How McCarthy used Join to collaborate and build trust for The City Of Sioux Falls water reclamation plant project
The majority of water/wastewater projects involve upgrades and expansion of existing buildings and other infrastructure that usually require operations to continue during construction. The technical nature of these projects requires a high level of expertise that a limited number of contractors can meet. McCarthy Building Companies’ National Water Group, with over 150 water experts on staff, is among them.
The level of detail and planning required for water/wastewater projects necessitates that owners, design engineers, operating teams, and the contractor(s) work closely during preconstruction. The challenge during preconstruction is keeping these experts on the same page while design, engineering, costs, and budget details are ironed out – a bigger-than-normal challenge amid the pandemic and inflation.
Here we learn how the Join decision-making platform was crucial in arriving at a Guaranteed Maximum Price (GMP) for the Sioux Falls Regional Water Reclamation Plant Expansion project and why McCarthy now uses Join for all its projects.
Construction Manager at Risk (CMAR)
delivery for cost certainty
The growing trend of public owners choosing the CMAR and other collaborative delivery methods for their water/wastewater infrastructure projects is to ensure expertise is brought into the project early in the design process and to increase the certainty that the project will be delivered within budget.
Cost certainty, in particular, is one of the biggest reasons that municipalities are increasingly opting for collaborative delivery methods like CMAR. CMAR prevents bid-day surprises caused by economic conditions such as inflation or supply chain disruptions caused by the pandemic.
In 2019, the City of Sioux Falls hired McCarthy as the CM at-risk to expand and upgrade the City’s 40-year-old water reclamation plant. The original budget objective was $130 million, but McCarthy’s and Carollo’s first cost model came in significantly higher. On their own, using traditional spreadsheet tools, McCarthy and Carollo were eventually able to bring the number down to $180 million. It was clear there were still opportunities to identify, hurdles to overcome, and optional elements and pricing options to consider.
“We learned early on that the Owner’s scope cost was considerably more than they were expecting,” said Chad Meyer, Vice President and Project Manager from Carollo Engineers, an environmental engineering firm specializing in the planning, design, and construction of water and wastewater facilities. “We had to make major changes to that scope through the design process to make sure we were managing the budget effectively.”
Closer collaboration: the fastest path to GMP
Closer collaboration with the client and engineering design firm became imperative, and at the 30% design milestone, McCarthy deployed Join. Though McCarthy teams had previously used Join on other projects, it would be one of the first times they had used the platform with external project team member.
“We began to use Join for every milestone for cost reduction and understanding what scope needed to change to get the project within budget — at 30%, at 60%, and again at 90%,” said Chad. “Join helped us track or trend the project within the scope of what was in the contract documents. If the Owner made a request that wasn’t yet in the contract documents, McCarthy would track that in real-time, and we could see those items coming together. They [McCarthy] were already tracking some of those additional requests, so we had a good indication of where that cost was going to land once they modeled it.”
Shannon VerHey, Assistant City Engineer for the City of Sioux Falls, leads the project delivery team responsible for the City’s construction program. As an engineer with significant experience in construction manager at-risk projects, Shannon functioned as the City’s project manager for the Water Reclamation Plant. “Join made it easy to see where the budget gap was,” he said. “It’s interactive, intuitive, and the graphics and reporting tools allowed us to see how the budget was trending. It allowed us to track the issues and look at specific items and the backup information related to cost reduction measures.”
The city of Sioux Falls chose CMAR delivery for transparency
CMAR projects are “open book,” with all associated costs available to the Owner; it’s the City of Sioux Falls preferred contracting method. Providing the transparency required for CMAR is challenging with traditional Excel spreadsheets. “It is a challenge to keep up with the changes on a spreadsheet for a project of this size and magnitude,” said Shannon. “You have to have a centralized hub.”
To deliver the transparency that Sioux Falls wanted, McCarthy gave access to the entire project team, the owners, the designers, consultants, and subcontractors. “Join allowed us to really open up everything and show the Engineer and the Owner how costs build up rather than just saying ‘it’s a million-dollar change,’” said Steven Jarvis, Preconstruction Director at McCarthy. “We could show how we got there, which helped develop and maintain that trust within the group.”
Because Join updates the numbers in real-time, the biggest challenge was ensuring that items were not portrayed as completed while pricing was still being developed. To do this, the McCarthy team developed their own internal process for ensuring all pricing was completed before notifying the Owner.
While Shannon and other City staff reviewed the costs weekly, real-time updates were very important to the design and CMAR teams.
“I would review, validate, and confirm costs of data that McCarthy was entering,” said Chad. “Join gave everyone on board a real-time snapshot of what was happening as opposed to waiting for several months to understand cost changes and cost trending. We saw where the costs were, where we could save money, and where we could shift some scope.”
Building trust and keeping it
The McCarthy team is keenly aware that it can sometimes be difficult to get Owners and Engineers to trust contractors. While Join provides full administrative control over what users see, McCarthy took the “open book” approach to show exactly how they arrived at costs, with backup information and markups.
“When we went from the pre-Join life to the Join life, people’s outlook on how costing was happening changed a ton,” said Steven. “You could visibly see that our Client and the engineers appreciated having that openness and seeing what was happening and understanding why the costs were going up or down. They could understand that maybe some of the decisions they were making were driving the costs the wrong way, so we could focus on that and then make a decision. Join helped facilitate these discussions and allow everyone to get a good feel for how the project was progressing.
Efficiency is a given with Join
The goal was to arrive at a number that was within City of Sioux Falls’ budget.
Join enabled McCarthy to more easily show the different scenarios that could get them to that number, and how the overall design would be affected. Join made it easier to see the options – what could and could not be accepted.
Join also allowed McCarthy to show the Owner what was happening between the milestones – how the CMAR team was finding ways to save money, how they were working together to refine the scope of the project.
Before Join, McCarthy’s project update meetings were spent talking through estimates and how the build-up equated to the dollars and the source of information. “I feel like we never do that anymore because it’s all in Join. We used to spend hours just going through detail estimates,” said B.J. Peterson, Vice President of Operations at McCarthy. “Now people can just look at the numbers and the information and ask questions.”
“We now spend our time in update meetings making decisions and determining if they’re the right decisions to make for that team and the project rather than the details behind them,” added Steven. Steven used Join so much during their update meetings that the team jokingly knighted him “Sir Join-a-Lot.”
McCarthy achieves project success using Join
For Jeffrey Clarkson, Preconstruction Director for Water/Wastewater Projects at McCarthy, real success happens when you achieve great solutions on budget. With Join, McCarthy delivers on both fronts. The way Jeff sees it, “there are a lot of really smart brains in the water treatment world. Keeping everybody on the same page so they have the same information and understand the options is very important, especially from a cost perspective.”
“Join makes it easier to make timely informed decisions, to quickly choose between path A or path B when there is a fork in the road rather than waiting for a milestone estimate to be complete. This keeps the team focused moving forward and limits having to carry multiple options or backtracking and redesigning after the milestone.”
While unprecedented inflation and cost escalation during the last year required finding additional money for the project, Shannon of Sioux Falls says that Join played an essential role in guiding the team toward a GMP.
“If we had used Join from the get-go, we might have avoided some of the twists and turns of the repricing exercises. We might have gotten to the GMP faster,” he said.
Want to learn how Join can help streamline decision-making on your projects? Book a demo!