, manual laborers, and specialty trade contractors ( plumbers, electricians, masons, carpenters, and roofers)
  • Segmented, linear, and non-integrated processes: planning, financing, design, engineering, procurement, construction, operations, and maintenance.
  • Lack of shared Risk/Reward – shifting responsibilities, and shifting levels of financial risk, which in turn often leads to adversarial relationships, disputes, and claims
  • Relative low adoption of LEAN business processes
  • Relative low adoption of technology
  • Lack of an industry-wide strategy, motivation, and/or effort to  improve construction efficiency.

Characteristics of an efficient construction sector include:

  • Production of quality products that meet owners’ and communities’ needs
  • Competitiveness in the global marketplace
  • Well-integrated processes, supply chains, and work flows
  • Promotion of sustainability through the efficient use of time, materials, skills, and dollars
  • Attractiveness to a diverse, well-trained, knowledgeable, professional, skilled labor force able to work collaboratively to meet owners’ and clients’ objectives
  • Ability to adapt to new conditions and to deploy new technologies effectively
  • Use of best practices to reduce rework and delivery time, and to improve job-site safety and project quality; and
  • Measurement of performance to enable innovation and improvements in products and processes. (3.)

 

LEAN, collaborative construction delivery methods such at Integrated Project Delivery (IPD) and Job Order Contracting (JOC) provide many of the required characteristics, processes, and desired outcomes for improving the renovation, repair, sustainability, and construction of the built environment.   Studies show that when these methods are understood and properly deployed a higher percentage of construction is delivered on-time and on-budget, as well as in concert with the quality and performance expectations of the Owners and Users.

It’s time that more Owners educated themselves on best value collaborative construction delivery methods and are held accountable as stewards of the built environment.

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  1. Studies document 25 to 50 percent waste in coordinating construction labor and in managing, moving, and installing materials (Tulacz and Armistead, 2007); losses of $15.6 billion per year due to the lack of interoperability (NIST, 2004); and  $4 billion to $12 billion per year are spent resovling disputes and claims associated with construction projects (FFC, 2007).
  2. Homes, office buildings, factories, shopping centers, hospitals, airports, universities, refineries, roads, bridges, power plants, water and sewer lines, and other infrastructure provide shelter, water, and power, and  support commerce, education, recreation, mobility, and connectivity.  40 percent of primary energy use in the United States, 40 percent of the U.S. greenhouse gas emissions, 30 percent of the raw materials, 25 percent of the water used, and for 30 percent of the materials placed in landfills are linked to construction. (NSTC, 1995).
  3. Advancing the Competitiveness and Efficiency of the U.S. Construction Industry 2009 National Resource Council.
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Facilities are NOT Commodities – LEAN Best Management Practices

The efficient and effective renovation, repair, sustainment, and new construction of facilities, other physical infrastructure and associated life-cycle management require knowledge, capability, transparency, collaboration, and robust business processes.

job order contracting

Treating your building portfolio as a commodity and outsourcing critical functions is  recipe for waste, mismanagement, and negative impacts upon your organizations mission and its building users.

Experienced owners, contractors, procurement managers, architects, or engineers agree that early and ongoing collaboration among dedicated and experience stakeholders generates the best construction outcomes in terms of quality, timeliness, and maximized return on dollars expended.

Why then, would any large or medium sized real property owner outsource the management of their renovation, repair, maintenance, and construction needs?   It just doesn’t make sense from a financial or a LEAN business management standpoint.

Effective management of the numerous renovation, repair, maintenance, and construction projects requires direct involvement of Owners with their Construction, Architecture, and Engineering service providers.


 

Any large build portfolio owner who doesn’t have the ability to strategically plan, construction cost estimate,  review contractor bids, conduct mutual site walks, monitor construction project in a transparent and consistent manner, etc. is simply not doing their job.   Unfortunately many, if not most real property owners fall into this category, including the largest entity in the Federal Sector.

Job Order Contracting – JOC  is a proven LEAN best management practice specifically developed for the numerous renovation, repair, maintenance, and smaller new construction projects constantly facing real property owners.  JOC enables full communication and transparency with regards to construction requirements and line time detailed costs for both Owners and Contractors.   The net result is Owners get high quality work on-time and on-budget for a fair price without onerous change orders and legals disputes.  Contractors earn a reasonable profit, develop long term relationships with clients, and can better estimate cash flow.

In order to deploy a JOC optimally, however, Owners must be capable of communicating detailed requirements to Contractors, including line item construction estimating and reviewing line item estimates, and doing so in standardized format.

Outsourcing these and other critical aspects of JOC to a third party is not a recommended best practice.  The latter can easily be supported by a review of third party audits of outsourced Job Order Contracts and Job Order Contracting activities.

True savings in project delivery time, and maximum return-on-invested for the numerous renovation, repair, and new construction project projects facing real property owners can only be achieved with DIRECT owner participate and a minimum skillset on the part of owners.

In short, Owners must be responsible for the real property portfolios.  The must be held accountable in their roles as stewards of the built environment.  The must be capable.

The low levels of productivity and high degree of waste associated with the construction industry is solely attributable to Owners.  It’s time for change.

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U.S. Facilities Portfolio – Major Trends 2016

U.S. Commercial Buildings – Current Trends:   Information shown below includes buildings greater than 1,000 square feet that devote more than half of their floor space to activity that is not residential, manufacturing, industrial, or agricultural.  Data was collect via the 2012 CEBECS Survey.

 

  1. Bigger Buildings – Size of buildings (SF) is increasing faster than the number of buildings. 2015 - U.S. Building StockBuilding size
  2. Buildings over 100,000 square feet of floor space account for more than one-third of total commercial building floor space
  3. 50% of all buildings were constructed befor 1980. Building Stock Age.png
  4. The Southern Region has the largest number of buildings and amount of built square feet, as well as largest population.Builings by Region.png5. Office, warehouse/storage, and mercantile buildings account for 50%+ of all facilities and built square footage.  Building type by use

joc CERTIFIEDvia the Center for Job Order Contracting Excellence

The Center For JOC Excellence (CJE) is the nation’s resource for efficient construction project delivery education,  research,  sharing best practices, and Job Order Contracting certification.
CJE serves JOC providers, JOC owners/users and educators in one forum to provide collaboration and continuous improvement for the most utilized efficient project delivery method in America.
We are honored to reach 20-years of achievement with volunteers across the county working together.
Facility managers, owners, end-users, procurement managers, municipal departments, construction companies, cost data & technology providers, industry consultants, and professors benefit from CJE  and the best practices developed for Job Order Contracting and IDIQ construction practices.
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FEDERAL REAL PROPERTY: Major Management Issues

  1. Lack of strategic focus on real property issues,
  2. Lack of reliable real property data
  3. Poor stakeholder  real property decision making

FEDERAL REAL PROPERTY:

Actions Needed to Improve How Agencies Manage Structures

GAO-14-87: Published: Jan 6, 2014. Publicly Released: Feb 5, 2014.

 

What GAO Found

In 2012, federal agencies reported to the Federal Real Property Council (FRPC)–an organization comprised of all real property holding federal agencies–that they are responsible for operating over 480,000 federally owned structures.

Information about these structures is recorded in the FRPC’s Federal Real Property Profile (FRPP), the government’s comprehensive database that describes the nature, use, and extent of federal real property.

About 176,000 of those structures are operated by civilian federal agencies.

The federal government manages a wide variety of structures. Some of these are common across agencies, such as roads and parking structures, while some are more specific to agencies’ missions, such as historic structures or particle accelerators.

Agencies take different approaches to defining and inventorying structures making the aggregation of data in the FRPP’s database unreliable.

Agencies we reviewed defined structures differently leading to inconsistencies in what assets are included in the FRPP, including counting some building-like facilities as structures.

We also found that these agencies counted structures differently, provided inaccurate structure location information, and categorized their structures inconsistently, all of which limits the usefulness of the data on structures in the FRPP.

Additionally, the agencies we reviewed submitted incorrect information for key data elements, such as the replacement value, annual operating costs, and condition.

General Services Administration (GSA) officials who manage the FRPP said that FRPC chose to provide flexibility in the reporting guidance for data on structures to account for the wide diversity in federal structures, but it also aggregates the data as if they were comparable.

Even if this data were useful, FRPC reports very little information on structures, and officials at GSA told us that there is low interest in and demand for this information, creating few incentives to improve data reliability.

In prior reports, we have stressed the importance of limiting the number of elements to the vital few that are considered essential for producing data for decision making in light of the costs in collecting this data.

Agencies generally face similar challenges in managing structures as they do in managing buildings. Officials from all of the selected agencies stated that most challenges centered on prioritizing resources to maintain structures, disposing of excess structures, and ensuring their safety and security.

Why GAO Did This Study

The federal government’s real property portfolio includes land, buildings, and structures.

GAO has designated the management of federal real property as high-risk based largely on the management of federal buildings.

However, over half of the assets are structures, such as roads, dams, and radio towers. GAO was asked to examine management issues related to structures. This report examines (1) the scale and scope of federally owned or leased structures, (2) how federal agencies track and categorize federal structures, and (3) the extent to which the challenges federal agencies face in managing buildings also apply to structures. GAO analyzed FRPP data on structures managed by federal civilian agencies against federal internal control standards for executive branch agencies and OMB guidelines, visited 24 sites selected to represent a variety of structure types from five civilian federal agencies with high numbers of structures, and interviewed officials from the five agencies, OMB and GSA about FRPP data collection and how agencies manage their structures.

What GAO Recommends

GAO recommends that OMB, in coordination with the FRPC, develop guidance to improve agencies internal controls to produce consistent, accurate and reliable information on their structures. GSA, in coordination with the FRPC, should clarify the definition of structures and assess the feasibility of limiting the data collected on structures submitted to the FRPP. OMB and GSA agreed with the recommendations, and GSA provided an action plan to implement GAO’s recommendations.

Full REPORT

http://www.jocexcellence.org

 

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Transparency is Required for Real Property Management

Improved Transparency Could Help Efforts to Manage Agencies’ Maintenance and Repair Backlogs

GAO-14-188: Published: Jan 23, 2014. Publicly Released: Feb 24, 2014.

What GAO Found

The five federal agencies GAO reviewed–the General Services Administration (GSA) and the Departments of Energy (DOE), Homeland Security (DHS), the Interior, and Veterans’ Affairs (VA)–reported fiscal year 2012 deferred maintenance and repair backlog estimates that ranged from nearly $1 billion to $20 billion. In accordance with Federal Accounting Standards Advisory Board (FASAB) standards, agencies report backlog estimates in required supplementary information accompanying their financial statements in their annual financial reports. In addition, data reported by agencies and included in the Federal Real Property Profile (FRPP)–a database overseen by the Office of Management and Budget (OMB) in coordination with agencies comprising the Federal Real Property Council (FRPC)–provides information that can be used to estimate an agency’s backlog. FASAB and FRPP guidelines do not share a common definition of deferred maintenance, and an agency can make different determinations when reporting information in its financial reports and to FRPP, resulting in dissimilar backlog estimates. In addition, agencies use different methods to determine and report backlogs, making estimates across agencies not comparable. For example, Interior excludes, while DHS includes, costs for some assets scheduled for disposal. In 2011 and 2012, FASAB adopted new standards that (1) clarify the definition of deferred maintenance and repair and (2) emphasize the need for consistency over time in determining and reporting backlogs. FRPC is considering incorporating the FASAB definition of deferred maintenance and repair in its fiscal year 2014 FRPP reporting guidance. These changes may result in improved information on agencies’ backlogs and prove beneficial over time.

… Four of the five agencies, however, generally did not employ a ninth leading practice–structuring budgets to identify the funding allotted (1) for maintenance and repairs and (2) to address existingbacklogs. This leading practice emphasizes that sufficiently funding maintenance and repairs is important because the costs to address backlogs may be significantly greater than if maintenance and repairs had been undertaken when needed.

 Having greater information on agencies’ annual funding of maintenance and repairs–and the corresponding effects on their maintenance and repair backlogs–would provide transparency about agencies’ efforts to manage their real property assets and promote improved effectiveness of federal real property spending.

Why GAO Did This Study

GAO has designated federal real property as a high-risk area due, in part, to deferred maintenance and repair that contributes to deteriorating assets. GAO has reported that the eventual need to address deferred maintenance and repair could significantly affect future budget resources.

GAO was asked to review federal deferred maintenance and repair backlogs. GAO examined, among other things, (1) selected agencies’ estimated fiscal year 2012 deferred maintenance and repair backlogs and (2) the strategies, if any, these agencies used to reduce their backlogs and how those strategies compared to leading practices. GAO selected five agencies for review that had a high ratio of deferred maintenance and repairs to annual operating costs. GAO identified leading practices in managing maintenance and repair backlogs from NRC reports, analyzed data and documents from the selected agencies and the NRC, and interviewed officials from OMB, FASAB, and the selected agencies.

What GAO Recommends

GAO recommends that OMB, in collaboration with agencies, collect and report information on (1) agencies’ costs for annual maintenance and repair performed, and (2) funding spent to manage their existing backlogs. OMB agreed with our recommendations. Technical comments from OMB, DHS, DOE, GSA, VA, and the Interior were incorporated as appropriate.

view REPORT

http://www.jocexcellence.org

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Federal Facilities at High Risk

Each year the GAO updates its “High Risk Series”.  This is a report on areas of critical concern at the Federal level, yet not being properly address.

For the 2015 Update, “Managing Federal Real Property” is on the list.

Since I began my facilities career in 1988 as a member of VFA, Inc.’s senior management team, the Federal Government has consistently failed to implement LEAN best management practices with respect to real property management.

The net result is billions of dollars in waste, lack of productivity, as well as major security and life/safety issues.

Buildings and other physical infrastructure (roadways, bridges, dams, utilities, mass transit…) are extremely important to our lives from both economic and environmental perspectives.

Lack of leadership and stewardship with respect to Federal Real Property is indeed, a critical issue.

GAO Report

ice_screenshot_20160105-132441

The federal government’s real property holdings are vast and diverse— comprising hundreds of thousands of buildings and permanent structures across the country, and costing billions of dollars annually to operate and maintain. Since federal real property management was placed on the High Risk List in 2003, the government has given high-level attention to this issue and has made strides in real property management, but continues to face long-standing challenges in managing its real property. For example, the federal government continues to maintain too much excess and underutilized property. It also relies too heavily on leasing in situations where ownership would be more cost efficient in the long run. In addition, the federal government faces ongoing challenges in protecting its facilities. Finally, effective real property management and reform are undermined by unreliable real property data. Specifically, despite a high level of leadership commitment to improve real property data, the federal government continues to face challenges with the accuracy and consistency of the Federal Real Property Profile (FRPP), causing the federal government to report inaccurate inventory and outcome information.

…  significant challenges in demonstrating progress in achieving tangible results remain. For example, we found that the results OMB reported from the first year of the administration’s Freeze the Footprint policy overstated the reductions for the four agencies we reviewed to the point where some of the reported decreases do not represent any decrease at all.

… while FPS has identified some measures that would help monitor progress in protecting federal facilities, FPS has not developed or implemented standards for measuring its performance in assessing risk at its facilities or obtaining feedback from its tenant agencies on the quality of security services provided.

… We found that the $3.8 billion which agencies reported in 2012 as cost savings from real property disposal, space management, sustainability, and innovation activities were not reliable.

 

 

www.jocexcellence.org

job order contracting

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2016 – Setting up a JOB ORDER CONTRACT

See what the experts say…

  1. “There’s plenty of help out there.”
  2. “Successful Owners are very forthcoming with information and assistance.”
  3. Join CJE
  4. “Hire an expert.”

Job Order Contracting – 2016 & Beyond!

Charles D. Bowers, LEED AP – National Secretary, The Center for Job Order Contracting Excellence

Charlie brings extensive experience working for national general contractors and JOC contractors, and successfully delivering projects across several market sectors throughout the United States. He is also a member of the U.S. Green Building Council and a LEED Accredited Professional. He is a firm believer that “JOC is an idea whose time has come in the public sector, and that it is truly a win-win alternative construction delivery method”.

Jacob Kashiwagi, PhD, – Program Manager/Lecturer, Performance Based Studies Research Group, School of Sustainable Engineering and the Built Environment, Ira A. Fulton Schools of Engineering, Arizona State University

Jacob is a program manager at PBSRG and lecturer at ASU. He is the developer of the no-influence leadership theory, the Theoretical basis for best value procurement. His studies and track record have enabled owners to achieved on-budget and on-time construction project delivery, and have been internationally recognized: 2012 Dutch Sourcing Awards – Best Overall Procurement Effort & Operational Excellence, 2011 Innovation Award – Ira Fulton School of Engineering, Arizona State University, Construction.

http://www.jocexcellence.org

 

 

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