Category: Industrial & Manufacturing

Lump Sum General Contractors… Yes or No?

Posted on January 29, 2024

When contracting for construction utilizing the CMAR approach most owners ask themselves if agreeing to a lump sum for general conditions type cost is the best contracting method. While there is not one answer to all questions, there should be a discussion of the pros and cons associated with payment plans for general conditions type costs.

Where to Start…

A great place to start is analyzing the reasons for selecting a fixed amount for GCs in the first place. Are these types of costs difficult to review, in that there are many small expenses? Are some of these costs difficult to understand, such as payroll burden and insurance? Might some of these costs, such as supervision and management, be subjective? Are we trying to eliminate the need to evaluate subjectivity?

Secondly, if we are going to specify a fixed amount for GCs, we must define General Conditions. Defining anything labeled as “General” takes work and specificity in order to ensure understanding.

Because there is no one “correct” approach, the question should not be binary (yes or no). There is a third option, Not to Exceed (NTE). NTE can be a good option in that the sum cannot be higher than, but could be less than, and can also be reviewed or audited if needed.

Factors to Consider

Without writing a dissertation on each of these points, it is important to consider problems that might arise from the lump sum GC’s method, along with other relevant factors.

Sure, invoices take time to review, and GC’s costs come with a lot of invoices. However, in some cases, not all invoices must be reviewed. Having the ability to review, but not the requirement, may be helpful.

Getting the lowest GC’s bid is occasionally a good thing, but having the best CM supervision is almost always a good thing. How many projects have gone awry because of excessive supervision or overly qualified personnel? A low bid for GCs (at least 50% complete supervision and management) positively correlates to less supervision and less experienced personnel. Incentivizing less supervision and experience is not our goal, but it may be the result.

There can be a case for certain types of GC’s costs being subjective. Mostly, off-site vs. on-site persons as reimbursable. This can be mitigated by making the dividing line clear in your contract and including that contract in your RFP.

In addition to the possible misaligned goals of the owner and CM with low bid GCs, another result of an LS GC’s approach could be a CM shifting GC’s type costs to the Cost of Work, either in a subcontract or in self-performed work.

Transparency is Key

Lastly, what starts as fixed, doesn’t always remain fixed. Having full transparency to actual costs when a claim for additional GCs arises might be helpful.

When we have these discussions (which are quite frequent), we agree with the CM that the Lump Sum is not adjustable. This, however, does not mean that it is not auditable. Also, just because the CM (at the moment) might think that certain costs are not reimbursable doesn’t mean that they are not project-related records that are auditable by the Owner’s accountants.

Why Does this Matter?

You may ask, “Why do we care, as long as we are not being charged any more than we agreed to and if they aren’t going to bill us that cost?” There are many reasons, including:

Credits related to the reimbursable Cost of Work may be miscoded to the LS or not reimbursable job cost (accidentally, of course), thereby inflating the Cost of Work.

Costs that are to be apportioned to the lump sum and to the reimbursable cost may only be charged to the reimbursable cost (again, an oversight). Having access to all the cost records would make such errors easy to spot (Dumpsters for demo work vs. dumpsters for new construction trash, where demo work is being self-performed on a lump sum basis).

Costs that are charged to non-reimbursable may point to other errors, like consultants being billed as employees (at fixed labor rates), or rental equipment from third parties being charged as if it were owned by the CM.

Illegal expenditures may be hidden in LS or non-reimbursable job costs.

As you are contemplating the above, also contemplate that well over 50% of the time, a review of the project records designated by the CM to be LS or not reimbursable indicates that credits are owed to reimbursable Cost of Work that would have not been discovered otherwise.

HPM Johnson Brings Holistic Program Management Services to Georgia

Posted on November 29, 2022

HPM and Atlanta-based Johnson Construction Services have announced a structured joint venture as HPM Johnson. The strategic partnership delivers holistic and integrated program management, flexible and scalable owner’s representation, and a range of services across the construction lifecycle for new and ongoing projects throughout the Atlanta metropolitan area, throughout Georgia and the Southeast.

Dedicated to all aspects of program management, HPM Johnson provides assessment, planning, contracting and procurement, design and construction management, project controls and move and transition coordination — through to audit, occupancy and closeout. Its approach to program management incorporates a cyclical pattern of assessment and planning to bring about a more effective and efficient program management plan, and ultimately save time and money for its clients.

“Both individually and collectively, the team behind HPM Johnson already possesses a proven track record of program management triumphs within the Atlanta market,” said Johnson Construction Services President and CEO Artis Johnson, an Atlanta native. “Our advantage now lies in our partnership’s ability to execute projects of any size or complexity, while offering access to management and leadership only a firm our size can offer.”

Johnson continued, “Relationships are the driving force behind our business, and our purpose is to represent the interests of owners and bring home success for our clients.”

HPM Johnson brings a combined 55 years of program management experience to Metro Atlanta, having worked with several high-profile clients in the market. Johnson Construction Services was founded in Atlanta in 1993, with a portfolio of projects ranging from education facilities to historic preservation projects. HPM originated out of an 80-year-old Hoar Construction and began our owner’s representation services more than 25 years ago, serving K-12, higher education, local and municipal entities, industrial and manufacturing, and additional sectors throughout the Southeast. After connecting and discovering similarities in each company’s core values and business approaches, HPM President Ryan Austin and Johnson decided to merge services in the Atlanta area and began pursuing partnership opportunities in early 2022.

Should You Consider a Specialist for Your Construction Audit?

Posted on October 27, 2021

By Vinson Chapman, Vice President, Audit & Contract Services

Auditing construction contracts can be complex. The expertise involved is significantly different than typical audits performed by CPAs and involves evaluating subjective estimates, identifying ambiguous terms of the contract, and noting contractual incentives where the owner’s and the general contractor’s interests may not be aligned. A construction audit also requires obtaining and evaluating all the appropriate evidence to support the audit findings. This is not legal work or work performed by an architect.

A detailed analytical review of completed contracts and contracts in progress will provide meaningful information and focus on potential problem areas. Our Construction Audit and Contract Services combine the skills of owner’s advocate, owner’s representative, program manager, and construction auditor.

Case Study Example

In the case of one independent K-12 school district in northeast Texas, the review of an extension of time by the general contractor/CM and a general financial audit required the expertise of HPM’s hybrid Contract Services, which included both project management and audit expertise.

When the GC/CM fell behind on schedule, their default was to request additional time through weather delays in order to avoid liquidated damages and redirect attention to the reality of the problem areas.

The project management audit review of the contract language and the potential weather impact on the critical path of the schedule resulted in the following:

The contractor did not provide the required documentation during construction for their intent to make a claim for more time per the contract.
The contractor did not provide evidence that there were abnormal (greater than average rain days) periods of weather. This data is measurable and a typical required deliverable in a change order request by the GC/CM.
The contractor’s critical path schedule was not affected by any claimed abnormal weather after review of the installation of work.

Project management issues were the reason behind a significant portion of the Contract Services Audit resulting in a credit back to the school district from the General Contractor/CM. Additional monies were recovered from the financial audit resulting in a total of over 5% of the construction contract value being returned to the district.

This example is somewhat typical of our standard audit findings of between 1% and 5% of the contract value. Obviously, savings of this type are well in excess of the fee to perform these hybrid services. The expertise for these services was not available from the district’s attorney or architect, and without the added HPM support, the district couldn’t defend the GC/CM’s requests. Our specialized knowledge and experience made it possible.

HPM provides peace of mind and confidence you paid the right price for your construction spend.

HPM’s audit service professionals offer expertise to secure fair negotiation and billing for client contracts. We perform comprehensive reviews of job costs that often lead to a substantial net savings of project costs. As always, if we can be of service, please do not hesitate to reach out. Click the button below to be directed to our page.

Audit and Contract Services

HPM Talks Webinar: Emerging Leaders

Posted on July 20, 2021

HPM’s Emerging Leaders Program offers undergraduate students a unique perspective of the planning, design, and construction process through hands-on experience at our projects across the country. Medora Gaddes oversees the program and, as a former HPM co-op herself, recognizes the immense value of experiential learning. During this HPM Talks webinar, Gaddes and co-ops Iriana Molusky and Ben Smith discuss their experience in the program and what they’ve learned along the way.

Webinar Details:

July 29, 2021 at 11AM CST

View the Recording

MEET THE HOST

Medora Gaddes, Assistant Project Manager and Talent Development Coordinator at HPM
Medora is not only an Assistant Project Manager at HPM, but also our Talent Development Coordinator and heads up the Emerging Leaders Program. She herself was a co-op with HPM before becoming a full-time employee. After graduating from Auburn University with a degree in civil engineering, she joined HPM as a project engineer and as a full-time HPM team member in the Huntsville office.

Learn More About Our Emerging Leaders Program

Q&A from Webinar

We heard about precon and program management. What is field coordination like as a co-op?

Ben Smith: During the field rotation as a co-op, a day usually consists of walking with the Field Coordinator (FC) as he makes his rounds around the job site to track the progress of construction and look for items that might need to be addressed with the owner/general contractor. For me, this was a time to pick the brain of the FC and ask as many questions as possible about what is happening on the job site and why/how they are doing it. You can be given miscellaneous tasks that help the FC with his job. For instance, one of the tasks I was given was keeping track of the progression of concrete pours and ceiling paint in a large warehouse. The FC used this information to update the weekly report that was sent to the owner. Other things I experienced were on-site meetings with the general contractor and the owner, taking meeting minutes to send to the HPM team on your specific project, site walks with the general contractor and owner about issues that need resolving, and much more. The field rotation is a good way to get a feel for what a construction site looks like and how things are run during construction both from the Construction Management side and the General Contractor side of things.

2. My major is Architectural Engineering. I have learned that very few companies are hiring ArchEs or understand what ArchE is. Does HPM recruit ArchE’s and how are they used?

Medora Gaddes: HPM is less focused on your specific major and more focused on what you are interested in doing upon graduation. Obviously your major plays a role in that, but I’ll give you an example. I have a bachelor’s in civil engineering and if I wanted to do structural design as a career path, HPM would likely not be the best fit for my interests because HPM does not have engineers designing and stamping drawings. HPM has been a good fit for me since I was interested in the management of design and construction upon graduation. My civil engineering degree has supported my ability to manage, understand, and communicate the civil aspects of design and construction. So ask yourself if you want to work for a company that will utilize the technical skills of architectural engineering and likely the skills you’ve learned in school? Or do you see your architectural engineering degree as a foundation or launching pad into a different career path? I think every engineer can ask themselves this question and it will help you be intentional with your job search. Does HPM hire architectural engineers who are going to use their technical engineering skills? Not at this time. Does HPM hire architectural engineers interested in the management of design and construction? Absolutely!

Co-Ops Learn to Lead Through Summer Seminar

Posted on July 7, 2021

HPM’s Emerging Leaders program provides undergraduate and graduate students the opportunity to explore a career in program management while gaining real world experience. As they work alongside industry experts, these students discover the business fundamentals needed to accelerate their careers. Last week, our co-ops gathered at our Birmingham office for the Emerging Leaders Summer Seminar, a two-day learning-to-lead workshop.

Assistant Project Manager Medora Gaddes oversees HPM’s talent recruiting process and the Emerging Leaders program. As a former co-op herself, Gaddes recognized that student employees are not only interested in their role or assignment, but in the company’s leadership and goals, as well.

“When you go to work anywhere, there is always a learning curve of figuring out what a company does, who runs the company and how they run it, and figuring out how that aligns with you as an individual,” she said. “I want our Emerging Leaders to get ahead of this while they are still in school and completing their internship or co-op rotation with us. This is important as they navigate the big questions of what do I want to do and what type of company do I want to work for when I graduate.”

During the Summer Seminar, attendees gained invaluable insight from members of our leadership team and sharpened their own leadership skills through team activities and goal planning.

“I had a lot of takeaways from the Summer Seminar, but my biggest take away was the art of leadership,” said Ben Smith, an HPM co-op from the University of Alabama. “We were not only taught what it means to be a leader, but how we can be leaders in the workplace and in our everyday lives. This seminar taught us a lot about ourselves and how we can utilize our skills and personalities to lead in a way that puts our team and others ahead of ourselves.”

HPM has offices and projects across the country, so the seminar also provides the co-ops with an opportunity to network with students who might not be assigned to a project in their area.

“I would encourage all co-op students to attend the summer seminar as it is a professional development opportunity that is relevant to our co-op and our academic success,” said UA student Iriana Molusky. “Spending time with other co-ops was a one-time opportunity to meet and learn from each other.”

Gaddes hopes seminar attendees will continue to build on what they learned and use their new leadership skills no matter what career path they choose.

“I think we all can look back on our early leadership growth and identify both people that invested in us and skills that we wish we had developed earlier,” Gaddes said. “I hope that through the seminar, the Emerging Leaders start connecting with like-minded individuals, build relationships with leaders in the industry, and sharpen leadership skills that will kickstart their personal growth.”

Interested in HPM’s co-op and internship program? Learn more on our Emerging Leaders page.

HPM Emerging Leaders

HPM Selected as Program Manager for Buffalo Rock Distribution Hub Expansion

Posted on January 7, 2021

HPM will serve as the program manager for Buffalo Rock’s 1 million-square-foot expansion in Birmingham, Alabama. It is the soft drink distributor’s largest infrastructure investment to date. This includes the renovation of an 895,000-square-foot warehouse and an approximately 120,000-square-foot office building, which will serve as the central distribution hub for the premier provider of food and beverage products. HPM’s Senior Program Development Manager Bruce Quisno and Project Manager Jeremiah Owen will oversee the project.

Buffalo Rock acquired the properties located at 400 Industrial Drive and 800 Lakeshore Drive earlier this year and recently announced plans for the massive expansion, which includes a $75 million investment in new technologies, infrastructure improvements and property renovations, leading to the creation of up to 50 new jobs in the initial phase of the project. As part of a strategic growth initiative to expand over the next decade, these state-of-the-art upgrades will double Buffalo Rock’s output, provide 90 loading docks, reduce the number of touches and improve efficiencies.

This office acquisition will significantly improve employee experience, increase productivity and allow for future growth. The renovated facilities are expected to be operational by the fall of 2021. Hoar Construction and GMC have partnered to be the lead Design-Build team for the project.

“Our team selected HPM for many reasons, but most notably because they demonstrated the ability to offer a full suite of planning solutions that carried us from acquisition to operation, and we couldn’t be happier with their performance at this stage of the journey,” said Matthew Dent, Buffalo Rock President and Chief Operating Officer. “We are not only moving with speed, but we are considering all options and addressing budget questions in real time as we bring this campus restoration to life. I am confident our employee-partners will love the experience this investment creates, and I am certain our customers will see the benefits this investment brings them in terms of service and quality.”

Buffalo Rock first tapped HPM to oversee programming and planning for the initial stages of the project. HPM led site analysis efforts, including a site assessment involving environmental studies and the hiring of consultants to perform upfront due diligence, which ultimately enabled Buffalo Rock to purchase the property. By performing a cost analysis and identifying which areas of the project to prioritize, HPM helped Buffalo Rock and its partners identify and control costs in planning, condensing the overall project timeline.

“I’m pleased with the strategic planning services we were able to provide Buffalo Rock as the company scouted various sites for its expansion, which led them to finding the ideal location off of Lakeshore Drive in Birmingham,” said HPM’s Quisno. “HPM’s expertise in preconstruction planning and site analysis positioned us as the perfect partner to ensure that every detail of the new site was carefully scrutinized and accounted for before any decisions were made, and now we’re ready to oversee the execution of Buffalo Rock’s expansion plans. I know our team is excited to see Buffalo Rock’s growth goals realized, and we’re honored to serve as a strategic partner for a company that continues to invest in Birmingham by expanding its operations here, creating jobs and partnering with the City to develop our community’s workforce.”

This assignment adds to our growing portfolio of clients and projects within the food and beverage industry, including the recent expansion and improvement of Royal Cup Coffee’s manufacturing facilities in Birmingham. The project received a Manufacturing Innovation Award from ProFood World in 2019.

HPM’s Jay Daily Joins BIO Alabama Board of Directors

Posted on January 6, 2021

HPM Vice President of Business Development Jay Daily has been named to the Board of Directors for BIO Alabama, a Birmingham-based organization that serves as the leading advocate for Alabama’s bioeconomy. BIO Alabama represents the state nationally and internationally as Alabama’s affiliate of Biotechnology Innovation Organization (BIO), the preeminent national association for biotechnology companies.

“When I learned about BIO Alabama and its mission to promote bioscience innovation, I was inspired by their dedication to the state of Alabama,” Daily said. “I’m excited about what HPM can bring to the group. The members of this board have diverse backgrounds and expertise, and we can promote our successes as a state in order to encourage growth in the biotechnology industry.”

BIO Alabama represents the state’s bio-related industries, clinicians, research scientists and business professionals who work together to foster the life sciences in Alabama. Its mission is to promote biotechnology innovation by creating a favorable scientific, business and legislative environment that will facilitate the growth of emerging and existing companies while attracting new biotechnology opportunities to Alabama. They also seek to increase public awareness regarding the potential impact on quality-of-life and the state’s economy.

“HPM has a role to play in ensuring that all of the necessary resources are available for existing industries to be successful and continue to grow,” Daily said. “Cutting edge innovation is happening in Alabama, and we want to help the state attract new companies to take advantage of the wonderful resources that we have here.”

HPM Talks Webinar: FedEx Explores the Synergy Between Human and Capital Resources

Posted on October 22, 2020

How do HR and Facilities Join Forces for the Next Normal in Work Places and Spaces?

The impacts of COVID-19 have been dramatic for companies around the world. At HPM, we’re inspired by our clients who have risen to the occasion with creative ways to ensure the health and happiness of their customers and team members. Our next HPM Talks will feature our client, Donna Cook, VP of Properties and Facilities for FedEx Express, and Robbin Page, VP of Human Resources for FedEx Express, who will join me for a discussion of how HR and facilities colleagues are galvanizing their perspectives as employees return to work. We will discuss the long-term effects on work places going forward, as well as the beneficial ways in which FedEx has evolved during the pandemic.

View Recording

Speakers:

Donna Cook
Vice President, Properties and Facilities, FedEx Express

Donna Cook has more than 37 years of experience in the transportation industry. In her current role, Donna is responsible for real estate and airport development, construction project management, sort design, facility planning, and sort and facility maintenance and services. Donna was appointed to this position in February of 2019. Before assuming her current position, she held several other leadership and management positions, including Vice President, Global Trade Services, where she oversaw U.S. clearance services, regulatory and carrier compliance, brokerage support, and U.S. port operations. Donna is a two-time recipient of the prestigious FedEx Five Star Award, the company’s highest level of recognition. She also has received the FedEx Express Quality Driven Management Silver Cup Award and the Purple Promise Quality Award.

Robbin Page
Vice President, Human Resources, FedEx Express

Robbin Page has leadership responsibility for H.R. Systems, Training & Development, Global Compensation, and Safety, Health & Fire Prevention. She began her FedEx career with the Legal Department in 1996. In 2011, she was promoted to Managing Director, Legal Counsel. Her years of dedicated experience in Legal with FedEx Express have given her an exceptional depth of knowledge in all types of employment matters, policies, strategies and situations. In the past 22 years, she has worked on virtually every major Human Resources project implemented at FedEx Express. Robbin is a 3-time winner of the FedEx Five Star Award. This award is the most prestigious honor a FedEx team member can receive. It recognizes those team members whose accomplishments demonstrate innovation, collaboration, efficiency, and profitability.

Andi Sims
Vice President, Marketing, HPM

Andi Sims is the Vice President of Marketing for HPM, a national program management company which leads clients in the planning, design and construction of capital building projects. Andi plays a dual role in business development and marketing for HPM and serves on the executive leadership team for the company. In addition to forging relationships and leads in new industries and clients for HPM, she serves alongside account teams to ensure service and continuity with original clients. Andi leads a staff who are responsible for the comprehensive marketing, communications and public relations efforts to enhance the company’s image and position among audiences and markets as well as to achieve clients’ objectives with stakeholders and the public for capital building programs and projects. She was elected as Vice President of Marketing & Communications for the International Aviation Women’s Association (IAWA), and she also serves on the board for the Southern Automotive Women’s Forum.

Soaring to New Heights with a Preconstruction Veteran

Posted on November 5, 2019

In an effort to maximize the company’s effectiveness and efficiency in its preconstruction services, HPM recently hired Del Buck as the Vice President of Preconstruction. In this position, Del is responsible for overseeing the preconstruction services of all HPM program management assignments.

Del has an extensive history of more than 30 years in the AEC industry, including both national and international leadership in preconstruction. His construction experience reaches to Africa, South America, Europe, Nepal, China, South Korea, New Zealand, and the Middle East. As a result of his work experience and attendance at both the American Institute of Estimating and the FMI Leadership Program, Del possesses the expertise to lead HPM in its preconstruction services.

Buck’s extensive history in preconstruction services includes involvement in multiple real estate sectors. In his preconstruction experience, he has managed an annual project bid volume totaling more than $3 billion for assignments in sectors such as retail, higher education, industrial, multifamily, K-12, medical, and government.

“Del’s problem- solving skills, attention to detail, and organizational skills make him a fit leader in HPM’s preconstruction services,” stated Greg Ellis, Vice President of Program Development. Del stated, “The duties of my position match up well with the experience I gained throughout my career as a general contractor, and the ability to leverage that with HPM’s vast database of pricing technology will allow us to offer custom-produced services tailored for each owner’s budget and scheduling requirements.”

One of HPM’s core values is that each team member strives to be good stewards in terms of time, energy, and resources invested in projects. “Del’s breadth of knowledge and experience in the industry allows HPM to continue to strive to meet this goal in order to efficiently serve the company’s clients. His goal of relentless improvement and efficiency in preconstruction services will contribute to the company’s exceptional performance in program management,” stated Greg.

“HPM considers Del to be an asset to the company, in terms of its growth and success. We believe Del’s ability to see through the GC lens combined with the advanced estimating technology and pricing databases at HPM will give us a competitive edge that cannot be replicated anywhere else.”
Mike Lanier, HPM President

Read about our other recent preconstruction expert hires

HPM’s Beginnings: A History Built on Standing in the Gap (Part Two)

Posted on May 15, 2019

By Mike Lanier, President

Welcome back as we turn back time with our founding president reminding us in this two-part series about how HPM was founded and how it continues to grow. You can read Part One of this series posted earlier on our blog.

See Part One Here

In 2013, HPM took to the skies and provided the much-needed boots on the ground in the US for the global aerospace company, Airbus. Our expert staff members embedded themselves within Airbus and became the client’s eyes and ears during the design and construction of their first US manufacturing facility, which has led us to other clients in the aerospace and aviation industry.

Along the time that HPM began making its impression in several industries signaled the time for the company to be organized into its own entity, and HPM was officially structured into an LLC, branded itself apart from the construction company, and offered services separate from industry norms.

A few years ago, HPM represented the City of Birmingham by managing the design and construction of a new minor league baseball stadium right in the middle of downtown which sparked a revitalization of the area. Now, we have lead the building of several new major and minor league baseball stadiums across the Southeast as well as numerous collegiate sports venues across the US.

As a part of our growth strategy, HPM acquired a construction audit and contracting firm which serves an impressive list of clients including Google, Caesar’s Entertainment, Southwest Airlines, Facebook and Landry’s. The team criss-crosses the country involving themselves in clients’ contract negotiations; conducting interim and final audits to determine reimbursable costs, fees, savings and savings allocations; reviewing pay applications; calculating scheduled damages; and managing claims analysis and defense. We like to say that our audit and contract services provide clients with confidence knowing you paid the right price on your construction spend.

Today, HPMers serve global clients across the US from offices and project sites dotted throughout the country. Our clients continue to work with us on new projects because we have created deep, long-lasting relationships, and we continue to attract innovative and passionate talent because our work and our teams are meaningful, interesting and fun!

HPM was founded by leaders for leaders who lead at every level. We strive to be the perfect partner in every way so that our clients’ organizations achieve success.

My talented colleagues come from all walks of life and expertise – engineers, builders, estimators and designers work alongside accountants, business managers, communications professionals and administrative experts. Every role is important in HPM’s success and our clients’ success.

I believe HPM employees are relationship-driven, problem solvers, and good stewards. We strive to have purpose in our lives and do the right things for our clients and our community. My colleagues take the time to truly get to know our clients and their businesses to provide that ultimate form of servant leadership – the trusted advisor.