Understanding Capital Improvements: A Guide to Compliance and Documentation

Understanding Capital Improvements

A Guide to Compliance and Documentation

W.A. Flickinger

Copyright © 2024 W.A. FLICKINGER

All rights reserved

First Edition

PAGE PUBLISHING

Conneaut Lake, PA

First originally published by Page Publishing 2024

ISBN 979-8-89157-190-7 (pbk)

ISBN 979-8-89157-245-4 (hc)

ISBN 979-8-89157-218-8 (digital)

Printed in the United States of America

Table of Contents

Introduction

Chapter 1

Funding

Chapter 2

Phases

Chapter 3

Project Manager

Management, Coordination, and Reporting

Chapter 4

Example

General Covenants and Conditions (GCC)

Chapter 5

Forms

Chapter 6

Example

Instructions to Prospective Contractors

Chapter 7

Why?

Chapter 8

Project Management Process

General Contract Management

Chapter 9

Payments Administration

Construction Contract Payments Administration

Chapter 10

Analysis

Chapter 11

Selection Processes

Chapter 12

The Full Scope

Chapter 12 Continued

Microsoft Projects Task Chart Example

Chapter 13

Forms, Project Management, and Database

Chapter 14

Notices and Inquiries

About the Author

Beneficiaries of Reviewing This Book

The review and sharing of the information contained may assist in keeping you out of harm's way under audit:

State governors

City and county managers

All capital improvement departments of all cities and counties

All engineers or architects doing or planning to do work for the government

All contractors doing or planning to do work for the government

All universities or colleges with engineering of project management departments

All city, state, and federal auditors

Introduction

This is not a rules and regulations information center, but it will point you in the right direction. There are libraries full of federal regulations, state statutes, ordinances, codes, and some unwritten policies, which for the purpose of this book will be referred to as rules. Be aware adherence to all pertinent rules is necessary to accomplish project goals, and you must become familiar with the process to locate and apply the appropriate rules, which affect the project.

This book is intended to provide a basic and general understanding of project management. It is intended to promote discussion and questions. As stated above, there are libraries full of federal regulations, state statutes, ordinances, codes, and some unwritten policies that should be reviewed and researched to provide answers to many questions. No one answer to a question or discussion can provide sufficient understanding since many discussions or questions may have several correct and reasonable answers depending on the circumstances. Following is a chapter titled Why. That is the question that should be asked many times. Most answers will lead to a logical conclusion, and that conclusion is not because it is required within the FAR, state statutes, or code but because it is required to support and document the intent of the rules and protect the owner and taxpayer. These same questions and following discussions, or perhaps arguments, will be asked by contractors, subcontractors, suppliers, members of the management team, or owners' representatives. Understanding the logic will put the person being questioned in a position of strength as well as respect.

What is a project manager? A project manager is any individual or individual in a project management team who is responsible for ensuring a concept project is accomplished within the anticipated goals in accordance with all established rules. A project could be anything from creating an administration to operate a business, creating a manufacturing process, or managing a capital improvement project, whether public or private.

The term project manager is used throughout this book to describe the individual who will be responsible for managing a capital improvements project and ensuring compliance with the written contract documents and the rules. The project manager can work for the owner (federal, state, county, city), a consultant hired by the owner to manage the project, an architect/engineer of record, or the contractor or consultant awarded to design or build or design/build a project. The table of organization (TO) throughout this country for the management and documentation process of a capital improvement project differs greatly. There may be many layers of responsibility in any given TO depending on the size of the city, county, state, or federal departments producing a project. The project manager can have many titles, i.e., program manager, construction manager, superintendent, engineer, etc., but will have the same responsibilities as previously stated.

The project manager could be assigned a project at conception or at any time throughout the process of developing and contracting portions of the project. The project manager, depending on when the assignment starts, must be aware of all rules and regulations that provide direction for compliance. The phases of any project are outlined in chapter 2. If the project manager is assigned to manage the project from the beginning, the project manager must understand the criteria established to contract with the various establishments to perform their work, i.e., design engineer, architect, contractor, etc.

This is written to provide a general and, in some cases, a specific guide for project management. Again, project management, for the purposes of this book, is defined as the management of a capital construction project from concept to completion.

A project manager will be responsible for managing and coordinating multiple teams of various disciplines. Some of the teams may be of higher authority than the project manager; therefore, coordination may mean reporting status or progress (refer to chapter 13). This also means the project manager must be familiar with and knowledgeable about the required processes to accomplish the goals of the proposed capital improvement. The various tasks and disciplines will be discussed in more detail in a later chapter.

Capital improvement, in this book, mostly refers to projects funded with public funds (taxpayers' money). This will provide understanding and management techniques focusing on government-funded projects, but much of the information, outlines, forms, etc., can be used in privately funded projects. The project manager may not be the construction manager or owner's representative during construction but may still remain the responsible entity during the transition to the overall construction manager, depending on the owner's TO. Many government agencies have large TOs, and therefore, the project manager may be assigned to only a portion of the project. However, many smaller townships or cities, or even counties, have limited resources and may assign an entire project to one individual or group. This book will discuss all phases of a capital improvement project, some in great detail and some in general terms.

The project manager is not where you start in the overall capital improvements/engineering organizations. To a great extent, project management is people management. If you do not have experience in people management in the industry, go to work for a good project manager and experience how to interact, not dictate, with the various consultants, government managers, council members or commissioners, the various trades, contractors, owners, and their managers. In addition, you must also be capable of reading and understanding the plans and technical specifications of the project. You will need to reference both many times throughout the project. Further into this book, I will provide you with the characteristics of a good project manager. Understand if you graduated from a college or a qualifying school of any kind with a certificate that states you are a project manager, i.e., as a construction manager, engineer, etc., you are not. Even though formal education is paramount, experience is the greatest teacher for a successful project manager.

Included within the package are many forms. These forms can be fully functional when recreated in a format, i.e., Word, Excel, etc. Therefore, these forms can be modified to suit any project developer. It is suggested that when modifying these forms, with perhaps a logo, they be saved under a differing title without changing the original forms. It is also suggested that the language within the forms not be changed without research into the reasoning behind the original language. The FAR (Federal Acquisition Regulations), state statutes, and codification of ordinances change from time to time. These changes may require a change in the language of a form.

Be aware that every government entity is constantly under pressure to change rules and provide alternative means of selecting a consultant or contractor and in the reduction or timing of the required documentation or the documentation in its entirety during the performance. This includes the state government and federal government. There are many certified lobbyists in each city, county, state, and federal government that are paid to convince government representatives to make changes to the rules. Many, if not most, high-profile and well-connected lobbyists work for large consultants and contractors or representative organizations and are constantly attempting to change rules in favor of the consultants or contractors and reduce the costs to perform and increase profits. Yes, government contracting is complex and expensive. Compliance with all required documentation in government contracting is extensive; however, most of these rules are created to ensure the documented, fair, and unbiased award and performance of government contracting and the expenditure of taxpayers' money. If the reader questions these statements, research the latest bills to your state congress that address government contracting and consider the results of the passage of these bills.

Government funding for projects can be from federal, state, county, city, townships, or a combination of some or all. Government funding means the project is anticipated to be paid for using taxpayers' money. When using taxpayers' money, the process for each stage of the project is to be documented and controlled and is outlined within the rules. Adherence to these processes is necessary. Private funding can be included but must be for a specific purpose within the overall government-funded project. The precedents of government rules are from federal down to townships, i.e., federal rules take precedence over township rules.

Since much of the understanding and knowledge necessary to manage the construction of any project is outlined within the contract documents of a project, examples of several sections of a set of contract documents are included within this book. Also included within this book are several analyses of specific requirements found in most contract documents for a project. Of course, past experience performing management on similar projects is an asset.

Some of this book is written in simple letter format and some in outline format. This provides for a better understanding of the subjects. You may want to tab areas for later reference.

Be aware that this book can only provide some of the processes and means to successfully perform a capital improvement project. There are as many, if not more, alternatives to contracting and managing than discussed within this book. This book is written to provide a general understanding and make the reader aware there are many processes and means to be successful and to fail.

It should be noted that there are exceptions to every rule. These exceptions are created and exist to serve specific purposes; however, these exceptions, once created, are often used and misused to further the goals of others. Great care and research should be taken before accepting the arguments of the exception.

Chapter 1

Funding

Since funding will determine the process, documentation, and rules and regulations with which the project manager must adhere, this chapter will outline the various government entities and the general requirements to accomplish a successful project.

First, let's understand the budgeting process. Every government entity, whether federal or township, must create and approve a balanced budget by the beginning of their fiscal year. These budgets are broken down and itemized to exhibit the approved funds for each category of proposed use. These funds are taxpayers' money or public funds collected to, in part, improve, repair, or create new projects for the use of the taxpayer/public, as well as budgets to operate and maintain the existing components (water, sewer, roads, police, fire, etc.) of the entity. The budgets, large or small, are broken down into the category of proposed expenditures, reviewed, and approved by the governmental entity of jurisdiction. An example: a county approves $100 million for building roads. Once approved, the $100 million can only be used for building or improvements to the roads. To reallocate any portion of the $100 million to another category, i.e., improving the county's potable water system, can only be done by a review and approval of the same governing body that approved the original budget. The budgeting process is much more complicated than explained here, but for the purpose of understanding the capital improvement process and the involvement of the project manager, it is important to understand the funds required to perform this project are previously approved by the governing body and funded by the taxpayer on government projects.

Each government entity provides rules by which a capital improvement project can be funded. The federal government incorporates the Federal Acquisition Regulations, referred to as the FAR, and the Code of Federal Regulations, referred to as the CFR. The states all have their state statutes, and the counties have their codification of ordinances code, as well as cities and townships also have their code. This code should not be confused with the various states', counties', or cities' building codes. The design and construction of a capital improvement must be in accordance with the building code. The management of a capital improvement project is accomplished in accordance with the FAR, state statute, and/or code. Note that most state statutes are similar in their rules regarding a capital improvement project; however, there are differences, and the project manager should be familiar with the pertinent state statutes.

It is important to know the extent and the origin of all the funding, regardless of what governing entity is producing or managing the project. For example, if a county determines a capital improvement project is necessary and manages the various phases of a capital improvement project, it also must comply with the state statutes since counties are created (incorporated) and regulated through the state. If this county obtains federal funding for a portion of the project, then the county must also manage the project in accordance with the FAR. The phases of a capital improvement project are discussed in a later chapter. This process applies to all governing entities.

Where funding originates is important to understand in order to coordinate the capturing of the funding. The federal government and state and county governments often create grants or low-interest loans available to other governing agencies in order to improve or develop necessary infrastructure projects, i.e., roads, government buildings such as city hall, libraries, potable water system(s), etc. These grants or loans are outlined and very specific in purpose for use by the user governing agencies. In the user agency applications for a grant or loan, they must exhibit the detailed need and fulfill the criteria established by the granting agency. Within the generally exorbitant criteria established by the granting agency are specific regulations (rules) that the user agency must adhere to in order to obtain and use the funds if approved by the granting agency. The aforementioned rules may be contained and documented within the FAR, state statutes, and county codes, or maybe a specific rule established just for the specific funds.

A county code, or any city/township code, can create a more stringent requirement than an existing state statute; it can copy or adopt the existing state statute, but it cannot reduce or weaken the requirements/details of the state statute requirements. The same is true regarding the FAR. A state statute can create a more stringent requirement than an existing FAR or Code of Federal Regulation (CFR), or the state statute can copy or adopt a FAR regulation, but a state statute or code cannot reduce or weaken the details of the FAR regulations, if funding, in whole or in part is federal. For example, a county code can establish wage rates for contractors employees by category, and these wage rates can be a requirement, providing there is no federal funding. If there is federal funding, the county must enforce the wage rates requirements of the posted federal wage rates. If the counties' wage rates are greater than the federal wage rates, the counties' wage rates can still be a requirement. If the counties' wage rates are less than the federal wage rates, then the federal rates take president.

The FAR, state statutes, and code will outline the means and methods to manage a capital improvement project. For example, the rules will outline how project management can procure and pay for services rendered, whether during design or construction. It is important to familiarize and understand these requirements in order to outline and provide these processes to the consultant or contractor within the advertisement of proposed contracts/agreements. The details and requirements to accomplish the payment processes will be discussed in a later chapter.

Note: It is important to be aware that all capital improvement projects fall under the rule of audit. An audit can be performed during or after the capital improvement project is completed. The results of an audit can affect the funding of that project by retraction or affect future funding for any project of the governing entity. It is most likely that an audit will take place after the project is completed and sometimes years after. Adherence to the rules of management and documentation will determine the outcome of the audit. It is also important to understand that, though the governing entity is creating the rules within the codes, statutes, and FAR, the governing entity does not provide the methods of enforcement or documentation of many of the rules. Since audits often occur at or long after project completion, it will be the responsibility of the project manager or project management team to ensure the contracts or agreements clearly explain the methods of documentation.

It is equally important to understand that a governing body cannot enter into a contract or agreement unless the contract/agreement is fully funded by the governing body's approval within the budget. This applies to the various phases individually if contracted individually. Phases are discussed in more detail in the following chapter. There are exceptions to the preceding, but great care is necessary for using these exceptions.

Once an agreement with a consultant or a contract with a contractor has been advertised, reviewed, accepted, and approved (award), and the submitted costs fall within the budgeted funding, the value of the agreement/contract cannot be increased or decreased without the proper documentation being reviewed and approved by the governing body. Advertising, review, and award will be discussed in a later chapter. A change order to an agreement/contract will be discussed in a later chapter.

Chapter 2

Phases

Since the major focus of this book is a capital improvement project funded by taxpayer money, the phases are explained as follows (these phases will be similar regardless of funding, public or private).

In general, there are four (4) phases of every capital improvement project. They are the program phase, schematic design phase, design phase, and construction phase. The programming phase generally starts the project; however, the desired needs the project is to provide generally have been discussed by the governing body, and in most cases, a general budget has been developed prior to