P22 Managing Capital Projects

Transcription

1 P22 David Spackman, CHF Canada Jim Kroesen, Housing Services Corporation Agenda 1. Introductions 2. What could possibly go wrong? 3. What are we doing 4. How can we ensure the best outcomes from capital projects? 5. Common pitfalls 1 CHF Canada Workshop 1

2 2 Capital Projects Capital projects can be for new construction, expansion, renovation, or a replacement project for an existing facility or major components within a facility 3 CHF Canada Workshop 2

3 Managing capital projects What could possibly go wrong? 1. Divide into groups 2. Choose person to keep notes 3. Choose person to report back 4 Managing capital projects What could possibly go wrong? 1. Injury or fatality, member, staff, visitors, workers, public 2. Interruption of essential services - electricity, communications, sewer, water 3. Illegal entry, member units 4. Damage/ theft of co-op, member or contractor property 5. Inconvenience to members- noise, parking, access/egress 6. Inconvenience to contractors delay of contract completion 7. Additional contract costs delay of contract completion 8. Additional costs to co-op power supply, waste disposal, clean up costs 9. Loss of income to co-op Unit(s) not ready for occupancy 10. Conflict between board, members and contractors 5 CHF Canada Workshop 3

4 Ensuring positive outcomes Understand your asset Spend time pre-planning Ensure adequate funding is in place Build consensus with members & board Get professional assistance Be fully engaged in the process 6 What do we need/want to do? Site Investigations & Feasibility Studies By conducting appropriate site investigations and feasibility studies you determine what you can afford, how to get what you need and perhaps even what you want. You can identify things in your project that will likely increase the cost of construction. You can consider energy retrofits and universal design 7 CHF Canada Workshop 4

5 Review the studies 8 Determine your needs Review the studies Prioritize the work life/health and safety requirements, compliance and/or building code where required, structural remediation as required, component failure replacement as or when required Listen to members Think about the future, energy efficiency & affordability, aging in place 9 CHF Canada Workshop 5

6 Invest resources Reserve Fund Forecast (RFF) The difference between your current reserves and contributions to reserves and the spending in the BCA How much money you should be putting into your replacement reserve each year. How much you can expect to earn on your replacement reserve investments What impact this will have on housing charges 10 Invest resources Refinancing closes the gap refinance 11 CHF Canada Workshop 6

7 Develop Strategies Asset Management Plans An asset management plan will: Review Building Condition Assessment (BCA) Generate a Reserve Fund Forecast Create a budgeted capital improvement plan Advise when the funding gap becomes critical Consider refinancing options Create long term budget & housing charge projections Create an annual maintenance plan 12 Building consensus - Member survey 60 Votes Votes Kitchens Bathrooms Flooring Windows Doors Siding Basement Furnace 13 CHF Canada Workshop 7

8 Building Consensus - Members want this 14 This maybe not so much 15 CHF Canada Workshop 8

9 Work for consensus while respecting the studies (BCA etc.) Kitchens 16 Implement your capital plan. Plan a large project with financing (3 5 years BCA) Consolidate years in your BCA and fund through reserves Budget capital repairs and work each year Prepare a work schedule for the work to be completed Prepare tender document and hire project management PM co-ordinates, final scope, any required specifications & engineering, tendering, contract negotiation, construction oversite, close out, commissioning. (get help if you need it) 17 CHF Canada Workshop 9

10 Implement your capital plan. Work with your project manager: Create a final scope with all specifications Obtain competitive bids from several contractors Ensure contractors work is inspected and monitored Comply with legislative/by-law requirements for notice to access to units Keep members informed of planned work, how long it will last, safety issues and types of disruption to expect, 18 Project management assistance Prepare a Request for proposals: RFP for PM Bid Document Introduction & Purpose Who you are/what you want Purpose of the project Schedule of events Submission instructions & requirements Submission contact & location and closing date to submit bids Communication rules during bid process Detailed response to statement of work Price quotation. Can $ Offering period (bid valid for 90? days) Bid selection (lowest cost or any not necessarily accepted) References 19 CHF Canada Workshop 10

11 Project management assistance Prepare a Request for proposals: Bid Document Statement of work requirements: Background description of co-op, General scope of work (the project) budget or not? Scope Work to be accomplished by consultant (project manager) Assessment of planning deficiencies. site visit, budget review, recommendation of any alternatives Preparation of specifications and bid documents for work Administration of bid process, recommendation of successful proponent Assist co-op to implement stipulated price or other contract with contractor. 20 Project management assistance Prepare a Request for proposals: Bid Document Contract Administration: Pre construction meeting of all parties Permits, bonds etc. Change order process, site instructions- cost notification Drawings as required Materials evaluation as required Information for member distribution Verification of works Submissions for payment advances. Deficiency review and follow up Commissioning of equipment as required Project close out. 21 CHF Canada Workshop 11

12 So what can you do A Project Manager can help! While not all pitfalls can be avoided, having an experienced project manager guide you through the process will help minimize or mitigate the many risks related with capital projects. The pitfall monster... I want more, faster and cheaper! 22 Stakeholder Alignment Sufficient time must be spent in the planning phase to make sure that all stakeholders are on the same page. Stakeholder alignment (buy-in and support) is KEY to the success of any project! 23 CHF Canada Workshop 12

13 Co-op capital project stakeholders Co-op members Board of directors Property manager Government/housing regulators Government /funding agencies or programs Lenders Project management provider Co-op member organizations, regional federations / CHF Canada 24 Create a RACI Chart A RACI Chart is a tool that can be used to help identify the roles and responsibilities of those involved in the project and help avoid confusion of those roles and responsibilities. What s RACI? 25 CHF Canada Workshop 13

14 RACI - Definition 26 RACI Example 27 CHF Canada Workshop 14

15 Contract Administration Remain Engaged - Pre-construction meeting construction schedule site meeting schedule inspection /testing requirements/timelines communication - manager/board/member site staging and organization protocol for change orders and site instructions progress payment schedule and protocol for authorization and approval 28 Scope, Schedule & Budget Definition Capital projects completed within budget and on schedule are the target, but not always the rule! 29 CHF Canada Workshop 15

16 Understanding the Triple Constraints 30 Clearly Define Constraints! Ensure scope, budget available, and time are clearly defined during initial project plan and again at project initiation. Ensure stakeholders are aware of what the ramifications might be for any requested or mandated changes. 31 CHF Canada Workshop 16

17 Develop Comprehensive Schedule Ensure ALL project activities are in the schedule Breakdown, breakdown, breakdown work! Review schedule and get input from stakeholders Consider history other similar projects Once project is implemented, monitor scheduled activities 32 Acceptance criteria for deliverables Acceptance criteria represents specific and defined list of conditions that must be met before a project has been considered completed and the project deliverables can and will be accepted by the client. Poorly defined acceptance criteria for deliverables is another of the major causes of project failures. Do NOT assume a listed deliverable (requirement) = acceptance criteria 33 CHF Canada Workshop 17

18 Define SMART Acceptance Criteria S Specific M Measurable A - Achievable R Realistic T Time Bound 34 Risk Management Failing to be pro-active and openly consider risks and issues is a major pitfall you will want to avoid. Recognize that risks and issues will be part of the project and take time early on to identify them and make plans to avoid or management them 35 CHF Canada Workshop 18

19 Managing Risk For negative project risks... some we can AVOID some we can CONTROL some we can TRANSFER some we must ASSUME 36 Avoiding Risk Example: Choosing a vendor/ design/productwith a proven track record at a higher price over a new vendor that is providing a significant price incentives to avoid the risks related with working with a new system. ie: exterior stucco cladding 37 CHF Canada Workshop 19

20 Do not become the Constructor (Ontario example) Property owners and managers may inadvertently face liability as a constructor under Ontario s Occupational Health and Safety Act (Act) (and similar rules in other provinces) for violations and accidents involving subcontractors and their employees. Per offence, constructors may face fines of up to $500,000 and individuals may face fines of up to $25,000 and one year in jail. When an owner undertakes a project by contracting with more than one employer (contractor), the owner is undertaking the project and is the constructor. Summary The following is a summary of a few common examples of how owners may inadvertently take on the role of constructor: o o o o Hire more than one contractor directly to work on the site at times that coincide Assign their own employees to work alongside the contractor s workers Personally supervise aspects of the work and direct workers Personally respond to safety issues and related incident. CHF Canada Workshop 20

21 Third Party Assuming Control is Constructor Provided the owner has relinquished control over the project and the employer or third party has assumed control, that employer or third party is the constructor, even if the owner is paying the other contractors on the project. Avoiding Constructor Liability Engage a general contractor and have them select, hire, direct and pay contractors personally. Contract in writing and to specify who will act as the constructor on the project and will comply with all legal duties and obligations of that position Require the constructor to file a notice of project with the Ministry of Labour (if necessary), and to obtain all necessary permits, drawings, inspections and approvals. This is not just Ontario, Notice of project also required by Worksafe BC over $100K. Check your provincial rules. CHF Canada Workshop 21

22 Avoiding Constructor Liability Leave health and safety in the Constructor s hands. Responsibility for safety is one of the most important obligations of the constructor. If the owner takes an active role in ensuring safety or responding to unsafe conditions, it runs a significant risk of becoming the constructor. Owners should immediately communicate any safety concerns to the constructor (through project manager) and leave it to them to address the issue. Controlling Risk Some practical steps you could take include: Hire experienced project management trying a less risky option ensuring an up-to-date DSS is in place and made available to the Constructor understanding legislation related to Constructor /Owner duties preventing access to the hazards ensuring work by the constructor is set up to reduce exposure to the hazard(s) 43 CHF Canada Workshop 22

23 Transferring Risk Insurance Bonding Bid bonding or deposit Labour and material bonds Performance bond Liability Un-owned vehicle Builder s risk or umbrella coverage 44 Assuming Risk Accepting risk occurs when the cost of managing a certain type of risk is accepted, because the risk involved is not adequate enough to warrant the added cost it will take to avoid that risk. i.e., landscape covering when repairing exterior walls. 45 CHF Canada Workshop 23

24 Develop a Contingency Plan Contingency funds are funds set aside by the project to address unforeseen events that cause the project costs to increase Projects with high risks will typically require a large contingency budget. After risks are identified and evaluated, develop a risk mitigation plan what you will do to minimize the impact of the unexpected event. 46 Performance Monitoring & Control Your project should have clearly defined milestones so that all stakeholders understand what successfully completed means. (SMART Acceptance Criteria) Performance should be measures against these clearly defined milestones. Take corrective actions as soon as issues emerge. 47 CHF Canada Workshop 24

25 Payment control and advances What is the source of funds? lender, regulator/program, co-op reserves What are the requirements for payment? Project milestones, site inspection, certificate of completion Who has to review and sign off? Project manager, project monitor, board of directors, lender How long does the process take? Contractors are notoriously grumpy if payments are delayed 48 Reporting and Communications Create a reporting and communication plan based on your stakeholder needs (refer to your Stakeholder Map and RACI Chart). Stakeholder(s) Information Method Frequency Who is responsible? Board members Project status report Monthly Project Manager Manager Develop a Communication Plan Detailed project reporting Meeting, report Every other week Project Manager Financial Funder Project status Meeting Monthly Project Manager Vendors Project initiation Meeting 1 month prior to Project Project Manager 49 CHF Canada Workshop 25

26 Reporting and Communications Your reporting should include: clearly defining where the project is relative to Budget, Schedule and Scope. status reporting- include details on any contingency expenditures and change orders (requests, approvals, completed, or rejected). performance is based on clearly defined and understood measurements (milestones). planned versus actual be comprehensive Reporting and Communications Engagement and communications Send flyer to members with construction schedule, site staging and communication protocol. Arrange regular meetings with project management Visit the worksite daily (not a formal site visit ) Visit the site after workers are gone in the evening and before weekends and holidays security /safety talk to PM! Visit a few member homes before and after work is completed. Meet regularly with the board and update, site meetings, site inspections, site instructions, change orders Help board members understand the lines of communication Send regular update flyer to members CHF Canada Workshop 26

27 Change Control/Scope Creep Failing to define and execute an integrated change control process will surely reap disaster Create a well-defined change control process that provides a mechanism for evaluating, approving or rejecting changes Ensure changes are assessed for their impact on constraints of the project before making decisions and enacting change Engage all stakeholders in change control (RACI chart) 52 Project close out Critical steps often overlooked: Deficiency review Final inspection / close out of permits / record drawings System start up, verification, demonstration Testing and verification reports Warranties / Guarantees / Certifications Construction lien requirements and release Payment certifications (final) Insurers notifications (handover) Occupancy permits, surveys, title registrations End of warranty period review 53 CHF Canada Workshop 27

28 Project Management Consider: Who is managing your project? Ensure all team members follow value-added project management processes; these processes will help you effectively execute, monitor, and control your project 54 CHF Canada Asset management Services Procure Building Condition Assessments. (BCA Preparing Asset management Plans Identifying scope of work and preparing requests for proposals Evaluating submissions and recommending contract awards Site inspections and contract administration Project management services for major capital projects 55 CHF Canada Workshop 28

29 CHF Canada David Spackman dspackman@chfcanada.coop ams@chfcanada.coop Jim Kroesen Jkroesen@hscorp.ca David Spackman ams@chfcanada.coop Evaluations please 57 CHF Canada Workshop 29

30 Getting Workshop Materials CHF Canada Website: Resources AGM Website: Events AGM Conference App 58 CHF Canada Workshop 30