Signed, sealed & delivered

Owners ask, builders find an answer

By Jeremy Harrell

The evolution of the construction industry is taking companies in interesting directions. For instance, it's possible now for a general contractor to build nothing and yet rightly claim credit for having built something.

Take for example CG Schmidt Inc., which shepherded an $81 million series of projects at General Mitchell International Airport in Milwaukee a few years ago. Under the leadership of CG Schmidt and its partner, the multinational Jacobs Engineering Group Inc., General Mitchell saw the construction of a $35 million parking garage, electrical upgrades, underground work, land-

scaping and a host of related projects. And neither Schmidt nor Jacobs performed any of the construction work.

Instead, the two companies served as the airport's program manager, a kind of professional adjunct to the owner. The companies essentially became an extension of the airport's facility staff, which numbered less than a dozen people and wasn't equipped to handle such a complex array of projects.

"The owner says, 'This is what we want as a final product,'" said Tom Baade, construction project manager for Milwaukee-based CG Schmidt. "When something gets so large and involved, they hire someone else."

Tom Baade, construction project manager for CG Schmidt Inc., stands before a piece of his company's program management handiwork, a new jet bridge at General Mitchell International Airport in Milwaukee.

Building the $35 million parking garage, Baade said, "was the easy part." The harder part was fitting that project in among the others and making sure the revenue the garage would generate would come online in time to fund the other jobs while not placing it ahead of work that had to go on beforehand.

Program management is an emerging industry field, ideally suited for big public- or quasi-public-works jobs like General Mitchell for which an owner has gathered together a large chunk of change for an assortment of projects. The construction company provides services ranging from value engineering to managing bids, selecting an architect to performing some project design. And the program manager's final portfolio with the client often includes a long list of jobs.

The relationship between a program manager and an owner lasts for years, and the company typically becomes so ingrained that it becomes difficult to tell where the program manager ends and the owner begins, said Jim Rossmeissl, executive vice president for Oscar J. Boldt Construction, a division of Appleton-based Boldt Co.

His firm has been working as a program manager at St. Luke's Medical Center for more than a decade, and at one point Boldt was overseeing 15 different projects.

"Many of the hospital employees think our guys work for the hospital," Rossmeissl said. "That's how subtle this can be."

The trend toward program management comes at a time when construction companies are increasingly positioning themselves as one-stop shops, providers of a broad range of services, many of which might seem like the kinds of things construction companies don't normally do.

A construction crew, under the guidance of CG Schmidt, pours concrete for a deck of the parking garage at Milwaukee's General Mitchell Airport.

The idea is that the program manager can call on a deeper wealth of construction and business knowledge than an owner's own staff and potentially deliver a slate of projects in less time and at a lower cost.

Such was the thinking of the state of South Carolina in 1999, when its Department of Transportation split the state in half and handed over management of its construction division to two companies, Fluor Daniel of Aliso Viejo, Calif., and Parson Brinkerhoff/LPA Group, New York. The South Carolina DOT is banking on the two companies to deliver $760 million in bridges and roads by 2006.

By doing so, the South Carolina DOT expects to shave 20 years off the schedule it would have required by retaining management in-house. The plan also kept the DOT from hiring an estimated 500 employees to carry out the program, according to a South Carolina DOT report.

"I think people are recognizing that as the economy has drifted off a bit, you have to be very careful about where you invest your resources," said Randy Rapp, associate professor of architectural, engineering and building construction and director of the Milwaukee School of Engineering's Construc-tion Management program.

"Program managers make sure projects are efficiently focused on what satisfies an organization's needs. They do have an intellectual purpose."

Such is the evolution of the construction industry today that general contractor CG Schmidt Inc., Milwaukee, can take credit for the huge build-out at Milwaukee's General Mitchell Airport even though the firm didn't actually build anything.

Especially when it comes to public owners, or owners such as hospitals that have to earn the faith of the people they serve. The public needs the reassurance that the money it's putting up won't be squandered, Rossmeissl said. In turn, the owners look to a program manager or a similar one-stop shop to bring a level of experience and competence that an owner might not have.

"They have a responsibility to the community from a fiduciary perspective," he said. "If people are going to pay for schools, they want someone to achieve the goals professionally. The school administrator has a full-time job. No one individual or group has the time to take it under their wings."

When working for a public owner, one of the program manager's chief duties is to uphold the competitive-bid law, Rossmeissl said. Program managers do perform some of the work, but the firm's objectivity in the construction process might mean that the program manager happens to be one of five companies to bid on one phase of a program, he said.

This allows the owner to rely on the services of an outside professional while still making a persuasive case to the public that the work is going to local companies and not just to some outfit from the outside. Paraphrasing former Speaker of the House Tip O'Neill's comment that all politics is local, Rossmeissl said that "all construction is local," and the program manager is obligated to help the owner keep face.

For all of its telltale characteristics, program management is more than a project-delivery method. It's becoming a business philosophy that determines how far a construction company wants to extend its reach.

In that way, it doesn't always fall under the heading of program management. Hoffman, the Appleton-based architecture and construction management firm, melds its company's mind so effectively with the owner that it ends up helping to make big business decisions for its clients, said Paul Hoffman, the company's president and owner.

Milwaukee's General Mitchell Airport parking garage breaks ground. Program manager CG Schmidt had to time the project to meet a complex financing system.

For an owner in the retirement-housing field, Hoffman's people perform market research, feasibility studies and, through its real estate arm, site selection, all to get a thorough understanding of the projects at hand. Hoffman said he asks his employees to "expand their peripheral vision," widening the typically narrow focus an architect or construction manager might bring to bear.

"We aren't afraid of asking why your business will be better off," he said. "Good design and good construction aren't going to mean much if they don't help the business.

I'd rather talk someone out of a project than build a project that doesn't work."

Hoffman can also help talk a large number of people into a project. When working on school referendums, the company's marketing and graphic design staffs create the pie charts, supporting documents and literature needed to sell the public on a project's worthiness, Hoffman said.

"This has happened not because architects, engineers and general contractors have been pushing for the change," he said of the combined resources evident in his company. "Owners have. The change that is going on in our industry is forcing architects and builders to think differently."