Page 34 - Urban Construction Project Management

Project Organization 9
DETERMINING THE COST OF PERSONNEL ASSIGNED
TO THE PROJECT—GENERAL CONDITIONS

The cost of the construction manager’s personnel time during the construction phase of
the project is usually billed as part of the general conditions for the project. The general
conditions for a project can be billed in a variety of ways, similar to the preconstruc-
tion costs described previously. The contractual relationship between the owner and
construction manager will define how the costs for the project staff will be billed, as
well as which costs are considered part of the overhead and fee, and which ones are part
of the general conditions. Make sure that you have a firm understanding of the terms of
the contract to determine which employees in the home office and their associated
expenses can be billed to the project. Many contracts read that only those employees
assigned directly to the project on a full time basis at the project site can be reimbursed
as part of the general conditions costs. If an employee, such as the project accountant,
is working out of the home office because he or she needs access to the project account-
ing and administrative systems within the company to properly perform his or her work,
then make sure that is provided for in the contract. The CM/GC does not want to be
arguing over such matters during the construction phase, when the project executive
and project manager need to focus their time and energy on getting the project built,
rather than dealing with auditors, lawyers, and contract compliance personnel.

PROJECT CLOSE-OUT PHASE

The close-out phase of a project is a very important phase for the successful comple-
tion and turn over of the project to the owner. It is often not given the attention that it
requires by upper management of a CM/GC. Because of the shortage of qualified
professional personnel available, the CM/GC is often in a hurry to reassign these
personnel to another project, without properly performing the close-out. The same key
staff of personnel, who were involved with the construction phase of the project, should
be involved with the close-out of the project. These personnel may be involved on a part
time basis, as may be required. The CM/GC may have provided excellent services
during the preconstruction and construction phases of the project, and then not per-
formed the project close-out phase in a very competent and professional manner,
especially if the overall general conditions costs for the project have been used up or
exceeded. The owner tends to remember the last items of work performed, and often
the CM/GC is remembered not for the 99 things that the CM/GC did right, but for the
1 thing that the owner perceives the CM/GC did wrong. The CM/GC’s reputation is at
stake, and at the end of the day, the CM/GC wants a satisfied client who will give the
CM/GC a good recommendation and retain the CM/GC for the next project. That is the
best advertising and marketing approach that the CM/GC can have.

A sample organization chart for providing project close-out services is illustrated in
Exhibit 1-9.

Exhibit 1-10 contains a detailed list of project close-out services for a project.