Construction Manager Agency Ripe for AI Disruption

A Non at-Risk Construction Manager Gets His Cake and Eats it too 

-often on the taxpayers’ dime, or for any given public megaproject. If that is the case, why then is there no facility for oversight? The answer to that question may not matter as AI – incapable of perpetrating fraud – is a perfect sop for the ever failing construction manager.

“No entity on large scale projects seems to more resemble a fifth wheel more than the conundrum known as the construction manager.

They are supposed to be  complex project delivery experts, but they only seem to be experts at generating paperwork. That’s the difference between general contractors and construction managers: general contractors physically put work in place, and generate the paperwork necessary to facilitate their commission.

Oxford Professor, Bent Flyvbjerg, has a lot to say about project management, in his 2014 What You Should Know About Megaprojects, and Why: An Overview, he cites Taleb:

“Delivery is a high-risk, stochastic activity, with overexposure to so-called “black swans,” i.e., extreme events with massively negative outcomes (Taleb, 2010).” Managers tend to ignore this, treating projects as if they exist largely in a deterministic Newtonian world of cause, effect, and control.

“Today, megaproject planners and managers are stuck in this paradox because their main delivery method is what has been called the “break-fix model” for megaproject management. Generally, megaproject planners and managers – and their organizations – do not know how to deliver successful megaprojects, or do not have the incentives to do so, and therefore such projects tend to “break” sooner or later, for instance when reality catches up with optimistic, or manipulated, estimates of schedule, costs, or benefits; and delays, cost overruns, etc. Projects are then often paused and reorganized – sometimes also refinanced – in an attempt to “fix” problems and deliver some version of the initially planned project with a semblance of success.

Flyvbjerg goes on to say:

“Megaprojects are a completely different breed of project in terms of their level of aspiration, lead times, complexity, and stakeholder involvement. Consequently, they are also a very different type of project to manage. A colleague likes to say that if managers of conventional projects need the equivalent of a driver’s license to do what they do then managers of megaprojects need a pilot’s jumbo jet license. And just like you would not want someone with only a driver’s license to fly a jumbo, you don’t want conventional project managers to manage megaprojects (Flyvbjerg).

Especially suspect are ‘not at-risk’ construction managers – who invariably seem to only function as a passthroughs on extra-large and multi-prime general contractor projects. Having little incentive to minimize costs, they can happily skate away through mountains of obfuscatory paperwork and invoices, or what is known as ‘general condition’ services.

However, note the reference above to “stakeholder involvement,” generally meaning a negative outcome of stakeholder involvement in pursuits they are not trained to operate on an equal footing with the designer and builder. The problem being a crass dilettantism that says “stakeholder POV will have prevailing impact, because we control the cash-flow.  Such shareholder interaction doesn’t play well with builders who didn’t get the memo: savvy CMs know what to expect from their designers, agencies, Unions, etc. If one of these elements requires more coordination than is typical, they will incorporate that expected impact  in their budget and schedule baseline.

Naturally, construction managers weren’t always such a notorious bunch, and not all of them are no good, or dishonest at what they do. ENR’s shortlist of winning construction managers, who have served the industry well for a long time, includes winners, losers, but mostly a combination.

Project delivery performance can be spotty, making it difficult to benchmark efficacy rates other than negative production, and the stats, below. Many construction managers (in the list) presiding over successful project deliveries (2%), are unsuccessful on the other 98%.

Sometimes, a very good construction manager is successful in all his ventures, and then gets stuck with a big loser: the big loser is what everyone will remember him for. Not infrequently, a very bad construction manager under indictment could receive industry recognition awards in the next year.

For example, the US ranks second to last – Europe – in global construction productivity. McKinsey (2017) believes this global phenomenon costs the global economy some USD$1.6T. The think-tank also says that 98% of all projects finish late and over budget. This is an ill portent, in regards to projected industry performance under passage of a trillion dollar stimulus bill that Pres. Trump is backing, though there were no further specifics made available, as yet.

AI to the Rescue

Data hunting/gathering is a natural instinct, just as our ancestors hunted and gathered sustenance. The data is used to help deterministically predict outcomes – in short – relying only on data, misses the forest for the trees. It is sent along to some clueless executive to disseminate, and make decisive action. However, that cycle continues to yield inconsistent, and poor results, which makes the process ripe for disruption by AI interfaces.

AI could take over entire data-driven project management and project control platforms, controlling all notifications, confirmations, documentation, permitting, drawings, schedules, estimates, specifications, etc., once they have been uploaded to its server, obviating gazillions of billable hours and equipment for emailing and voice mailing by personnel. And they could do this all flawlessly.

Such an upgrade of data transactions could begin to reverse construction industry wide negative productivity trends, as those cost overages are tied to general condition busts. These count toward the final cost of work in place, or USD$1.6T, at minimum, 10% of that $1.6T, or $160B.

This industry mentality is not much of an upgrade from analog paper pushing, and subject to the same degree of deprecation through each transaction.

Much of the transactions are already semi-automation-ready in platforms such as ProCore. We can automate the process with rather mundane algorithms – CM general requirements with AI destroying personnell digital learning curves in the process. What AI may be asked to do for construction is already making impact in other sectors, in foreign countries.

It is within this capacity of glorified paper-pusher that AI is well-positioned to replace with efficient, low-error automated processes, that will eventually – in large part – supplant and usurp this underperforming aspect of public work construction project delivery: data gathering, analysis, verification, and distribution: for just about any mundane administrative task required, AI would require perhaps 1% of its computing capabilities.

“A young applicant shows up to an interview claiming to be a newly anointed ‘construction manager.’ He has attached a copy of his certificate to his resume. My comment is: “I don’t even know what that is, or what capacity or acumen it guarantees, and you want a six figure salary?”

The industry is only partially blameful for its perpetually sullied reputation: colleges and universities contribute to the problem by rolling out Construction Management certificate and degree programs that purport to prepare students as ‘construction managers,’ however, this classroom manifestation of the term defies interpolation, and does little or nothing to make ‘construction managers’ of lay-people; as if there really was such a job title.

The Next Gen of Project Managers Will Run on Lithium Batteries

There’s no certificate that can replace years of experience and wisdom that can be learned, but not taught, which is why many programs are – by and large – not a great ROI, and most importantly will limit you to administrative duties. Of course, you can excel and become an executive someday, if that’s your aim, but you need to be your very best, because the field is becoming saturated with candidates:

“Construction trades had the largest percentage increase in enrollment at four-year institutions between spring 2016 and spring 2017 – 26.4 percent – according to a recent report from the National Student Clearinghouse Research Center.

“There were just 7,659 undergrads enrolled in a construction trade major in spring 2016, says Jason DeWitt, a research manager at the National Student Clearinghouse Research Center. The number of students seeking a bachelor’s degree in this field jumped to almost 10,000 by the following spring (US News).

Consider the construction manager curriculum of measly 3 and 4 hour courses designed to educate a construction manager at a local university:

Leadership & Foundations of Construction Management

4 Credits Construction Modeling and Data Structures
3 Credits Construction Materials & Methods
3 Credits Contracts & Construction Documents
1 Credits Materials Engineering Laboratory
3 Credits Cost Estimating
3 Credits Construction Scheduling
3 Credits Construction Site Layout & Surveying
3 Credits Non-Structural Building Systems
3 Credits Construction Modeling and Data Structures
3 Credits Construction Engineering
3 Credits Construction Project Administration
3 Credits Structural Building Systems
3 Credits Construction Law
3 Credits Construction Management Project

-a classic example of ‘a little knowledge being a dangerous thing.

Virtually not one of these classes will deliver the requisite course material to educate a layperson into a construction management professional: three or four course hours per week in a classroom, over a semester, guarantees only an entry level candidate, which is why many schools (now) only offer an associate’s or minor degree. Naturally, an industry veteran could hope to enhance his CV with the addition of a certificate, but I don’t know any who have, or would even consider it.

Perhaps if the programs were more robust and included at least one semester in the field, more seasoned candidates could be trained, however, the going rate for Construction Management Certificate grads in NYC right now is about USD$54K, which isn’t a huge incentive to draw talent toward that ‘vocation.’ Indeed, there is no such job title as a ‘construction manager’: the term denotes an entity. Graduating certificate holders can look forward to assistant project manager jobs.

Owner Agency: Cockamamie Manifestations

The concept of owner agency began with the architect, and he is named as such in the basic AIA contract family (AIA B101). However; that agency is a benign one, and is given short shrift by most any architect: they do the bare minimum in this capacity, and most are ill-equipped to perform the duty with any degree of acumen. Moreover, a conflict of interest exists because no one is managing the architect.

Of course, work that is design/build does not suffer from this shortcoming, as the project is single-sourced. Alternatively, the construction manager can be tasked with managing the designer and engineers; however, that is an atypical scenario. As a CPM scheduler, I plot designer deliverables driving work in the field as a matter of accountability. Designers surely resent this overlay; however, it is an imperative of the contractor affected by untimely and piecemeal deliverable sequences.

“A seasoned project manager can act in capacity of a construction manager, and even do a better job at it.

Along came the owner’s rep, someone the architects resented as a person who was taking their work and showing them up at the same time; perceptions that usually turn out to be valid. Truth be told, architects were always the fifth wheel of project management, until the AIA anointed them the ‘owner’s agent.’ Hitherto the 2oth century, builders performed these duties exclusively, and even designed their own buildings. Today, the old animosity and distrust is ever in play:

“Between 1830 and the Civil War, architects published scores of pattern and style books. At one point or another, most of those volumes argue that an architect offers the client protection from the builder. The case is often founded on social class, the architect being the client’s ally by virtue of education and breeding. The argument plays upon the suspiciousness of clients about builders, a wariness that seems to have been around for so long that it probably deserves to be called natural.

“Competing with builders for the patronage of people with the money to build, in an age of emerging specialization, architects staked a claim on taste. Pattern and style book writers defined taste in many ways, but ultimately it seems to have been simply something a trained architect had and a builder didn’t. And while clients usually were described as having taste, most needed architects to find their way to it. An architect could protect clients from themselves as well as ignorant builders. (House, Kidder, Tracy)

Owner’s reps are still around, but many have evolved into ‘owner project managers’ – a more dynamic office that is intended to be far more involved than any owner rep, but merely a cog in the construction management machinery, never replacing a construction manager.

Construction Management Expertise: in what capacity, exactly?

Construction managers are supposed to be expert in the art of complex project delivery, which is why they are chosen to coordinate large projects. The majority of their work pertains to project management, such as

  • Coordinating logistics and permit issuance
  • Soliciting, leveling (comparing), and awarding procurement packages
  • Managing the RFI process
  • Articulating change orders
  • Monitoring progress with a CPM schedule
  • Conforming to Union and Labor Law Requirements

However; construction managers don’t seem to be any more adept at complex project delivery than their general contractor counterparts: projects consistently run over-budget, and fail to make deadline, at an even greater rate than traditional project deliveries. When designers routinely fail to process design and submittal documentation in a cohesive and timely fashion, the sheer magnitude of documentation takes on a life of its own, as narratives become more conflated and inscrutable; defying ready interpretation and assessment.

Rethinking the Mundane

Construction managers have a knack for rendering seemingly simple data-processing into a tortured Rube Goldberg farce. To be clear, I am talking about projects over USD$100M – where even a hundredth of a percentage point massage could buy some BA a nice yacht. Some of this, I fear, is by design: construction managers believe they hold an advantage if their documentation is squirrelish and incoherent because it can’t be readily deconstructed. Within this confusion can reside heinous volumes of excess billable hours, fraud, or plain over-billing.

AI Advantages Over Construction Managers

  • AI is immune to calculation and input/output errors.
  • AI has no such prerogatives as puffing up the monthly requisition with fluff, or redundant make-work.
  • AI checks and balances would discourage fraudulent  wage reporting or MWBE fraud.
  • AI offers superior organizational, and scale efficient data management processes that would obviate a majority of inflated general condition services by human data gatherers, including:
    • Assistant Project Managers
    • Project Managers
    • Superintendents
    • Foremen
    • Clerk of the Works
    • Estimating, bid and change order management

AI Will Do These Things Better

Despite a mundane nature, many a construction manager struggles mightily with documenting and coordinating work to acceptable levels. The overarching theme is ‘the bigger the headache – the bigger the pill,’ a reality that can only stand to improve through AI innovation, as AI is immune to the elements of scale that seem to inundate and disorient the hapless construction manager.

AI will also be immune to the performance inconsistencies that besiege human operators, and rarely make the same mistake twice. Its archive of algorithms and processes will have infinite capacity to service a project of any conceivable size, and execute instructions at Mbps that are light years accelerated ahead of standard operating procedures and manual data crunching, much in the same way as BIM does.

AI will take over the lion’s share of the following project administration responsibilities from under-performing construction managers:

  • AI can interact with BIM by managing design and build documentation through that platform, including clash detection and tracked resolution process, outcome, and notification.
  • AI can be taught what to distribute, when, and to whom, and to maintain records of every transaction – especially those subject to fragmentation and deprecation: construction drawings, sketches RFIs, meeting minutes, etc.
  • Financial management of accounts payable and receivable
  • Product submittals, distribution, and notification
  • Project closeout documentation checklist management
  • Punch list management
  • Generation of Continuation Sheets and Applications for Payment
  • Quitclaims and waivers
  • AI will ensure accountability by perfecting the distribution process, which will include two-way transactions for every issue (confirmation, read receipts), as well as follow up response through to closure..
  • AI can be taught to conduct Safety Meetings and Training, and record participation and attendance.
  • Time Management and Reporting: AI will streamline these processes into one central database that will discourage the double and triple entry accounting processes the industry is noted for.
  • Order and delivery placement and tracking.
  • Direct monitoring and confirmation of fabrication and delivery processes and schedules
  • Copious LEED Submittals, Reporting, and Scorecards
  • Tedious MWBE qualification interviews and reporting

BIM will be a critical component of this process

“According to 3DR CEO and co-founder Chris Anderson, “Our big bet is on BIM.” Part of that prediction, he said, is based on the notion that digitizing construction documents and making them available to all project stakeholders with real-time updates is going to be the biggest trend.”  Anderson said that shift can be attribute to a larger trend in the industry of a movement toward living documents, or those that are updated and accessible to project teams in real time.

“We think this is the biggest trend — this notion of digitizing construction and making living documents — and it will be over the next few decades. We’re betting that this is going to become ubiquitous and standard. For us, that means [our product] goes from something that’s a ‘nice to have’ to a ‘must have.”(Construction Dive)

AI is poised to bridge the disconnect between the adversarial design and production teams, doing away with the idiosyncrasy and Kafkaesque miscommunication that typifies this relationship. AI only needs to be nudged into service as a construction manager, a facilitator. It would be a bitter pill to construction managers who have historically lived off the fruits of their own inefficiencies and fraudulent practices, such as:

  • Poor safety training and management policies
  • Fraudulent MWBE status claims
  • Overbilling for services performed
  • Billing for services not performed
  • Replacement workers, or undocumented workers

As AI platforms become available to the industry, savvy construction managers will be the first to embrace the technology and avail themselves of it. I expect AI will bring about a slow, but inevitable change to the industry that is sorely in need of improvement and amelioration. Yet, the change will never come from within, as the industry is traditionally technophobic and reactionary, in general. Besides, too many construction managers are making a meal out of anything thrown in their direction – why would they want to change that and suddenly become accountable?

They wouldn’t, but then necessity is the mother of invention, and the necessity is to reverse years of negative productivity rates in an economy where all other industries experience positive production rates. The invention is the AI driven construction manager – a team player if ever there was one, but never with incompetent operators and racketeers.

Written by

Derek Graham is a Primavera 6 scheduler and schedule oversight consultant for public and private sector projects with four decades of construction industry experience. He has been an active construction expert witness in over 30 cases – both nationwide, and Federally, since 2006, when his book Managing Residential Construction Projects, was published by McGraw Hill