FREQUENTLY ASKED QUESTIONS
Click on a question to see its answer.
Q. Why does Fulcrum endorse Construction Management (CM) over traditional Design/Bid/Build (D/B/B)?
There are many good reasons CM is a superior project delivery method to D/B/B, but here are the two most notable:
1. With CM the project cost is developed first, and the design evolves within the budget. Using CM your cost is identified very early in the planning phase, unlike D/B/B where you don't know your actual cost until the GC bids are in, sometimes just days before the project is set to start.
2. With CM, you select your sub bidders from a pool of prequalified subcontractors. With D/B/B you prequalify your General Contractors but you have no way of knowing who is actually constructing your project. When price is the sole differentiator between GC bidders, a GC's inclination is to go with the lowest cost subs, who can often be the least qualified.
Q. Most CM's base their fee on a percentage of the project cost. How are you compensated as a CM?
Fulcrum prefers to work under a fixed fee, not a percentage of the cost. As your fiduciary agent it just makes sense. It is difficult to make objective decisions if our fee increases when the cost goes up, and decreases when the cost goes down. When we make a recommendation to spend more or less money you can be certain that recommendation is made with your best interest in mind.
Q. What is a Guaranteed Maximum Price (GMP) and how is it derived?
The Guaranteed Maximum Price is arrived at by bidding the project competitively when the plans are 50-70% complete.
Q. How much of the actual construction work is put out for competitive bidding?
The percent varies by project, but typically 80-90% of the total cost of the project is bid to selected pre-qualified subcontractors and material suppliers.
Q. What happens if the project cost comes in above the GMP.
Fulcrum pays the additional cost out of pocket. Period.
Q. What happens if the project cost comes in below the GMP.
All savings are returned to the Owner. Period.
Q. Do you ever do projects where savings are shared between the Owner and CM?
Rarely. Since we develop the budget and control the spending, the thought of creating and then sharing savings seems a bit contrived.
Q. What are General Condition expenses?
General condition expenses are direct project overhead expenses, in other words, expenses that would cease if the project were to not go forward. Typical costs include permits, fees, temporary facilities, winter conditions, jobsite supervision labor, project management labor, transportation, equipment rentals and small tools consumed in the work.
Q. Aren't General Condition expenses part of the CM's overhead?
No. General Condition expenses are considered direct job overhead, and are driven by the progress and duration of the project. Home Office Overhead, on the other hand, is fixed and goes on regardless of whether a job is in progress. General Conditions expenses are part of the construction budget while Home Office Overhead expenses are paid by the CM out of his/her fee.
Q. What are the key components of Fulcrum's safety plan?
Fulcrum has developed an award winning comprehensive safety program modeled on a few basic tenets:
1. Training, training, training! All superintendents hold OSHA 30 hour certificates, and all tradesmen hold OSHA 10 hour certificates. All employees receive annual First Aid and CPR training through the Red Cross.
2. Fulcrum uses an independent safety consultant to conduct random, OSHA style safety inspection on all of our jobsites.
3. Fulcrum uses a program of written violations to police the safety of subcontractors working under us. It's simple, three strikes and the offending employee is removed from the jobsite.
4. Weekly task specific safety meetings for all subcontractors on site conducted by the project superintendent.
Q. What is a Workers Compensation Experience Modifier and why is it important to me?
The Experience Modifier, or "mod", is a rating assigned to a Contractor by his/her insurance carrier. It is based on the contractors safety and loss record over the past five years. The mod is a good indicator of the effectiveness of the CM's safety program, and is used to adjust the rate paid by the CM for insurance. A mod of 1.0 means no adjustment, a mod of 1.2 means a premium of 20% is being added to the base insurance cost, while a mod of .80 represents a discount of 20%. A CM with a lower mod has a lower operating cost and superior safety record, both essential attributes.
Q. What is Fulcrum's current mod?
For 2009 it is .83, for the 5 years prior to 2009 it has ranged from .79 to .85.
Q. As an Owner, how liable am I for safety on my project site?
The CM is your first line of defense in the event of an accident, and all contracts have provisions that indemnify the Owner to some degree in the event of an accident. That being said, well written contracts can blunt an Owner's liability in the event of a major accident, but rarely does any project participant escape cost or liability in the event of a catastrophic accident. The best insurance you can have is a CM that values safety above all else, employs a well designed safety plan on every project and has a demonstrated safety track record. Many CM's today rely on contract language that holds subcontractors solely responsible for jobsite safety. As they say, risk transfer is not risk management.
Q. Everyone sells quality, what makes Fulcrum different?
First, look at the warranty offered. Fulcrum offers a minimum 2 year warranty on all of our work, double the industry standard. Second, ask for proof that your building is actually performing as designed and promised. We employ technologies such as thermal imaging to verify the integrity of components and assemblies during construction as well as upon completion. We monitor interior environmental conditions such as temperature, humidity, CO2 and particulate count after you move in to confirm comfort systems are functioning as designed. Finally, we will collect your first years energy bills and confirm that target goals for energy consumption have been met. If they haven't, we'll pay the difference and fix the problem.
Q. What steps do you take during construction to ensure quality?
Poor quality in the finished product is the direct result of mistakes made during the construction process. Due to the uniqueness and high variability between projects mistakes are a fact of life in construction; the challenge is finding and correcting them before they are buried. Working with highly qualified subcontractors as we do minimizes mistakes, but can't eliminate them. One way Fulcrum addresses this is through a series of pre-installation meetings. As an example, before a concrete floor slab is placed, a meeting is held with the earthwork contractor, concrete contractor and any contractor that has penetrations or utilities in the floor. Dimensions are reviewed, materials and products are confirmed and the overall quality of the work in place is evaluated before the floor is released to the concrete subcontractor. Meetings such as this take place at every critical hand-off, ensuring our mistakes are corrected, not buried.
Q. All you hear about today is "Green Construction". Is Fulcrum "green"?
When oil crossed $70/barrel everybody became green overnight, regardless of past history or experience. So much so, in fact, that the term "greenwashing" has been officially added to the language by Merriam Webster. Fulcrum has taken a somewhat different approach, starting more than 15 years ago. While we wholeheartedly support and promote the principles and ideals of the green building movement, we find too often that they can run counter to economic reality. Most of our clients have to make difficult business decisions every day based on Cost/Benefit analysis, and constructing or renovating a facility is no different. We can make great C/B arguments for airtight envelopes, enhanced HVAC systems and lighting controls. For vegetated roofs, cork floors and bamboo wall coverings, not so much. Everyone has a finite budget; spend your money where it earns the greatest return (if your budget is infinite, please call me at home at 603-672-7577, any timeÉJeff).
Q. Is it true a building can use more energy than a conventional building and still be certified as Green?
Yes. A building with code minimum HVAC and lighting systems can gain points for features such as preferred parking for hybrid cars, access to public transportation, bicycle racks, waterless urinals, drought tolerant plants, vegetated roofs, cork floors, bamboo wall coverings, FSC certified wood and use of locally produced materials and still be certified as Green, all the while consuming more energy than a comparable building with moderately enhanced envelope, HVAC and lighting systems. Don't misunderstand, there are substantial benefits to the features described above, they just don't always hold up to C/B analysis the way high performance upgrades can.
Q. You promote "High Performance Construction", how is this different from "Green Construction"?
It really isn't. Both approaches seek to create the most sustainable, comfortable and environmentally friendly buildings possible, for the lowest possible cost. HPC just orders the enhancements differently. It's simple; we categorize improvements by payback period. Upgrades with an immediate payback are no brainers. So are upgrades with 3 to 5 year paybacks. At 7 and 10 years, the building owner's financial realities weigh more heavily. Cash flow, the ability to service debt, future value and exit strategies enter the picture, and no two clients are alike. This is where the hard decisions are made, and this is where our expertise lies.
