Construction Contract Administration

Issues that arise during the CCA phase can effect the overall profitability of a project. The CCA phase can be demanding on large, complex projects. To successfully deliver a project, a significant amount of time and effort may be necessary. Unfortunately, the budget can be tight during the CCA phase and it may be difficult to request extra fee from an owner being that the CCA phase is at the end of the project and the owner's budget is diminished.  Here is a list of some causes that affect project profitability during CCA:

1. Fees not aligned to scope of work during contract negotiations.
1. Underestimated fees for the CCA phase due to unclear or misunderstood scope.
2. Optimistic work plan did not budget enough hours.
3. Owner unwilling to compensate for adequate hours. Owner may not be convinced of the value architects provide during the CCA phase
4. Onerous contractual terms/ client processes required more hours than anticipated
5. Remaining fee is insufficient.  The bulk of fees were spent during the design phase and there isn't enough fee remaining to budget adequately for the CCA phase.
2. Scope creep
1. Client design changes require additional time and effort of architect
2. Client demands architect manage more of the CCA process
3. Onerous GC requests
1. GC requests architect to coordinate work of subcontractors
2. Excessive substitution requests. Each requires time for the architect to review and evaluate.
4. Incomplete submittals
1. Missing or uncoordinated shop drawings
2. Unanswered questions from subcontractors to GC are directed to architect
5. Inefficiency of GC
1. Inexperienced GC project engineers. Architect may need to spend time assisting project engineers to maintain the pace of construction
2. Turn over of GC's staff. The loss of project knowledge on the contractor's side could cause the architect to revisit already resolved issues
3. Excessive/unwarranted RFI's. Inefficient use of architect's time spent on questions related to scope already clearly covered in the contract documents
4. Incomplete work at Substantial competition. This can cause inefficiencies in punch list review.
6. Schedule delays
1. Bid phase extended due to issues in bid/award process.
2. Construction schedule delay/extension. This can impact wage escalation and extend the architect's time on the project.
7. AHJ inspection issues. Inspector may be overly demanding and interpret the code differently than anticipated.

There are specific strategies to help mitigate some of these issues. However, having a discussion with the client and contractor early on to managing the expectations can help avoid some of these issues altogether.

What are other challenges that architects face during CCA that can impact profitability?

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Tyler Schaffer AIA
LMN Architects
Mukilteo WA
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If we have inefficiencies on our side; such as inexperienced staff, whereby that Arch. staff isn't familiar w/ the Contract (to understand what should be add services or what they should NOT be doing), the process etc... so that falls on us I suppose! Doing too many site visits (which may be in excess of the contract, but no one looked).  Under #2 - In Design/Build some Owners think we can re-design on their whim. This can also happen on DBB work as well. But you made a great list! Kudos!

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Janene Christopher
Steinberg Hart
San Diego CA
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Tyler: Excellent post. Just one practice issue to add to your list: Adequate development and use of project specifications. If the specifications are well prepared and used by the Architect's CCA staff, they support the Architect in controlling excessive RFIs, inadequate submittals, and improper substitutions, all of which eat into the Architect's CA phase fee budget. Staff need to know the extent of their power in doing this - they must be well trained. It's important to start off on the right foot at the preconstruction conference by making it clear that all parties need to read and abide by the specifications. Follow this with emphasizing the contract document requirements during preinstallation conferences. But there must be adequate fee for coordinating documents and thorough CA practices, and that falls back on the partner in charge and the owner coming to the understanding of their importance.

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Philip Kabza AIA
SpecGuy Specifications Consultants
Mount Dora FL
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This is a great list, Tyler. Janene and Philip also touched on important points - Arch. staff need to be equipped with the knowledge and tools to be effective and efficient.

Other challenges, some similar to what was mentioned - 1) Items submitted as an RFI that should be a submittal or substitution request (creates duplication), 2) Reviewing submittals that are not required (this goes back to knowing and enforcing the specification requirements), 3) Attending unnecessary and inefficient meetings, 4) Architect not having good organization or workflow (keeping accurate logs, filing, making it easy to quickly find things and know what tasks are open and when they are due), 5) Architects (and consultants) who don't fully answer the question or complete the task, 5) Consultants who are not timely or thorough. 6) Missed coordination by the design team (it usually takes more effort in CCA to resolve than during design).

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Sharon Day AIA
GWWO Architects
Baltimore MD
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Sharon, let's tack on to your #6 "Inadequate time, fee assigned, and effort in final QC and coordination of all drawings and specifications including consultants."

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Donald Koppy
Mead & Hunt
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Original Message:
Sent: 05-20-2024 07:26 AM
From: Sharon L. Day AIA
Subject: CCA Phase Profitability Impacts

This is a great list, Tyler. Janene and Philip also touched on important points - Arch. staff need to be equipped with the knowledge and tools to be effective and efficient.

Other challenges, some similar to what was mentioned - 1) Items submitted as an RFI that should be a submittal or substitution request (creates duplication), 2) Reviewing submittals that are not required (this goes back to knowing and enforcing the specification requirements), 3) Attending unnecessary and inefficient meetings, 4) Architect not having good organization or workflow (keeping accurate logs, filing, making it easy to quickly find things and know what tasks are open and when they are due), 5) Architects (and consultants) who don't fully answer the question or complete the task, 5) Consultants who are not timely or thorough. 6) Missed coordination by the design team (it usually takes more effort in CCA to resolve than during design).

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Sharon Day AIA
GWWO Architects
Baltimore MD
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Most architects who look into this issue are focused on how to be more efficient and to reduce the impact that elements without our control have in our workload.  While this is very important, it is all "after the fact".  There is something, however, that we can do way before the construction fence goes up:  Negotiate a better CA fee.  

Many architects calculate their CA fee on a percentage of their architectural fees, which are frequently tied to the construction value.  This is entirely inadequate, as CV does not drive but a minuscule part of the CA effort.  To estimate more accurately what the cost of providing CA services may be, it is helpful to think about it in two segments:  Office and Field.  And to compute how many hours these two efforts may take, consider these items of work:

For Office-related work, three items carry the lion share of the workload:

1. Submittals:  Read your own spec and calculate how many submittals you are asking the contractor to produce, and then assign an average review time per submittal (3-4 hours, including processing?).  don't forget to account for the time required to review and process the submittals reviewed by your subconsultants.
2. RFI's: Assign a number of RFI's per day of Construction Schedule (1.5-2.5 RFI's/day?) based on how complex your project is and how experienced the team who produced the CD's was.  Then assign an average review and processing time per RFI (2-3 hours?).  Include time to review the RFI's answered by your subconsultants.
3. Applications for Payment: 1 per month of schedule, at 2-3 hours per month, depending on how large and complex the pay app is.
4. Change Orders are not supposed to cost you anything, because you are supposed to bill your client for the effort.

For Field Work

1. Site visits and OAC's:  Estimate how many of these there are going to be, and write them into the contract.  Then estimate the time that it will take to accomplish them, including travel time, and the time it will take to write your field visit report and write/review the meeting minutes
2. Punch list: How many people, for how many days?  Include travel, and punch list preparation.

These five tasks constitute 75-80% of your CA hours.  So multiply your total by 1.25-1.33 and you'll have a good estimate of the hours it is likely to take you to do CA.

Then ask your Client to pay for it on an hourly basis, with a not to exceed amount.  

And take a look at the list above, and realize that none of these items of work are driven by the construction value, which is a very poor stand-in for duration, complexity, quality of the CD's, distance to the site, etc. 

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Gustavo Lima AIA
Gustavo A. Lima Architecture, PC
Williamsville NY
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Mr. Lima;

Excellent recommendations.  Far too many AE firms try to cheat on the CCA budget, as do some Owners.  In my 5 decades of experience the projects where the AE had minimal (or no) scope of services during construction inevitably had the most construction phase problems.

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Ellis Whitby AIA Member Emeritus
Alexandria VA
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Original Message:
Sent: 10-25-2024 10:09 PM
From: Gustavo A. Lima AIA
Subject: CCA Phase Profitability Impacts

Most architects who look into this issue are focused on how to be more efficient and to reduce the impact that elements without our control have in our workload.  While this is very important, it is all "after the fact".  There is something, however, that we can do way before the construction fence goes up:  Negotiate a better CA fee.  

Many architects calculate their CA fee on a percentage of their architectural fees, which are frequently tied to the construction value.  This is entirely inadequate, as CV does not drive but a minuscule part of the CA effort.  To estimate more accurately what the cost of providing CA services may be, it is helpful to think about it in two segments:  Office and Field.  And to compute how many hours these two efforts may take, consider these items of work:

For Office-related work, three items carry the lion share of the workload:

1. Submittals:  Read your own spec and calculate how many submittals you are asking the contractor to produce, and then assign an average review time per submittal (3-4 hours, including processing?).  don't forget to account for the time required to review and process the submittals reviewed by your subconsultants.
2. RFI's: Assign a number of RFI's per day of Construction Schedule (1.5-2.5 RFI's/day?) based on how complex your project is and how experienced the team who produced the CD's was.  Then assign an average review and processing time per RFI (2-3 hours?).  Include time to review the RFI's answered by your subconsultants.
3. Applications for Payment: 1 per month of schedule, at 2-3 hours per month, depending on how large and complex the pay app is.
4. Change Orders are not supposed to cost you anything, because you are supposed to bill your client for the effort.

For Field Work

1. Site visits and OAC's:  Estimate how many of these there are going to be, and write them into the contract.  Then estimate the time that it will take to accomplish them, including travel time, and the time it will take to write your field visit report and write/review the meeting minutes
2. Punch list: How many people, for how many days?  Include travel, and punch list preparation.

These five tasks constitute 75-80% of your CA hours.  So multiply your total by 1.25-1.33 and you'll have a good estimate of the hours it is likely to take you to do CA.

Then ask your Client to pay for it on an hourly basis, with a not to exceed amount.  

And take a look at the list above, and realize that none of these items of work are driven by the construction value, which is a very poor stand-in for duration, complexity, quality of the CD's, distance to the site, etc. 

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Gustavo Lima AIA
Gustavo A. Lima Architecture, PC
Williamsville NY
------------------------------

Great insight, Gus. Can you clarify what you mean by "4. Change Orders are not supposed to cost you anything, because you are supposed to bill your client for the effort."? I'm thinking about contractor change orders and reviewing their cost proposals which often is a part of our required tasks, so I am not understanding how this wouldn't be included in what you estimate in your budget. Do you mean you are already billing the owner for this time if you are hourly? 

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Sharon Day AIA
GWWO Architects
Baltimore MD
------------------------------

Original Message:
Sent: 10-25-2024 10:09 PM
From: Gustavo A. Lima AIA
Subject: CCA Phase Profitability Impacts

Most architects who look into this issue are focused on how to be more efficient and to reduce the impact that elements without our control have in our workload.  While this is very important, it is all "after the fact".  There is something, however, that we can do way before the construction fence goes up:  Negotiate a better CA fee.  

Many architects calculate their CA fee on a percentage of their architectural fees, which are frequently tied to the construction value.  This is entirely inadequate, as CV does not drive but a minuscule part of the CA effort.  To estimate more accurately what the cost of providing CA services may be, it is helpful to think about it in two segments:  Office and Field.  And to compute how many hours these two efforts may take, consider these items of work:

For Office-related work, three items carry the lion share of the workload:

1. Submittals:  Read your own spec and calculate how many submittals you are asking the contractor to produce, and then assign an average review time per submittal (3-4 hours, including processing?).  don't forget to account for the time required to review and process the submittals reviewed by your subconsultants.
2. RFI's: Assign a number of RFI's per day of Construction Schedule (1.5-2.5 RFI's/day?) based on how complex your project is and how experienced the team who produced the CD's was.  Then assign an average review and processing time per RFI (2-3 hours?).  Include time to review the RFI's answered by your subconsultants.
3. Applications for Payment: 1 per month of schedule, at 2-3 hours per month, depending on how large and complex the pay app is.
4. Change Orders are not supposed to cost you anything, because you are supposed to bill your client for the effort.

For Field Work

1. Site visits and OAC's:  Estimate how many of these there are going to be, and write them into the contract.  Then estimate the time that it will take to accomplish them, including travel time, and the time it will take to write your field visit report and write/review the meeting minutes
2. Punch list: How many people, for how many days?  Include travel, and punch list preparation.

These five tasks constitute 75-80% of your CA hours.  So multiply your total by 1.25-1.33 and you'll have a good estimate of the hours it is likely to take you to do CA.

Then ask your Client to pay for it on an hourly basis, with a not to exceed amount.  

And take a look at the list above, and realize that none of these items of work are driven by the construction value, which is a very poor stand-in for duration, complexity, quality of the CD's, distance to the site, etc. 

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Gustavo Lima AIA
Gustavo A. Lima Architecture, PC
Williamsville NY
------------------------------

Good point Sharon, I was oversimplifying. 

Of all the reasons for a change order, your CA fees should certainly accommodate the costs to implement and review changes resulting from your own Errors and Omissions.  However, the efforts associated with changes derived from the owner's desire to add scope, or from the contractor's suggestions or requests, or from unforeseeable conditions, or from capricious interpretations of the code by the Agency Having Jurisdiction should all be charged to the owner as additional services.  

This, of course, is what should happen based on a fair interpretation of the contract.  However, business development and client management may dictate that you not charge the owner for all of those changes, in which case you would include a provision for them, of course. 

My point was that all too often we do work for free and then complain that we are running out of fee.  A good recommendation would be to pay attention to the origin and reason of the request for a change and then to make sure that the party responsible pays for the effort to implement it.  

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Gustavo Lima AIA, MRAIC, CCCA, DBIA, LEED AP
Gustavo A. Lima Architecture, PC
Buffalo, NY
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Original Message:
Sent: 11-02-2024 08:33 AM
From: Sharon L. Day AIA
Subject: CCA Phase Profitability Impacts

Great insight, Gus. Can you clarify what you mean by "4. Change Orders are not supposed to cost you anything, because you are supposed to bill your client for the effort."? I'm thinking about contractor change orders and reviewing their cost proposals which often is a part of our required tasks, so I am not understanding how this wouldn't be included in what you estimate in your budget. Do you mean you are already billing the owner for this time if you are hourly? 

------------------------------
Sharon Day AIA
GWWO Architects
Baltimore MD
------------------------------


Original Message:
Sent: 10-25-2024 10:09 PM
From: Gustavo A. Lima AIA
Subject: CCA Phase Profitability Impacts

Most architects who look into this issue are focused on how to be more efficient and to reduce the impact that elements without our control have in our workload.  While this is very important, it is all "after the fact".  There is something, however, that we can do way before the construction fence goes up:  Negotiate a better CA fee.  

Many architects calculate their CA fee on a percentage of their architectural fees, which are frequently tied to the construction value.  This is entirely inadequate, as CV does not drive but a minuscule part of the CA effort.  To estimate more accurately what the cost of providing CA services may be, it is helpful to think about it in two segments:  Office and Field.  And to compute how many hours these two efforts may take, consider these items of work:

For Office-related work, three items carry the lion share of the workload:

1. Submittals:  Read your own spec and calculate how many submittals you are asking the contractor to produce, and then assign an average review time per submittal (3-4 hours, including processing?).  don't forget to account for the time required to review and process the submittals reviewed by your subconsultants.
2. RFI's: Assign a number of RFI's per day of Construction Schedule (1.5-2.5 RFI's/day?) based on how complex your project is and how experienced the team who produced the CD's was.  Then assign an average review and processing time per RFI (2-3 hours?).  Include time to review the RFI's answered by your subconsultants.
3. Applications for Payment: 1 per month of schedule, at 2-3 hours per month, depending on how large and complex the pay app is.
4. Change Orders are not supposed to cost you anything, because you are supposed to bill your client for the effort.

For Field Work

1. Site visits and OAC's:  Estimate how many of these there are going to be, and write them into the contract.  Then estimate the time that it will take to accomplish them, including travel time, and the time it will take to write your field visit report and write/review the meeting minutes
2. Punch list: How many people, for how many days?  Include travel, and punch list preparation.

These five tasks constitute 75-80% of your CA hours.  So multiply your total by 1.25-1.33 and you'll have a good estimate of the hours it is likely to take you to do CA.

Then ask your Client to pay for it on an hourly basis, with a not to exceed amount.  

And take a look at the list above, and realize that none of these items of work are driven by the construction value, which is a very poor stand-in for duration, complexity, quality of the CD's, distance to the site, etc. 

------------------------------
Gustavo Lima AIA
Gustavo A. Lima Architecture, PC
Williamsville NY