Remy Edmunds
Within a week of signing the guaranteed maximum price, I was in a meeting watching a team discover, one element at a time, that the project systems we had built over a year of design had not carried over with us into construction. The risk register came first. As the owner, we had kept it, through design, with the estimator. No one had beaten him over the guaranteed maximum price. It was not lost. had stopped,
because no one on the construction side had been told to own it. The information request process was in the same condition: now with real volume and no one staffed to run it. Also the shipping record.
None of this was a failure in the usual sense. Nobody dropped the ball. It had simply never been formally delivered. We have treated the guaranteed maximum price execution as a finish line when it is actually a transfer. When not managed, handovers can cause critical items to be lost.
Construction is not the first industry to learn this. Hospitals studied the problem and found it expensive. A transfer of patients between shifts or units is where the information falls. To address the problem, a 2014 study of nine hospitals created a structured transfer program. It reduced preventable adverse events by 30% and medical errors by 23%, all without making deliveries take longer. Different work, same weak point: delivery.
A capital project has the same exposure. The design produces a set of working controls: a risk register, a decision register, a coordination rhythm and a way in which information moves and is approved. These controls live in documents and also in the heads of the people who built them.
With guaranteed maximum price, people change and the pace changes. Controls that were obvious to the design team are invisible to the build team that inherits them.
The information governance created during design, the data models and accountability workflows that keep decisions traceable, tend to break down when the work is delivered. Capital project research has found that communication has one of the biggest effects on performance, working through team competence. Delivery is where this communication is most likely to break down.
With the design team finished and the construction team ramping up, the owner is the only party present to see how they both work. The builder will maintain its own controls, but these do not automatically preserve the owner’s design history or the open risk position that the owner brings to the build. The builder who follows his own contingency is not the same as the owner knowing what he brings. If the owner doesn’t run the transition, no one does.
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The Simple Reframe
The reframe is simple and I call this oversight resetting my 30-day delivery rule. The time of signing the contract is the time to reset it for construction.
In practice, this requires a short and unglamorous list. Decide now who owns the risk record and how it is reviewed or decide on the record to retire. Customize the request information and send function before the volume peak, not after. Confirm who is driving, who is auditing the coordination meeting, and who is attending, and add it to the calendar before the first crash.
Then forward open design assumptions as named items with the owners so they don’t come back later as change orders. Also, reassert decision rights for the construction phase, because the authority that was clear among a small design group is not clear once the room is filled with new parts.
These steps are easy to skip because each one feels like something that will fix itself and because signing the maximum guaranteed price comes with the comfortable feeling of an ending. The cost of skipping those deliveries shows up a month later as a slow log of information requests, a risk no one saw, a decision that took three weeks when no one knew who owned it.
I’ve started to treat the first few weeks after the guaranteed maximum price like the schedule treats mobilization: as real work with an owner and a delivery, not as a gap between phases. Delivery is continuity and it’s my job as the owner. The window closes faster than it seems. Delivery is cheap if you manage it and expensive if you take it on. The maximum guaranteed price assigned seems to be the end of the hard part. For the owner, it’s where the project keeps its grip or quietly loses it.
