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Fast Track Construction
Is It Too Good To Be True? Can It Really Deliver?

Arthur O'Leary, FAIA, MRIAI
 


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The construction industry is a fertile field for colorful and racy jargon. New words and terms spring up most regularly, usually for the purpose of promoting something or for confusing the issues to gain economic advantage. A stylish new term of the past twenty-five years is Fast Track Construction. It is a no-nonsense term that rolls easily off the tongue and conjures up images of expedition, economy, efficiency, and directness of purpose. The word track connotes a direct, unswerving route to a predetermined destination. The term as a whole promises efficacious and accelerated construction and we can all accept that time is money. But, is it reasonable to expect that fast track construction will always live up to these optimistic prospects?

The answer is a qualified yes. It could work well and often does. But only under ideal conditions. And only when the owner, architect, and contractor all conduct themselves properly and reasonably. Otherwise, the results can be extremely disappointing and distressful to all concerned. According to one realistic construction industry expert, “Experience indicates Fast Track construction will be delayed and cost more than any other method.” (Note 1)

What Is Fast Track Construction?
The normal process of construction scheduling involves the performance of a series of discrete functions, one after the other, in a predetermined sequential order. The customary logical order of these functions is programming, design, governmental approvals, bidding and negotiation, contract award, construction, and finally, completion. This is shown on the first line of the accompanying diagram (Normal Construction Schedule). Each activity is virtually completed before the next may be commenced. To perform all of these functions will take a certain amount of time.

Working Faster. The usual way of shortening the time scale is by increasing productivity, that is, by completing each function as efficiently as possible and starting each new phase immediately upon completion of the preceding phase. Everything is done in proper order and no time is wasted.

Concurrent Work. Another way of saving total elapsed time would be by compression of the time schedule. That is, by overlapping some of the functions, doing two things at the same time. This would be accomplished by starting a new phase of work where possible before the preceding phase is completed. Time saved by concurrent work will accumulate and appear at the end of the construction period in the form of early overall completion.

Organizing the project to produce early completion by the technique of concurrent or overlapping time scheduling is the essence of fast track construction.

How Can This Be Done?
The usual procedure for overlapping functions entails the contractor’s earlier involvement in the project. However, there is no generally accepted standard system or approach. Every fast track project can be different.

Some owners will select and engage a contractor to confer with the architect during the early stages of design. (Note 2) The contractor’s advisory input during the early stages will assist the architect in making practical and economical choices from readily available materials and systems. Architects and engineers would generally profit from the experienced contractor’s review, consultation, advice, and pragmatic judgment.

The contractor then starts producing provisional construction budgets and time schedules that are then continuously refined and updated as more precise design information is simultaneously developed by the architect.

Upon the owner’s approval of the completed Design Development Phase documents, the contractor can start in earnest seeking subcontractor interest and more definitive prices. At this juncture the size and character of the project will have been fairly well determined and described. The architectural, structural, mechanical and electrical systems, materials, and other elements will have been resolved in principle, but the drawings and specifications will not yet be sufficiently advanced for actual construction or for submittal to governmental agencies for their review. Any suggestions to be advanced by the contractor or required by the owner should be made at this time, as it will be simple and economical to incorporate them into the next stage of the architect’s work.

The third and final design stage, the Construction Documents Phase, comprises an enormous amount of coordination, synthesis, and sheer production of documents, both graphic and verbal. It involves the intimate cooperation of structural, civil, mechanical, and electrical engineering and architectural personnel. All of the drawings and specifications must be properly interrelated and consistent. Precise details are being finalized and everything must be technically correct. Changes in the program during this high volume production phase usually are very complicated and therefore costly. They create confusion and delay and significantly increase opportunities for error.

As the construction documents progress, the contractor will be able to monitor the architect’s use of materials and selection of systems and to gradually refine the cost breakdown and time schedule.

The Guaranteed Maximum Price (GMP)
By the time the construction documents are about 60 to 70 percent complete they may be submitted to governmental authority for review, approval, and issuance of building permits. At the same time the contractor can stabilize the breakdown of estimated costs and determine a guaranteed maximum price. As the contract documents are still incomplete, the GMP is necessarily predicated upon the contractor’s insightful assumptions and accurate predictions of what will be included in the final state of the documents. The contractor must have included in the GMP all work that is shown on the drawings and in the specifications at that time, but also that which is reasonably inferable or expected.

If the GMP and time schedule are acceptable to the owner, the contract may be executed and the contractor may start construction as soon as the building permit is issued.

The time compression described in this scenario, shown in the second line of the diagram (Fast Track Construction Schedule), consists of:

(a) The bidding and negotiation period is completely concurrent with the design and governmental approval periods.
(b) The governmental approval period commences before the design period ends.
(c) The construction period commences immediately after governmental approval even though design is not completed.

Faster Track
Even more schedule compression is possible by other variations in technique. For example, by obtaining limited governmental approval of the foundations so they may be constructed concurrently with completion of the construction documents and the governmental review process. This is illustrated in the third line of the diagram (Fast Track Construction Schedule - With Early Foundation Start). This technique carries with it an additional formidable risk: If the building officials, as they continue their structural engineering review, later require any adjustments in the foundation design, it may be costly to correct the affected members in the field if they have already been constructed. This is a normal condition imposed by governmental authority as a quid pro quo for premature or piecemeal approval. In this case all of the time gained could be lost and then some. In addition, the cost of removing or reconstructing the footings or grade beams would be wasted, thereby causing owner dissatisfaction with the stru tural checkers. Accordingly, some jurisdictions no longer allow “foundation only” permits.

There are many other possible variations in arrangement of the work schedule to compress the time scale. The maximum theoretical amount of time that can be saved will vary from one project to another depending upon their individual characteristics.

Selecting the Contractor
In as much as the contractor must be brought in at a very early stage in fast track, it is difficult to obtain genuine general contractor price competition. If bidding competition is an absolute owner requirement, the contractor cannot be selected until after the drawings and specifications are available, at least to the level of 60 or 70 percent completion. This would effectively rule out any contractor input during the early design stages when the most significant costaffecting decisions are being made.

Contractors bidding from incomplete documents will be at a distinct disadvantage. If they price the work to include all that is inferable from the unfinished documents, they will not be competitive with other contractors who infer something less. The bidder who infers the least could end up with the low bid and will almost certainly be later involved in a dispute with the owner as to what was reasonably inferable.

For these reasons, it would make better sense to select a contractor on the basis of comparative experience, reputation, recommendations, and interviews. The price competition at the level of subcontractors and suppliers will normally be quite sufficient to protect the owner’s interests. As a part of the selection process the contractor remuneration system or formula can be discussed, negotiated, and adopted.

An experienced owner may, usually with the architect’s assistance, choose a suitable contractor on whom the owner can rely to be honest and competent and who has the required financial and practical resources to accomplish the assignment. If the owner has serious reservations concerning the contractor’s qualifications or character the contract cannot possibly succeed. Mistrust and suspicion will breed dissatisfaction, and ultimately, unresolvable disputes. Any expectation of saving time by the fast track process will be long gone. There will be only contention, delay, and higher costs, as could have been reasonably predicted.

Owners who require general contractor bidding competition and who cannot abide the uncertainties of bidding from incomplete documents should not get involved with fast track construction.

The Fast Track Contract Form
The contract payment system that is in widespread use in fast track is based upon reimbursement of the actual cost of the work plus a fixed or percentage fee for the contractor. This can be with or without a guaranteed maximum price. (Note 3)

Possibly, the contractor will be paid an additional consulting fee for advisory and cost estimating services during the design period. In this system the construction contract could be executed either before any services are performed or, alternatively, after the GMP is agreed upon, prior to commencement of construction. This could be accomplished by two contracts, the first for advisory and costing phase services and the second for the construction phase, or, if desired, by a single contract cancellable at the end of the advisory service if the construction is cancelled or the owner decides to part with the contractor.

Necessary Adjustments of the GMP and Time Schedule
Although the owner may regard the GMP as inviolate, the contractor will rightly expect it to be appropriately adjusted to reflect any deviations from the drawings and specifications and their reasonable inferences. The contractor will also expect that the contract time will be fairly adjusted to reflect unforeseen occurrences and unbudgeted changes in conditions.

This is an area rich in the probability of misunderstanding. The owner and architect will generally assume that all inferences in the incomplete documents are obvious and should have been understood by the contractor, therefore no change in price or time is expected or justified when the completed documents are gradually, or finally, issued.

Unsurprisingly, the contractor will take an opposing view. When the contractor’s position is found correct by a fair contract administrator or an arbitrator, then the GMP must be raised and the sacrosanct completion date will have been breached. The only practical solution for resolving cost and time overruns at this point is to immediately reduce the scope or quality of the project. This could be a serious disillusionment to an owner who thought the maximum price and time were absolutely guaranteed.

The Architect’s Problems
Expect More Errors. Under normal time scheduling, prudent architects, in consonance with their engineering consultants, take great pains to check their work product in the hope of culling out errors and to make sure that the work of all disciplines is coordinated. Even with the most rigorous reviewing and checking procedures, some errors and anomalies will inevitably slip through.

In the fast track process, incomplete drawings and specifications are incrementally released for bidding, governmental review, and construction. Although architects and engineers should have checked their work meticulously at this point, some errors and omissions will undoubtedly be later uncovered during the completion of the documents and in the field as construction progresses. Also, as the drawings and specifications are being further developed, situations will arise where it would seem advisable to change previously released designs and details.

More Change Orders. To correct errors or to change to more advantageous designs will require more change orders than would be common under normal construction scheduling. This will be an inconvenience to the contractor, sometimes an embarrassment to the architect, and usually added cost to the owner. There is also the added risk of jobsite confusion and construction delay.

Will it Save Time or Money?
Although the Fast Track Construction method has the potential of saving time, there can be no reasonable expectation of always saving money. The monetary saving is primarily in the value of the time saved, if it materializes.

The final construction cost will be about the same as in any other cost plus contract with or without a GMP. However, in fast track contracts the construction contingency allowance must, prudently and realistically, be higher to cover the always expected but unknown costs of erroneous inferences and faulty predictions. So it is distinctly possible that a normal construction schedule with a smaller contingency reserve will produce a lower final total cost. It is also possible that the misunderstandings and erroneous inferences due to incomplete documents inherent in the fast track method will cause a loss of some or all of the overlapping advantages and thus yield a completion date on or after that of a normal time schedule.

When Should Fast Track Be Used?
Fast Track Construction should not be attempted unless the owner is under real pressure to achieve a specific mandatory completion date. The owner, architect, and contractor must all be completely acquainted with the process and must enter into it fully aware of the inherent problems. They must be willing to engage in the give and take of compromise, and to assume reasonable and flexible attitudes. Even with all of the extraordinary efforts expended to achieve the time savings available in fast track construction, it is possible to lose them all in the event of labor disruption, material unavailability, unpredicted inclement weather, fire, accident, earthquake, or any of a number of other unfortunate occurrences. (Note 4)

Notes:
1. H. Murray Hohns, Preventing and Resolving Construction Contract Disputes, Van Nostrand Reinhold Company, New York, 1979, footnote on Page 88. (Emphasis added.)
2. There are three distinct stages of the architect’s design services: Schematic Design Phase, Design Development Phase, and Construction Documents Phase, performed in that order. The work of these phases is somewhat self-descriptive but is fully described in Article 2.4 of the AIA Owner-Architect Agreement, Document B141-1997.
3. A suitable contract form for this application is AIA’s Standard Form of Agreement Between Owner and Contractor, where the basis for payment is the Cost of the Work Plus a Fee with a Negotiated Guaranteed Maximum Price, Document A111-1997. This should always be used in conjunction with AIA’s General Conditions of the Contract for Construction, Document A201-1997.
4. When assessing the probability of uncalculated adversity, one cannot completely ignore the prescient insight of the apocryphal Gaelic lawgiver, who observed, “Anything that can go wrong will go wrong.” (Murphy’s Law)


This article was originally written for California Construction Law Reporter, August 1993. References to AIA Documents have been updated. Additional information on construction contracts, bidding, selecting the contractor, and AIA Documents will be found in “A Guide to Successful Construction - Effective Contract Administration,” Third Revised Edition, by Arthur F. O’Leary, FAIA, MRIAI.



“A Guide to Successful Construction: Effective Contract Administration” by Arthur F. O’Leary, FAIA, MRIAI or “Construction Nightmare Jobs From Hell & How To Avoid Them” by Arthur F. O’Leary and James Acret are available from bookworkz.com or call DCD at 800-533-5680.


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