Construction Administration

Construction Administration Economics

1/26/2019

If you do a good job of Construction Administration,
you, the architect, will lose money.
Guaranteed.

Why will you lose money doing a good job of Construction Administration?

The main reason is that most small contractors are not very competent at building effectively.

This hasn't always been the case. Prior to 1980, the superintendents and project managers in modest sized construction outfits were often more experienced than the architectural staff and could be counted on to do it right.

The only place I find that type of person these days and for the past two decades is in a construction management firm that negotiates, not bids, its work. Many developers have similar capabilities. If your contractor came to you by way of a public or open bidding process, you should expect the worst. You won't be disappointed.

If you are a capable architect, this is an aggravation, but mostly it is a financial problem. The reason is that you will burn through your fee at two to three times the rate that the standard AIA contract anticipates. If you choose not to put out the extra effort, you risk an unhappy client and additional liability. Even if your documents are air-tight, you can find yourself being sued. You probably won't have a judgement against you, but you will use up your professional liability insurance deductible and plenty more before you are able to make your case.

It is way better to do an outstanding job of Construction Administration. And get paid for it by setting a limit on the number of hours that Construction Administration includes. After all you do not have controll over this part of the project. The downloadable file was prepared to make our case to a client years ago. We referred to and paraphrased it in our proposals and contracts. You will find the spreadsheet, too.

Here is a listing of some of the issues that you can expect from the low bidder.

Weekly (minimum) site visits to catch screw-ups. You will use the entire Construction Administration fee on a $1,000,000 construction project to cover this level of involvement.
Submittals will take more time because of issues with missing submittals, wrong or incomplete submittals (re-submittals), correct submittals but incorrect materials used nevertheless.
Questions or Requests For Information that can take up hours per week as you are bombarded with "Why can't we just...?" questions. We had one superintendent who couldn't read drawings! That creates a special level of hand-holding.
The Punch List will be long and take forever to resolve. We have experienced over 60 hours just for this.

Bear in mind that you will still be certifying pay requests, reviewing test reports, issuing the Certificate of Substantial Completion, documenting Closeout and perhaps reporting to your Owner's board.

We discovered what was happening only after years of losing money on Construction Administration.
You don't want to do that.

Here are a few more articles on Construction Administration.