As an owner, why is quality important?
Unlike construction managers and general contractors, the owner's core competency is not construction – it is our primary business, like financial services, pharmaceutical manufacturing, or home goods retail, for example. However, owners do put a high volume of construction in place on annual basis, including retrofits and renovations to existing buildings, turnarounds to existing facilities, and new construction out of the ground.
As an owner, you pay a great deal in fees to designers, such as architects and engineers, to ensure that the design is high quality, and that the drawings and specifications conform to your corporate standards and your business needs. To complement and supplement the designers, you have an in-house design and construction team of registered architects, professional engineers and construction managers, who take an active role in managing the process and in advocating best interests as owners and operators. Sometimes, you also contract out third party architects and engineers to audit the contract documents, as part of a checks-and-balances system.
In turn, you select and contract construction managers and general contractors, not always on a lump sum, low bid basis, but on a cost and quality basis – who is the most qualified to do the job at the most reasonable (not always lowest) cost, based on past experience and knowledge base. So – isn’t it the contractors responsibility to ensure quality, to deliver the work in accordance with the contract documents, drawings and specifications, on time and on budget? Quality is the contractors’ responsibility, along with all of the other project stakeholders. Quality is everyone’s responsibility, not only the construction manager and general contractor and on through to the trade contractors, subcontractors, vendors and manufacturers. Quality is everyone’s responsibility, but what’s the business case for quality?
From the owners’ perspective, quality is a critical facet of risk management. Zurich presents a compelling business case for quality (and for averting defect claims):
“A Zurich sponsored study found that in 2007, the U.S. construction industry reported 15,000 new defect claims which totaled more than 3 billion dollars in settlements. Industry-wide, legal defense costs are now equal to or greater than indemnity costs on most construction defect claims.” (From Zurich Services Corporation, Zurich Quality Management Program)
So, if the quality of the work put in place is deficient, and you as an owner file for defects claims, the legal costs to defend those defect claims in arbitration or litigation will most probably be the same or more as the cost which you may (or may not) recuperate as owner and the cost to repair or replace the deficient work. Defect claims are a lose-lose for both the owner and contractor. The cost-sensitive solution – prevent defect claims in the first place. Leverage a quality program. Gain real-time visibility into project quality and stakeholder performance. Take proactive, preventive action and reactive, corrective action to address non-conformances. Avert isolated issues from spiraling out to systemic trends during the course of the project. Inspect and observe incrementally and cumulatively, day by day as the work is put in place, and not only at the end of the job at substantial completion and handover.
Adam H. Omansky, A.M.ASCE CI, has an acute understanding of the challenges and sometimes pains that owners and developers face out in the field and at the point of construction, based on years of experience as a design architect and project coordinator for an international real estate development and equity investment group based in Canada and in Eastern Europe.