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Interview with Alex J McBride, PE, PSP, Senior Manager, Construction, Wipfli
Alex, there are a lot of “players” and moving parts when a Tribal organization decides to make a major construction investment. Set the stage for us before we dive deeper.
Tribal organizations know this better than anyone that some construction projects are almost “generational.” As an example, it could be a Tribal organization that is making an investment of hundreds of millions of dollars on a project they have been planning for 20 years that could dramatically expand their infrastructure, available services or gaming operations. Some organizations have in-house construction experience they leverage because they operate robust communities and facilities with a history of significant capital expenditures, but others may have no experience at all. Regardless, if they do or don’t have that experience, we tend to find that those key operations personnel already have a full plate and do not have significant extra time in their schedule.
The owner will go through the process of deciding what the project’s going to be and trying to identify the stakeholders. The stakeholders are going to be your design, engineering, and construction professionals, as well as any other consultants. That’s where we come in, consolidating information and tracking the project from a big picture perspective. I think of it as project advocacy … trying to get the project across the finish line such that everybody goes home happy.
How does Wipfli work within this team and how do you save Tribal organizations money and protect a Tribe’s project?
Depending on the project and the need, we can provide the specific services an owner needs to ensure the project is being built according to the contract requirements and advise if the project is on-time and on-budget. Our goal is to help owners and stakeholders reach agreement about what it is they’re signing up for and keeping everybody up to speed about the status of the project as they go.
Specifically, we can help Tribes save money by:
- Providing risk-management based on extensive experience with problem projects.
- Identifying over-billings on construction costs.
- Identifying potential delays to the schedule to be evaluated and addressed quickly (time is money, literally in construction)
- Evaluating change orders for accuracy and reasonableness.
- Advising in disputes or settlements.
Conversations, especially post-Covid, often focus on labor shortages and fluctuating material costs upending projects. However, simple tasks can be derailed by the enormous amount of paperwork that is generated on a construction project. How does Wipfli analyze and manage these questions?
There’s the construction process and how it gets documented: contracts, change orders, schedules, budgets — all of that is really our specialty. The documentation and the paperwork created on construction projects has become absolutely massive. There is more information being created on construction projects now than ever, and an owner’s rep who’s critical in the day-to-day management of the Project might find it difficult to sort through the signal from the noise.
Here’s an example. Say you are in a project that’s new with a series of players you haven’t interacted with much before. You, as the owner can selectively decide what responsibilities they want to lie with which stakeholders. An owner often sees their best advocates as those they’ve contracted with directly, like an Architect or Owner’s Representative. If the owner is selecting those stakeholders for their design expertise and field presence it may not be appropriate to also ask them to evaluate billings for accuracy, analyze construction schedules, or evaluate delay related change orders. As part of an Owner’s team you’ll want to ensure you have someone who has the technical skills to evaluate complicated financial or schedule questions.
We have the ability to do two things. One, we have an eye for what really matters. There might be something that comes across that makes us sit straight up in our chair and say, “that could be a huge issue and needs to be dealt with immediately.” On the flip side, we have dealt with massive amounts of construction data either in the form of some of the largest schedules ever created or the largest data sets ever created. Whether it’s a construction cost audit, a forensic schedule analysis, or wading through a thousand pages of PDF invoices, we have the ability to convert, analyze, and review that information in hours. We can have feedback and answers coming the same day on data sets that are incredibly detailed and complicated.
You specifically mention that “change orders” can easily impact a project from getting across the finish line. Even something as simple as a change to a sink design. Can you give us an example and how Wipfli can help?
There are typically two kinds of problematic change orders. You’ve got the contractors change order because they realize they missed something in their bid, and they’re trying to find a way to pass it back through to the Owner. The other side is the change order the contractor doesn’t want, which is an owner walking in the door with a strong new opinion which is three months too late. They like making money, but they don’t like making money if they have to work 80 hours a week for the next three weeks to deal with the ramifications.
Hotels a great example where a change order can have unintended consequences. Say you have a 150-room hotel. Now you have the potential to make small decisions that get multiplied by 150 over the course of the project. Helping an owner evaluate if something that they want to change is worth it based on the magnitude of the project with how it might impact dollars as well as it might impact schedule is really important. and sometimes those changes are going to be inconsequential because the project is early. For example, you have decided that you want a different sink throughout the entire hotel and it’s only in the conceptual phases, that should be okay. It’s a good conversation. The contractor can explain any differences in price, and it should just be a procurement issue. If you decide that you want a different sink and the project is significantly underway before you unilaterally direct the contractor to do that, you might have to take into account how your request now impacts in-wall framing and plumbing and if the two-month delay and million dollar change order reflects the actual impact.
Helping an owner understand that the decisions they’re making are reasonable requests with limited impact or if they’re a major impact to the entire project is something we can help with because we’ve seen the construction sequencing on hundreds of issues and Projects.
When should someone reach out to Wipfli – is it ever too late during a project?
We have a lot of experience in construction disputes and where construction projects go wrong – and are brought in after a project has started. We also have a ton of experience in the actual finances of construction budgets and construction schedules and that means we can offer a lot of value by getting involved as early as possible.
We tend to do our work on an as needed basis so we can be retained but be available as a resource to that owner as they go through the conceptual design stage all the way into conceptual budgets and more advanced design.
Early on in the project, as the design is being built out, the owners are going to start receiving conceptual budgets and schedules. We’re happy to look at those for reasonableness and accuracy and how it compares to an acceptable amount of detail in the industry. We’ve found we tend to ask the probing questions of underlying assumptions that makes sure all the parties understand what they are looking at.
During the course of construction, we help them verify that the information they’re receiving matches the facts on the ground and allow them to have confidence in their cost and schedule projections about when their new investment is going to be available, is it going to be opened on time and on budget or if there’s a big problem brewing to make sure that gets addressed as soon as possible.
A lot of times we see the owner gets a problem handed to them too late to do anything about it because they didn’t necessarily have someone there from a risk management perspective tasked with identifying those issues proactively.
For decades Wipfli has had a trusted relationship with Tribal organizations – tell us more about your organization.
We, like a lot of CPA firms, have people that are focused on specific industries. Wipfli believes that our depth of knowledge tends to go beyond just the individual service line. We offer construction tax professionals that really take to heart both the tax and construction side. I don’t know if you’ll find a CPA firm that has Tribal-based services and that knows more about the actual ins and out, nuances and day-to-day concerns of their Tribal clients better than we do.