. 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

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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.

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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.

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   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.

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