. July REFERENCES Accounting Guide for Construction Grants U S En- vironmental Protection Agency, Office of Resources Management, Financial Management Division, Oc- tober 1977 Construction Grants 1985 (CG 85) U S En- »ft Ky"\|-l rYlQm+n I D», 4. j.* A /'^^ «^^« ^.1 I Management of A Construction Project- A Guide for OfTf ? MU'S- Environ™<*a' Protection Agency Office of Municipal Pollution Control, April ?986 Management of Construction Change -- on of Water Program Operations, March Agency, Prevention and Resolution of Contractor Claims- n^io£°rSnU^^ntPr°gram Gu''dance for Mu- nicipal Grants, U.S. Environmental Protection Aaen- cy, Off,ce of Municipal Pollution Control, Ma?ch1 985 Uniform Appraisal Standards for Federal Land Ac- quisition, GPO #052-059-00020 For additional information, contact: EPA Office of Municipal Pollution Control Municipal Construction Division (WH-547) 401 M Street, SW Washington, D.C, 20460 EPA Region 1 John F. Kennedy Federal Building Boston, MA 02203 EPA Region 2 26 Federal Plaza New York, NY 10278 EPA Region 3 841 Chestnut Street Philadelphia, PA 19107 EPA Region 4 345 Courtland Street, NE Atlanta, GA 30365 EPA Region 5 230 South Dearborn Street Chicago, IL 60604 EPA Region 6 1201 Elm Street Dallas, TX 75270 EPA Region 7 726 Minnesota Avenue Kansas City, KS 66101 EPA Region 8 999 18th Street Denver, CO 80202-2413 EPA Region 9 215 Fremont Street San Francisco, CA 94105 EPA Region 10 1200 6th Avenue Seattle, WA 98101 United States , JU Environmental Protection Agency ' 1986 Washington DC 20460 &EPA IVIanagemetTTof a Construction Project: An Opportunity and a Challenge ------- MANAGEMENT OF A CONSTRUCTION PROJECT:! AN OPPORTUNITY Ais| INTRODUCTION To help achieve its mandate to protect America s waters, the Environmental Protection Agency's goal is to ensure that its construction grants funds are being used to complete properly designed, well-con- structed wastewater treatment systems. In that re- gard, the Agency has identified two concepts that have generally resulted in the successful use of grant funds. These are: • Good project management and management planning have proven to be key factors in suc- cessful construction projects; and « The purpose of a construction grant is most likely to be achieved when the municipal official re- sponsible for the construction project is held strictly accountable for expenditures and ultimate performance of new facilities. A PROVEN APPROACH Successful management of a wastewater treatment works construction project is a major undertaking for any municipality. Those that have succeeded have gained valuable in- sight into techniques and approaches that have worked well in the management of construction pro- jects. Based on a review of these various ap- proaches, EPA has developed a booklet entitled Management of a Construction Project: A Guide for Grantees, April 1986. It is designed to help a municipal official responsible for a construction pro- ject to avoid problems that others have encountered. Recommendations in this guidance include: • Designating a project manager to represent municipal interests; • Using a team approach to manage the project; and • Developing a project management plan. The guidance also highlights project management issues and ways they can be addressed. Much of it can be used as a reference document for the pro- ject manager. The guidance includes management plan worksheets that can be used for preparing the municipal project management plan. The guidance may also be used by a municipality to demonstrate its capability to manage a construction grants project. While use of the management plan worksheets is optional, each grant applicant is re- quired by EPA regulation 40 CFR 35.2104 to demonstrate its project management capability. The reviewing agency (EPA or delegated State agency) can be expected to review the municipality's project management capability demonstration and manage- ment plan as part of the construction grants over- sight process. ESTABLISHING THE PROJECT MANAGEMENT TEAM There are a multitude of tasks to be performed, supervised, approved, analyzed, monitored, and re- corded throughout the construction of a wastewater treatment project. The key to good project manage- ment is to designate a project manager who will take charge of all project and grant-related activities. This person should be readily available full-time to deal with project matters as an employee of the mu- nicipal government, if possible, and be given the necessary authority to oversee and coordinate all project activities. The project manager on a relatively small project may do the administrative work and much of the financial work personally or with temporary help. On a large or complex project, the project manager may be supported by a team of professionals who can provide advice and assistance in specialized areas. The project management functions are the same, however, on small or large projects and are com- mon to all successful project management teams. THE PARTICIPANTS The Authorized Representative is the municipal of- ficial responsible for the project. This person de- velops and implements the municipality's project management plan, and organizes a management team to meet project needs. The Project Management Team includes the project manager and administrative, technical, financial, and legal support. • Project Manager—Manages the overall project on behalf of the municipality. • Construction Manager—May be used on larger or more complex projects to provide the project manager with construction management services including detailed cost estimating, schedule monitoring, and quality control systems. ------- A CHALLENGE • Administrative Support—Assists the project man- ager in developing and maintaining the record- keeping system, prepares progress reports and grant reimbursement requests, and provides other support functions. e Technical Advisor and Support—Ensures that the project is well-constructed, completed on time, and satisfies applicable State and Federal re- quirements. Generally, this team member is re- sponsible for field personnel, including the resi- dent engineer and inspectors. » Resident Engineer—Oversees inspection and quality control, handles field communications, and supervises and coordinates work of inspectors. • Inspectors—Inspect the work and prepare detailed daily inspection reports. • Financial Advisor and Support—Establishes and maintains auditable, financial systems, arranges financing for municipality's cost share, and prepares vouchers and disbursements. • Legal Advisor—Oversees issues related to con- tract law, legal authority, acquisition of property " and easements, procurement, and resolution of disputes. The Construction Contractor builds the facility and installs the equipment in compliance with contract documents. Subcontractors and equipment suppliers are responsible to the construction contractor. • Subcontractors—provide specialized construction services. • Equipment Suppliers—Fabricate and deliver equipment, provide warranties and bonds for pro- duct performance, and furnish shop drawings of specified equipment. The Reviewing Agency is the EPA Regional office or the State construction grants agency if the EPA pro- gram has been delegated. PREPARING FOR CONSTRUCTION Preparing for the construction phase of the project begins with organizing the project manager's sup- port team and field personnel. The project manager should meet with the team as a group to review in detail the project management plan and organiza- tional structure. This will ensure that all team mem- bers understand their roles. At this organizational meeting, the project manager should provide the team members with a summary of their major re- sponsibilities and duties, an organizational chart, the project schedule, names, addresses, and telephone numbers of key contacts. When project management performance was ana- lyzed nationwide, the activities described below were identified as areas that most often require the pro- ject management team's attention before construc- tion contract award. The guidance highlights tech- niques that can be used to address these potential problem areas: • Procurement Strategies and Procedures—To. pro- cure the professional and construction services needed for the project. • Municipal Coordination—To prevent project delays in obtaining municipal services to support con- struction and operation of the project. • Recordkeeping Procedures—To minimize cost overruns and delays in project completion, and to verify the allowability of project costs. • Financial Management—To ensure accountability and control of all project funds and to document that all construction grant funds are used solely for their authorized purpose. • Cash Flow Control—To ensure that there will be sufficient funds available throughout the project to meet all obligations as they arise. • Permit Needs—To avoid project delays and addi- tional costs associated with delays in obtaining permits. ', • Bonding and Insurance Requirements—To secure fulfillment of the construction contractor's obliga- tions and to protect against fire, theft, and other hazards during construction. • Work Site Availability—To guard against project delays and the possibility of cost increases that are generally not allowable for construction grant participation. MANAGEMENT DURING CONSTRUCTION The project manager should use the project management team to assure that the project is con- structed in accordance with approved plans and specifications, addenda, change orders and grant conditions. Good communications among all parties to the project are essential in managing the project during construction. ------- Effective communication tools for the project man- ager include regularly scheduled project manage- ment team coordination meetings and a routine for written communications. In addition, on-site meetings between the technical advisor or resident engineer and construction contractors are recommended on about a weekly basis to monitor actual progress The project manager, technical advisor, and resident engineer should also hold management meetings at least monthly to review progress. Once construction is underway, the following areas have been shown to need significant project man- agement attention: • Tracking construction progress against project and contract schedules to ensure the project is kept on schedule. * Relating payments to work accomplished to avoid overpayment. • Conducting change order negotiations in a man- ner which will preserve the benefit of the original competitively bid price. • Monitoring construction activities closely to an- ticipate problems that can lead to construction contractor claims. • Ensuring that on-site safety, security, traffic con- rol, and utility coordination are provided to main- tain the integrity of the project. PREPARING FOR OPERATION Before the construction contractor is released the project manager should conduct a final construction inspection with the technical advisor, resident en- gineer, and chief facility operator to assure that all work has been properly completed. The final inspec- tion should take place after all equipment has been tested, and generally after a start-up period in which all the treatment processes have been run. Before releasing the construction contractor, all warranties should be legally transferred to the municipality. The project manager should also be responsible for initiating a final inspection by the reviewing agency when construction is complete. This final inspection formally establishes that the project has been con- structed in accordance with the approved plans specifications, and change orders. At the end of the one-year certification period, which begins after construction is completed, the author- ized representative must certify whether or not the project meets its performance standards. The project manager should endeavor to make it possible to certify that the project does meet its standards by closely monitoring the status of equipment, opera- tion of the facilities, and training of operating per- sonnel during the certification period. PREPARING FOR FINAL AUDIT In accepting an EPA construction grant, the author- ized representative has agreed to make all project- related documents, books, records, and papers ac- cessible to the reviewing agency for audit purposes Either the authorized representative or project man- ager should be the main point of contact for the auditors. During the final audit, a municipality's care in estab- lishing and maintaining up-to-date and accessible records will be an advantage. The auditors can be expected to review accounting records, verify claims trace transactions, and determine that costs which were eligible for Federal participation were properly segregated from ineligible costs. If cost'documenta- tion is lacking, the municipality may have to reim- burse the Federal government for overpayments. Common audit problems that are identified and discussed in the guidance include: • Claims for undocumented costs. • Costs claimed in excess of grant or contract limitations. • Costs claimed which have been previously deter- mined ineligible or unallowable. • Costs incurred after the authorized construction contract completion date. « Redesign or rework costs. • Inadequate records supporting force account or administrative costs. • Costs of unapproved or unallowable chanqe orders. • Non-compliance with procurement regulations. ------- |