Project Management New York Style: It is about how, not what, you buy
The relationship between architect and project manager can be fraught with complexity; many anecdotes suggest that projects run smoothly when both are in place, while almost everyone also has a war-story or two about the time that the two were at odds and disaster ensued. While project managers may argue that costs increase due to “design creep,” architects are fending off a wide variety of other client service providers. In other words, one might argue that costs are rising instead from “consultant creep.”
Lorenzo Vascotto, a founding partner currently serving as managing director at VVA Project Managers & Consultants, was game to take on this topic and many others during the Professional Practice Committee’s fourth program of the “Leading Architecture in a Changing World” series, which culminates on 06.17.13 with “Entrepreneurship in Architecture and Beyond.”
Vascotto presented an honest look at the differences between general contractor (GC) and construction management (GM), specifically focusing on the impacts of their decisions on, among others, design quality, cost to deliver, reliability of cost, and use of change orders.
VVA, is a leading independent project management firm founded in New York City over 19 years ago, is best known for offering a full range of advisory and technical project management services in the real estate and construction arenas. Vascotto brings a technical and financial approach to his work that was honed during the 13 years before founding VVA. He served as an engineer at Syska & Hennessy, which laid the technical and mechanical foundation for his career. He further expanded his knowledge of real estate, facilities management, and finance, during his seven year tenure at Goldman Sachs.
The first portion of Vascotto’s presentation focused on the practical differences between general contractor and construction management for project delivery. From his experience, he’s found that design delivery with a GC may be 10-15% cheaper due to a number of drivers including competition, business experience, risk absorption, and actual services delivered. There was then some conversation about the value of those services, and the kinds of projects and clients that benefit from each.
The opinions of both Vascotto and the audience revealed that our industry still seems to have a significant amount of cost volatility. Relaying recent experience in comparing construction bids, Vascotto saw budgets/fees/proposals with 15-20% price differentiation. He explained that, unlike in Europe, where quantity surveying is a licensed profession, cost estimators are less prominent in the United States marketplace and their level of expertise is more varied; this is one of many roles that project managers are supporting.
One of Vascotto’s key points: it is all about “how you buy, not just what you buy.” He emphasized that asking the right questions during the bid and negotiation process is essential to mitigating risk and making sure that expectations are met later on. He generally aims to require that the final selected delivery team commits to the design intent, not the letter of the drawing. At the end of a bid sequence, he often goes back and negotiates a Guaranteed Maximum Price. He advocates clear and open communications to reduce “change order mania.”
Vascotto finally described ways to achieve price control throughout the process, including pre-purchase pricing of carpet, walls, furniture, lighting, doors and hardware, and other items, locking in the cheaper – and often better – option.
Audience member Peter Matthews of Matthews Moya Architects offered a keen observation and potential solution, explaining that “the perception of the creative architect is a double-edged sword, that as design costs increase, we often appear to be part of the problem, contributing to the cost, rather than helping to control it.” He said that one way his practice has mitigated that perception and limited cost increases, while preserving design quality, is by locking in prices on premium items early on, sometimes through purchase, other times just by getting a bid and price commitment.
For better or worse, there also seems to be power in being big. Vascotto’s presentation emphasized the role of social, political, and industry prominence as way to access better results in the construction and design-delivery worlds, particularly in New York City. He mentioned revenue volume and potential for repeat business as one of the key reasons contractors deliver services on time, as well as leverage in negotiations.
At event’s end, the conversation shifted to a debate on several topics including those that cut to the quick of architectural fees, from value engineering to a constant barrage of new players, and challenges around who is closest to the client – when and for what purpose. Further conversations will surely be required.
Melissa Marsh is a workplace strategy and change management consultant with an architectural education. She recently founded her own company, Plastarc. She is new contributor to e-Oculus, and can be reached at email@example.com.
Event: Leading Architecture in a Changing World: Digital Strategies for Architects and Our Clients
Location: Center for Architecture, 03.22.13
Speaker: Lorenzo Vascotto, Founding Partner and Managing Director, VVA Project Managers & Consultants
Organizers: AIANY Chapter Professional Practice Committee and AIANY staff