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CONSTRUCTION MANAGEMENT PLANNING:
THE IMPACT ON MEETING OWNER GOALS

BY

David Allan Boothe

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER OF SCIENCE

Department of Agricultural Engineering

1984

ABSTRACT

CONSTRUCTION MANAGEMENT PLANNING:
THE IMPACT ON MEETING OWNER GOALS

BY
David Allan Boothe

This study investigated the impact which planning, done
by a Construction Management (CM) firm during the precon-
struction phase of a CM contract, had on the effectiveness
with which the firm met owner goals. The relative impact of
selected organizational and environmental characteristics on
the CM firm's ability to meet owner goals was also investi-
gated.

The study was conducted through the use of a question-
naire mailed to 92«companies, in Michigan, who advertised
that they provided CM services. The responses were analyzed
by frequency to describe the typical company and through the
use of Pearson's product-moment correlations and partial
correlations to ascertain the strength of linear relation-
ships between selected planning, organizational, and envi-
ronmental characteristics and measures of effectiveness.

The study results indicated that some aspects of plan-
ning affected the ability of the CM company to meet owner
goals, although they followed no clear pattern. As measured

by this study, the CM company‘s effectiveness was more a

David Allan Boothe

result of an interaction of organizational and environmental
characteristics rather than the clear cut action of any

planning characteristic investigated.

@Wan. 5&5/ 53

Chairman, Agricultural'Engineering Department

I

. ' m
. '1 ‘ 4 ,1
”33*? My

Major/Professor

DEDICATED TO
HOWARD PAYNE BOOTHE AND ERNESTINE EATON BOOTHE
WHO ORIGINALLY MADE IT POSSIBLE
AND TO
JANET LIVESAY BOOTHE AND SHANNON MCKINZIE BOOTHE
WHO NOT ONLY MADE IT POSSIBLE

BUT ALSO MAKE IT WORTHWHILE

ii

ACKNOWLEDGMENTS

I would like to thank Tim Mrozowski, Dr. Merle L.
Esmay, and Dr. Mary Van Sell for the support they provided,
both philosophically and material ly, during the period of
this research. My special thanks go to Dr. Mary Van Sell
for her assistance and guidance through the written laby-
rinth within these pages.

I would also like to thank the U.S. Army Corps of
Engineers for providing the opportunity, and the time, for
me to further my education at Michigan State University and
LTC Conner and the other members of the ROTC Detachment for
their support and assistance.

To those individuals in the construction industry who
took the time and effort to respond to my questonnaire--

thanks!

iii

TABLE OF CONTENTS

LIST OF TABLES O O O O O O O O O O O O O O O O O O O
LIST OF FIGURES O O O O O O O O O O O O O O O O O O

CHAPTER 1: INTRODUCTION

Overview . . . . . . . . . .
Importance of the Construction Industry in

the United States . . . . . . . . . . . .
Definition of Construction Management . . .
The Importance of CM to the Construction Effort
Statement of the Problem . . . . . . . . . . .
summary O O O O O O O O O O O O O O O O O O O O

CHAPTER 2: REVIEW OF LITERATURE

Overview 000 0000.

CM Company Effectiveness . . . . . . . . . . .
Dimensions of Effectiveness . . . . . . .
Management By Objectives . . . . . . . . .

Organizational Design . . . . . . . . . . . .

Organizational Characteristics Related to

Effectiveness . . . . . . . . . . . . . . .
Experience . . . . . . . . . . . . . . . .
Organizational Size . . . . . . . . . . .
Information . . . . . . . . . . . . . . .
Hypotheses O O O O O O O O O O O O O O O O

Environmental Characteristic cs Related To

EffeCt lveness O O O O O O O O O O O O O O O
PIC]. eCt 8126 O O O O O O O O O O O O O O O
Contracting Sequence . . . . . . . . . . .
Network Scheduling . . . . . . . . . . . .
Hypotheses O O O O O O O O O O O O O O O O

Planning Characteristics Related To

EfoCt iveness O O O O O O O O O O O O O O O
Value Engineering . . . . . . . . . . . .
Computerized Estimating . . . . . . . . .
Risk Anal-Y8 18 O O O O O O O O O O O O O O
PrOposal of Construction and Design

Alternatives O O O O O O O O O O O O O

Team Approach . . . . . . . . . . . . . .
Hypotheses O O O O O O O O O O O O O O O O
summary O O O O O O O O O O O O O O O O O O O O

iv

xii

CHAPTER 3: METHOD

overvj-ew O O O O O O O O O O O O O O
sample O O O O O O O O O O O O O O
Descriptive Measures . . .
Organizational Characteristics .
Environment of the CM Project .
Preconstruction Planning Techniques
Experience of the Company in Meeting
Owner Goals . . . . . . . . . .
The Questionnaire . . . . .
Survey Distribution and Follow-Up .
Statistical Procedures . . .
One Way Frequency Distribution
Pearson Correlation . . . . .
Partial Correlation . . . . .
summary O O O O O O O O O O O O O O

CHAPTER 4: RESULTS

overview O O O O O O O O O O O O O O O
Survey Response . . . . .
Descr ption of the Typical Company . .
Organizational Characteristics . .
Environmental Characteristics . .
Planning Characteristics . . . . .
Experience of the Company in Meet in
Owner Goals . . . . . . .
Organizational Characteristics Relatedt
Planning O O O O O O O O O O
Experience . . . . . . .
Organizational Size . . .
Information . . . . . . .
Organizational Form .
Organizational Characteristics Related to

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Environmental Characteristics of the Job

Experience O O O O O O O O O O O O
Organizational Size . . . . . .
Information . . . . . . . . . .
Organizational Form . . .
Environmental Characteristics Related
Planning Characteristics . . . . .
PIOjeCt Size O O O O O O O O O O
Contracting Sequence . . . . . .
Private Owners . . . .
Network Based Scheduling Systems
Measures of Effectiveness (Interrelati
Simple Hypotheses . . . . . . . . . .
Hypothesis No.
Hypothesis No.
Hypothesis No.

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Simple Hypotheses (Cont.
Hypothesis No. 4
Hypothesis No. 5
Hypothesis No. 6
Hypothesis No. 7
Hypothesis No. 8
Hypothesis No. 10
Hypothesis No. 11
Hypothesis No. 12

Results of Partial Correlation . . .
Relationship of Organizational Characte -

istics to Meeting Owner Goals . . .
Final Cost Equal To or Less Than
Owner's Original Budget . . . .
Final Cost Equal To or Less Than
Final Pre-Bid Estimate . . . . . . .
Job Completed On or Before Owner's
Original Date . . . . . . . . . . .
Job Completed On or Before Date Set
During Preconstruction Planning . .
Relationship of Planning Characteristics
to Meeting Owner Goals . . . . . . . .
Final Cost Equal To or Less Than
Owner' s Original Budget . . . . . .
Final Cost Equal To or Less Than
Final Pre-Bid Eatimate e e e e e o 0
Jobs Completed On or Before Owner's
Original Date . . . . . . .
Jobs Completed By Date Set During
Preconstruction Planning . . . . .
Other Organizational and Planning Charac-
teristics Related to Meeting Owner Goals
summary O O O O O O O O O O O O O O O O O O O O O

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CHAPTER 5: DISCUSSION AND CONCLUSIONS

Overview . . . . . . . .
Limitations . . . . . . .
Sample Size . . . .
Restricted Sample .
Small Standard Deviations
Unuseable Responses . . .
Organizational Characteristics R
Planning Characteristics .
Experience a e e e e 0
Discussion . . .
Conclusions . . .
Organizational Size .

1 t

Discussion . .
Conclusions . .

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vi

Information . . . . .
Discussion . . .
Conclusions . . .

Organizational Form .
Discussion . . .
Conclusions . . . .

General Conclusions: Organizational Character
istics Related to Planning Characteristics .

Organizational Characteristics Related to
Environmental Characteristics . .

Experience . . . . . . . .
Discussion . .
Conclusions . .

Organizational Size
Discussion .
Conclusions .

Information . . .
Discussion .
Conclusions .

Organizational Form .

General Conclusions: Organizational

Characteristics Related to Environmental

Characteristics . . . . . . . . . .
Environmental Characteristics Related to

Planning Characteristics . .

O O O O O
O O O O O O O O O
O O O O O O O O O
O O O O O O O O O
O O O O O O O O O O

O O O O O O O O O
O O O O O O O O O O
O O O O O O O O O O O
O O O O O O O O O O
O O O O O O O O O O O
O O O O O O O O O O O
O O O O O O O O‘ O O O
O O O O O O O O O O O

Value of Smallest Project . . . . . . . . .
Discussj-Ofl O O O O O O O O O O O O O O
Conclusions . . . . . . . . . . . .

Value of Largest Projects . . . . . . . . .
Discussion . . . . . . . . . . . . . .
conCIUSi-ons O O O O O O O O O O O O

Network Based Scheduling Systems Required

By owner O O O O O O O O O O O O O O O O
Discussion . . . . . . . . . . . . . .
conCIus1on8 O O O O O O O O O O O O O O

Hiring Sequence . . . . . . . . . . . . . .
Discussion . . . . . . . . . . . . . .
conCIusj-ons O O O O O O O O O O O O O O

Private Owners . . . . . . . . . . . . . . .
Discussion . . . . . . . . . . . . . .
Conclusions . . . . . . . .

General Conclusions: Environmental
Characteristics Related to Planning
Characteristics . . . ... . . . . . . . .

Measures of Effectiveness (Interrelationships):
Discussion . . . . . . . . . . . . . . . . .
Hypotheses . . . . .
Hypothesis No. 1 .
Discussion .
Conclusions .

vii

106
106
107

113

113
113
113
114

114
115

115
115
116
116
116

117
117
118
118

118
121

121
121

Hypothesis No. 2 .
Discussion .
Conclusions .

Hypothesis No. 3 .
Discussion .
Conclusions .

Hypothesis No. 4 .
Discussion/Con

Hypothesis No. 5 .
Discussion .

Conclusions .

&
o

l s o

Hypothesis No. 6
Discussion
Conclusions

Hypothesis No. 7
Discussion
Conclusions

Hypothesis No. 8
Discussion/C n

Hypothesis No. 10
Discussion .
Conclusions .

Hypothesis No. 11
Discussion .
Conclusions .

Hypothesis No. 12 .
Discussion/Conclusions

Partial Correlation . . . .

Organizational Characteristics

Meeting Owner Goals . . . . . . .
Final Cost Equal To or Less Than
Owner' s Original Budget (CSTOWNBG)
Discussion . . . . . . . . . . .
Conclusions . . . . . . . . . .
Final Cost Equal To or Less Than
Final Pre-Bid Estimate (CSTPREBD)
Discussion . . . . . . . . . . .
Conclusion . . . . . . . . . .
Job Completed On or Before Owners
OriginalDate eeeeeeoeoo
Discussion O O O O O O O O O O O
Conclusions . . .
Jobs Completed On or Before Date Set
During Preconstruction Planning .
Discussion . . . . . . . . . . .
Conclusion . . . . . . . . .
Planning Characteristics Related to
Meeting Owner Goals . . . . . .
Final Cost Equal To or Less Than
Owner's Original Budget . . . . .
Discussion . . . . . . . . . . .
Conclusions . . . . . . . .

viii

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O O O O O O O O O O O O O O O O O O O O O O O O O O O O

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131
131
131

132
132
134

134
134
135

136
136

135
137

Final Cost Equal To or Less Than

Final Pre-Bid Estimate .

Discussion . .
Conclusions .

Jobs Completed On or Before Owner'

Original Date .
Discussion . .
Conclusions .

Jobs Completed On or Before Date Set
During Preconstruction

Discussion . .

Conclusions

Discussion Summary . . . .
Simple Correlations .
Simple Hypotheses . .
Partial Correlations . .

Organizational Characteristics Re

Planning

to Meeting Owner Goals . .

Planning Characteristics Related
Meeting Owner Goals

Study Synopsis . . . . . . . . . . .

Recommendations for Future Research

summary O O O O O O O O O O O

BIBLIOGRAPHY O O O O O O O O O O O

APPENDICES

t

to

A. List of Construction Management Contractors .

B. Survey Instrument . . .

C. Statistical Definitions and Formulas Used to

Analyze Data . . . . . .
D. Key to Variables . . . .
E. Frequency Histograms . .
F. Pearson Correlation Matrix

ix

138
138
138

139
139
140

140
140
142
142
142
144
147

147

149
149
151
153

154

159
167

175
177
180
191

Table
4.1

4.2

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

5.1

5.2

LIST OF TABLES

Company Characteristics: Means, Standard
Deviations (S.D.). and Ranges . . . . . . . . .

Environmental Characteristics: Means. Standard
Deviations (S.D.), and Ranges . . . . . . . . .

Planning Characteristics: Means, Standard
Deviations (S.D.). and Ranges . . . . . . . . .

Measures of Effectiveness: Means, Standard
Deviations (S.D), and Ranges . . . . . . . . .

Correlation Coefficients of Organizational
Characteristics Related to Planning
Characteristics . . . . . . . . . . . . . . . .

Correlation Coefficients of Organizational
Characteristics Related to Environmental
Characteristics . . . . . . . . . . . . . . . .

Correlation Coefficients of Environmental
Characteristics Related to Planning
Characteristics O O O O O O O O O O O O O O O O

Correlation Coefficients Between Dependent
var 1ab1e8 O O O O O O O O O O O O O O O O O O O

Correlation Coefficients of Simple Hypotheses
Characteristics Related to CM Effectivenss . .

Organizational Characteristics Related to
Measures of Effectiveness: Correlation
Coefficients and t-Tests . . . . . . . . . . .

Planning Characteristics Related to Measures of
Effectiveness: Correlation Coefficients and t-

Tests O O O O O O O O O O O O O O O O O O O O O

Measures of Effectiveness: Means. Standard
Deviations (S.D.). and Ranges . . . . . . . . .

Variance (r2) Explained By Relationship of
Dependent Variables . . . . . . . . . . . . . .

Page

63

66

67

69

72

76

79

82

84

89

93

101

119

Table . Page

5.3 Summary of Organizational Characteristics
Related to Planning Characteristics . . . . . . 143

5.4 Summary of Organizational Characteristics
Related to Environmental Characteristics . . . 145

5.5 Summary of Environmental Characteristics
Related to Environmental Characteristics . . . 146

5.6 Planning Characteristics Whose Relationship to
Meeting Owner's Goals was Affected by
Organizational and/or Environmental
Characteristics . . . . . . . . . . . . . . . . 150

F.1 Pearson Correlation Matrix .. . .. . .... . 191

xi

Figure

1.1

1.2

1.3
1.4
2.1
2.2
2.3
2.4

E.1

LIST OF FIGURES

General Comparison Between Traditional General
Contracting and Construction Management . . . .

Construction Management versus General
contraCting O O O O O O O O O O O O O O O O O O

CM Preconstruction Services . . . . . . . . . .
CM Construction Services . . . . . . . . . . .
Example of Military--or Line-Type Organization
Example of Line and Staff Organization . . . .
Management Process . . . . . . . . . . . . . .

Performance of Formal and Informal Planners
During the Planning Period . . . . . . . . . .

Summary of Working Hypotheses . . . . . . . . .
Partial Correlation Procedure . . . . . . . . .
Organizational Characteristics Whose
Relationship to Meeting Owner‘s Goals was
Affected By Planning . . . . . . . . . . . . .

Frequency Histograms . . . . . . . . . . . . .

xii

Page

10

28
39

41
48
58

148
180

CHAPTER 1
INTRODUCTION

mm
This chapter provides a sampling of several of the
current meanings of Construction Management (CM) and formu-
lates the working definition for this study. It also points
out.how CM can.be of benefit to the construction industry.
In addition, the chapter will provide a statement of the re-
search problem addressed by this study.

W
W

Thelconstruction industry predates even the earliest
historical records. and has been an important part of civil-
izations in every part of the world. In the United States
construction is a major industry. According to U.S. govern-
ment statistics. construction accounted for approximately
10% of the Gross National Product (GNP) between 1947 and
1975. Since 1975 this share has fallen to about 6% (Busi-
ness Roundtable, 1983). The dollar amount used in the
government's figure for put-in-place construction may be
understated by as much as 25% (BusinessiRoundtableq 1983).
This is due. the Business Roundtable found. to two main

reasons. First. the government defines “construction" in an

2

outdated and inconsistent way in gathering the figures for
the value of construction put-in-place. Second, the govern-
ment data-gathering procedures do not collect all the infor-
mation they are intended to collect. If this understatement
is true this would mean that the true value of construction
put-in-place in 1979 was about $300 billion, rather than the
figure of $229 billion reported by the government.

Construction is the single largest production activity
of the American economy in terms of dollar value produced
(Clough and Sears, 1979). If, as Clough and Sears, 1979,
estimate the annual total construction expenditure is equal
to approximately 12% of the GNP, then one of every eight
dollars spent in this country for goods and services is a
construction dollar. If, additionally, production, trans-
portation, and distribution of construction materials is
taken into account, then about 15% of the total employment
in the United States is‘directly’or indirectly created by
the construction industry (Clough and Sears, 1979).

The construction industry, therefore, has an important
impact on the economy of the people in the United States.
The efficiency with which construction projects are accom-
plished, and the cost and quality of the resulting construc-
tion, affect not only the economy but also the quality of
peoples livesm For this reason, techniques such as Con-
struction Management (CM) that hold the promise of improving
efficiency have become increasingly common in the construc-

tion industry.

3
W

The Associated General Contractors of America (AGC)
define Construction Management as a method of contracting
for project delivery. This method has as a central concept
the use of a Construction Manager, who, as a member of the
construction team composed of the Owner, the Architect-Engi-
neer (A-E), and other consultants as needed, coordinates and
manages the building process.1 The primary emphasis is on
overseeing and integrating the design and construction
phases of a project.

The AGC definition of a CM (Construction Manager) says
that the CM will use his/her skill and knowledge of general
contracting to developrschedules: prepare project estimates:
analyze alternative designs: study labor conditions: advise
on construction techniques: perform value engineering; and
coordinate and communicate the activities of the team, both
during the design and construction phase (The Associated
General Contractors of America, 1982).

The American Society of Civil Engineers defines a Pro-
fessional Construction Manager as a firm or organization
specializing in the practice of Construction Management.
The CM should provide, as part of a management team consist-

ing of the owner, a design organization, and CM, the

 

1In the remainder of this paper the terms Construction
Management and Construction Manager will be used inter-
changeably and will be abbreviated by CM. Strictly speak-
ing, the term Construction Management refers to a method of
contracting while Construction Manager refers to the firm,
but CM is used to represent either in the literature.

4
following services, or whatever portion is required:

1) By working with the owner and‘design organization
from the beginning of design through completion, he/she
provides leadership on all construction matters. This in-
cludes keeping the project management team informed, and, in
the case of design improvements, construction technology,
schedules, and(construction.economies, making recommenda-
tions.

2) During the planning phase he/she suggests construc-
tion and design alternatives and analyzes their effect on
project cost and schedules.

3) The CM tracks the development of the project to
ensure that project budgets, schedules, and quality require-
ments are not exceeded or sacrificed without the owner's
knowledge.

4) He/She coordinates the work of all construction
contractors and advises on and‘coordinates procurement of
equipment and material.

5) The CM may monitor claims, changes, payments to
contractors, and inspection for conformance to‘design re-
quirements. He/She also provides current cost and progress
information.

The ASCE definition also states that the CM does not
usually perform significant design or construction work with
his/her own forces. This is in keeping with the non-

adversary relationship of the team members (ASCE, 1976).

5

According to Goldhaber, Jha, and Macedo (1977) CM is
basically'a systems approach to construction. This approach
saves time because of the efficient phasing between the
decision, design, and construction activities. As shown in
Figure 1.1, the overlapping of the stages in the construc-
tion process--i.e., final schematic design with design de-
velopment, design development with construction documents,
design development with construction documents with bid,
construction documents with bid, and bid with construction,
in the CM approach theoretically provides a saving of time
when compared with the sequential approach used by the
traditional general contractor. This type of approach also
realizes cost savings through design alternatives, value
analysis, and package bidding, which encourages competition
between subcontractors. ‘Cost monitoring and cost control
systems are also important factors in this definition.

Adrian (1981) indicated that CM was a process where a
potential owner engages an agent (CM) to coordinate and
communicate the entire building process. The emphasis is on
minimizing the time and cost of the project through in-
creased efficiency in coordination procedures while still
maintaining the desired project quality. Figure 1.2 illus-
trates the conceptual differences between the CM as an agent
of the owner and the traditional general contractor rela-
tionship. Adrian (1981) also noted that the most distin-

guishing characteristic of the CM process is the involvement

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8
of a single firm through the.entire project: feasibility,
design, contract letting, construction and implementation.

CM contracts are professional service contracts and are
normally negotiated between the owner and CM. A basic
fixed-fee, normally ranging from 2 to 5% of the estimated
construction cost is agreed on for total compensation for
all preconstruction and construction phase services
(Goldhaber et a1., 1977).

George J. Heery, writing in The-MLIW
(1974), said that when a firm represents the owner in all
construction management activities, CM includes all the
management activities that are related to a construction
program.and carried out during thejpre-designw design, and
construction phases of a project.

Foxhall (1972) stated that CM is a firm that applies
know-how of construction techniques, conditions, and costs
to the three phases of construction: decision, design, and
delivery.

A concept central to all published definitions of CM is
that the process is divided into two distinct phases and
that each phase has some functions, offered by the CM firm,
which are limited to only one phase while some functions
overlap both phases. The preconstruction phase could re-
quire some or all of those functions listed in Figure 1.3
while the construction phase could require some or all of
those functions listed in Figure 1.4. As was noted above,

all functions in both phases, may or may not be required.

Owner-Needs Identification Study
Project Feasibility Study

Tax Analysis of Project

Marketing Research for Proposed Project
Assistance in Obtaining Financing

Assistance in Obtaining Permits 5
Zoning

Budgeting

Value Engineering

Paramenter Estimating

Scheduling of Design & Pre-Construction
Identification of Long-Lead Items

Bid Packaging

Awarding Contracts

Setting Out Operating Procedures &
Responsibilities

Process Paper Work

 

Figure 1. 3

Source:

CM Preconstruction Services

Adrian, James J., CM: The Construction
Management Process, (fiEston Publishing
Company, Reston, Virginia, 1981), p. 47

 

10

Detailed Planning 8 Scheduling
Construction Phase Estimating
Operating Procedures
Supervision

Inspection

Testing Materials

Handling Paper WOrk

Handling Change Orders

Cost 8 Time Control System
Process Contractor Payments
Testing the Completed Project
Marketing the Project

Property Management

 

Figure 1.4

Source:

CM Construction Services

Adrian, James J., CM: The_§9nstruction
Management Process, (Reston Publishing
Company,§3ston, Virginia, 1981), p. 55

11
The choice of which functions to include is a product of the
owner's‘desires, the type and size of the project, and, of
course, the contract.

A distillation of these definitions and explanations of
Construction Management leaves the essentials of a firm,
strong on management ability and practical construction
knowledge, which is involved with a project from conceptual-
ization to turnover of the completed project. CM is a team
concept which consists of, as a minimum, the CM, the owner,
and the design professional (A-E).

Although the CM process may be used to implement phased
construction, the overlapping of construction stages, there
is not an irrevocable link between the two. The fact that a
.project is being constructed utilizing the CM method does
not also mean that the project is being constructed utiliz-

ing phased construction.

WW
According to the Business Roundtable (1983) the United

States is no longer getting its moneys worth from the con-
struction industry. They cited a Commerce Department report
that productivity in put-in-place new construction had
dropped from an index number of 100 in 1972 to an index
number of 82.9 in 1979, a drop of nearly 20%. The Business
Roundtable further pointed out that this erosion of con-
struction efficiency and productivity had a disastrous ef-

fect on the economy since the price of every new piece of

12
real property that is built directly affects the price for
goods and services produced in it.

The Business Roundtable believed that fragmentation is
the one reason that the construction industry is relatively
inefficient. It is a $300 billion a year business which has
been activity involving almost one million contractors and a
similarly large number of owners and architects. These
large numbers offer almost endless permutations, with the
chances fof litigation equally large.

M. R. Lefkoe (1970) wrote that contractors should view
their function as making it as easy as possible for poten-
tial customers to obtain the value satisfaction that their
structure would ultimately provide, rather than viewing the
activity as merely putting up a structure. He thought that
those contractors who accepted this new definition of con-
struction would have to assume increased responsibilities
for the entire construction process. Adrian (1981) cited
two reasons for the growth of CM: one, the failure of tradi-
tional construction methods to attain the owner's time,
cost, and quality objectives, and two, the compatibility of
the CM process with increased project complexity. The Busi-
ness Roundtable (1983) indicated that opportunities to
shorten the project time and cut project costs are often
passed by because the traditional construction process iso-
lates financial planning, design, and scheduling from that

of the actual construction.

13

A study conducted by Parvis F. Rad and Marion C. Miller
(1978) found that from 1971 to 1976 the percentage of all
contractor and design firms offering CM services increased
9%. They also found that, among contractor firms, the
increase»in the percentage of firms providing CM services
was predominantly among the largest firms. Lindstrom (1982)
citing from construction statistics in W
Construction noted that Construction Managers boosted their
commercial, industrial, and institutional (CII)*volume by
27.3% in 1981 as compared to only a 12% growth overall from
CII volume. CM was the area of greatest growth. In their
search for methods to increase efficiency, and therefore
their company's profits, construction companies were appar-
ently turning to CM in large numbers.

The CM process has evolved from its beginning in the
late 1960\3 as a method to integrate, under a continuity of
management, all the phases of construction: conceptual
planning, schematic design, design development, contract
documents, bidding, and actual construction. This conti-
nuity of management, coupled with the presence of construc-
tion expertise early in the design phase, is the construc-
tion industry's response to the challenge of many critics to
enter the latter part of the twentieth century and employ
modern management techniques.

Although much has been written about the growth of CM,
what it is, and how to implement it, the available litera-

ture is deficient in studies or articles pertaining to a

14
question central to the CM process. That is, are the compa-
nies who provide CM services any better off than those who
do not? Logical extensions to this question, which appear
to be lacking in the literature, are investigations into the
specific planning techniques CM firms use and if their
activities have any impact on the effectiveness with which
projects are completed. This question is central to the

purposes of this thesis.

SithflflfltJflLihfiJflfihLfln

This study is directed at the preconstruction phase of
CM. More specifically, the study will attempt to determine
the effect of planning, during the preconstruction phase,
on the effectiveness of the CM firm.

The investigation is directed towards determining the
relative impact of the planning techniques, which a CM
company uses during the preconstruction phase, on the effec-
tiveness of the company and consequently on its profitabili-
ty. Also the relative impacts of both selected organiza-
tional characteristics and the type of CM projects a company
undertakes on the effectiveness of the company will be
investigated.,

The key word in this is 'relative.‘ That is, how does
the impact of the planning done in the preconstruction phase
relate/to the organizational characteristics or project

type. Is the impact of any of these three, or some

15
combination, more important to the efficiency of the CM

company than any other, either singularly or in combination?

W

The construction industry, including its many ancillary
industries, has always been an important part of the economy
of the United States. According to government statistics it
now accounts for 6% of the GNP although some sources feel
that this is understating its importance.

The definitions of CM are as varied as the companies
who engage in it or the individuals who write about it.
Several professional organizations, including the ASCE and
the AGC, have published definitions and guidelines in an
attempt to arrive at a common meaning of the term "Construc-
tion Management.“

CM is one of several methods by which the construction
industry has attempted to meet public criticism of industry
inefficiency and charges of poor management. Failure of
traditional contracting methods to attain the owner's time,
cost, and quality objectives plus the increased complexity
of present day construction projects have been the major
factors in the apparent growth of CM.

This study, directed at planning in the preconstruction
phase of CM, is an investigation of the relative impact of
the planning techniques used on the ability of a CM company

to meet an owner's requirements.

CHAPTER 2

REVIEW OF LITERATURE

Quaint
This chapter provides a recapitulation of the litera-

ture.concerning the central question of this paper. That is
the extent to which characteristics of the CM company,
characteristics of the CM project or the project environ-
ment, and the planning used by the CM company during the
preconstruction phase of a project all.have an impact on the
effectiveness of the CM company in meeting the requirements
of an owner. The review is a combination of literature from
the construction industry and from organizational behavior
in the field of business management. In conclusion, the

hypotheses drawn from this literature are presented.

WW
Goldhaber, et a1. (1977) stated that the major concern

of the construction industry is to erect quality buildings
on schedule and within the owner's budget. They felt that
the best method of combining the diverse activities of a
construction project into an integrated whole is a systems
approach. This approach is a process that generates a
completely integrated system that is intended to accomplish

one or more objectives. In the case of a construction

16

17
project that objective is a quality building, on time and
within budget. They argued that CM is the system approach
applied to the construction industry.

The Construction Industry Cost Effectiveness Project
(Business Roundtable, 1983) recommendations, made after
studying over 125 different organizations and companies, for
increasing the cost effectiveness of the construction indus-
try mainly involved ways to manage construction projects
more effectively. They found that more than half the time
wasted during construction was attributable to poor manage-
ment, that is the lack of efficient management.

Hofer and Schendel (1978) made a distinction between
effectiveness and efficiency when applied to a company.
They stated that in general systems theory, effectiveness is
the degree to which the actual outputs of the system (CM)
correspond to its desired outputs, while efficiency is the
* ratio of actual outputs to actual inputs. In the construc-
tion industry these two terms, effectiveness and efficiency,
appear to be used interchangeably. Hofer and Schendel
(1978) went on to say that efficiency usually applied to
Operations internal to the company while effectiveness ap-
plied to the relationship between the company and its exter-
nal environment.

Steers (1977) made the point, after studying previous
research, that, at least in some cases, efficiency is not a
prerequisite of effectiveness. He cited the case of a

government in time of war, the government had “unlimited“

18

resources, where efficiency may be less important than ef-
fectiveness. On the other hand, where an organization does
not have unlimited resources, efficiency may be the most
important factor in facilitating organizational effective-
ness. Under these constrained circumstances, efficiency
allows for increased productivity. He also stated that, in
highly competitive market situations, efficiency may repre-
sent survival itself.

Goldhaber, et al. (1977), felt that the system ap-
proach, CM, when prOperly applied helps to develop a more
efficient operation that provides better quality, reduced
time of work, and lower costs. Additionally, by providing
better coordination and communication between specialized
areas of the project, it further increases operational effi-
ciency and the effectiveness of the company on the project.

Adrian (1981) said that the CM firm's ability to be
involved in the construction process throughout design,
construction, and implementation places the firm in a posi-
tion to make decisions that minimize the project's time and
cost and maximize project quality, thereby making the pro-
ject more efficient. This introduction of a single source
of management into both the design and construction stage
introduces, in Adrianis words 'work smarter not harder“ into
the construction process and that is the key to obtaining
the most efficient project.

Earl M. Jennett (1972) said that theoretically, under

CM, there should be a gain in efficiency through early input

19
or construction expertise and less need for contingency
allowance.

Roy Harley (1972) said that CM aims to meet the owner's
needs most efficiently. Abraham S. Bolsky (Construction
Management: The Man Behind the Concept, 1972) indicated
that his company had found that an experienced CM who parti-
cipates in the design and then innovates in the construction.
process could produce savings of 25% to 33% over the cost of
traditional design and construction procedures.

Dioguardi (1983) writing about the construction indus-
try stated that for companies to function efficiently their
managers must introduce and expand the use of computerized
information systems. These systems are combinations of
computer programs, such as CPM (Critical Path Method) and
PERT (Production Evaluation and Review Technique) which are

used for planning, and estimating programs.

We

Sloma (1980) created a performance test for management
which, due to the relationship of management to company
effectiveness, could also be considered a measure of the
effectiveness with which a CM company meets an ownerus
requirements. He asked if managers were primarily guided by
market or customer needs rather than theoretical concepts.
This is especially pertinent to CM because an owner's needs
are a quality project delivered on time and within schedule.
An owner is not primarily concerned with thei'how' but

rather with the 'when' and 'how much.’

20

Another of Sloma's (1980.) questions had to do with the
amount of time spent ”fire-fighting“ problems rather than
preventing them. This relates to the planning conducted
during the preconstruction phase by the CM company.

His question regarding creating new ideas and solu-
tions, as opposed to a “don't rock the boat' conformity is
one of the central purposes in CM. This is the early use of
construction knowledge to improve the design and to make
alternatives available to the owner. This can save time and
cost later in the project and lead to increased effective-
ness in meeting the owner's requirements.

Klein and Ritti (1984) differentiated among political
goals, planning goals, and action goals of an organization.
Political goals are usually set at the executive level to
maintain resources of sentiment and power, both inside and
outside the organization, and are often stated in general
terms as ideas. Political goals tell the organization that
these ideas are important, but specific planning goals are
generally not given.

Intended to guide choices, planning goals may be dif-
ferent than the more public political goals. These are set
to demonstrate organizational intent and provide a basis for
choice among alternatives. These types of goals usually
come from middle and upper management. Action goals, those
set by first level management, are goal statements which can
be acted upon without further simplification (Klein and
Ritti, 1984).

21

Taken in the context of a CM company, an example of a
planning goal would be the signing of a contract for a CM
project. The meeting of the owner's requirements are the
organizational intent while the how, or action goals, are
those actions which must be completed to meet the planning
goals. ’

Thompson and McEwen (1958) stressed the close relation-
ship between goal setting in the organization and the exter-
nal environment in which the organization operates. In this
case, environment means factors outside the organization
which have the potential to influence organizational actions
and success. In the construction industry, short term
goals, i.e., project completion, etc., are influenced more
by the company"s environment than by factors internal to the
company. This environment includes not only the wishes of
the owner, but also competition from other companies,
unions, and the complexities of federal, state» and local
regulations.

As Dioguardi (1983) has pointed out, the construction
company exists almost at the whim of factors in an environ-
ment external to the company itself. The ability of a
construction company to continue to operate is almost wholly'
based upon its effectiveness in meeting goals set for it by
its environment. This is not to say that the company, as
Thompson and McEwen (1958) stated, has no input on maintain-
ing a balance of power with this external environment. In

the end, the company can turn down any contract for which it

22
feels the goals are unrealistic.

In writing on the multivariate approach to measuring
organizational effectiveness, Steers (1971) found that there
was a surprising lack of consensus as to what constitutes a
useful set of measures of organizational effectiveness.
Although each model had three or four defining characteris-
tics of success, there was little overlap among the ap—
proaches. Only one criterion was mentioned in over half of
the models he studied. This was adaptability/flexibility.
This criterion was followed by productivity and satisfac-

tion.

WWI-m
As described by Campbell (1980) , management by objec-

tives (MBO) represents the ultimate in a goal-oriented model
of effectiveness. Rather than an organization being evalu-
ated on a single continuum, such as a cost/benefit ratio,
MBO assumes that effectiveness is some aggregation of spe-
cific, observable, and quantifiable accomplishments and
failures. Either an organization accomplishes a specific
task or objective set for it or it does not.

Campbell (1980) mentioned that one relevant issue with
HBO is what group or individual sets the goal(s) for a
particular organization. A second issue is to what extent
is it possible to define quantifiable goals for the organi-
zation. Additionally, to what extent is it possible to know
whether or not an objective has been met? He further stated

that for a particular time period, each organization must

23

specify in detail the things which it wishes to accomplish.

For the CM company MBO seems to be an especially appro-
priate method of measuring the efficiency of its Operations
concerning a specific project and its (the CM company's)
effectiveness from the owner's viewpoint. The objectives
are exceptionally clear-cut, at least from the perspective
of the owner, and are arrived at, collectively, by the CM
firm and the owner with input from the design professional
(A-E). The desire of the owner to have a quality project,
built on time and within the budget, is quite easily trans-
lated into a yardstick by which the CM company can measure

both its efficiency and its effectiveness.

Organizationaljesisn
Burns and Stalker (1961) originated the designation of

organizational structure as mechanistic or organic. Miles
(1980) characterized mechanistic forms as having a rigid
breakdown of roles into functional specializations, precise
definitions of duties, responsibilities and power, and a
well developed command hierarchy through which information
filters up and decisions are instructions flow down.
Organic forms are more flexible and adaptable: jobs lose
much of their formal definition, and communications up and
down the hierarchy are more in the nature of consultations.
In addition to the characterization he felt that the organic
form is more suitable for changing conditions “which give

rise constantly to fresh problems and unforeseen

24
requirements for action which cannot be broken down or
distributed automaticallyu'

Mintzberg (1979) designated five structural configura-
tions for organizations. They are each characterized by
specific prime coordinating mechanisms, key part Of the
organization, and type of decentralization.

His simple structure has direct supervision as the
prime coordinating mechanism and the key part of the organi-
zation is the strategic apex. Power over all important
decisions is usually in the hands of the chief executive
officer. Decentralization is non-existent but rather this
type of organization has vertical and horizontal centraliza-
tion. This structure is characterized by what it is not--
elaborated.

Mintzberg's second structure is the machine bureauc-
racy. Its prime coordinating mechanism is standardization
of work and the key part of the organization is the techno-
structure. Rules and regulations are the seat of power for
this structure with formal communication favored at all
levels. The machine bureaucracy has limited horizontal
decentralization.

Another structural design for organizations is the
professional bureaucracy. Standardization of skills is its
prime coordinating mechanism with the key part of the organ-
ization being the operating core. The Operating core is
defined as where the Operators carry out the basic work of

the organization. In the case of the professional

25
bureaucracy the Operating core is composed of trained and
indoctrinated specialists--professionals. This structure is
characterized by both vertical and horizontal decentraliza-
tion.

With its prime coordinating mechanism being the stand-
ardization of outputs the divisionalized form has as its key
part of the organization the middle line. This form has
limited vertical decentralization.

The final organizational firm, as noted by Mintzberg
(1979) is the adhocracy. This form, although it is the
newest, seems to be a description of the construction com-
pany which has organized itself for CM. As noted by Mintz-
berg, this structure is highly organic, with little formali—
zation of behavior; high horizontal job specialization based
on formal training: a tendency to group the specialists in
functional units for housekeeping purposes but to deploy
them in small market-based project teams to do their work: a
reliance on the liaison devices to encourage mutual adjust-
ment-~the key coordinating mechanism-~within and between
these teams: and selective decentralization to and within
these teams. In this form, managers are abundant--function-
a1 managers, integrating managers, and especially project
managers.

Dioguardi (1983) felt that, due to the fact that the
construction industry'is a macroeconomic sector that fre-
quently gives rise to booms and recessions of a more or less

intense character but of limited duration, the industry can

26

no longer operate as compact, highly integrated self-
contained units that can perform all work Operations them-
selves. The danger always looms of facing production peaks
with an organizational structure too large or too small for
the work actually awarded. This is why a new organizational
approach needs to be developed, capable of determining in-
terdependencies that run from a central base pole, toward
various autonomous productive poses situated inside or out-
side the firm. This means that the larger enterprises must
act as contract coordination and management firms.

Describing a military or line type organization for
construction, Deatherage (1964) said that this is the‘old
construction type where discipline was the essential fea-
ture. As shown in Figurer2.1, where the solid lines show
authority and the broken lines show contract and communica-
tion, the solid lines predominate. Discipline, under this
structure, is assumed to be the most important factor.

Figure 2.2 illustrates Deatherage's concept of a line

and staff organization where communication and contact are

at least as important as discipline.

WWW

Experience
The CM Committee of the Associated General Contractors

of American (AGC) found, after reviewing projects where CM
tiad failed to meet the owner's objectives, that the cause

was usually directly related to the selection of an

27

 

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29

incompetent CM (Lindstrom, 1982). The General Services
Administration (GSA) feels that a CM firnfls experience in
the construction field in general and the CM field in parti-
cular should be a basic consideration when hiring a CM firm.
Questions relating to this experience are placed on the
questionnaire which prospective CM firms are requested to
fill out for pre-qualification (GSA, 1975).

The AGC feels that, in the preliminary or initial
consideration of possible CM prospects, the firm's recent
experience would be a basic consideration. In order to
narrow the field of possible CM firms, an owner should
conduct a detailed investigation of past performance (AGC,
1982). This is important not only because the successful
completion of comparable projects is a basic consideration
to the owner, but also because it indicates the demonstrated
ability of the CM in several areas.

For many attributes of CM firms experience is perhaps
the best indicator of potential (Tatum, 1979). He pointed
out that one of several criteria whiCh may be used in eval-
uating experience is overall performance on like projects
when judged by comparison of actual cost and completion date

with budgets and schedules.

W

The more sophisticated owners and buyers of construc-
tion products of today are beginning to demand that the
fragmented responsibilities which heretofore have been a

'given' in the construction industry be combined for

30
efficiency, for aesurance of quality, and for economy of
products delivered in a timely manner. The client wants a
single-source. broad range of professional capabilities
(Fox, 1976).

The planning and execution of building projects have
traditionally asked for the collaboration of a large number
of partners. These partners have usually worked together
for a period of time and ended their collaboration as soon
as the project was finished. They are experts in their
field and contribute their knowledge towards a common end,
meeting the needs of the owner (Diepeveen, 1976). As Fox
(1976) has noted, owners are demanding that the skills
gained from working together on a project not be lost, but
rather that they be combined into a form.where the tradi-
tional division between roles become blurred. In this man-
ner continuity of joint experience does not become lost
(Diepeveen, 1976).

Being characterized by a highly sophisticated interac-
tion between owner, governmental organization, local regula-
tory agencies, constructor, financer, designer, and subcon-
tractors, present day projects are getting larger and more
complicated (Burger and Halpin, 1976). This in turn calls
for increasingly saphisticated project controls. This is
true for some projects but not, by any means, all of them.
Fox (1976) said that the type of builder who executes small
units which are comparatively simple, but nevertheless im-

portant, cannot necessarily conceive of the organization and

31
control necessary in terms of.computers, complex management
information systems or high level expert staffs for compli-
cated projects.

Silverman (1976) suggested the many facets and skills
which are required to produce a large construction project
and which must therefore be incorporated into the organiza-
tion dealing with such a project. He noted that not the
least of these was the management within the organization
which should, hapefullyy be skilled in several of the criti-
cal disciplines of the project. Silverman (1976) continued
by stating that delivery of the building project must uti-
lize a system approach and employ sophisticated systems
technology to control, coordinate, and to monitor the de-
livery process.

Because the human element is predominant in construc-
tion this itself often takes the understanding out of an
architectural/engineering context. The inference is that
such work needs to be undertaken by multi-disciplinary teams
(Pilcher, 1976).

The outline of the company needed to engage in CM then
emerges as being one that has assets which include many
disciplines. These assets should have a continuity over a
large number of project and have access to sophisticated

management information systems.

Information

The construction industry has been criticized for its

slow acceptance and use of modern management systems to plan

32
and execute projects. Research has shown that ineffective
management is a major demotivator on projects and that this
ineffectiveness is directly traceable to the lack of modern
management systems (Business Roundtable, 1982).

Tatum (1979) felt that the management ability of a CM
firm may be evaluated by its commitment to expansion of
management systems and the approach to systematic perform—
ance of CM tasks. In order to expand management systems,
the individuals in the firm first have to be exposed to
(learn about) them and be convinced of their worth.

In a large part, the practice of CM was brought about
by firms in order to better meet the requirements of owners
who were not satisfied with the status quo then in existence
in the construction industry. It was innovative and a
search for a better wayu This search is still going on in
the attempt to better the effectiveness of CM.

Hypotheses

Based on the literature reviewed, the following
hypotheses are offered.

- The length of experience a company has with CH contracts
has a positive relationship to effectiveness.

- The size of a CM company has a positive relationship to
effectiveness.

- Exposure of CM managers to sources of information about
new management techniques has a positive relationship to

effectiveness.

33
MW

W

The Business Roundtable (1982) has noted that construc-
tion projects are becoming larger in size and consequently
in dollar value. This has not only had an effect on the
organization and size of the company but also on the exter-
nal environment in which the company exists. Larger, more
complicated, projects involve the organization in a more
complex environment. T

Mintzberg (1979) believed that one facet of an organi-
zation's environment, complexity, can be thought of as sim-
ple or complex. An environment is complex to the extent
that it requires the organization to have a great deal of
sophisticated knowledge about products, customers, or what-
ever. The environment becomes simple if it can be broken
down into easily comprehended components.

Complexity is viewed by Miles (1980) as one general
environmental dimension. This dimension refers to the num-
ber of different organizational attributes or components of
the environment. Additionally, Jurkovich (1974) said that
organizations dealing with noncomplex environments have one
advantage: there are fewer critically important information
categories necessary for decision making.

Miles (1980) believed it is important to recognize that
organizations may inherit complexity in their environment.
Public sector organizations usually find the level of com-

plexity in their environment to be mandated. As described

34
earlier, Dioguardi (1983) also noted this and felt that one
of the construction industry"s biggest problems was in com-
ing to grips with this mandated complexity.

In discussing all of the technological needs of a
construction company to meet owners' demands Pilcher (1976)
added that the principles of organization are just as impor-
tant to the small firnvs organization, as well as to the
construction industry if it is to be efficient. A logical
extension of this is that the principles involved in CM can
improve effectiveness for any project. Linstrom (1982)
found that CM worked well on projects of $1 million in cases
where the client's needs dictated phased construction and
input into the design phase for specialized cost control.

He believed that the process can work for any size project.

W
Bosche (1976) felt that the person who gets involved

with the owner first will control the organizational form in
the construction business. That is, the individual (com-
pany) who gets an agreement with the owner first to be on
the project team controls the organizational form and, by
extension, the communication procedures.

All of the literature reviewed has made the same point.
For the most effective use of the CM process the company
providing the CM service should be involved from the very
inception of the project. An inplace management information
system is a basic requirement of a CM company and a part of

the system is the plan for utilizing the information

35
generated, that is the communication channels.

To function effectively construction companies must
have different types of communication systems: interper-
sonal, interdepartmental, and interorganizational. In the
construction industry graphs, letters, reports, bar charts,
CPM diagrams, and cost control reports are used to convey
both verbal and nonverbal communication about specific in-
formation about activities on a project (Guevara and Boyer,
1981).

In a study of nine unionized construction companies in
Illinois, Guevara and Boyer (1981) found that 72% of all
management level employees felt that information overload,
having too much information available» was a moderate or
severe problem. Fifty-three percent of these same employees
felt that gatekeeping, withholding information, was a prob-
lem while 59% felt that distortion.of the available informa-
tion was a moderate or severe problem.

Having the CM company establish the communication pro-
cedures for the CM team, owner, A-E, and CM, was seen as a
major responsibility by The Associated General Contractors
of America (1976),.Darin and Armstrong, a major CM company
in Michigan, and the Committee on Professional Construction
Management of the ASCE (1979). All felt that this responsi-
bility falls more on the CM company than on either the owner
or the A-E.

Management success depends, largely, on trust to whom

trust is due, what information is chosen, and how it is

36
effectively utilized (Bhandari, 1978). The three problems
with communication in construction companies described by
Guevara and Boyer (1981) are reflected by organizations
suggesting guidelines for the services CM companies should
provide. Those in the construction industry have expressed
an interest in, and are implementing, construction manage-
ment information systems such as cost accounting, schedul-
ing, equipment selection and maintenance, cost control, and

others (Bhandari, 1978).

Willing
Originated in 1957 and 1958 by the Sperry Rand Corpora-

tion for use by Dupont to schedule construction, mainten-
ance, and shutdown of chemical process plants, the Critical
Path Method (CPM) is a key element in successful construc-
tion management (McGough, 1983). At the same time, the Navy
Special Projects Office deve10ped an integrated management
technique for use in the Polaris Missile Program. This was
known as Program Evaluation and Review Technique (PERT).
Although CPM and PERT are superficially different, both use
a network to model a real project (McGough, 1983).
Scheduling management normally is activated, in some
form, at the conception of the project. A management plan
is developed at a low level of detail containing major
milestone events, important events, for all elements of the
project (McGough, 1983). This is then usually used to
facilitate the preconstruction planning process. Many re-

searchers of CM activities (Foxhall, 1972: Halpin, 1980:

37
Goldhaber, et al., 1977; Adrian, 1981) and professional
organizations (The Merican Society of Civil Engineers and
the Associated General Contractors of America) have felt
that the use of scheduling, early on, in preconstruction
planning is an important attribute of CM.

When multiple prime contracts are involved on a project
the owner may choose to hire a CM company to coordinate and
manage the job. The CM company will prepare and monitor a
coordinated schedule based on individual schedules prepared
by the prime contractors. The owner will benefit from
expert assistance in schedule coordination but still be able
to maintain a close overview of the project (Galloway and

Nielsen, 1981).

W
Based on the literature reviewed, the following hypoth-

eses will be tested.

- Using a network based scheduling systemiduring precon-
struction planning has a positive relationship to effec-
tiveness.

- Being hired as CM prior to the hiring of the A-E has a
positive relationship to effectiveness.

- The CM firm establishing communication procedures for the
management team (CM, owner, A-E) has a positive relation-
ship to effectiveness.

- Project size has no relationship to CM effectiveness.

38
WW
Clough and Sears (1979) described planning as being

that activity which, on the basis of a detailed study of the
job requirements, establishes what is to be done, how it is
to be done, and the order in which it will proceed.

The traditional view'of planning in the construction
industry has planning being synonymous with scheduling of
the project. Densmore and Burgoine (1981) stated that in
any undertaking for the successful completion of a project,
there must be a clear understanding of what is required,
when it is to be done, and by whom. The emphasis here is on
project planning. If proper planning is achieved, then,
ideally» the project is completed by the best use of the
available resources.

As shown in Figure 2.3, Densmore and Burgoine (1981)
viewed project planning as having six principal elements:
the definition of the work, preparation of the scope of the
work activities, allocation of responsibilities and prepara-
tion of project plan, developing the project organization,
and administrative procedures. Figure 2.3 shows the plan-
ning phase in network form. The interdependence between
areas is also depicted.

The reasons for managers failing to plan their activi-
ties adequately and to set specific targets or goals for
performance are many. Steers (1977) listed several which he
found important. First was the issue of accountability,

that is the more specific managers are in setting goals the

39

 

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40
more clearly deviations from these goals stand out. Second
was that many managers are so focused on immediate problems
that they do not have time to focus on the future. Another
reason was that some managers lack the patience to engage in
detailed planning and goal-setting activities.

In a study of the top 400 construction companies, as
ranked by Engineering Hens Eggnnd, Choromokos and McKee
(1981) found that 55% of the companies responding to the
survey felt that there was a high opportunity in their
office/headquarters Operation for productivity improvement
.in planning and scheduling.

As shown by Figure 2.4, Thune and House (1970), in
comparing the performance of eighteen matched pairs of
medium- to large-sized companies in the food, drug, steel,
chemical, and machinery industries, found that those that
had a formal planning system outperformed those that did
not. They also found that, since the advent of formalized
planning, the companies using it had outperformed their
prior growth. Although this study was done with strategic
planning a parallel could be drawn with the importance of
planning during the preconstruction phase by CM firms.

Herold (1972), in an extension of the Thune and House
(1970) study, found that for the firms in the drug and
chemical industries the formal planners not only continued
to outperform the nonplanners but increased their lead over

nonplanners in almost all performance measures.

Criterion

41

Average Percentage Increase

 

Sale:

 

f1/[ If]

 

 

Earning: per
Share

 

 

 

 

 

Stock Price

 

f//[ [I]

 

 

Earnings on

Common Equity

 

 

 

Earnings on
Total Capital

 

 

 

 

 

.zf—f

 

 

'25 0 +25 50 75 100 125

— Formal planners
[m3 Informal planners

 

Figure 2.4

Source:

Performance of Formal and Informal Planners
During the Planning Period

Thune, 8.8. and House, R.H. "Where Long-
Range Planning Pays Off," Business Horizons,
13: 81-87 (August 1970), p. 83.

42
In their report on modern management systems in the
construction industry the Business Roundtable (1983) found
that, on average, it should be possible to achieve a 10%
reduction in construction time, for most projects, through
better planning. This would result in a 3% saving to the
owner, mainly due to his realizing an earlier return on his

investment.

W

Miles (1961) defined value analysis or value engineer-
ing as a philosophy implemented by the use of a specific set
of techniques, a body of knowledge, and a group of learned
skills. It is an organized creative approach which has for
its purpose the efficient identification of unnecessary
cost. Macedo, Dobrow, and O'Rourke (1978) found that the
definition of Miles (1961) leads to the conclusion that the
process tends to relate product worth to product cost and
implies an evaluation of the function performed by the
product or its components.

Many researchers, including Halpin and Woodhead (1980),
Goldhaber, et a1. (1977), Adrian (1978), and Tatum (1979),
have indicated that value engineering is a primary reason
for the CM process and has a large potential for saving an

owner money.

WW

Time and cost are the two key variable that determine

the success or failure of a project (Goldhaber, et al.,

43
1977). At every stage of planning, time and cost are major
factors the owner must use’to choose betweenlalternatives
yet the final cost and time of competition cannot be fore-
casted accurately until the project is substantially com-
plete (Goldhaber, et al., 1977).

The CM preliminary cost estimate is made without work-
ing drawings or detailed specifications and yet this is
usually the first dollar figure the owner is exposed to
(Adrian, 1981).

A computerized estimating system can store information
on quantity data and systematized the accumulation and anal-
ysis of detailed cost information from past projects. This
greatly increases the ease and accuracy of applying histori-
cal experience to the project being estimated.(Clough and
Sears,l979).

The Business Roundtable (1982) found that computerized
estimating systems are not fully utilized by the construc-
tion industry. Many estimates are prepared without using
state-of-the-art techniques. They felt that the industry
should expand its use of computer aided estimating for
efficiency, speed, and cost reduction. Additionally they
added that computerized estimating hinges on developing a
reliable data base of information.

The GSA, in their prequalification questionnaire for CM
firms, asks the CM firm to discuss their method of estimat-
ing construction requirements in preconstruction planning.

This is one of several questions regarding the CM firm's

44

Construction Management Control System.

RisLAnalxsis
It is difficult to justify the construction of any

project, private or public, unless a quantitative analysis
is made of the cost to benefit ratio. Many times a project
has been completed only to have its owner discover it was
poorly planned in its economics from its inception (Adrian,
1981).

Erickson and CPConnor (1979) gave a working definition
of risk (in construction) as exposure to possible economic
loss or gain arising from involvement in the construction
process. JProviding input.to define this risk is seen as a
major objective of CM by both the ASCE and the AGC.

The Business Roundtable (1982) has found that many
project estimates are prepared by companies without using
state-of-the-art techniques for risk analysis. Without the
correct input of construction costs and ongoing expected
maintenance and repair costs, the validity of any project
feasibility study is questionable (Adrian, 1981). Tatum
(1979) and the GSA felt that the CM's ability to provide
useful input to this risk analysis was an important means of

evaluating potential CM performance.

WWW
All of the various definitions of CM, as noted in

Chapter 1, include that the CM should use its experience in

the construction field, and on past similar projects, to

45
prOpose construction and design alternatives, as required,
to the owner. This procedure is central to the entire
philosophy of CM of bringing the contractors experience and
'know how' into the construction process early on. Halpin
and Woodhead (1980), Goldhaber, et al., (1977), Foxhall
(1972), and Adrian (1981), among others, have echoed this

sentiment.

W
As described by Adrian (1981) and Goldhaber, et al.

(1977), the CM process is a team approach to construction.
The ASCE and the AGC both make this distinction also. The
team at this level consists of the owner, CM, and A-E but as
noted by Fox (1976) there is a need to concentrate responsi-
bility for the constructed product, a demand imposed by
buyers of that product. This concept stresses the need to
combine and organize disparate disciplines into a coordi-
nated effort.

Fox (1976) continued by saying that being structured as
a team is not enough. Team members need to be able to work
together and that comes from having worked as a team, from
learning by experience all the interactions that ease commu-
nications, establish understanding, and convert ideas easily
into actions.

Pilcher (1976) noted that it is not only a matter of
coincidence that, with the increase in size and complexity
of projects, several authors have remarked on the need for a

pre-planning group in the organizations to investigate

46
thoroughly the proposals, design Options, budgets and con-
tractual arrangements in order to ensure a viable project
and optimized project content.
Noted by Logcher and Levitt (1976) was the fact that
the amount of data available from present day MIS systems
may well exceed the amount a single project manager can

process and use in decision making.

Hypotheses
Based on the literature reviewed, the following hypoth-

eses will be tested.

- Using computerized estimating techniques during precon-
struction planning has a positive relationship to ef-
fectiveness.

- Value engineering has a positive relationship to effec-
tiveness.

- A team sharing supervision of the entire preconstruction
phase of a project has a positive relationship to effec-
tiveness.

- The proposal of construction and design alternative dur-
ing preconstruction planning by the CM firm has a posi-
tive relationship to effectiveness.

- Risk analysis in preconstruction planning has a positive

relationship to effectiveness.

47
Summanx

As can be seen from this review of pertinent literature
the construction industry is not besieged by an army of
researchers. The majority of the reviewed literature on the
construction industry came from two sources: Jenrnel nf the
Censrruetien llixersien of the ASCE and the Pueeedine of the
LIME Win an Organism and Management 9f Cnnstruc:
Lien held May 19-20, 1976, in Washington, DJ;

The wealth of literature on organizational effective-
ness to be found in the business management field allows
only a cursory examination in a paper of restricted length.

After an extensive search of the literature available
in the construction field concerning planning by CM firms it
was found to be impractical to arrive at any hypotheses
other than the simple 'if-then' form. An intensive study of
the statistical analysis of the data should indicate rela-
tionships of the I'if this and this then this' form.

Listed in Figure 2.5 are the simple hypotheses arrived

at as a result of this review.

48

 

1.

2.

4.

7.
8.

9.

10.

11.

12.,

The length of experience a company has with CM con-
tracts has a positive relationship to effectiveness.

The size of a CM company has a positive relationship to
effectiveness. '

Exposure of CM managers to sources of information about
new management techniques has a positive relationship
to effectiveness.

Using a network based scheduling system during precon-
struction planning has a positive relationship to ef-
fectiveness.

Being hired as CM prior to the hiring of the A-E has a
positive relationship to effectiveness.

The CM firm establishing communication procedures for
the management team (CM, owner, A-E) has a positive
relationship to effectiveness.

Project size has no relationship to CM effectiveness.

Using computerized estimating techniques during precon-
struction planning has a positive relationship to ef-
fectiveness.

Value engineering has a positive relationship to effec-
tiveness.

A team sharing supervision of the entire preconstruc-
tion phase of a project has a positive relationship to
effectiveness.

The proposal of construction and design alternative
during preconstruction planning by the CM firm has a
positive relationship to effectiveness.

Risk analysis in preconstruction planning has a posi-
tive relationship to effectiveness.

 

Figure 2.5. Summary of Working Hypotheses.

CHAPTER 3

METHOD

Qxenxieu

This chapter describes the sample chosen for the study.
In addition, certain demographic facts about that sample are
included and the measures used to describe these character-
istics of the research sample are discussed in detail. Also
described are the procedures utilized in preparing, mailing,
and following up on the survey questionnaire. Finally, the
statistical procedures to be used in analyzing the data and
the reasoning behind using those particular methods are

discussed.

Sample

The sample chosen for this study consisted of those
companies who advertise that they provide CM services in the
1982 issue of the W, published by
the Builder's Exchange 'of Detroit, Michigan. These compa-
nies were all located in Michigan with the largest percent-
age located in or near Detroit. The original list contained
92 companies (See Appendix A) but it was presumed that some
of those would no longer be in business, no longer be offer-
ing CM services, or for some other reason would fail to
return the questionnaire.

49

50
W
The measures used to describe the characteristics of
the sample fall into four general categories: characteris-
tics of the company, the environment of CM projects which
the company undertakes, the planning which the company does
in the preconstruction phase, and the experience of the
company in meeting owners' requirements, on time and within
budget. These measures were investigated through the use of

a mail-out questionnaire (See Appendix B).

QreanizatienaLCharaeterisries

In order to characterize the company several different
measures were used. Some of these were designed to give an
indication of the age of the company, its size and the scape
of its activities, the size of its CM contracts, its physi-
cal area of operation, and how important CM contracts were
to its operations. Another question was asked to discover
how the company was organized. In addition to these, sever-
al questions were asked to determine how the CM company

increases its knowledge of how to manage CM contacts.

Enxirnnment.ef.the.£h.zreieet

As noted in Chapter 2, construction projects tend to
create their own environment and the bigger the project the
more this tendency is demonstrated. Two questions were
asked to measure this portion of the CM environment. An-
other of the CM company”s environmental concerns is when the

firm is hired and the control it has over the establishment

51
of the communication procedures for the management team
composed of the CM, owner, and A.E. Scheduling is an impor-
tant part of the construction project and the requirement
for a network based scheduling by the owner affects the
environment in which the CM company functions. The final
measure of the project environment to be investigated was
whether the owner of the CM project was a public or private

organization.

WW

Measures of preconstruction planning consist, in part,
of questions about how this planning is managed, by an
individual or by a team. The use of computer generated
schedules and computerized estimating techniques in precon-
struction planning was also investigated through the ques-
tionnaire. Measures were designed for investigating the
amount of formalization in the preconstruction planning and
the amount of adherence to the plan once set. The proposal
of design and construction alternatives during planning, by
the CM, is one area where this form of contracting is sup-
posed to increase the efficiency of the project. Two ques-
tions regarding this area were asked. The application of
'risk analysis' and “value engineering' during preconstruc-
tion planning was measured. Additionally, two questions
were asked to determine how often the team concept of pro-

ject supervision was used in the company.

52

WW

Measures in this area were keyed to the needs of the
project owner. The owner wants a quality project which is
completed on time and within the budget originally set. The
CM companies were asked how often their completed CM pro-
jects met the owner's original budget, the final pre-bid
estimates, the owner's original completion date, and the
completion date set in the preconstruction plan. To measure
how selective both owners and CM companies were in contract-
ing for jobs, a question was asked about the percentage of
jobs actually contracted for after participating in a selec-
tion interview. Several questions concerning the financial
health of the company were asked in order to measure the
validity of CM as an alternate method of construction con-

tracting.

TheJnesrinnnaire

The questionnaire was prepared over the period of two
months, during which time a continuing search of the avail-
able literature defined the final form of the survey instru-
ment. The completed questionnaire (Appendix B) consisted of
52 questions divided into four major sections preceded by a
cover letter explaining the questionnaire and the efforts of
the researcher to ensure the confidentiality of the respond-
ent companies. Also included in the cover letter was an
offer to send a feedback report to companies which desired

one o

53

The four major sections of the questionnaire were
(1) questions about company characteristics, (2) questions
about the type of CM projects the company undertakes:
(3) questions concerning the planning which the company does
in the preconstruction phase, and (4) questions about the
company‘s experience in the CM field over the last five
years. Section 4 also included three questions about the
company's financial performance during the past year. Each
question was constructed so that a choice of five possible
answers was provided. The only exceptions were the three
questions concerning financial performance. The companies
were asked to provide the answers to these in the form Of a
ratio.

After the questionnaire was completed it was pretested
by being given to two firms in the Lansing, Michigan area
which Operated in the CM field. These companies were Clark
Construction Company and the Christman Company. The heads
Of these companies were asked to inspect the questionnaire
looking for questions which were unclearly worded or for
which the choice of possible answers provided was too

limited. No questions Of this type were noted.

W
The survey was conducted through the use of a question-
naire mailed to each of the 92 companies listed in Appendix
A, all of which had Michigan addresses. The survey was

addressed to the Chief Executive Officer. The survey

54
package consisted Of a questionnaire and a self-addressed,
stamped enveIOpe in which to return the completed question-
naire. The original mailing was done on March 1, 1984. A
telephone follow-up was scheduled for March 19-23, 1984, in
order to remind the companies Of the questionnaire and to
find out which companies needed to be included for the
second mailing. Due to compliance with university regula-
tions concerning the confidentiality Of respondents, the
questionnaire was constructed so that there was no means of
identifying which company had returned the questionnaire.
This meant that all of the companies had to be contacted for

the follow-up.

StatistieaLPmcednree

The statistical procedures which were used in the anal-
ysis of the data are part of the integrated system of compu-
ter programs called SLetietieal Baekages fer the 522111
Seleneee (SPSS). This is a unified and comprehensive system
designed for the analysis Of social science data that allows
the researcher to perform many different types Of data
analysis (Statistical Package for the Social Sciences,
1975). Three procedures from the package were used to“

analyze the data from the questionnaires.

W
The first procedure to be utilized in the analysis of

the data was a frequency distribution. This procedure com-

putes and presents frequency distribution tables for

55
categorical variables. Categorical variables are those
variables classified into a limited number of values or
categories (SPSS, 1975). In addition, the procedure pro-
vides the mean, standard deviation, and range for each
variable, (See Appendix C). These statistics were used to
describe the sample.

This procedure also enabled the researcher toldetect
those variables for which all the responses had the same
value, and thus gave no information that was useful for
analyses. Performing this procedure first allowed the re-
searcher tO check the correctness of the file set—up prior

to performing more complex statistical analyses.

Welatien

The procedure computed Pearson product-moment correla-
tions for pairs of variables. These correlations are known
as zero-order correlations because no controls for the in-
fluence of other variables are made (See Appendix C). The
Pearson correlation coefficient, r, is used to measure the
strength Of the linear relationship between two interval-
level variables. When r is squared, this statistic (r2)
gives the prOportion of variance in one variable explained
by its linear relationship with the other (SPSS, 1975).
Pearson correlations were used to test the two variable
hypotheses. For example, if companies that have been in
business longer are more likely to complete CM jobs by the
owners' original date than the companies which have not been

in business as long, the correlation between years in

56
business and completion on time will be statistically sig—
nificant. This procedure produced a correlation matrix
which showed the strength of relationship each variable had
with every other variable. Also shown was the level of
statistical significance for each relationship.

Tests of statistical significance, which are automati-
cally performed on each correlation coefficient by the SPSS
program, determine the probablility that each correlation
coefficient Observed in the sample is 'sufficiently‘ large
to warrant concluding that a linear relationship actually
does exist between the correlated variables examined. TO
test the null hypothesis that the correlation coefficient,
r, equals zero, the following formula is computed using
sample values for r, r2, and n:
rVGTtr7'

l - r

The resulting t-value is compared to a standard table, to
determine whether the probability (P) is “sufficiently"
small that an r as large as the one Obtained would be Ob-
tained from a random sample of size n drawn from a popula-
tion whose r is actually zero. By convention, the criterion
for ”sufficiently” small is a probability of .05 or less. A
level of significance of p 3,.01, for example, indicates
that there is only one chance (or fewer) in 100 Of obtaining
a correlation coefficient as large as the one found in the
sample by pure chance. The alternative, which we infer, is

that there actually is a non-zero, linear, relationship

57

between the two variables. Typically» statistically'signif-
icant results from a sample are generalized to a population
that has the same characteristics as the sample» In this
case, to the extent that the sample represents all Michigan
and other U.S. CM firms, the results would be expected among
those firms (Cohen & Cohen, 1983).

The correlation matrix was examined to determine which
pairs of variables had a strong relationship and, as a
consequence, explained a large amount of the variance in

2 are symmetric measures of asso-

each other. Since r and r
ciation, it does not matter which variable is considered to

be predicting the other (SPSS, 1975).

W

This procedure provided the researcher with a single
measure Of association which described the relationship
between two variables while holding constant (controlling)
one or more additional variables. Partial correlation al-
lows the removal of the effect of the control variable from
the relationship between the independent and dependent vari-
ables (SPSS, 1975) (See Appendix C). This method Of statis-
tical analysis was used to test for variables which had
interrelated effects. As shown by Figure 3.1.A, a pair of
partial correlation coefficients was Obtained for each or-
ganizational characteristic indicating the strength of its
relationship to the measures of effectiveness. The first
partial coefficient obtained was with job characteristics

controlled. The second partial was with both job and

58

Company Characteristics w/
Job Characteristics Controlled

 

 

Measures of
Related to

Effectiveness

 

Company Characteristics w/ JOb a
Planning Characteristics Cbntrolled

 

A. Company characteristics related to measures of effectiveness.

Planning Characterisitcs w/
Company Characteristics Controlled

 

Measures of
Related to

Effectiveness

 

Planning Characteristics w/ Company a
Job Characteristics Controlled

 

B. Planning Characteristics related to measures Of
effectiveness.

 

Figure 3.1 Partial Correlation Procedure

59

planning characteristics controlled. A t-test was then
performed to determine if there was a significant difference
between the simple correlation coefficient and the partials
Obtained when job and job/planning characteristics were
controlled. If a significant difference was shown by the
second partial (job/planning characteristics controlled) and
not by the first partial (job characteristics controlled)
this indicated that some combination Of planning character-
istics was affecting the relationship Of that characteristic
to the measure of effectiveness.

The same procedure was followed for the relationship Of
the planning characteristics to the measures of effective-
ness. Figure 3.1.8 shows that first organizational char-
acteristics were controlled and then organizational/job
characteristics. In this case, if the first partial was
significantly different it indicated that some combination
of organizational characteristics.was affecting the rela-
tionship of that planning characteristic to the measure of
effectiveness. If the second partial was significantly
different it indicated that the combined effects of organi-
zational and job characteristics were affecting the.rela-
tionship of the planning characteristic.

In both of the partial correlation procedures discussed
above, if the coefficients (simple and partials) stayed
relatively'the same, this indicated that controlling the

different characteristics were no difference. Whatever was

60
being controlled had no impact on the underlying relation-

ship shown in the simple correlations.

W

This chapter described how the sample was chosen and
detailed the procedures followed in preparing, mailing, and
following up on the questionnaire. Also described were the
four major sections of the questionnaire: company char-
acteristics, job characteristics, planning techniques, and
measures of effectiveness. The reasons and methods for
utilizing the three statistical procedures, frequency,

Pearson correlation, and partial correlation were discussed.

CHAPTER 4
RESULTS

merrier
This chapter provides a description of the mailing and

follow-up procedures which were employed to attain the best
questionnaire return rate. Additionally, the chapter de-
scribes the typical company responding to the questionnaire
utilizing company, project, planning characteristics, and
company experience with CM projects to do so.

The results Of the research (simple correlations) con-
cerning organization characteristics and job characteristics
related to planning are set forth, delineated by company
experience, size, information sources, and organization.
The results of the tests Of the simple hypotheses are also
provided.

Results Of the partial correlation analysis, provided
by this chapter, include the relationships of organizational
characteristics to measures of effectiveness when the ef-
fects Of job characteristics are controlled (removed) and
when both job and planning characteristics are controlled.
Also included are the relationship of planning characteris-
tics to measures of effectiveness when organizational char-
acteristics are controlled and when both company and job
characteristics are controlled.

61

62
W

Of the original 92 questionnaires which were mailed,
seven (7.6%) were returned by the Postal Service as unde-
liverable. Two and one-half weeks after the original mail-
ing, on March 1, 1984, 18 completed questionnaires had been
received. From March 19-23, 1984, a telephone follow-up was
conducted in which 60 of the 85 remaining companies were
contacted. Of the 60 companies, 11 told the researcher that
they either did not do CM or that they had not had a CM
contract in the past three or four years and did not feel
competent to answer the questionnaire. This meant that the
number of companies who could possibly respond was 74. Of
the 60 companies contacted 15 requested an additional ques-
tionnaire and these were mailed. By April 6, 1984, the
total number of completed questionnaires received was 32.
This represented 35% of the original mailing and 43% of

those companies who could possibly respond.

W

W
As indicated by Table 4.1 the typical company respond-

ing to the survey had been doing business in the construc-
tion industry for 16 to 20 years (>20 years, 65.6%)2, had

been offering CM services for seven to nine years (>12

 

2The parentheses denotes the most frequent response to
that question and the percentage of respondents (N/32) who
gave that response. This does not always correspond to the
mean for that question. See Appendix E for all responses.

Table 4.1 Organizational Characteristics:
Deviations (S.D.), and Ranges

Means, Standard

 

 

 

Characteristic Meana 8.0. Low Bange_§I§E._.
Years in business 4.22 1.18 6-10 yrs >20 yrs
Years in CM 3.45 1.48 1-3 yrs >12 yrs
Years with in-house 1.69 1.40 0 yrs >15 yrs
design.capability
Number of branch 1.59 1.01 0 >15
offices
Number of full time 1.41 1.10 <50 >350
employees
Number of CM contracts 1.78 1.18 1-10 >40
(last five years)
Value of CM contracts 2.94 1.50 ($2.5 mill >390 mill
(last five years)
Percent of individuals, 3.97 1.47 (20% 80-100%
employed during pre-
construction, who are
permanent employees
Vblume of CM work with 3.47 1.30 $1-10 mill >$30 mill
present work force
Percent of in- lace 2.56 1.44 0-20% 81-100%
volume due to M con-
tracts (1ast five
years)
Useful sources of CM
contract management
information:
- Professional Not at Ver
Journals 2.53 .80 all useful use ul
Not at < Ver
- In-house seminars 2.38 .91 all useful usefu
- Seminars by Not at Very
professionals 2.94 1.34. all useful useful
- Manager's own < Ver Very
experience 4.47 .76 usefu useful
Company organization 3.34 1.21 Line Staff

 

a The mean given is based on the number (1-5) which corre-

sponds to possible answers in the questionnaire.

For an

explanation of possible answers, see the questionnaire

(Appendix B).

64

years, 37.5%), and did not have any in-house design capabil-
ity (none, 75%). This typical company had no branch offices
(no branch offices, 59.4%) and employed, full time, fewer
than 50 people (<50 employees, 84.4%). In addition, this
company had completed ten or fewer CM contracts (1-10 CM
contracts, 53.1%) with a total value of $30 million or less
($2.5-30 million, 28.1%; >$90 million, 28.1%) in the last
five years.

The typical survey respondent could do $10-20 million
of CM work with his present workforce and of the people em-
ployed during the preconstruction phase, 40%-60% were perma-
nent employees (80-100%, 59.4%). This company had generated
21%-40% of its in-place volume over the last five years from
CM jobs.

As a source of information for managing the company's
CM contracts more efficiently, the manager's own experience
was by far the most important (very useful, 62.5%). Inter-
acting with design firms (somewhat useful, 46.9%) was found
to be somewhat useful as an information source while semi-
nars by professionals (somewhat useful, 28.1%), professional
journals (somewhat useful, 53.1%), and in-house seminars
(somewhat useful, 46.9%) were described as the least useful.
This typical company had an organizational structure which
is a combination line and staff structure (combination,

50.0%) .

65
W.

The smallest CM project completed in the last five
years (($500!(, 56.3%) was less than $500K while the largest
($1.0-$10 million, 46.9%) was worth between $1 million and
$10 million.

As shown by Table 4.2, in a CM project the typical
company had the major role in establishing the team communi-
cation procedures (always, 3735%) 50% of the time, while on
33% of the projects a network based scheduling system was
required by the owner' (one-third of time, 31.3%). Only 33%
of the time was the company hired as CM before the A-E was
hired (one-third of time, 46.9%) and 50%-75% of the com-
pany's CM contracts, over the last five years, were done for

private owners (75-100%, 59.4%).

W

Prom reviewing Table 4.3 one can see that the typical
company was more likely to use one individual to supervise
the preconstruction planning than it was to use a team for
supervision. It used computer generated schedules during
preconstruction planning less than 30% of the time, and used
computerized estimating techniques on almost no CM jobs.

Value engineering techniques were incorporated into
planning on 30% - 60% of all CM jobs but formalized methods
of "risk analysis“ were used only rarely.

The steps used in planning a CM job rarely varied with
the size of the job, while 30% to 60% of the projects had

dates set, during the conceptual stage, for completing the

Table 4.2 Environmental. Characteristics:
Dev iat ions (8.0) ,

66

and Ranges

Means, Standard

 

Characteristic

Meana

SOD.

___.____Ban§3___.___.
Low High

 

Value of smallest CM
project completed in
last five years

Value of largest CM
project completed in
last five years

Part of time with
major role in estab-
lishing team communi-
cation procedures

Portion of CM con-
tracts with network
based scheduling
system an owner re-
quirement

Part of time hired as
CM prior to hiring of
A-E

Percent of CM jobs
done for private
owners

1.63

2.84

3.53

2.75

2.44

4.13

.83

1.42

1.32

1.34

1.08

1.29

($500K >$10 mill

($1 mill >330 mill

Never Always

None All

Never Always

0% 75-100%

 

a The mean given is based on the number (1-5) which corre-

sponds to possible answers in the questionnaire.

For an

explanation of possible answers, see the questionnaire

(Appendix B).

Table 4.3 Plannin

Characteristics:

tions ( .D.), and Ranges

Means, Standard Devia-

 

Low High

 

Characteristic Meana S.D.
One supervisor for 3.31 1.23 Never Always
preconstruction
Team supervision of 2.94 1.27 Never Always
preconstruction
Percent of time com- 2.16 1.35 Never Always
puter enerated
schedu es used in
planning
Percent of CM jobs 3.53 1.30 None All
incorporating. Value
Engineering" into
planning
CM jobs using com ut- 1.88 1.39 No CM All CM
er estimating tec - jobs jobs
niques during planning
Planning steps vary 2.75 1.14 Never Always
with job value
Percent of CM jobs 3.63 1.31 None All
with dates for com-
pleting design phase
set during conceptual
planning
Updating dates in 4.19 .93 Semi- Monthl or
preconstruction plan weekly less 0 ten
Application of “Risk 2.50 1.39 Never Always
Analysis"
PrOposal of design 3.84 .68 Sometimes Always
alternatives
Proposal of construc- 3.78 .83 Sometimes Always
tion alternatives
Decisions affecting
planning made:

- By owner 2.56 .80 None A11

- By CM 2.78 .91 1-30% All

 

a The mean given is based on the number (1-5) which corre-

sponds to possible answers in the questionnaire.

For an

explanation of possible answers, see the questionnaire

(Appendix B).

68
design phase. Additionally, the typical company updated the
preconstruction plan on a semi-monthly basis.

The company sometimes proposed construction (sometimes,
46.9%) or design alternatives (usually, 53.1%) during the
preconstruction phase. The decisions affecting planning
during the preconstruction phase were made as often by all

three members of the CM team, owner, CM, and A-E.

W

The company had met the needs of the owner, as defined
in the questionnaire, less than 60% of the time on CM con-
tracts over the last five years (Table 4.4). Fewer than 60%
of the CM jobs had a final cost equal to or less than the
owner's original budget (GO-90%, 50%) or the final pre-bid
estimate (GO-90%, 50%). In addition, less than 60% of the
CM jobs were completed by the owner's original completion
date (60-90%, 62.5%) or the date established during the
preconstruction phase planning (60-90%, 65.6%).

The company actually contracts for less than 30% of the
CM jobs for which they participate in a selection interview
by the owner (l-30%, 40.6%). The company's CM portion is
believed to be improving more slowly than that of their

competition (same, 31.3%).

W

For clarity of discussion, the results of the research
concerning the organizational characteristics will be ar-

ranged as they were in Chapter 2. The order of discussion

69

Table 4.4 Measures of Effectiveness: Means, Standard
Deviations (S.D), and Ranges

 

 

_.._____Banae________
Measure Meana S.D. Low High
Percent of CM jobs 3.69 .93 None All
with final cost 5
owners original budget
Percent of CM jobs 3.72 1.14 None All
with final cost 5
final pre-bid estimate
Percent of CM jobs 3.47 .92 None All
completed by owner's
original completion
date
Percent of jobs CM 3.72 .68 1-30% All

completed by date es-
tablished during pre-
construction planning

 

a The mean given is based on the number (1-5) which corre-
sponds to possible answers in the questionnaire. For an
explanation of possible answers, see the questionnaire
(Appendix B).

70
is company experience, size, information sources, and

organization.

W
The simple correlation analysis displayed in Table 4.5

indicates that the longer a firm had been in the construc-
tion business (YRSNBUS) the less likely it was to employ a
formalized method of 'risk analysis“ (RISKANL) during the
conceptual stage of a CM project (-.30“").3 In addition, the
A-E was less likely to make decisions affecting planning
(DBCBYAB) during the preconstruction phase (-.43**). Owners
were more likely to make decisions affecting planning
(DECBYOWN) in the preconstruction phase for more established
companies (.38* and .75***).

The number of years a CM company has had an in-house
design capability (YRSNHSE) was positively related to its
having the major role in establishing the communication
procedures (COMMO) for the management team (.44**).

The number of CM contracts which a company had com-
pleted in the last five years (NUMCMCTS) was positively
related to the use of computer generated schedules (CMPPLN)
to assist in planning (DECBYOWN, .41") and to the percent
of decisions affecting planning made by the owner (.75***).
Decisions affecting planning made by the CM (DECBYCM,

-.47**) and the A—B (DECBYAB, -.32*) were inversely related

 

3The figure in parenthesis is the Pearson correlation
coefficient with *p. S. .05, **p. S, .01, ***p. S. .001.

71
to the number of CM contracts .a company had completed in the

last five years.

QmanizatimaLSize
As indicated by Table 4.5, the use of computer gener-

ated schedules (CMPPLN) to assist in preconstruction plan-
ning (.50**) and the percentage of decisions, affecting
planning (DECBYOWN), made by the owner (.40**) both showed a
positive relationship to the number of branches (NUMBRNCH)
which a CM company has. The percentage of decisions
(DECBYAE), affecting planning made by the A~B (-30*) showed
a negative, or inverse, relationship to the number of
branches a CM company has.

The number of full time employees (NUMEMPFL), excluding
trades, which the CM company had, displayed a positive
relationship to both having the major role in establishing
team communication procedures (COMMO, .36*) and the percent
of time a team supervises the entire preconstruction phase
(TMSUPER,.32*).

Incorporating 'value engineering“ into preconstruction
planning (VALENG) had a positive relationship to the value
of new construction done, under CM contracts, in the last
five years (VALCMCTS, .35*). The use of computer estimating
techniques (CMPEST) in planning also had a positive rela-
tionship (.37*) to the value of new construction. The
percentage of decisions, made by the owner (DECBYOWN),
affecting planning had a positive relationship (233*) to

value of new construction while the percent of decisions

72

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73
made by the CM (DECBYCM) had an inverse relationship
(-.32*).

The percentage of employees used by the CM firm during
preconstruction planning (PRECONEM), who are permanent, had
a positive relationship to having the major role in estab-
lishing communication procedures (COMMO, .30*), setting
dates, during the conceptual stage, for completing the de-
sign phase (SETDTDBS, .36*), and updating those dates set
for the firnfls preconstruction plan (PLNUPDT, .50**). Addi-
tionally, it had a positive relationship to percent of
decisions made by the owner which affect planning (DECBYOWN,
.34*).

The volume of CM work which the company could handle
with its present workforce (VOLWRPRS)‘was positively related
to the use of computer generated schedules for planning
(CMPPLN, .35*) and to the use of computer estimation tech-
niques during planning (CMPEST, .43**). Updating those
dates set for the firnfls preconstruction plan (PLNUPDT,
.32*) and the percentage of decisions made by the owner
which affect planning (DBCBYOWN, .39*) were also positively

related.

Information

The use of in-house seminars (SEMNHOUS), seminars given
by professionals (SEMBYPRO), and interaction with design
firms (INTERACT) as a source of information to manage CM

contracts (Table 4.5) had an inverse relationship to one

f 74
supervisor for the entire preconstruction phase (-.34*,
-.40*, and -.35* respectively).

Seminars by professionals (.34*) and interaction with
design firms (.39*) as sources of management information had
a positive relationship to using a team to super vise the
preconstruction phase (TMSUPBR). These two also had an
inverse relationship to planning which varies with the size
of the project (PLNVSSIZ).

The manager's own experience (MANGREXP), used as a
source of management information, had a negative relation-
ship to the use of computer estimating techniques during
planning (-.40*). The manager's experience was positively
related to establishing communication procedures for the
management team (COMMO, .48**), setting dates, during the
conceptual phase, for completing the design phase (SETDTDES,
.34*), and for updating those dates set (PLNUPDT, .42**).
In addition, the manager's experience was related in a
positive direction to the proposal of design alternatives
(MANGRBXP, .40*) and decisions made by the CM which affect
planning (DECBYCM, .34*).

Organizationalflrm

The manner in which the CM company is organized
(COORGAN), line structure to staff structure, was found to
have a positive relationship to the use of 'value engineer-
ing' (VALENG, .42**) and to updating those dates set during
preconstruction planning (PLNUPDT, .34*). This organiza-

tional attribute showed an inverse relationship to both the

75
proposal of design and construction alternatives (DESQIALT,
-.40*** and CONSTALT, -47***) and to the percent of deci-

sions, affecting planning, made by the CM (DECBYCM, -.46**).

MW
Enxirnnmentatharacteristics

Experience

The years a company has had an in-house design capa-
bi lity had a negative relationship (YRSNBSE, -.30*) to the
value of the smallest CM project done in the last five years
(VALSMPRJ) but had a positive relationship (.44**) to the
company being hired prior to the A-E (HIREBPAB). The number
of CM contracts completed in the last five year (NUMCMCTS)
and the percent of the company's in-place volume due to CM
contracts (INPLUOL) had a positive relationship to the value
of the largest CM project completed (VALLGPRJ) in the last
five years (.50** and .44“ respectively) as shown by Table

4.6.

QrmnizatinnaLSize
The number of branch offices (NUMBRNCB, .54***), the

number of full time employees (NUMEMPPL, .56***), the value
of CM contracts over the last five years (VALCMCTS, .92***),
and the volume (dollars) of CM work with their present
workforce (VOLWKPRS, .75***) all had a positive relationship
to the value of the largest CM project done in the last five
years (VALLGPRJ).

76

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77

Value of CM contracts done in the last five years and
volume of CM work with their present work were both related
positively'(.40* and .46**) to the owner requiring a network
based scheduling system (NTWRKSYS).

The number of full time employees was related positive-
1y to being hired prior to the A-E (HIREBFAE, .39*). The
percentage of private owner CM projects (PVTJOBS) done had a
negative relationship to both the number of branch offices
(NUMBRNCH, -.38*) and the value of CM contracts completed
over the last five years (VALCMCTS, -.51***) but had a
positive relationship (.31*) to the number of permanent

employees used during the preconstruction phase (PRECONEM).

Information

The use, for a source of information for managing CM
contracts, of seminars given by professionals (SEMBYPRO,
-.34*) and the manager's own experience (MANGREXP, -.35*) .
was inversely related to the value of the largest project
completed in the last five years (VALLGPRJ). Using interac-
tion with design firms (INTERACT) and the manager's experi-
ence (MANGREXP) as a source of CM management information
both had a positive relationship to the percentage of jobs
done for private owners (PVTJOBS) (.32* and .46" respec-
tively).

Qrcanizationaliorm

How a company is organized (COORGAN), line structure to

staff structure, was related positively to the value of the

78
largest CM job completed in the last five years (VALLGPRJ,
.54***) but was inversely related (-.40*) to the percentage

of jobs done for private owners.

WW
I E] . :1 | i I'
W

As shown in Table 4.7, the value of the smallest pro-
ject done (VALSMPRJ) was inversely related to the use of one
supervisor during preconstruction planning (ONESUPBR,
-.45**) and to the percentage of decisions affecting plan-
ning made by the owner (DECBYOWN, -54***). The smallest
project value also had a positive relationship to both the
use of the team to supervise preconstruction planning
(TMSUPER, .34*) and to the use of “value engineering“
(VALENG, .37*). (See Table 4.7)

The value of the largest project (VALLGPRJ) had a
negative relationship to the percentage of decisions,
affecting planning, made by the CM (DBCBYCM, -.38*) but was
positively related to the use of “value engineering“ (.36*)
and the use of computer estimating techniques during precon-

struction planning (CMPEST, .32*).

W
Being hired as CM prior to the hiring of the A-E

(HIREBFAE) was positively related to setting dates for the
completion of the design phase during conceptual planning
(SETDTDES, .35‘“).

 

79

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80

W

The percentage of jobs done for private (PVTJOBS), as
opposed to public, owners was negatively related to the used
of computer estimating techniques (CMPBST, -.37*), the use
of “risk analysis“ techniques (RISKANL, -.34*), and to the
percentage of decisions, affecting planning, made by the A-E
(DECBYAE, -.36*). Percentage of jobs done for private
owners showed a positive relationship to the proposal of

design alternatives (DBSGNALT, .36*).

WW

Required by the owner as a requirement and not an
option, the use of a network based scheduling system for CM
contracts (NTWRKSYS) had a positive relationship to using
one supervisor for preconstruction planning (ONBSUPER,
.30*), the use of computer estimating techniques (CMPEST,
.61***), setting dates for the completion of the design
phase (SETDTDES, .31*), and to the use of “risk analysis“
(RISRANL, .38*).

Using a team to supervise preconstruction planning
(TMSUPER, -.33*) and the percentage of decisions affecting
planning, made by the CM, (DECBYCM, -.39*) both had a nega-
tive relationship to this variable. Additionally, the pro-
posal of design (DESGNALT, -.36*) and construction

(CONSTALT, -.34*) alternatives was also inversely related.

81
W

The four measures of effectiveness, final cost equal to
or less than owner's original budget (CSTOWNBG), final cost
equal or less than final pre-bid estimate (CSTPREBD), job
completed on or before owner's original date (JOBOWNDT), and
job completed on or before the date set during preconstruc-
tion planning (JOBPRBDT) could be combined into two differ-
ent groups.

The first of these groups could be visualized as dol-
lars and dates. CSTOWNBG and CSTPREBD (see Table 4.8) were
both most directly linked with meeting a cost and had an r
of .76***. JOBOWNDT and JOBPREDT were most directly linked
with meeting calendar dates and had an r of .48**.

A second grouping concept would be those measures of
effectiveness most directly concerned with goals internal to
the CM company and those concerned most directly with goals
more external to the company. CSTPREBD and JOBPREDT ap-
peared to be involved with internally set goals and had an r
of .47**. CSTOWNBG and JOBOWNDT appeared to be linked more
to goals set by the owner and had an r of .44".

Cutting across the arbitrary groups, costs-dates and
internal-external goals, was the relationship between

JOBPREDT and CSTOWNBG (.57***).

82

Table 4.8 Correlation Coefficients Between
Dependent Variables

 

Dependent
Variable CSTOWNBG CSTPREBD JOBOWNDT JOBPREDT

 

a

CSTOWNBG 1.00 .76*** .44** .57***
CSTPREBD .76*** 1.00 b .47**
JOBOWNDT .44** 1.00 .48**
JOBPREDT .57*** .47** .43** 1.00

 

a*p.=< .05, **p.=< .01,***p.=< .001

bAll correlation coefficients not appearing in the body

of the table had a p. greater than .05. See Appendix F
for the complete matrix.

83
W

W “b

The length of experience which.a company had with CM
contracts was related positively to the percent of completed
CM jobs with a final cost equal to or less than the owner's
original budget (.48**). Length of CM experience was also
positively related to the percent of completed CM jobs with
a final cost equal to or less than the final pre-bid esti-
mate (.50**). (See Table 4.9) Years in business was unre-

lated to the four measures of effectiveness.

I F
. l , , ! , ‘
:1 ”Many L ‘ ’ ’ . “f.

Hypothesis N9 2 (l; ,- CM ‘,  :7; l- * ‘1 "LU" "1':

The Qize of a CM company (variable NUMEMPFL) was posi-
tively related to the percent of CM jobs completed by the
owner's original completion date (.31*). The percentage of
permanent employees utilized during preconstruction planning
was positively related to all effectiveness variables:
final cost equal to or less than owner's original budget,
final cost equal to or less than final pre-bid estimate, job
completed on or before owner's original date, and job
completed on or before the date set during preconstruction
planning.
’W

Exposure of CM managers to sources of information about
new management techniques had one facet that was inversely
related to completing the job by the owner's original date.

That was the use of professional journals (-.39*). No other

84

Table 4.9 Correlation Coefficients of Simple Hypotheses
Characteristics Related to CM Effectiveness

 

Hypothesis Measures of Effectiveness
Characteristic CSTOWNBG CSTPREBD JOBOWNDT JOBPREDT

 

Hypothesis #1
YRSNCM .43xxa .50** b

- Hypothesis #2
NUMBRNCH
NUMEMPFL .31**
VALCMCTS .
PRECONEM .53** .38** .56** .57**
VOLWKPRS .30.

— Hypothesis #3
PROFJOUR , _.39.
SEMNHOUS
SEMBYPRO
INTERACT

- Hypothesis #4
NTWRKSYS

— Hypothesis #5
HIREBFAE .44** .30*

- Hypothesis #6 .
COMMO ,32* .53***

- Hypothesis #7
VALSMPRJ .33*
VALLGPRJ .33*

- Hypothesis #8
CMPEST

- Hypothesis #9
VALENG

- Hypothesis #10
TMSUPER .36* .39*

 

3*p.=(.05, **p,=<,01, ***p.=<.001

bAll correlation coefficients not appearing in the body of the

the table had a p. greater than .05. See Appendix F for the
complete matrix.

85

Table 4.9 (cont'a)

 

Hypothesis Measures of Effectiveness
Characteristic CSTOWNBG CSTPREBD JOBOWNDT JOBPREDT

 

- Hypothesis #11
DESGNALT .53*** .S7*** .46**
CONSTALT .41** .41** .34**

- Hypothesis #12
RISKANL

 

86
source of information was significantly related to

effectiveness.

" O
W wmfi .
The use of a network based scheduling system, as a

requirement of the owner, showed no significant relationship

to any effectiveness variable.

Hxnethesia_flni_5

Being hired agéCM prior to the hiring of the A-E was
positively related to meeting completion dates. The percent
of CM jobs completed by the owner's original date had a
relationship of .44** and the percent of CM jobs completed
by the date established during preconstruction planning had
a relationship of .30*.

H¥Pnth£§18_flni_£ 7L

Having the major role in establishing the team communi-
cation procedures was positively related to the percent of
completed CM jobs with a final cost equal to or less than
the final pre-bid estimates (.32*). It also had a positive
relationship to the percent of CM jobs completed by the date

established during preconstruction planning (.53***).

BMW 7%

The size of a CM project had a positive relationship
with two effectiveness variables. The value of the smallest
project completed in the last five years was related to the

percent of completed CM jobs with a final cost equal to or

87
less than the final pre-bid estimate 033*) while the value
of the largest job was related to the percent of CM jobs

completed by the owner's original completion date (.33*).

W 0
The use of the computer estimating techniques and the
use of “value engineering“ showed no significant relation-

ship to any effectiveness variable (See Appendix E).

Hypothesis_flni_ln —Z/‘

The use of a team to supervise the entire preconstruc-
tion.phase of a project was related to percent of CM jobs
completed by the owner's original completion date L36*).
It was also related positively to the percent of CM jobs
completed by the date established during preconstruction
planning (.39*).
law/é

The only effectiveness variable to which the proposal
of design and construction alternatives was not related, at
a significant level, was the percent of CM jobs completed by

the owner's original completion date. See Table 4.8 for the

strength of those relationships.

ffi
lhflmmhsahLth_12 k/

The use of a formalized method of “risk analysis“
showed no significant relationship to any effectiveness

variable.

88

W
W

As indicated in Table 4.10, the value of CM contracts
completed in the last five years (VALCMCTS) showed a signif-
icant difference (t s 2.59) in its relationship to final
cost equal to or less than the owner's original budget when
the effects of both job and planning characteristics were
removed from the relation (controlled). This was an inverse
relationship (-.54*).

Table 4.10 also shows that the significant r of both
percent of preconstruction phase employees who are permanent
(PRECONEM) and the use of the manager's own experience as a
source of CM contract management information (MANGREXP)
stayed relatively equal regardless of which factors were
controlled in their relationship with final cost equal to or
less than the owner's original budget. These were both
positive relationships.

W

W

The years a company has been in the construction indus-
try (YRSNBUS) showed a significant difference (t =- 2.29) in
its relationship, a negative relationship (-.60*), to final
cost equal to or less than the final pre-bid estimate. This
was true when the effects of both job and planning charac-

teristics were controlled (Table 4.10).

89

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91

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We

The number of full time employees (NUMEMPFL) showed a
significant difference (t a 2.64) in its relationship to
completing the job on or before the owner's original date
(Table 4.10)‘when the effects of job and planning character-
istics were controlled. It had an inverse relationship
bu44). The use of the manager‘s own experience as a source
of CM contract management information (MANGREXP) also showed
a significant difference (t = 2.89) when its relationship to
completing the job on or before the owner's original date
had the effects of job and planning characteristics con-
trolled (.79***).

The percent of preconstruction phase employees who were
permanent (.56***) and the use of professional journals
b539*) had r values which remained relatively constant and
significant through both partial correlation procedures
(Table 4.10). The first of these had a positive relation-
ship and the second an inverse relationship.

WWW
Washing

As indicated by Table 4.10, a significant difference
(t - 2.37) was shown by the number of CM contracts completed
in the last five years (NUMCMCTS). This showed a positive
relationship (.72**).

The percent of preconstruction phase employees who were
permanent (PRECONEH) had a significant r which remained

relatively constant when either job characteristics alone or

92
both job and planning characteristics were controlled. This

was a positive relationship.

WWI-253.111“
Shumm;s_QLEuunu_jmdsst

Formal updating of the preconstruction plan (PLNUPDT)
had a significant difference in its relationship to final
cost equal to or less than owner's original budget when
organizational characteristics were controlled (t =- 3.29)
and when both organizational and job characteristics were
controlled (t = 3.84). Both were negative relationships
(Table 4.11).

W

W

The use of "risk analysis' (RISKANL) showed a signifi-
cant difference (t =- 3.l4) in its relationship to final cost
equal to or less than the final pre-bid estimate when
organizational and job characteristics were controlled
(-.72*).

W

The use of computer estimating techniques during pre-
construction planning (CMPEST) showed a significant differ-
ence (t a 4.07) in its relationship to jobs completed on or
before the owner's original date (.82**) when both organiza-
tional and job characteristics had their effects controlled

(Table 4.11). The setting of dates for completing the

93

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95
design phase, during conceptual planning (SETDTDES), had a
significant difference in its relationship to jobs completed
on or before the owner's original date when organizational
characteristics (t - 2.71) andwhen organizational and job
characteristics were controlled (t a 2.71). This was an

inverse relationship (Table 4.11).

MW
Waning

Setting dates for the completion of the design phase,
during conceptual planning (SETDTDES), had, as indicated by
Table 4.11, a significant difference in its relationship to
jobs completed by the date set during preconstruction plan—
ning regardless of whether organizational characteristics
(t =- 3.20) or both organizational and job characteristics
(t - 4.35) were controlled. This was an inverse relation-
ship.

The use of I'risk analysis“ (RISKANL) showed a signifi—
cant difference in its relationship to this measure of
effectiveness (t :- 2.61) when the effects of both organiza-
tional and job characteristics were controlled. This rela-

tionship (-.6l*) was an inverse relationship.

WWW
911W
Wals-

No other organizational or planning characteristic had
a significant difference (t value) in its relationship when
other characteristics were controlled (Tables 4.10 and

4.11). Additionally, no other organizational or planning

96
characteristic had an r value which remained relatively
constant, at an acceptable level of confidence, through the

partial correlation procedure.

W
This chapter has provided a description of the mailing

and follow-up procedures utilized for the questionnaire and
a discussion of the return rate. ‘The typical company re—
sponding to the questionnaire was described in detail.

The significant relationships between organizational
characteristics and planning (44 total) and organizational
characteristics and job characteristics (20 total) were
pointed out. Additionally'the significant relationships
between job characteristics and planning characteristics (17
total) were noted.

Those significant relationships (7 total) that indi-
cated support for the simple hypotheses were also described.
The lack of support for four simple hypotheses was noted.

Described in this chapter, additionally, were those
partial correlation coefficients which had a significant
difference for organizational characteristics related to
measures of effectiveness when the effects-of job charac-
teristics were controlled (none significant) and when the
effects of both job and planning characteristics were con-
trolled (6 total). Those relationships between planning
characteristics and measures of effectiveness which had-a
significant difference when organizational characteristics

were controlled (4 total) and when both organizational and

97
job characteristics were controlled (7 total) were also

noted.

CHAPTER 5

DISCUSSION AND CONCLUSIONS

91211131!

This chapter discusses those relationships reviewed in
Chapter 4 and provides the conclusions reached by the re-
searcher as a result of the analysis performed on the data
collected during the research.

Included in this chapter, additionally, are recommenda-
tions for further research pertaining to those areas for
which the research posed questions but for which the data

collected had no satisfactory-response.

Limitations
This study had several limitations which may restrict

its ability to predict the relative impact which planning,
done in the preconstruction phase of a CM contract, has on
the CM company meeting an owner‘s goals. Two of these, even
though limitations in one sense, actually increased the
confidence with which the statistical analysis could be

interpreted.

fiamlsJize
The first limitation was the size of the sample on

which the statistical analysis was performed. Sampling, in

98

99

general, is used because it is presumed to be descriptive of
a population, a larger collection of entities similar to
those found in the sample itself. Sampling helps the re-
searcher cover the greatest possible number of cases within
the limit of his or her resources. In return for this gain
some degree of certainty must be sacrificed (Ziegenhagen and
Bowlby, 1971). A sample size of 32 does, of necessity, lead
to a lesser degree of certainty which could be placed in the
results, since this small sample-may'be in some ways dis-
similar to CM firms that were not sampled or did not re-
spond. Because the sample size was small, however, the
results, especially those concerned with correlation coeffi-
cients, are conservative.

Examination of the formula for significance tests given
in Chapter 4 will show that level of significance depends on
sample size (n) as well as the size of the correlations
observed. In a sample size of 32, variables which are found
to be significantly related are likely to be of importance

in a larger sample or in the population.

WW

As was discussed in Chapter 4, in the description of
the typical company which answered the survey, the question-
naire was answered by companies which were relatively small.
The typical company had less than 50 full time employees,
had done less than $30 million in CM contracts over the past
five years, and had few, if any, branch offices although

they had been in business for between 16-20 years. As a

100
consequence, the results of the research, and the conclu-
sions drawn from those results, were only applicable to
other CH companies in Michigan which fit within those para-

meters.

W

The four measures of the effectiveness with which a CM
company meets an owner's goals: CM jobs with a final cost
equal to or less than the owner's original budget
(CSTOWNBG), CM jobs with a final cost equal to or less than
the final pre-bid estimate (CSTPREBD), CM jobs finished by
the owner's original date (JOBOWNDT), and CM jobs finished
by the date set during preconstruction planning (JOBPREDT),
all had fairly small standard deviations. (See Table SulJ
No matter what shape the distribution of responses, this,
the small S.D., meant that a large proportion of these
survey responses all had the same answer marked. Other
responses on the survey also had small S.D.‘s (see Tables
4.1 to 4.3) but these four were especially noteworthy.

Although these small S.D.‘s indicated a high level of
agreement among the companies surveyed, they also meant that
strong correlations are not as likely when other variables
were related to these four. That is, because the ranges of
the effectiveness variables were small, the greater variance
in organizational characteristics, job characteristics, and
planning techniques, were less likely to show a linear
relationship to effectiveness than if these four measures

were spread over a wider range.

101

 

 

Table 5.1. Measures of Effectiveness: Means, Standard
Deviations (S.D.), and Ranges
Measure of
Effectiveness Mean S.D. Low High
CM Jobs Final Cost 3.69 -.93 None All
S Owner's Original
Budget
CM Jobs Final Cost 3.72 1.14 None All
5 Final Pre-Bid
Estimate
CM Jobs Completed By 3.45 .92 None All
Owner's Original Date
CM Jobs Completed By 3.72 .68 1-30% All

Date Set During
Preconstruction

 

a The mean given is based on the number (l-5) which corre-
sponds to possible answers on the questionnaire.
explanation of possible answers, see the questionnaire

(Appendix B).

For an

102
W

Two sets of questions in the survey instrument had no
useable responses marked on the returned questionnaire.
These were questions having to do with where the company
performed CM work (questions 5-9, Appendix B) and regarding
financial ratios (questions 50-52, Appendix).

The series of questions which asked where the company
performed CM contracts was designed to indicate if the
company was exposed to conditions other than those which
exist in Michigan. The lack of this information-made the
generalization of results to include any companies located
outside Michigan unwarranted.

The questions concerning financial ratios were designed
to give added validity to the measures of effectiveness.
Without these responses it was impossible to draw any con-
clusions as to the link between effectiveness in meeting an
owner's goals and the success of the company as a business

enterprise.

WWW
Elanninmaracteiisiics

Emu-shes

Of the 75 possible correlations between experience
related to organizational characteristics and planning char-
acteristics four (5.3t) were found to have a positive rela-
tionship while five (6.3%) were found to have an inverse

relationship.

103

Discussion

The longer a company had been in the construction
industry, the more decisions affecting planning were made by
team members other than the A—E. This seemed to partially
support the team concept of decision making, especially for
those decisions which affected planning. This supported the
work of Adrian (1981) and Foxhall (1972).

The use of “risk analysis“ declined the longer a com-
pany had been in business. This seemed to support the
Business Roundtable (1982) finding that many construction
project estimates were prepared without using state—of-the-
art techniques for risk analysis.

The longer a company had had an in-house design cap-
ability, the more they felt that the owner made a large
percentage of the planning decisions while they made less.
This length of in-house design experience also was related
to the CM company's use of the computer in planning and to
having the major role in establishing the communication
procedures for the management team.

The more CM contracts they had completed in the last
five years, the less likely it was that planning decisions
were made bythe A-E. This supported Fox's (1976) comment
that being structured as a team was not enough. Experience
was the key. This indicated that the more experience a
construction company had with CM the less likely it was that

decisions affecting planning would be left to the A-E.

104

Conclusions

Based on this sample, and the data collected, it ap-
peared that companies which were older, and more experienced
with in-house design capabilities and CM contracts, were
more likely to let the owner make decisions affecting plan-
ning. They were also more likely to use computers in plan-
ning and to take a major role in establishing team communi-
cation procedures.

These findings appeared to indicate, at least for the
companies surveyed, that the CM firm was concentrating on
the planning technology and leaving the major portion of the
decision making process to the owner. This contradicts the

AGC (1980), ASCE (1976), and Foxhall (1972).

Qwanizationalflzo
Organizational size was positively related in 15 out of

75 (208) possible correlations to planning characteristics.
Size was inversely related in only 2 out of 75 (2.6%) corre-

lations possible.

Discussion

Generally, all measures of the physical size of the CM
company were positively related to planning characteristics.
No significant relationship was detected for any measure of
size to the use of one supervisor, planning steps varying
with size of the project, the use of risk analysis, or the
proposal of design and construction alternatives. The per-

cent of decisions, affecting planning, made by the owner

105
increased with all measures of size except the number of
full time employees. As the number of preconstruction plan
employees who were permanent and the volume of CM work
possible with their present workforce increased, so did the
number of planning characteristic relationships that were
significant.

Of particular interest was the finding that the larger
the total value of CM contracts completed over the last five
years the more the CM company employed “value engineering“
and computer estimating techniques. This appeared to sup-
port the finding by the Business Roundtable (1982) that the
computer estimating hinged on develOping a reliable data
base which can be achieved through use on multiple projects.

As the total value of the CM contracts Completed over
the last five years increased, the percent of decisions made
by the CM decreased. This supports the previous conclusion
that experience was an important factor, for these compa-
nies, in the choice to let the owner make decisions affect-
ing planning. As the CM company increased the number of
branch offices it had, the A-E made a smaller percent of the
decisions affecting planning. This supported fox's (1976)

comment mentioned in the preceding section.

Conclusion
The data collected appears to support the writing of

Silnverman (1976) and Pilcher (1976). This was that the
larger and more complex construction projects require a

large diversity in skills and techniques, not the least of

106
which is in the management of the organization. These
diverse skills and techniques are more often found in the

larger CM firms.

Information

The sources of information to manage CM contracts were
found to be positively related in 7 out of 75»(9.3%);pos-
sible correlations while they were inversely related in 6

out of 75 (6%) correlations.

Discussion

As the use of in-house seminars, seminars by profes-
sionals, and interaction with design firms increased in
usefulness as sources of information for managing CM con-
tracts so did the use of a team to supervise the precon-
struction planning. As expected, as team use increased the
use of one supervisor decreased. This supported the conten-
tion by Logcher and Levitt (1976) that the availability of
increased information may well exceed the amount a single
project manager can process and use. Even though they were
writing of M18 generated information the concept appeared to
be true here also.

If a company found the use of the manager's experience
useful as a source of management information it also de-
creased the use of computer estimating techniques. The
company was also more likely to set dates for completing the
design phase and to up-date plans less frequently but to

make more of the decisions affecting planning. This was the

107

only instance where an increase in an organizational charac-
teristic was accompanied by an increase in the percent of
the decisions, affecting planning, which were made by the
CM. This use of the manager's experience was also related
to the company more often proposing design alternatives.

Table 4.1 shows that the manager's experience was the
most useful source of information and it showed in the
correlation coefficients. This seemed to indicate that the
CM companies-put an inordinate amount of faith in the cor-

rectness of the managem's information concerning planning.

Conclusions
This sample, and the data collected, appeared to indi-

cate that companies which actively seek disparate sources of
information used a team approach, more often than not, for
planning during the preconstruction phase. It also sug-
gested that the manager's own experience was the factor
which decided which of the planning techniques investigated

was to be used.

QmanizationaLEorm
Discussion
The data collected indicated that companies organized

along a line concept were more likely to prOpose design and
construction alternatives and also more likely to make a
larger percentage of decisions affecting planning. These
findings seemed to support Mintzberg's (1979) concept of the

simple structural configuration for the organization. In

108
this structure direct supervision was the prime coordinating
mechanism. The power over all important decisions rested
with one individual. The data indicated that that was what
happened in the CM company also.

As the organization of the company shifted towards a
combination line and staff or staff design, the data indi-
cated that they were more likely to have a major role in
establishing team communication procedures but also to up-

date their preconstruction plan less frequently.

Conclusions

The conclusion to be drawn from the analysis of the
data was that companies organized along a line form, as
opposed to staff, were more likely to propose design and
construction alternatives and to make a larger percentage of
decisions affecting planning.
WWW

CharactcristichslatchLzl-annino
Charactsristics

Generally the results supported the findings and be-
liefs of other researchers and authors. That was that the
larger, more experienced companies tended to utilize more of
the planning characteristics which were investigated by the
study than did smaller, less experienced CM firms.

What was unexpected, and seemingly, contradicts most
published concepts of CM was that as the CM company size and
experience increased so did the percent of decisions affect-

ing planning made by the owner. This apparent increase in

109
the decisions made by the owner was related in a positive
direction, at a significant level, to more organizational
characteristics than any other planning characteristic in-
vestigated. A possible explanation of this, and one sup-
ported by the data which indicated that a line organization
CM company made a larger percent of decisions than did a
staff organization, was that the respOnsibility for decision

making became too diffuse in staff organizations.

WWW
to_Enuironmsnta1_Charact.uistics

Exosnicncc

Of the 25 possible correlations between experience
related to organizational characteristics and environmental
characteristics, three (12%) were found to have a positive
relationship while one (4%) was found to have an inverse

relationship.

Discussion

As anticipated, the companies which had more experience
with CM projects and a larger percentage of their total
volume generated by CM contracts also tended to be awarded
the larger projects. This suggests popular support for the
recommendation by the AGC (1982) and the GSA (1975) that
past experience should be a basic consideration when hiring
a CM company. i

As the years a CM company had had an in-house design

capability increased, the value of the smallest project

110

completed in the last five years decreased. This supported
the finding that larger, more experienced CM firms got
larger projects. This could be explained by cost effective-
ness. It may not be cost effective for a large CM company
to split some of its resources among smaller projects, nor
for smaller companies to acquire the resources needed for
large, complex projects.

Being hired as CM, prior to hiring the A-E, increased
as experience with in-house design capability increased.
This could indicate that the CM firm was performing the

functions of the A-E as well as that of the CM. .

Conclusions
As indicated by the data collected, the more experi-

enced CM companies also were awarded the larger jobs.

QroanizationaLSizc
Eight of 25 (32%) possible correlations between mea-

sures of CM company size and environmental characteristics
were found to be positive. Two of 25.(8%) were found to be

inversely related.

Discussion

All but one of the measures of size were found to be
positively related to the value of the largest CM job com-
pleted in the last five years. The one exception was the
percentage of preconstruction planning employees who were
permanent. These findings supported the conclusion that

size, along with experience, appeared to be a major factor

111

in the award of larger projects. This supported the conten-
tion of Diepeveen (1976) and Silverman 91976) that owners
did not want the skills-gained on a project to be lost at
the end of the project. One way of keeping those skills is
to have an organization large enough to retain them inter-
nally between jobs.

Those CM companies which had a larger total dollar
volume of CM contracts (last five years) and were able to do
a larger volume of CM work with their present workforce also
tended to have owners require a network based scheduling
system more often.

CM companies with more branch offices and a larger
total value of CM contracts (last five years) appeared to do
fewer jobs for private owners. This could indicate that CM
jobs done in the public sector were usually larger (dollar
value) and that working on those public sector jobs required

that branch offices be opened or available.

Conclusions

As found for experience, those companies which were
bigger appeared also to be those companies which were award-
ed the larger CM contracts. Those larger companies also had
project owners who required the use of network based sched—
uling systems. This may be explained by the propensity of
the Federal government to require some variation of CPM
(GSA, 1975). These larger companies also did fewer private

sector contracts than did those that were smaller.

112
Information
Of the 25 possible correlations between sources of
information and environmental characteristics two were found
to be positively related (8%) and two were found to be

inversely related (8%).

Discussion

The use of the manager's own experience and interaction
with design firms as a source of CM contract information
increased the more the company performed in the private
sector. Additionally, as the value of the largest CM con-
tract completed in the last five years increased, the use of
seminars given by professionals and the manager's own exper-
ience as a source of management information appeared to

decrease.

Conclusions
As indicated by the data collected from this sample,
the larger firms appeared to depend less on seminars and the

manager's experience than did CM firms which were smaller.

QtoanizationalJorm
Staff organizations, as indicated by the data collect-

ed, appeared to obtain contracts for larger CM jobs and to
do less work in the private sector. This was a further
indication that those companies which did the larger CM
projects did them in the public sector, as Opposed to the
private sector, and tended to use staff rather than line

organizational designs.

113
ConanConclusionsi—Droanizational
ChauctcsisticLBclatodJanuironmsnt-al
Charactctistics

In general, as indicated by the data, the larger compa-
nies were also the ones which performed on the larger con-
tracts. Also these larger contracts appeared to be in the
public rather than the private sector. Additionally, these
contracts were indicated as having owners who required a
network based scheduling system. A review of Appendix F
indicated a strong negative correlation between value of the
largest CM project (VALLGRPJ) and percent of CM contracts
done for private owners (PVTJOBS) which lent support to this

conclusion. ‘The use of network based scheduling systems and

private jobs were also correlated in a negative direction.

Ensitonmsntamxaractssistichsl-itcd
tLRlannintharactstistics

llaluc_of_fimallcst_2roisct

Of the 15 possible correlations with planning charac-
teristics, the value of the smallest CM project completed
(last five years) was positively related to two (13.3%). It

was inversely related to two (13.3%).

Discussion

The use of a team to supervise preconstruction planning
increased as the value of the smallest CM project completed
increased. As a consequence the use of one supervisor
decreased. This appeared to support the conclusion that the

larger the project the more likely it was that it was done

114
by a larger company which used a team concept during precon-
struction planning. The use of “value engineering“ also
increased with the size of the smallest project. This fact,
taking into consideration the relationship of “value engi-
neering“ to the largest project completed (next section),
appeared to support the correlation found between the use of
“value engineering“ and value of CM contracts, value of
largest and smallest project, and being organized along

staff lines (Appendix F).

Conclusions
As indicated by the data collected, and supporting
previous findings of the study, the larger companies were

more likely to use a team approach to planning.

W
This was positively related two out of 15 (13.3%)

possible correlations and inversely related one out of 15

(6.7%) possible correlations.

Discussion
The value of the largest CM project completed in the

last five years had related to its increase the increased
use of “value engineering“ and the use of computer estimat-
ing techniques. These findings added additional depth to
the support for these, in some ways, advanced techniques
being associated with the larger, more progressive CM com—
panies. The Business Roundtable (1982) felt that the use of

computer estimating hinged on deve10ping a reliable data

115
base. Large companies have better Opportunities to develop
this needed data base.

.As the value of the largest project increased the
percent of decisions, affecting planning, made by the CM
decreased. This supported previous findings of this study
but appeared to contradict the writing of Adrian (1981) and
Goldhaber, et al. (1977). The CM is thought to make more of

the decisions, not less, on larger projects.

Conclusions

The conclusion to be drawn from this data was, as
previously stated, that the larger companies have access to,
or at least use more frequently, more complex planning tech-
niques.

WW
BcouitcLBLDJ-mcr

Out of 15 possible correlations to planning techniques
the use of a network based scheduling system, as an owner
requirement, was positively correlated in four instances
(26.7%). It was inversely correlated in four out of 15

instances (26.7%).

Discussion

As the requirement for network based scheduling in-
creased the company was more likely to use one supervisor to
supervise preconstruction planning. As previously, the use
of a team declined. The use of computer estimating and

“risk analysis“ increased along with the scheduling system

116
requirement while prOposal of design and construction alter-
natives decreased. This appeared to indicate that if a
network based scheduling system was required that once the
schedule was set it was impervious to change. This was also
supported by the decline in the percent of decisions made by
the CM which affected planning.

Conclusions

The use of a network based scheduling system, as an
owner requirement, actually appeared to hinder the proposal
of design and construction alternatives. The key here could
have been “owner required.“ It is conceivable that the
scheduling systems required by the owner concentrate on
carrying out the original design, and leave no time for

proposing design alternatives or revisions.

HiLinLScousncc

This environmental characteristic was found to be posi—

tively related to one planning characteristic (6%).

Discussion
The CM being hired prior to the hiring of the A-E was

related, positively, to setting dates for the completion of
the design phase during conceptual planning. This charac-
teristic was also related to length of experience with an
in-house design capability'(Appendix F) and so this rela-
tionship may have been another manifestation of the CM firm

fulfilling the role of the A-E.

117
Conclusions
This relationship appeared to support the supposition,
indicated by other data collected, that, at least in some
cases, it was possible that the CM firm was performing the
function of the A-E. This was in addition to their function

as CM.

W

The percent of CM jobs done for private, as opposed to
public, owners was positively related to two out of 15
(13.3%) possible planning characteristics. It was inversely
related in three out of 15 (20%) possible instances.

Discussion

This environmental characteristic displayed the same
behavior, in part, as that discussed for organizational
characteristics related to environmental characteristics.
That was that the larger contracts, those more likely to
require the use of computers and more involved planning,
were found doing projects in the public sector. The inverse
relationship of the use of computerized estimating tech-
niques and “risk analysis“ to the percent of CM jobs done in
the private sector appeared to support that finding.

The CM companies sampled also appeared to provide more
in the way of design alternatives when they were working on
private sector CM contracts. Additionally the percent of

decisions, affecting planning, made by the CM increased, at

118
the expense of decisions made by the A-E, as the CM company

did more jobs in the private sector.

Conclusions

The relationship displayed by this environment charac-
teristic related to planning characteristics appeared to
support other data collected as to the contention that
public sector jobs were larger, more complex, and required

more sophisticated planning techniques.

ConsnLConclusionsLJncironmsnt-al
:1 |.|. EJIiIEJ I
Charactsristics

The relationships in this section seemed to reinforce
those found previously that the planning for larger jobs was
supervised by a team and that these larger CM jobs were to
be found in the public sector. The idea that the more
complex the job the more complex the planning required was
also supported by this section. This supported Burger and
Halpin (1976) in their contention that present day projects
were getting larger and more complicated and that this in
turn called for an increasingly sophisticated project con-

trol.

WW
mationshioleJliscussion

Fifty-eight percent of the variability (see Table 5.2)
in completing the project with a final cost equal or less
than the owner's original budget (CSTOWNBG) was explained by

a final cost equal to'or less than the final pre-bid

119

Table 5.2 variance (r2) Explained by Relationship
of Dependent Variables

 

Dependent
Variable CSTOWNBG CSTPREBD JOBOWNDT JOBPREDT

 

CSTOWNBG 1.00 .58 .19 .32
CSTPREBD .58 1.00 a .22
JOBOWNDT .19 1.00 .23
JOBPREDT .32 .22 .23 1.00

 

aAll values not appearing in the body of the table
a p. greater than .05.

120

estimate (CSTPREBD) which also demonstrated the close rela-
tionship of those measures of effectiveness linked to dol-
lars. Completing the job on or before the date set during
preconstruction planning (JOBPREDT) explained 23% of the
variability in meeting the owner's original date (JOBOWNDT).
It also partially confirmed the supposition that those meas-
ures of effectiveness concerned with dates were linked, at
least for the companies surveyed.

Of the variability of completing the project with a
final cost equal to or less than the final pre-bid estimates
(CSTPREBD), completing the project on or before the date set
during preconstruction planning (JOBPREDTO explained 22%.
This added additional insight into what had been theorized
in Chapter 4. That was that internally set goals were
associated, as were goals set more external to the CM com-
pany. This latter supposition was supported by the r2
between jobs completed on or before the owner's original
date (JOBOWNDT) and completing the project with a final cost
equal or less than the owner's original budget (CSTOWNBG).
This r2 was .22.

The relationship that cut across the boundary of date-
cost and internal-external goals was that completing the job
on or before the date set during preconstruction planning
(JOBPREDT) explained 32% of the variability in final cost
equal to or less than the owner's original budget

(CSTOWNBG).

121

H!Dflhh£fii§.floi_l

Discussion

The hypothesis that the length of time a company had
been performing CM contracts had a positive relationship
with effectiveness was supported by the relationship of the
organizational characteristic, years in CM. ‘This charac-
teristic was positively related in two of four (50%) pos-
sible correlations. The percent of CM jobs with a final
cost equal to or less than the ownerfls original budget
increased as the years in CM increased. Also increasing
along with years in CM was the percent of CM jobs with a
final cost equal to or less than the final pre-bid estimate.
The data indicated that the years a company had been in the
CM field was a factor in meeting those measures of effec-
tiveness most directly linked to dollar value»(CSTOWNBG and
CSTPREBD) but not those linked most directly with calendar
dates (JOBOWNDT and JOBPREBD).

Conclusions

The data collected from this sample indicated that
years in the CM field could be used as an indicator of the
ability of a CM firm to meet those owner goals related to
dollar value but not those related to calendar dates. This,
in part, supported the GSA (1975), the AGC (1982), and
especially Tatum (1979), in their views that experience in
the construction field and the CM field in particular should

be used to evaluate a CMfirm's potential.

122

H!D££h£fii§.flci_2

Discussion

The hypothesis that the size of a CM company was posi—
tively related to effectiveness was supported by the data in
six out of 20 (30%) possible correlations. The number of
full time employees the CM company had was found, for this
sample, to be positively related to the percentage of CM
jobs completed by the owner's original date. The percent of
preconstruction phase employees who were permanent was found
to be the best indicator of effectiveness. It was related,
in this sample, to all four of the measures of effectiveness
which were surveyed. The percentage of CM jobs completed by
the date set during preconstruction planning increased with
an increase in the dollar value of CM work which the CM firm
could do with its present workforce.

These relationships appeared to support the writings of
Fox (1976), Diepeveen (1976), and Silverman (1976) when they
argued that the increasingly larger construction projects
were making necessary companies which could retain the ex-
perience~gained from previous projects within the company

itself.

Conclusions

Of the five characteristics, pertaining to organiza-
tional size, which were investigated, the one which best
predicted the ability of a CM company to meet an owner's
goals was the percentage of preconstruction phase employees

who are permanent employees.

123

H!DDLh£flifi_flbi_1

Discussion

The hypothesis that exposure of CM managers to sources
of information about new management techniques is positively
related to effectiveness was not supported by the data
gathered as a result of this study. In fact, the use of
professional journals as a source of CM contract management
information decreased as the percentage of CM jobs finished
by the date set during preconstruction planning increased.

Inspection of the means in Table 4.1 will show that, of
the five sources of information surveyed, respondents indi-
cated that they found only their own experience useful. The
standard deviations for three of these five items was small,
indicating a restricted range of responses. Therefore, as
previously discussed, significant correlations were not
statistically'possible.

This lack of usefulness attributed to new information
seemed to support the findings by the Business Roundtable
(1982) that construction companies were not instituting the
modern management systems which were available to other

sectors of the business world.

Conclusions
This hypothesis was not supported by the data collected
in this study.

124

H!RDLh£fiifi.NC._A

DiscussionAConclusions
The hypothesis that a network based scheduling system,

used during preconstruction planning, had a positive rela-
tionship to effectiveness was not supported by the data
collected. This lack of significant relationships could
have been explained by the way the survey instrument was
worded (Question 25, Appendix B). The question asked con-
cerned the proportion of CM jobs where a system was required
by the owner, rather than the proportion of jobs on which
they were used. To the extent that responding CM firms use
such systems when not required by the owner, the data do not

provide a valid test of this hypothesis.

H¥Dnthfiflifi_floi_i

Discussion

They hypothesis that being hired as a CM prior to the
hiring of the A-E was positively related to effectiveness
appeared to be supported by the relationship of the environ-
mental characteristic to the two measures of effectiveness
related to meeting dates set (JOBOWNDT and JOBPREDT). It
was not significantly related to those measures pertaining
to dollar values. This appeared to support the concepts of

Adrian (1981).

Conclusions
The data collected from this sample appeared to support

the hypothesis that being hired as a CM prior to the hiring

125 .
of the A-E was related positively to those measures of

effectiveness related to meeting dates set.

MothcsileoiJ

Discussion

The hypothesis that the CM company having the major
role in establishing communication procedures for the man-
agement team (owner, CM, and A-E) was positively related to
effectiveness was supported, for two measures of effective-
ness; the percentage of CM jobs with a final cost equal to
or less than the final pre-bid estimate, and the percentage
of CM jobs completed by the date set during preconstruction
planning. Both of these measures of effectiveness were
internal to the company itself rather than linked more
directly to the owner. This seemed to indicate that estab-
lishing team communication procedures was more closely re-
lated to meeting internally oriented goals rather than those
more externally (to the company) oriented. This appeared to
contradict Thompson and McEwen (1958) who stressed the close
relationship between goal setting in the organization and
effectiveness in the external environment in which the or-

ganization operated.

Conclusions
The ability of the CM to establish the team communica-

tion procedures was related to the ability of the CM company

to meet those internally established measures of

126
effectiveness, at least in so far as this sample represented

the population.

EXDQLhcfiiD_NDi_1

Discussion

The hypothesis that project size had no relationship to
CM effectiveness appeared to be'contradicted by the rela-
tionship between the value of the smallest and largest (last
five years) CM projects completed and both the final cost
equal to or less than the final pre-bid estimate, and the
jobs completed on or before the owner's original date. The
dataindicated that the larger the project the larger per-
centage of completed CM jobs that met these measures of
effectiveness. This contradicted the belief of Linstrom

(1982) that CM worked equally well on any size project.

Conclusions
The data collected in this study indicated that the

larger a CM project was the larger was the percentage of
projects that would be completed with a final cost equal or
less than the final pre-bid estimate and on or before the

owner's or iginal date.

8W

DiscussionLConclusions
The hypotheses that using computerized estimating tech-

niques and “value engineering“ in preconstruction planning
had a positive relationship to CM company effectiveness was

not verified by the data collected from this sample. No

127
significant relationship for either characteristic to a

measure of effectiveness was evidenced by the findings.

HypothesileoiJD

Discussion

That using a team to supervise preconstruction planning
had a positive relationship to effectiveness was supported
by its relationship to the two measures of effectiveness
linked most closely to meeting calendar dates. As the use
of a team increased so did the percentage of projects com-
pleted on or before the owner's original date and on or
before the date set during preconstruction planning. This

supported the findings by Fox (1976) and Pilcher (1976).

Conclusions

This sample indicated that the use of a team to super-
vise preconstruction planning was positively related to the
CM company‘s effectiveness in meeting those owner goals

linked to calendar dates set.

W41

Discussion

The hypothesis that proposal of design and construction
alternatives-by the CM had a positive relation to effective-
ness was the hypothesis for which the simple correlations
provided the most support. Proposal of design and construc-
tion alternatives was positively related to all measure of
effectiveness but percentage of jobs completed on or before

the owner's original date. This provided additional support

128
for the contention of all in the literature, including the
AGC (1982), ASCE (1976), and Adrian (1981) that the intro-
duction of construction experience into the design phase by

the CM is one of CMJs most important aspects.

Conclusions
This data indicated that CM firms which propose design
and construction alternatives to the owner are more effec-

tive than those which do not.

HypothesisJoiJz

DiscussionZConclusion

The hypothesis that the use of “risk analysis“ in
preconstruction planning had a positive relationship to
effectiveness was not substantiated by the results of this
study. No significant relationship was evidenced by the
data collected.

As shown by Table 4.10 the total value of CM contracts
completed over the last five years (VALCMCTS) was the only
organizational characteristic to show a significant differ-
ence (t-value) in its relationship (-.54*) to this measure

of effectiveness (CSTOWNBG) when the effects of both

129
environmental and planning characteristics were controlled.
The t-value was not significant when only environmental
characteristics were controlled. This meant that, while
environmental characteristics were not affecting the rela-
tionship, some combination of planning characteristics was.

The relationship‘was an inverse one. This indicated
that as the total value of completed CM contracts became
smaller the likelihood of finishing the project with a final
cost equal to or less than the owner's original budget
increased. This appeared to indicate that smaller, less
complex projects were easier to control, and thus more
easily met the owner's budget, than were the large complex
projects and that planning characteristics played an impor-
tant role in the ability of the CM company to meet the
owner's budget.

The r for company organization (COORGAN) held relative-
1y constant regardless of whether environmental or environ-
mental/planning characteristics were controlled. This in-
verse relationship indicated that CM companies organized
along a line concept, usually a smaller company, were better
than staff organizations at keeping a project within budget
and that neither the type of job nor the planning done
affected this relationship.

The manager's own experience, useful as a source of CM
contract management information, (MANGREXP) maintained a
significant relationship to meeting the owner's budget irre-

gardless of the control of environmental or environmental/

130

planning characteristics. This indicated that neither en-
vironmental nor planning characteristics affected this rela—
tionship and that the use of the manager's experience, a
positive relationship, was important, in and of itself, in
the capability of a CM company to meet the owner's budget.

The interrelationship between these three company char-
acteristics (VALCMCTS, MANGREXP, and COORGAN) and the abil-
ity of the CM company to meet the owner's original budget
appeared to support Fox (1976) who said that the builder who
executes small units, which are comparatively simple cannot
not necessarily conceive, and by implication does not need,
of the organization and control mechanisms necessary to

manage large projects.

Conclusions
The data collected indicated, by the significant rela-

tionships and significant t-values, that smaller, line or—
ganization CM companies, who rely on the manager's experi-
ence for management information, appeared better able to
meet the owner's budget than did larger companies. This was
indicated as applying to smaller CM projects. A possible
explanation may have been that small projects, done by large
CM companies, tended to fragment the resources available to
large companies and that management had a harder job track-

ing actual cost as related to the budget.

When the effects of both environmental and planning
characteristics were controlled the number of years that a
company had been in the construction business (YRSNBUS) was
found to have a significant t-value for its relationship to
final cost of a project equal to or less than the final pre-
bid estimate (CSTPREBD). This indicated that younger, and
thus usually smaller, companies were more likely to complete
a project at, or under, the cost given in the final pre-bid
estimate than were older companies. This finding was not
supported by available literature and seemed to contradict
the AGC (1982), the GSA (1975), and Tatum (1979) who felt
that past experience was a good indication of potential.

This relationship was not evident when only the effects
of environmental characteristics were controlled but ap-
peared when the effects of environmental and planning char-
acteristics were controlled simultaneously. This indicated
that, at least for young companies, planning characteris-
tics, and not environmental characteristics, were important

factors in their ability to meet the final pre-bid estimate.

Conclusion
The data collected indicated that younger, less experi-

enced CM companies completed a larger percentage of CM
projects with a final cost equal to or less than the final

pre-bid estimate than did older, more experienced companies.

132

It also indicated that some combination of planning charac-
teristics had a more important affect on this relationship
than did environmental characteristics. A possible reason
for this may have been that younger companies approach the
CM process in a more innovative manner. Although this was
not generally supported by this study one possible indica-
tion is the relationship (Appendix F) of years in business
(YRSNBUS) to the use of “risk analysis“ (-.30*). This was
that younger companies appear to use “risk analysis“ on more
projects than did older companies.

JDDJEHMHJ¢£C_QDJNLJEICL3

Shumms.QnflflUflu_Dats

Discussion

As shown by Table 4.10 the relationship of the number
of full time employees (NUMEMPFL) to completing the job on
or before the owner's original date was not a significant
relationship when either environmental or environmental/
planning characteristics were controlled. What was
indicated as being significant was the change in t-values
when both environmental and planning characteristics were
controlled. .Additionally this appeared to suggest that what
had made this a significant relationship was the effect
which planning had on the relationship.

The use of the manager's experience as a source of CM
contract information.(MANGREXP) showed a significant t-value
when its relationship to completing the job by the owner's

original date had the effects of both environmental and

133
planning characteristics controlled. The t-value was not
significant when only environmental characteristics were
controlled. This appeared to indicate that not only was the
manager's experience important, in a positive manner, but
the effect of the planning characteristics was important
also. This supported the findings of the ASCE (1975).

Both the percentage of preconstruction phase employees
who are permanent (PRECONEM) and the use of professional
journals as a source of CM contract management information
(PROFJOUR) maintained relatively constant r values regard-
less of which other characteristics was controlled. The
first was a positive relationship while the second was
inverse. This meant that for these two company characteris-
tics the effect of environment and planning were negligible.

The higher the percentage of preconstruction phase
employees who were permanent employees the better the CM
companies surveyed appeared to do in completing the job on
or before the owner's original date. This finding support
the argument of Fox (1976), among others, that being struc-
tured as a team was not enough. They (the team) needed to
be able to work as a team and could only come from having
worked as a team previously.

The use of professional journals as a source of CM
contrast information maintained a relatively constant nega-
tive r during both partial correlation procedures. This
appeared to indicate that, although unaffected by environ-

mental or planning characteristics, the companies in the

134
survey got their CM contract management information from

other sources.

Conclusions

Planning characteristics had an important impact on the
relationships of both the number of full time employees and
the use of a manager's experience as an information source
to completing the job on or before the owner's original
date.

This data also appeared to support the argument of Fox

(1976) mentioned previously.

WW
Set_Durino_Ercconstruction_21annino

Discussion

The effects of planning characteristics were important
to the relationship of the total number of CM contracts
completed in the last five years (NUMCMCTS) to completing
the job on or before the date set during preconstruction
planning (JOBPREDTW. ‘When environmental characteristics
were controlled alone the t-value was not significant. ‘When
both environmental and planning characteristics were con-
trolled the t-value was significant and this indicated that
some interaction of planning characteristics had an impor-
tant effect.

This finding indicated that the more CM contracts a
company had completed in the last five years the larger
percentage of projects they completed on or before the date

set during preconstruction planning. Also suggested was

135

that the use of some combination of the planning character-
istics investigated was important to the ability of the CM
company to meet that date. This supported the majority of
the literature reviewed (Goldhaber, et al., 1977; GSA, 1975;
AGC, 1982: Tatum, 1979; Clough and Sears, 1979) in that the
experience gained in planning a larger number of projects
appeared to be a major factor in completing the project on
or before the date set during preconstruction planning.

As was found for completing the job on or before the
owner's original date (JOBOWNDT) the relationship of the
percentage of preconstruction planning employees who were
permanent employees (PRECONEM) to completing the job on or
before the date set during preconstruction planning was
unaffected by either environmental or planning characteris-
tics. This provided additional support for the views of Fox
(1976).

Conclusion
For the data collected planning had a positive impact

on the relationship between the number of CM contracts
completed in the last five years (NUMCMCTS) and the percent-
age of jobs completed on or before the date set during
preconstruction planning. Additionally, neither environ-
mental nor planning characteristics had an observable effect
on the relationship of percentage of preconstruction plan-
ning employees who were permanent employees to competing the
job on or before the date set during preconstruction plan-

ning.

The formal updating of the dates set in the company's
plan for the preconstruction phase (PLNUPDT), in its rela-e
tionship to projects with a final cost equal to or less than
the owner's original budget (CSTOWNBG), showed a significant
difference in the value of its r when organizational charac-
teristics were controlled and when organizational and envi-
ronmental characteristics were both controlled. Both of
these were inverse relationships which meant that those
companies who updated their planned dates more frequently
appeared to meet the owner's original budget more often than
those companies who were less frequent in their updates.
The fact that this relationship changed from not being
significant, to being significant in both cases, indicated
that, when the effects of either organizational characteris-
tics alone or company and environmental characteristics
together were controlled, frequent updating of planned dates
had an important positive impact on the ability of a CM
company to complete a project with a final cost equal to or
less than the owner's original budget.

This finding supported Densmore and Burgoine (1981) in
their contention that if proper planning were achieved the
project would be completed with the best use of available

resources and would be successful. Additionally, this

137

supported the Business Roundtable (1983) in their finding
that, through better planning, construction time on most
projects could be reduced by 10% and consequently reduce the
costs. ~

After the removal of the effects of organizational
characteristics the r value of decisions affecting planning,
made by the CM (DECBYCM), stayed relatively constant when
the effects of organizational and environmental characteris-
tics were also controlled. This appeared to indicate that
the interaction of organizational and environmental charac-
teristics'were having a masking effect on the importance of
the CM making planning decisions and its relationship to the
ability of a CM firm to meet the owner's original budget.

Adrian (1981) stated that being involved with a project
throughout design, construction and implementation placed
the CM in a position to minimize the project's time and
cost. This finding of increased decisions by the CM

appeared to support that argument.

Conclusions
The analysis of the data collected indicated that fre-

quent updating planned dates enabled a CM company to more
often complete a project at or under the owner's original
budget. In addition, it appeared that increasing the deci-
sions made by the CM, which affected planning, also in-
creased the ability of the CM company to meet the owner's

original budget.

The use of “risk analysis“ in preconstruction planning
(RISKANL) showed a significant difference in its relation-
ship to final cost equal to or less than the final pre-bid
estimate (CSTPREBD) when the effects of organizational and
environmental characteristics were controlled. Its inverse
relationship indicated that the less those companies sur-
veyed used it the more likely they were to complete the
project with a:final cost equal to or less than the final
pre-bid estimate. The fact that this planning characteris-
tic became significant only after both organizational and
environmental characteristics were controlled indicated that
it was the environmental or job characteristics that had the
major effect. Although one of the stated services which a
CM firm should offer (Adrian, 1981: AGC, 1982; ASCE, 1976)
for these companies it appeared that the majority of the
jobs (owners) did not require it. .For this study a factor
may have been that the companies surveyed were all relative-
ly small (Appendix E) and that “risk analysis“ appeared to
be associated with jobs done in the public sector, which in
this study, were done by large companies with the presumably

large resources needed to perform “risk analysisJ'

Conclusions

The use of “risk analysis,“ for the companies surveyed,

appeared to decrease with the increased ability of a CM

139
company to complete a project with a final cost equal to or

less than the final pre-bid estimate.

JoDLComolctsLQLoLBsforc
QunsLLsCLicinaLDatc

Discussion

The use of computerized estimating techniques in pre-
construction planning (CMPEST) displayed a significant
change in its relationship to jobs completed on or before
the owner's original date (JOBOWNDT) when both organiza-
tional and environmental characteristics were controlled but
not when organizational characteristics were controlled
alone. ‘This indicated, for these companies, that the job
required the use of computerized estimating techniques
rather than any internal company requirement. The positive
relationship indicated that jobs on which computerized esti-
mating was used more often met owner's original completion
date than those on which it was not.

Although these findings supported Adrian (1981) and
Clough and Sears (1979), they more fully supported the
Business Roundtable (1982) finding that computer estimating
systems were not fully utilized by the construction indus-
try. The data in the present study appeared to indicate
that the use of computerized estimating was more a function
of the job than of any policy within the CM company itself.
Logic would seem to indicate that if a CM company had the
system available it would be used for all jobs, regardless

of any special characteristics of the individual job.

140

Setting dates, during conceptual planning, for complet-
ing the design phase (SETDTDES) showed a significant change
in r values when either organizational or organizational and
environmental characteristics were controlled. This rela-
tively constant negative relationship appeared to be affect-
ed by some combination of organizational characteristics and
not by environmental characteristics. The data indicated
that these companies were better off not to set dates for
completing the design phase. Setting them led to not com-
pleting the job by the owner's original date. This same
relationship was found to be true for completing the job by
the date set in preconstruction planning also. (See next

section.)

Conclusions

The conclusion supported by this data was that using
computerized estimating was a function of environmental
(job) requirement rather than internal CM company policy and
that on jobs where it was used it had a positive impact on
completing the job on or before the owner's original date.
Additionally, setting dates, during conceptual planning, for
completing the design phase had a negative influence on

meeting the owner's original completion date.

WW
Sct_DuLino_2rsconstruction_Elanninc

Discussion

The use of “risk analysis“ during preconstruction plan-

ning (RISKANL) showed a significant difference in its

141

relationship to jobs completed on or before the date set
during preconstruction planning (JOBPREDT) when both organi-
zational and environmental characteristics were controlled.
This significant t-value was not evidenced when only organi-
zational characteristics were controlled. This indicated,
as for its relationship to meeting the final pre-bid esti-
mate, that this planning characteristic was affected most by
environmental or job characteristics and not any internal
company characteristic. It also showed the same inverse
relationship. For a full discussion of the possible expla-
nation for this, see the section of this study entitled
“Planning Characteristics Related to Meeting Owner Goals:
Jobs Completed On or Before Date Set During Preconstruction
Planning.“ ‘

The data collected also indicated that the negative
aspect of using “risk-analysis“ was in some way a function
of goals set within the CM company. IWLhad a significant
negative relationship with the two measures of effectiveness
linked most directly with the CM company (CSTPREBD and
JOBPREDT) but had no significant relationship with those
linked most directly to the owner (CSTOWNBG and JOBOWNDT)
when both organizational and environmental characteristics
were controlled. This seemingly contradicted Adrian (1981)
who argued that this procedure was of benefit to the owner
rather than the CM company.

As was indicated by the data for meeting the owner's

original date, the setting of dates, during the conceptual

142
planning, for completing the design phase (SETDTDES) had a
significant t-value in its relationship to completing the
job on or before the date set during preconstruction plan-
ning when either organizational characteristics alone or
when both organizational and environmental characteristics
were controlled. The data indicated that this planning
characteristic's negative relationship was affected by some
combination of organizational characteristics and not by

environmental characteristics.

Conclusions

The data collected and analyzed in this study indicated
that those companies surveyed did not use “risk analysis“ to
any extent and that by not using it they were better able to
meet.the>completion-date set during preconstruction plan-
ning. .Additionallyu the use of this planning characteristic
was a function of some interaction of organizational charac-
teristics as opposed to environmental characteristics. The
setting of dates for completing the design phase, during
conceptual planning, was indicated by the data collected by
this study to impede the ability of the CM company to com-
plete the project on or before the date set during precon-

struction planning.

DiscussioLSummarx

SimolLCorrclations
As indicated by Tables 4.5, 5.3, and in the discussion

of the results, the larger, more experienced companies

143

Table 5.3 Summary of Organizational Characteristics
Related to Planning Characteristics

 

Organizational Total Planning Characteristics Related

 

Characteristica Positive Relation Inverse Relation
- Experience
YRSNBUS g 2
YRSNHSE 3 l
NUMCMCTS a 1
- Size
NUMBRN CH 2 l
NUMEMPFL 3 1
VALCMCTS 3 1
PRECONEM 4 g
VOLWKPRS 4 g
— Information
PROFJOUR 1 fl
SEMNHOUS fl 1
SEMBYPRO 1 2
INTERACT 1 2
MANGREXP 5 l
- Organization
COORGAN 2 3

 

aThese organizational characteristics are not rank-ordered.
The data collected did not support that type of conclusion.

144
tended to utilize more of the planning characteristics which
this study investigated than did the smaller, less experi-
enced CM firms. This study also found that the use of
outside sources of CM contract information was inversely
related to the majority of the planning characteristics
investigated. Those companies surveyed relied most heavily
on the manager's own experience.

Tables 4.6 and 5.4 indicate that the larger CM con-
tracts, at least for the surveyed companies, appeared to be
in the public and not the private sector. Additionally most
of the owners for these larger contracts required the use of
a network based scheduling system. ‘These scheduling systems
did not appear to be generally required by the private
sector owners.

The larger jobs were also found to be those which, for
the companies surveyed, required the use of more sophisti-
cated project controls and the use of more varied planning

(Tables 4.7 and 5.5).

W
Of the simple hypotheses which this study investigated,

seven (58%) were supported by the data while five (42%) were
not supported by the data. The majority of those found to
be supported by the research were those that related, in
some form, the size of the CM company to increased effec-
tiveness, rather than the use of some planning characteris-
tic. The major exception to this was the proposal of design

and construction alternatives by the CM. This was related

145

Table 5.4 Summary of Organizational Characteristics
Related to Environmental Characteristics

 

Total Environmental
Characteristics Related

 

 

Organizational
Characteristic Positive Relation Inverse Relation
- Experience
YRSNHSE l l
NUMCMCTS 1 g
- Size
NUMBRNCH 1 l
NUMEMPFL 2 fl
VALCMCTS 2 l
PRECONEM 1 {5
VOLWKPRS 2 fl
- Information
SEMBYPRO g 1
INTERACT 1 fl
MANGREXP l l
- Organization
COORGAN 1 1

 

aThese organizational characteristics are not rank-ordered.
The data collected did not support that type of conclusion.

146

Table 5.5 Summary of Environmental Characteristics
Related to Planning Characteristics

 

Total Planning
Characteristics Related

 

 

Environmental
Characteristics Positive Relation Inverse Relation
Value of smallest 1 2

project completed
in last five
years

Value of largest 2 1
project completed

in last five

years

Network based 2 4
scheduling system
required by owner

CM hired prior to l 0
hiring of A-E

Percentage of 2 3
private jobs, as

opposed to public

jobs

 

aThese environmental characteristics are not rank-ordered.
The data collected did not support that type of concluSion.

147
positively to all measures of effectiveness except complet-

ing the job by the owner's original date (See Table 4.9).

EartiaLCorrolations

DrcanizationaLCharactcristicLleatcd
Lil—MW

As indicated by Figure 5.1, when both environmental and
planning characteristics were controlled the data indicated
that planning was affecting the relationship of the value of
CM contracts completed (last five years) (VALCMCTS) to final
cost equal to or less than the owner's original budget
(CSTOWNBG). Planning also had an impact on the relationship
of years in the construction industry (YRSNBUS) to final
cost equal to or less than the final pre-bid estimate
(CSTPREBD). ‘This impact of planning was also seen in the
relationship of number of full time employees (NUMEMPFL) and
the use of manager's own experience (MANGREXP) to completing
the job by the owner's original date (JOBOWNDT). Planning,
as indicated by the data, has an effect on the relationship
of the number of CM contracts completed in the last five
years to completing the job on or before the date set in
preconstruction planning.

All of these effects were seen only after controlling
for the environmental and planning characteristics and not
when controlling for only environmental characteristics.
This indicated that planning, and not environmental, charac-

teristics were affecting these relationships.

148

 

Measure of

 

Organizational Effectiveness

Characteristic Effected Relationship
Value of total CM Final cost =< Inverse
contracts completed owner's original

in last five years budget

Years in the Final cost =< Inverse
construction final pre-bid

industry estimate

Use of manager's own Job completed on Positive
experience as a or before owner's

source of CM contract original date

management

information

Total number of CM Job cdmpleted on Positive

contracts completed
in last five years

or before date set
during precon-
struction planning

 

Figure 5.1

Organizational Characteristics Whose Relation-

ship to Meeting Owner's Goals Was Affected by

Planning

149

Planning_Char.actsristics_Rslatsd
to_Mcstins_ansr_Coals

As indicated by Table 5.6 environmental (job) charac-
teristics were found to be the important factors influencing
the use of “risk analysis“ (RISKANL) and computerized esti-
mating techniques (CMPEST) in their relationships to the
measures of effectiveness. This was shown by the action of
the t-values when, in addition to controlling organizational
characteristics, environmental characteristics were con-
trolled also.

Updating the dates set during preconstruction planning
(PLNUPDT) and setting dates for the completion of the design
phase during conceptual planning (SETDTDES) were affected by

both organizational and environmental characteristics.

Wis
This study was designed to investigate the effects of

planning, during the preconstruction phase of a CM job, on
the effectiveness of the CM company in meeting owner goals.
More specifically, it was an attempt to determine the rela-
tive impact of planning, on CM company effectiveness, when
compared to the impact of the CM company‘s organizational
characteristics and the job environment in which the company
worked.

Although some aspects of planning, in general, were
indicated as affecting the ability of the CM company to meet
the goals of the owner the results of the study appeared to

follow no clear pattern. The factor that did stand out in a

i150

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151
discernible manner was that-the success of a company in
meeting an owner's goals, as measured by this study, was
more the result of an interaction of organizational and
environmental characteristics than the clear cut action of
the planning characteristics investigated. That is not to
say that planning does not have a beneficial impact, logic
says that it does, but that the relationship which specific
planning characteristics have with success in meeting an

owner's goals was unable to be delineated by this research.

RsoomsndatioanoLEuturLssscarch
Some questions which arose during the course of this
study were unable to be answered either through the data
collected in the study or through the available literature.
The areas to which these unanswered questions pertain need
to be investigated further in order that the underlying
relationships may be better understood.
The areas suggested for further study, in no particular
order of importance, are:
- The interaction of the decision making process be-
tween the owner, CM, and A—E under CM contracts.
- Sources of CM contract management information, other
than managers' experience.
— The use of goal setting in CM companies.
- Is the effective use of CM limited to any certain
range of project sizes/values?
- Why do younger CM companies appear to meet final

pre-bid estimates better than more established ones?

152
- How wide spread is the use of computerized estimat-
ing in the CM field? A
- Why did the use of “risk analysis“ appear to be
negatively related to goals set internal to the CM
company and positively related to externally linked
goals?

Finally, the pattern of correlations among the effec-
tiveness measures and the other results suggests that effec-
tiveness in CM companies is multidimensional, and involves
both internal-external and date-cost dimensions. These
study results lend credence to the writings of Mintzberg
(1979), Miles (1980), and Jurkovich (1974) reviewed in Chap-
ter 2. The organizational, environmental, and planning
characteristics that are related to one aspect of effective-
ness are not usually associated with the other aspects”
This suggests that future research is needed to investigate
(l) the relationships, including potential conflicts, among
dimensions of effectiveness in CM firms, (2) other
dimensions of effectiveness, including profitability and
growth, and (3) the specific types of organizational, envi-
ronmental, and planning characteristics associated with each
aspect of effectiveness. Meanwhile, these results suggest
that caution may be needed on the part of writers-~and
readers--of literature who assume effectiveness to be uni-
dimensional, and who make blanket statements about the need
for, and positive effects of, aspects of the management of

CM projects and firms.

153
Summon!

This chapter discussed the significant results of the
research, as indicated in Chapter 4. Also noted were the
conclusions drawn by the researcher as the consequence of
those results.

Remarked on in the discussions presented in this chap-
ter was whether or not the results of this research sup-
ported or contradicted past research or information pre-
sented by CM literature.

Finally, this chapter recommended areas for future
research and a warning of the dangers of drawing unwarranted
conclusions from either this study or the writings of others

pertaining to CM.

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D.C., 19-20' May 1976' V01. II, Pp. 31-41, 43-44, 49.

Rad, Parviz F. and Miller, Marion C. “Trends in Use of
Construction Management,“ Journal of the Construction
Dirision. Proceedings of the American Societx of Cisil
Engineers, Vol. 104, No. CO4, December 1978, pp. 515-
523.

Silverman, Robert L. “A Multi-Discipline Time Approach to
Building Construction,“ Proceedings of the CIP Weds,
on Qrganizationand Management of Construc:
tion, U. S. Academy of Science, Washington, D. C., 19- ~20,
May 1976, Vol. I, pp. II-246 - II- 252.

Sloma. Richard 8. Box to Measure Managerial Performance.
(MacMillan Publishing Company, Inc.: New York, 1980),

pp. 65, 66.

for the Social Sciences. Ed. Bowman.
Kenneth J. and Cahill, Matthew. (McGraw-Bill: New

York, 1975), Pp. 1’ 194' 280' 302.

(“r

158

Steers, Richard M. organizational Effectiuenessr A Eehax:
ioral lieu, (Goodyear Publishing Company: Santa Moni-
(13;; California, 1977): PP. 26, 27, 42, 43, 136, and

Subcommittee on Construction Management Organization and
Evaluation of the Committee on Professional Construc-
tion Management of the Construction Division, American
Society of Civil Engineers. “Professional Construction
Management Services.“ Journal of the Construction Diri:
sioni Proceedings of the American Societx of Ciril
Engineers, Vol. 105, No C02, June 1979. PP. 139-156.

Tatum, Clyde 8. “Evaluating PCM Firm Potential and Perform-
ance.“JournalortheConstructionDieision.-.Proceed:

ingsoftheAmericanSocietrofCixilEngineers. Vol.
105, No. C03, Sept. 1979, pp. 239- 251.

The Associated General Contractors of America, 1976, Con;
struction Mangement Control Process. Washington. D.C.

The Associated General Contractors of America, March 1979,

Construction Management Guidelines. Washington. D.C.

The Associated General Contractors of America, 1982, owner

Guidelines for Selection of. a Construction Manager.
Washington, D.C.

The Business Roundtable, 1983. Modern Mangement W A
Construction Industrx Cost Effectiteness Project Be:
pm, New York, New York, p. 2, 16-18.

The Business Roundtable, 1983. More Construction for the

Monexi Summarx Resort of the Construction Industry
CostEffectireness Project. New York, New York, pp. 11-
13, 17, 18, 29, 30.

Thompson, J. D. and McEwen, W. J. “Organizational Goals and

Environment." American Sociological 33.11.31: 1958. PP-
23-30.

Thune, Stanley and House, Robert, “Where Long-Range Planning
Pays Off.“ Business Horizons. August 1970. P- 33-

Ziegenhagen, Deuard A. and Bowlby, George. Techniques for
Political; Analgsis, (Bolbrook Press: Boston, 1971),

{k

APPENDICES

APPENDIX A

List of Construction Management Contractors

APPENDIX A

List of Construction Management Contractors

The A. M. E. Group, Inc.
1825 Brinston Ave.
Troy, MI 48084

ASR Multi Construction, Inc.
5600 Crooks Rd., Suite 200
P.O. Box 10

Troy, MI 48099

Adair-Chaldecott Construction Co., Inc.
4027 E. Nine Mile Rd.
Warren, MI 48091

Amurcon Corp.
26555 Evergreen, Suite 1717
Southfield, MI 48076

A. J. Anderson Construction Co.
21044 Kelly Rd.
East Detroit, MI 48021

Atomic Construction, Inc.
20043 W. Ballantyne Ct.
Grosse Pte. Whods, MI 48236

Geo. W. Auch Co.
3646 Mt. Elliott Ave.
Detroit, MI 48207

Barton-Malow Co.
13155 Cloverdale
Oak Park, MI 48237

Brown-Schroeder & Co.
Box 27
Richmond, MI 48062

Webster Buell
27630 Southfield Rd.
Lathrup Village, MI 48076

H. F. Campbell Co.
9301 Michigan Ave.
Detroit, MI 48210

Oscar J. Chapaton
39288 Dodge Pk. Rd.
Sterling Hts., MI 48078

Chapoton General Contracting Co., Inc.
32625 W. Seven Mile Rd.
Livonia, MI 48152

The Christman Co.
408 Kalamazoo Plaza
Box 14120

Lansing, MI 48901

The Christman Co.
G-3512 W. Bristol Rd.
Box 248

Flint, MI 48501

Christopher Construction Co.
8345 Lynch Rd.
Detroit, MI 48234

Clark Construction Co.
P.O. Box 40087
Lansing, MI 48901

Edward Colbert/Systems
237 N. Woodward
Birmingham, MI 48011

Collins & Catlin, Inc.
P.O. Box 529
Port Huron, MI 48060

Comprehensive Management Services, Inc. (CMSI)
220 W. Congress
Detroit, MI 48226

Construction Management, Inc.
21800 W. Ten Mile Rd.
Southfield, MI 48075

Walter L. Cause 8 Co.
12740 Lyndon Ave.
Detroit, MI 48227

Cunningham-Limp Co.
1400 N. Woodward
Birmingham, MI 48011

D. J. R., Inc.
227 Iron
Detroit, MI 48207

R. E. Dailey 8 Co.
19200 W. Eight Mile Rd.
Southfield, MI 48075

Ken Daly General Contractor, Inc.
1520 N. woodward, Suite 107
Bloomfield Hills, MI 48013

Danic Co.
16338 Andover Dr.
Fraser, MI 48026

Darin & Armstrong, Inc.
23999 Nerthwestern Hwy.
Southfield, MI 48075

Henry de Koning Construction Co.
2459 S. Industrial Hwy.
Ann Arbor, MI 48104

Dumas Concepts in Building, Inc.
9215 Michigan Ave.
Detroit, MI 48210

J. L. Dumas & Co.
1000 Long Blvd., Suite 8
Lansing, MI 48910

R. W. Edgar 8 Co.
2852 Benson
Detroit, MI 48207

Elgin Builders, Inc.
21415 Civic Center Dr.
Suite 211

Southfield, MI 48076

Elzinga & Volkers, Inc.
86 E. 6th
Holland, MI 49423

The Emanuel Co.
14385 Wyoming Ave.
Detroit, MI 48238

Etkin, Johnson & Korb, Inc.
10111 Capital Ave.
Oak Park, MI 48237

Felker Construction Co.
8226 Michigan Ave.
Detroit, MI 48210

Ferguson, Hogle, Brassell Constr. Co.
(J. A. Ferguson Constr. Co.)

32715 Folsom Rd.

Farmington, MI 48024

Fordon Construction Co.
28000 Middlebelt Rd.
Farmington, MI 48018

J. A. Fredman, Inc.
735 S. Paddock St.
Pontiac, MI 48053

Freeman-Darling, Inc.
20337 Middlebelt Rd.
P.O. Box 66

Livonia, MI 48152

The Garrison Co.
24400 Indoplex Circle
Farmington Hills, MI 48018

E. Gilbert & Sons, Inc.
45887 Mound
Utica, MI 48087

Granger Construction Co.
6267 Aurelius Rd.

P.O. Box 22187

Lansing, MI 48909

R. C. Hendrick & Son, Inc.
P.O. Box 1886

427 Atwater St.

Saginaw, MI 48605

Elise Hosten-McGough & Associates
2809 Saddlewood Rd.
Orchard Lake, MI 48033

Irving-James Corp.

26561 W. Twelve Mile Rd.
Suite 207

Southfield, MI 48034

Paul H. Johnson, Inc.
225 Merrill
Birmingham, MI 48011

F. J. Jones 5 Co.
24333 Southfield Rd.
Suite 104

Southfield, MI 48075

Kapila Contracting Co., Inc.
7439 Middlebelt Rd.

Suite 2

West Bloomfield, MI 48033

Kingston Contractors, Inc.
19675 W. Ten Mile Rd.
Southfield, MI 48075

D. M. Kitchen Building Co.
1925 Heide St.
Troy, MI 48084

Robert J. Koepsell Building Co.
23780 Mack Ave.
St. Clair Shores, MI 48080

Matthew Lalewicz, Inc.
P.O. Box 847
Bloomfield Hills, MI 48013

D. W. Lewis & Co.
24655 Southfield Rd.
Suite 100

Southfield, MI 48075

MSI Construction Managers
23309 Plymouth Rd.
Detroit, MI 48239

K. H. Mahnick & Associates, Inc.
5700 Orion Rd.
Rochester, MI 48064

Manix Inc.

6785 Telegraph Rd.
Glover Bldg., Suite 101
Birmingham, MI 48010

F. H. Martin Construction Co.
22700 Wood St.
St. Clair Shores, MI 48080

Master Plan Construction
Div. of Leo's Corp.

555 Oliver St.

Troy, MI 48084

Miller-Davis Co.
P.O. Box 2367

1029 Portage St.
Kalamazoo, MI 49003

Edward V. Monahan, Inc.
21321 Kelly Rd.
East Detroit, MI 48021

J. G. Morris Co.
8600 Church Rd.
Grosse Ile, MI 48138

Newmyer Contracting, Inc.
1700 N. Opdyke Rd.
Pontiac, MI 48057

Nerth Construction Co.
401 N. Jackson

P.O. Box 116

Jackson, MI 49204

R. L. Owen Co.
7771 Auburn Rd.
Utica, MI 48087

Palmer-Smith Co.
20840 Southfield Rd.
Suite 200

Southfield, MI 48075

Paragon Construction Corp.
12433 E. Eight Mile Rd.
Warren, MI 48089

Parliament Construction Co.
30200 Telegraph

Suite 251

Birmingham, MI 48010

K. Pemberton Construction Co., Inc.
12641 Stark Rd.
Livonia, MI 48150

Joseph Pope Construction Co.
477 N. Dixie Hwy

P.O. Box 983

Monroe, MI 48161

Prater, Wells & Associates Ltd.
19847 James Couzens Hwy
Detroit, MI 48235

Pyramid Construction Co., Inc.
31471 Northwestern Hwy.
Farmington Hills, MI 48018

Remer + Webber Construction Programmers
3260 Coolidge Hwy.
Berkley, MI 48072

Roberts & Dudlar, Inc.
20525 Freemont
Livonia, MI 48152

A. z. Shmina & Sons Co.
13000 Newburgh Rd.

P.O. Box 2129

Livonia, MI 48151

Smith & Andrews Construction Co.
13100 Northend

P.O. Box 3845

Oak Park, MI 48237

Spence Brothers
417 Mo Coskry St.
P.O. Box 1568
Saginaw, MI 48605

Strobl Construction Co.
5612 E. Davison Ave.
Detroit, MI 48212

Talbot & Meier Inc.
1000 Larchwood
Detroit, MI 48203

Taubman Construction, Inc.

3270 W. Big Beaver Rd., Suite 300
P.O. Box 3270

Troy, MI 48099

Time Construction Co., Inc.
2526 Bretby
Troy, MI 48098

True Management, Inc.
8344 Hall Rd.
Utica, MI 48087

Turner Construction Co.
932 Fisher Bldg.
Detroit, MI 48202

Utley—James, Inc.
1100 Opdyke Rd.
P.O. Box 1100
Pontiac, MI 48056

Robert Van Kampen Co.
12836 Fenkell
Detroit, MI 48227

Aldinger Walbridge Co.
38099 Schoolcraft
Livonia, MI 48150

Glenn E. Wash 8 Associates, Inc.
14541 Schaefer
Detroit, MI 48227

Waterford Construction Co.
4511 Highland Rd.
Pontiac, MI 48054

K. H. Wehner (P.E.) Engineering 8 Construction Consultants
Holly, MI 48442

M. Weingarden Associates, Inc.
20900 Hubbell
Oak Park, MI 48237

P. H. Williams a Son, Inc.
20070 Coryell
Birmingham, MI 48010

Williams 8 Richardson Co., Inc.
10611 W. McNichols Rd.
Detroit, MI 48221

woodland Construction, Inc.
30850 Groesbeck
Roseville, MI 48066

APPENDIX B

SURVEY INSTRUMENT

MICHIGAN STATE UNIVERSITY

 

WWW mum-mnem-m
mum-communicate
(”hm

lurch 1984

Dear Construction Executive,

I am doing Master's thesis research in the Building Construction Program of
the Agriculture Engineering Department, Michigan State University. I would
like to be able to identify those aspects of a company's pro-construction
planning which contribute to organisational success is the field of CONSTRUC-
TICI MANAGEMENT.

The voluntary participation of your company in the study is important. A high
rats of return is the survey will enable ms to better define those aspects of
planning which are important to companies in the field of CONSTRUCTION MANAGI-
MENT in Michigan. In return, on request. I will provide feedback to your
company rogsrding results.

no absolute anonymity and confidentiality of your response is guaranteed.
Please do not put your name or identify your firm on the questionnaire. Upon
receiving your completed questionnaire I will losd your response into the
computer, and than destroy your questionnaire. Data will be aggregated across
the entire sample only by such classifications as company size, ate. No indi-
vidual company data will be used or made public.

Even though your company may have other types of construction operation, this
survey is targeted only to those projects which your company undertakes under a
CONSTRUCTION MANAGEMENT form of contract. The term 'CONSTRUCTION MANAGEMENT'
is used here as defined by either The American Society of Civil Engineers on-
tha Associated General Contractors of America. mastions are asked about the
characteristics of your company and the type of CONSTRUCTION MANAGEMENT pro-
Jocts it undertakes, planning conducted during the pro-construction phase. and
how your company measures its performance.

I am hoping to have your completed questionnaire within two weeks. Should you
have difficulty with this request or regarding the questionnaire, please do not
hesitate to contact so. This research is totally supported by my own funds and
not affiliated with a consulting firm or national organization.

Sincerely,

David A. Booths
(517) 351-5571

Would you like a copy of the feedback report? Please telephone ms at 353-0101
or write. To assure you anonymity, please do not include a written request on
the questionnaire you ram.

usua-Wwwwmw

167

1158

 

company; Please otrnleuths answer’fhr each questicaLuhich best describes how.yn|,

This section of the questionnamre asls qmssticas about the characteristics of your
see
your company in relationship to the questica.

1. Now many years has your coapany been offering its services, in some fora, to the
construction industry?

(1) 1-5 yrs (2) 6-10 yrs (3) 11-15 yrs (I) 16-20 yr! (5) over 20 yrs

2. Now many years has your coapany been offering CONSTNUCTION MANAGEMENT services as
defined by the A.S.C.l. or the A.G.C.?

(1) 1-3 yra (2) 1-6 yrs (3) 1-9 yrs (1) 10-12 yrs (5) over 12 yrs

3. Now aany years has your company had an inshouse design capability?
(1) None (2) 1-5 yrs (3) 6-10 yrs (I) 11-15 yrs (5) over 15 yrs

3. Now aany branch offices, not including field offices, does your company have?
(1) None (2) 1-5 (3) 6-7 (I) 11-15 (5) over 15

Hhat percent of your cospany's CONSTRUCTION MANAGEMENT projects are done:

5- in_Ninhiaan3

(1) o: (2) 1-253 (3) 25—505 (1) so-1sx (5) 75-1005
6. in.aid=laatacn_atatas3

(1) 0! (2) 1.25! (3) 25-501 (1) 50-151 (5) 75-100:
7- in_tha_cnntinantal_nnitad_§tataa3

(1) as (2) 1-253 (3) 25-501 (1) 50-751 (5) 15-1001
8. in_tha.liA..Canada..and.Hasicc?

(1) o: (2) 1-25: (3) 25-501 (1) 50-7ss (5) 75-1001
9. Innld_lida?

(1) o: (2) 1-253 (3) 25-501 (1) 50-751 (5) 75-1001

10. Now aany full time employees, excluding trades (carpenters, electricians, eth.
does your company havs?

(1) favor than 50 (I) 251 to 350
(2) 51 to 150 (5) over 350
(3) 151 to 250

11.

12.

13.

1'1.

15.

169

Now,many CW MANAGEMENT contracts has your conany completed in the last
five years?

(1) 1-10 {2) 11-20 (3) 21-30 ('1) 31-110 (5) Over 110

Nhat is the approxiaate total value. excluding real estate cost. of the new
construction which your company has put-in-place under CONSTRUCTION MANAGEMENT
contracts in the last five years?

(1) Less than (2) 82.5-30 (3) 330-60 hill ('1) “0-90 sill (5) our 390
“.5 I111 lill Ill].

Nhat percent of those individuals whoa your coapany usually eaploys. during the
pro-construction phase of a CONSTRUCTION MANAGEMENT project are m employ-
ass?

(1) 1... than (2) 20.101 (3) 10-60: (1) 50.801 ' (5) 00-1001
20:

In today's construction dollar, what is the approxi-te volume of C.M. work which
your company can handle g]; m tin, with your present workforce?

(1) less than (2) O1-1O sill (3) $10-20 mill (I) $20-30 hill (5) over $30
$1 sill sill

What percent of your cospany's in-place construction voluss (dollars). over the
last five years, has been generated by CONSTRUCTION MANAGEMENT jobs?

(1) 0-20! (2) 2140‘ (3) 111.603 (11) 61-80! (5) 81-1005

To what extent have you and your managers found the following to be useful as sources
of intonation for aanaging your cospany's CONSTRUCTION MANAGEMENT contracts sore
efficiently?

16. W

1 2 3 11 5
(Not at all ( Soaewhat ( Very
useful) useful) useful )

17'. Was).

1 2 3 11 5
(Not at all (So-awhat (Very
useful) useful) useful)

(Not at all (Souewhat (Very
useful ) useful) useful )

1370
Towhatextenthaveymandymrsanagarsfoundthefollcwingtobeusafulassources

of information for unsging your company's CONSTRUCTION MANAGEMENT contracts more
efficiently? (Cont.)

19. W

1 2 3 I) 5
(Not at all (Somewhat (Very
useful) useful ) useful)

20-1Nanasaniaunxn_ssnanianca

1 2 3 '1 5
(Not at all ( Sosauaat (Very
useful) useful ) useful)

21. If you had to characterise your company's design would you say it was organised

along:

1 2 3 N 5
(a LINE organi- (a COMBINATION) (a STA" organi-
sation) sation)

NOTE: LINE refers to an organisational design where decisions on all projects
are made by the highest executive in the organisation, and responsibili-
ties for carrying out decisions are then delegated to employees.

STA" refers to an organizational design where organisational authority is
shared among several functional area managers, each of whom is responsible
for his own area.

COMBINATION refers to an organizational desin which is a blending of both
LINE and STARE.

 

This section of the questionnaire asks questions about the type of CONSTENCTIN
MANAGlllTprojectsuichyourccqsnyundertahss. Plessscirclethsanswardlich
bestdescribashcwnsssyou-ccqsnyisrelaticnehiptothauestics.

22. Nhat is the approximate dollar value, excluding real estate cost, of the m
CONSTRUCTION MANAGEMENT project which your company has done in the last five
years?

(1) Lass than (2) ”ODE-1.5 (3) 81.5-5 sill (11) 85-10 sill (5) Over 010
.500! I111 '111

23. Nhat is the approximate dollar value, excluding real estate cost, of the 1m
CONSTRUCTION MANAGEMENT projact which your company has done in the last five -
years?

(1) Less than (2) S1-1O mill (3) 810-20 sill (A) $20-30 mill (5) Over $30
$1 sill mill

171 .
2!. In your experience, once a CONSTRUCTION MANAGEMUT contract has been signed, what
part of the time does your company have the major role in establishing team
(owner, C.M., Architect-Engineer) co-anicaticn procedures?

(1) Never (2) 1/3 (3) 112 (N) 2/3 (5) Always

25. Nhat portion of your company's CONSTRUCTION MANAGEMENT contracts require a net-
work based scheduling system as a requirement, not an option, of the owner?

(1) None (2) 1/3 (3) 1/2 (R) 2/3 (5) All

26. that part of the time is your company hired, under a CONSTRUCTION MANAGEMENT
contract, prior to the Architect-Engineer being hired?

(1) Never (2) 1/3 (3) 1/2 (11) 2/3 (5) Always

27. Nhat percent of your company's CONSTRUCTION MANAGEMENT jobs, over the last five
years, were done for private, as opposed to public, owners?

(1) OS (2) 1-25’ (3) 25-501 (11) 50-755 (5) 75-1003

 

nisuctiosofthsquutionnainashquesticuabcutthaplaminguhichycsrcos-
pany does during the pre-constructicn phase of a CONSTRUCTION MANAGEMENT project.
Pleuecirclethsananrwhichbestducribuhowmseeyourminnlmtics—
ship to the mastics.

 

28. On what percent of your company's CONSTRUCTION MANAGEMENT jobs does on m
M supervise the entire pre-construction phase of the project?

1 2 3 ‘1 5
(Never) (Rarely) (Sometimes) (Usually) (Always)

29. On what percent of your company's CONSTRUCTION MANAGEMENT jobs is the supervision
of the entire pre-construction phase shared by a team?

1 2 3 N 5
(Never) (Rarely) (Sometimes) (Usually) (Always)

30. Nhat percent of the time does your coapany use computer generated schedules to
assist in planning during the pro-construction phase?

(1) Never (2) 1-305 (3) 3040‘ (’1) 60-901 (5) Always

31. Nhat percent of your company's CONSTRUCTION MANAGEMENT jobs incorporate 'Value
Engineering' into planning during the pre-construction phase?

(1) None (2) 1-301 (3) 30-501 (’1) 60-905 (5) All

 

32.

33-

BI.

35.

36.

37.

38.

39.

1372
On what proportion of your company's CONSTRUCTION MANAGEMENT jobs does your
ccnany use ccquterised esti-ting techniques during the pre-oonstruction phase?

1 2 3 I 5
(no C.M. jobs) (sost C.M. jobs) (all C.M. jobs)

To what extent do the steps which your company uses for planning a CONSTRUCTION
MANAGIIENT job vary with the dollar value (sise) of the job?

1 2 3 I 5
(Never) (Rarely) (Sometimes) (Usually) (Always)

On what percent of your company's CONSTRUCTION MANAGEMENT jobs does your ccmany,
during conceptual planning, set dates for completing the design phase?

(1) None (2) 1-305 (3) 30.605 ‘ (I) 60-905 (5) All

Once set, how often are the dates in your company's plan for the pre-construction
phase formally updated?

1 2 3 I 5
(Daily) (Semi-weekly) (Neekly) (Semi-monthly) (Monthly or
less often)

Does your company apply any formalized sethod of 'risk analysis' to the project
during the conceptual stage?

1 2 3 I 5
(Never) (Rarely) (Sosatises) (Usually) (Always)

For what percent of the jobs does your company propose m alternatives during
the pre-constructicn phase of a CONSTRmTION MANAGDTENT project?

1 2 3 l1 5
(Never) (Rarely) ( Sometines) (Usually) (Always)

For what percent of the jobs does your conpany propose W alternatives
during the pre-construction phase of a CONSTRUCTION MANAGEMENT project?

1 2 3 '1 5
(Never) (Rarely) (Sosatises) (Usually) (Always)

In your experience, once a CONSTRUCTION MANAGEMENT contract has been signed, what
percent of decisions affecting planning during the pre-construction phase is
mm; made by the ONNER?

(1) None (2) 1-301 (3) 304“ (N) 60-90! (5) All

1373

NO. In your experience, once a CONSTRUCTIN MANAGEMENT contract has been signed, what

percent of decisions affecting planning during the pro-construction phase is
m made by the CGSTEUCTION MANAGER?

(1) lone (2) 1-305 (3) 30-608 (N) 60-901 (5) All

’11. In your experience, once a CONSTRUCTION MANAGEMENT contract has been signed, what

percent of decisions affecting planning during the pre-conatruction phase is
m made by the Architect-Engineer?

(1) None (2) 1-305 (3) 30-60! (N) 60-905 (5) All

 

Thisseoticsofthsuastic-einaflsquesticuabostyosrcqny'sempciasouin
themMAEAu-Tfieldcverthelastnnyearm. Rlessscirclethemmsr

hichdasa-ibashosneesyosrm's ”foul-nos.

 

N2.

N3.

NN.

N5.

Nhst percent of your company's completed CONSTRUCTION MANAGEMIT jobs had a final
cost equal to or less than the m original budget? (On average for the last
five years.)

(1) None (2) 1-301 (3) 30-60$ (N) 60-903 (5) All

Nhat percent of your company's completed CONSTRUCTION MANAGEMENT jobs had a final
cost equal to or less than the final pre-bid estimate? (On average for the last
five years.)

(1) None (2) 1-303 (3) 30-601 (N) “-9“ (5) All

Nhat percent of your company's CONSTRUCTION MANAGEMENT jobs were conleted by the
SIM—'1 original completion data? (On average for the last five years.)

(1) None (2) 1-3OI (3) 30-605 (N) 60-901 (5) All

Nhat percent of your company's CONSTRUCTION MANAGEMENT jobs were completed by the
date established during pre-construction planning? (On average for the last five
years.)

(1) None (2) 1-303 (3) 304” (N) 60-90‘ (5) All

Of the CONSTRUCTION MANAGEMENT jobs for which your coapany was asked to partici-
pate in a selection interview by an ONNER, what percent did your company mm
contract for?

(1) None (2) 1-30’ (3) 30405 (N) 60-90‘ (5) All

174

'17. Now do you believe your conany's growth, over the last five years, compares with
other companies of your sise offering CONSTRUCTION MANAGEMENT services? (This is

only in reference to the CONSTRUCTION MANAGEMENT portion of your company)

1 ‘ 2 3 11 5
(Slower) (Same) (Easter)

 

 

Thimseoticsofthauutionninasksquutionsaboutyurccwsuduringthslatut
couleted fiscal year. Anticipating your sensitivity to some of the questions, I
egeissouldlikstousunyourthstyourrupouuwillbegW
Atntimssillanyofthisinfor-ticsbekmntoamonabutmysalf. Themality
anduufulnsuofthsfesdbsckwhichycuressivenosmsandtheuufulnsssoftha
istI-tinsfiichyoshsvealrudygivendepndsupcnthacoqletauuofthsouu-
tic-sire. Iassotaskingforspecificfiguras, onlyratios.

 

 

PLEASE cm 0":

NS. These ratios are for the ENTIRE company

N9. __ These ratios are for the CONSTRUCTION MANAGEMENT Division only.

Please give the following ratios for the latest completed fiscal year:

50. Operating profit/gross fixed assets __ S
51. Net profit after tun/(Allow - Liabilities) __ f
52. Income before taxes/Equity __ 1

'Please feel free to use the remaining space for any additional co-ents.

THANK IOU FOR IGOR TIME AND EFFORT.

PLEASE FOLD IOU! comm QUESTIONNAIRE AND MAIL II
II was STAMPID mops PROVIDED.

IF YOU 113003le A cumin 0! RBOLIS, IOU HILL REBIVI II
II APPROXIMATELY SIX wuss.

THANK YOU.

APPENDIX C
STATISTICAL DEFINITIONS AND FORMULAS USED

TO ANALYZE DATA

APPENDIX C
Statistical Definitions and Formulas Used
to Analyze Data

MEAN: The sum of the individual values for each case

divided by the number of cases.

_ XX

X:—
n

Where § - sample mean

2x = sum of values of all cases
n = number of cases in the sample
STANDARD DEVIATION: The square root of the averages of

the squared distances of observations from the
mean.

 

2(x - §)2
n
Where 3 = standard deviation of the sample
2 = symbol for the sum of all the (x - §)2
x = the observation

the sample mean

x
n = the number of cases

RANGE: The minimum value given for a variable subtracted
from the maximum value given.

175

176

PEARSON PRODUCT-MOMENT CORRELATION: The general formula

PARTIAL

for computing Pearson product-moment correlations
is -

2 1:1(X1-XHY1-Y)

_ _ 1/2
{[2“ (x -x) 2] [2" (YI-Y) 2])
1:1 1 1=1

Where X1= 1th observation of variable X
Y1: 1th observation of variable Y
N = number of observations
N

2: 1=1X1/N

i

mean of variable X

mean of variable Y

K21
II
M
K:
\
2‘.
ll

CORRELATION: The basic formula for the compu-
tation of partial-correlation coefficients is

 

 

 

_ r.. - (r. )(r. )
rij.k — 13 1k 3k
2 2
\/ l rik J l rjk
Where k = the control variable

i the independent variable

the dependent variable

Us
II

(the order of i and j is immaterial)

APPENDIX D
KEY TO VARIABLES

Iariahle

CSTOWNBG

CSTPREBD

CMPEST

CMPPLN

COMGRWTH

COMMO

CONSTALT
COORGAN
DECBYAE

DECBYCM

DECBYOWN

DESGNALT
HIREBFAE

INPLVOL

APPENDIX D

KEY TO VARIABLES

Machine

Percent of CM jobs with final cost equal to or
less than owner's original budget.

Percent of CM jobs with final cost equal to or
less than final pre-bid estimate.

Percent of time computer estimating techniques
used during preconstruction phase.

Percent of time computer generated schedules
used to assist in preconstruction planning.

CM company growth as compared to competition.
Part of time the company has major role in
establishing team (owner, CM, and A-E) commu-
nication procedures. p

Proposal of construction alternatives by CM.

Company organization.

Percent of decisions affecting planning, dur-
ing preconstruction, made by A-E.

Percent of decisions affecting planning, dur-
ing preconstruction, made by CM.

Percent of decisions affecting planning, dur-
ing preconstruction, made by owner.

Proposal of design alternatives by CM.

Part of the time the CM company is hired
before the A-E.

Percent of in-place construction volume (dol-

lars) generated by CM contracts for last five
years.

177

Mable
INTERACT

JOBOWNDT

JOBPREDT

JOBSCNT

MANGREXP

NTWRKSYS

NUMBRNCH

NUMCMCTS

NUMEMPFL

ONESUPER

PLNUPDT

PLNVSSIZ

PRECONEM

PROFJOUR

PVTJOBS

RISKANL

SEHBYPRO

178

Meaning

Interaction with design firms useful as a
source of CM contract management information.

Percent of CM jobs completed by owner's origi-
nal completion date.

Percent of CM jobs completed by date set dur-
ing preconstruction planning.

Percent of CM jobs actually contracted for
after participating in owner's selection in-
terview.

Manager's own experience useful as a source of
CM contract management information.

Part of CM contracts which require a network
based scheduling system as a requirement of
the owner.

Number of branch offices.

Number of CM contracts completed in last five
years.

Number of full time employees.

Percent of CM jobs with one supervisor for
preconstruction phase.

Formal updating of plan for preconstruction
phase.

Extent to which planning steps vary with pro-
ject size.

Percent of preconstruction phase employees who
are permanent.

.Professional journals useful as a source of CM

contract management information.

Percent of CM jobs done for private, as op-
posed to public, owners over last five years.

Application of formalized method of "risk
analysis' during the conceptual stage.

Seminars by professionals useful as a source
of CM contract management information.

Eariahls
ssuuaons

SETDTDES

TMSUPER

VALCMCTS

VALENG

VALLGPRJ

VALSMPRJ

VOLWKPRS

YRSNBUS
YRSNCM
YRSNHSE

179

Meanina

In-house seminars useful as a source of CM
contract management information.

Percent of CM jobs on which dates for complet-
ing the design phase are set during conceptual
planning.

Percent of CM jobs with team supervision for
preconstruction phase.

Value (dollars) of CM contracts completed in
last five years.

Percent.of time ”value engineering“ incorpo-
rated into preconstruction planning.

Value (dollars) of largest CM project in last
five years.

Value (dollars) of smallest CM project in last
five years.

Volume (dollars) of CM contracts which can be
handled with present workforce.

Years in the construction industry.
Years offering CM services.

Years of in-house design capability.

APPENDIX E

FREQUENCY HISTOGRAMS

180

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APPENDIX E

PEARSON CORRELATION MATRIX

191

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no. mo. AA.- oo.- soo.- oo. mo.- «A. m~.- Ao.- AA.- .on.- mo. oA.- aza:m4¢>
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AA. so.- AA.- 0A.- «A. .nn. ..Av. vA. .nn. m~. ...an. cu. n~. oo.~ maazmua

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mN.I mu. vn.I ON. OA.I OO. mu. NOO.I OO.I ho. OO. mu.l dO.I Na.
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