As finances tightened in the construction industry over the past two years, property owners say they experienced a remarkable decrease in the quality of service provided by architects, engineers and construction managers.
"There used to be a certain level of confidence that your design professional was watching your job," said James Keaney, director of capital projects for the City of Hartford. "Now more responsibility for oversight is shifting to the owner."
Keaney delivered this message at the Construction Institute's Owners' Forum on Dec. 10 at Northeast Utilities in Berlin where four property owner representatives laid out their concerns in front of an audience of design and construction professionals.
The consensus from the panel — along with design and construction professionals on a rebuttal panel — was the quality of service provided to the owners is declining, more so in the public sector where building longstanding relationships with design and management companies is much more difficult. Although many factors contribute to the decline, the main culprit is a changing fee structure awarding less money to oversight firms.
"The realization that reduced fees are affecting quality is real," said James McManus, chairman of the S/L/A/M Collaborative, a construction design and planning firm in Glastonbury.
In the City of Hartford, which has done $500 million in school construction in the past eight years, the fees for architects and engineers dropped to 5.7 percent of a project's cost, the lowest level since 2005 and significantly below the fees leading up to the recession. For construction managers, the fees dipped to 1.5 percent, nearly half the 2007 levels and the lowest since before 2003.
As a result, items such as preconstruction planning and management have been substandard over the past two years, Keaney said. There has been a drop off in construction administration as well, and field reports from construction sites are not as good.
Poor communication between owners and their design and management teams leads to problems such as several different types of energy efficient LED light bulbs installed in each new facility. While LED lighting is great for the environment, the building and grounds departments must stock the many different types of bulbs to use as replacements, which is difficult and costly.
"These are all small things, but as we know, in this industry small things can become big things," Keaney said.
This decreased level of service could lead to a much dimmer future in the construction industry, Keaney said. The people who run these oversight jobs for design and management firms are getting young and younger, and they are learning in an environment of lower quality.
"Are these young people truly being taught a level of service that our industry is used to?" Keaney asked.
Paul Brady, executive director of the American Council of Engineering Companies in Connecticut — who wasn't on the panels — said he has not heard any discussions from his members about level of service declining. It may be true in some cases, though, because of the economy.
With construction unemployment nearing one-quarter of the workforce, there's a stronger push to get the available work, so companies are bidding lower and lower on the projects. Brady said firms are cutting their fees on projects to get the low bid.
"To reduce price, one way to do that is to reduce the number of services you provide," Brady said.
John Cistulli, director of facilities construction and engineering at ESPN in Bristol, said the same issues are arising in private sector construction. Unlike public entities, thought, private sector owners have more flexibility in projects so they can pay for a higher quality design and management professionals.
Whenever starting projects, companies in the private sector tend to use the same design, management and construction firms from previous jobs because they have built longstanding relationships, said Jeff Cugno, director of program management service at O&G Industries, a Torrington construction service company.
These longstanding relationships lead to trust between owners and their teams, and trust is important in knowing that a project will be completely properly and without unnecessary costs, Cugno said. The public sector can't build that same level of trust because bidding laws tend to require the lowest bidder be awarded the project.
The City of Hartford laws allow for some flexibility in awarding projects where quality history and relationships can be considered, Keaney said, but, with governments under budget constraints and facing public scrutiny, they need an excellent reason for not choosing the lowest bidder.
"That price is a driving factor," Keaney said. "The criticism is 'We can't keep the spray pool open, but we can afford to pay this firm an extra $100,000?' Nobody wants to be in a situation to answer that question."
The panels touted some newer public project laws that allow for the cross-section of picking the most qualified company with the best bid, but the issue of justification to the public still hangs over the process.
"There's no easy way in the public sector. That's the bottom line," Cugno said.