Thanks to Bob Padgett, PE of Padgett Engineering Group (www.padgettengineering.com) for assistance with this posting.

Manufacturing facilities are focused on production and it seems non-process building components are a low maintenance priority. As facilities get some years on them, there are some basic building components that should be reviewed periodically.

One such component is a metal roof deck.  It’s an important structural element (diaphragm) that does more than support your roof – it also provides important lateral bracing for your building structure.  It is frequently loaded and unloaded by wind and rain, and is often covered by a ceiling or above bright lights making visual inspection a challenge. When first installed, the roof deck is usually either prime painted or galvanized giving it some basic protection from rust.  However, many manufacturing plants are relatively harsh environments and we see a lot of metal deck damage. Often, the damage is severe enough to be a concern.

When you hear of roof collapses, it’s usually when it’s raining. These types of collapses can begin as metal deck failures due to damage from rust, structural overloading from added equipment, or “beyond design weather events”.  Once roof deck or structural support failure begins, which may not be sudden or particularly noticeable, the local area sags encouraging water to pond.  The increased ponding compounds the overloading and sudden collapse can occur.  Nothing stops production like a hole in the roof – not to mention the life safety aspect of such an event.

If you have a facility with a metal roof deck, part of your preventive maintenance program should be the periodic inspection of the roof immediately after a rain to look for areas of ponding.  If ponding is found, look for the cause, including inspection of metal roof deck and structure below, and make the necessary repairs.  If the cause is not obvious, like a clogged roof drain, consult a structural engineer for an assessment and recommendations.  He’s a lot cheaper than the lost time, possible injuries, and repair costs of a collapsed roof.

 

The trend over the last few years has been for Clients to demand longer payment periods to its Vendors and Contractors.  We see many proposed payment terms in the 60 day range, some in the 90 day range, and a few in the 120 day range.  Why is this and what does it mean to the industry?

The “why” part of the question seems to be driven by the fact that in slow economic times, it can be done with little negative impact and some tangible benefits.  The Client’s cash flow is improved and risk is reduced since more money is being held longer.  Since money is cheap and competition is fierce, even the top tier contractors seem willing to put up with these terms (at low to no cost) so Clients continue to get good service from good firms.

A subtle benefit to Clients is the additional leverage it provides in the event of a dispute or problem. Since most contracts are based on 30 day billing cycles, extended payment terms mean multiple billings are “in process” and can be withheld increasing the leverage to force a resolution of a dispute in the Client’s favor.

There may also be subtle benefits from lien rights expiration that can result from extended payment terms. Our home state has statutory lien waiver forms that say payments are “deemed” to have been made in 60 days (even if they haven’t) unless a contractor files a lien or notice of non-payment.  Some contractors may decide to waive their lien rights rather than disrupt payments by these filings.

It’s hard to say what this means to the industry and whether there will be any structural changes in reaction to these extended payment terms.  Possible options include changes to lien laws, a push by Contractors and Vendors for up-front payments (deposits), or a reduction of the now typical 10% retainage to a lower amount . 0% retainage and 90 day payment terms would typically have more money being held by Client than 10% retainage and 30 day payment terms.

Our guess is that as economic conditions improve, Clients may want to re-think their extended payment terms.  Costs will likely increase but these will mostly be lost in the noise about price inflation for commodities and labor. But they will also increase due to the increased cost of money and reduced competition. Contractors and Vendors will start adding money to their quotes for the payment terms because they can. Firms who were previously willing to agree to extended terms may choose to pass on those projects as their work load increases.

We suspect within a year of solid economic times, we’ll be hearing some Clients complain about the quality and performance of their Contractors and Vendors. If you are a Client, that’s one sign it’s time to address your payment (and other) terms that define your relationship with Contractors and Vendors to assure you have motivated and qualified firms for your work.

 

 

When capital projects are conceived, budgets for various costs of the project are developed and then refined over the life of the project.  For a new facility one of those costs is “Site Acquisition”.

It’s fairly common for a community to offer “free land or work” in some form to entice a desirable business to locate there.  Who doesn’t want something for free? Especially if you have budget responsibility for the project.

Sometimes these are good sites and worth consideration. But sometimes, they aren’t.

Several years ago, a site was selected by a future Client mainly because it was “free” and in a desirable location. The Client felt good about the decision because the budget for site acquisition was about $1 million.

Then came the bad news – because of soils issues, the costs of site grading and development would be more than $3 million over their budget.  And extended their schedule by 2 months.  Not exactly “free land” anymore.

Reasonable due diligence and an understanding of the results would have identified the problem and without doubt the Client would have made a different decision. They got excited about the prospect of savings $1 million early in the process and failed to count the total cost of the “free land.” It was a hard earned lesson we’re sure they never repeated.

A while back we called on a prospective client. As the meeting broke up we had the chance to talk with the client’s project manager.  Wanting to tailor our proposal to his preferences, we asked what type of Project Delivery Method he preferred. He deflected and asked what we suggested.

Since it was a process expansion project we suggested EPC. He replied “I tried that once. It didn’t work out.” We poked and prodded trying to find out why, but made no progress.

Ok, what about CM at Risk? “I tried that too. It didn’t work out either”.

Straight CM? “Did that once too. It didn’t work out”.

Design-Bid-Build? “No, tried that too and it was the worst job ever.”

There was obviously a problem here and it wasn’t which type of project delivery method to use.

More important than the delivery method are the capabilities of the people assigned to your project.  Any delivery method is only as good as the people executing it.  That includes the Client’s.

The best project delivery method? Depends.  Get some good advice from a good firm to find out which is right for your project (and why).  And pay attention to the qualifications of the people involved – we think they are more important than the delivery method.