Schedule of Values and Traditional Craftiness

Ken Follett describes certain practices, such as a schedule of values, often used in traditional (and other) construction projects.
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Ken Follett describes certain practices, such as a schedule of values, often used in traditional (and other) construction projects.

Recently I had one of those conversations wherein I realized that a few things about project management that appear to me to be quite obvious may not be so obvious, and that the person I am working with needs to know. I am assisting as a project management consultant on a fairly significant Hudson Valley structure dating to 1721. The topic came up in my explaining the steps one goes through in the post-bid process, what to look and ask for from a contractor who has been accepted to do the work.

The specific topic was a Schedule of Values, to which in my assuming my associate knew what I was referring to I quickly veered into Front-End Loading and went on with details of that process and remarked, as a qualification of my knowledge, that I was trained to be particularly good at both processes. Then I stopped. The expression of my associate informed me that they had no clue what I was talking about.

A Schedule of Values is a list of items of work and costs associated with each item, and in general is ordered from top to bottom with what the contractor imagines will be the order of the progress of the work. Anyone who works with costs quickly realizes that cost, particularly when it is broken out into smaller and smaller units, is a form of information. With a Schedule of Values at first glance one may assume that the item listed and the cost associated with it as a reflection of what the item itself should cost when compared to what the contractor will have to expend in resources as the project progresses. This is not always the case, and a contractor often will inflate the cost of work items that they anticipate to complete early in the project, and reduce the cost of later items. This shifting of the costs is called Front-End Loading.

I’m not writing this for the architects or the contractors who are used to playing with it. I am writing it for the property steward, say the fellow whose job it is to see that the historic house gets treated properly and that the museum gets fairly what they are paying the contractor for. I am also writing it for the small contractor, who may benefit from knowing the plus and minus of the practice.

Front-End Loading

Front-End Loading at first may seem unfair, possibly unethical, but if one is in the business, then as an ethical situation it pales in comparison to all sorts of other very unfair things that tend to go on, and that are sometimes so onerous that nobody wants to talk about them.

A win-win plus for Front-End Loading is that the contractors get paid sooner than they would otherwise, and money when available helps to keep the project moving forward. Most contractors, particularly if they are more passionate about their traditional trade than they are about capitalist avarice, always seem to be struggling with cash flow. I remember hearing a story about a grist mill where the carpenter, way behind on the work, though it appeared to be done properly, complained to the architect that he needed his payment because he could not afford dog food that month. Obviously there are extremes. Payment went through in that case, as the carpenter was married to a local politician. (So maybe the how-to element to this article should be how to marry properly for future success as a tradesperson.)

Completion of a project in an amenable manner and on time is a benefit to the stewards of the property. A downside of Front-End Loading is that it can, and often enough does, result in contractors being paid for work not yet done, and then they default and walk away, or vanish. But that extreme often engages more pressing scenarios of the unsavory ethics that we talk in private about when we dare talk about what we heard those dudes did, like why nobody wants to pick up that mystery dumpster that has sat in the parking lot the last six months.

When a Schedule of Values is well constructed, on first appearance it makes perfect sense. If Front-End Loading is well done, then nobody other than the originator of the document can tell.

I was brought up try to do my best at whatever task I take on. A Schedule of Values is like a poem in a way: it can appear to be one thing on the surface and another in the depth. When done well the combination is elegant, a thing of beauty, more precious for its subtle deceit. Precious as well in that it translates into money, which poems rarely do.

To carry that a little further; when done poorly your Schedule of Values is worse than doggerel. I have always felt, in certain arenas of employment, if one is going to be a crook, then do it well. Which reminds me of our friend who set up a complicated sting operation and had one accountant who told him how to follow the rules and another accountant who told him how to break them.

So then I was asked how I came to know about any of this and why I considered myself good at it.

An Early Decision

Early in my career, though I wanted to pursue historic work, I was offered a position as Clerk of the Works, the #2 project management position, for a $20 million rehabilitation of three bus depots in Harlem for the NYC Transit Authority (now the MTA), and I figured it would be a good experience in the future. This was in the 1980s, at a time when the Columbia Preservation program was just gearing up and issuing graduates, when the role of Construction Manger had not come into dominance against the General Contractor, when there were no construction management degree programs to speak of, and learning a traditional trade still meant going out and finding some old person doing some arcane thing, like building stone fireplaces, and then making oneself useful.

So instead of going to Cooper Union to take up architecture; I took this job. The first thing that I was confronted with was that one of the three brothers who were partners in the company was not too enthused with my taking the position on his project, as I was seen as his older brother’s protégé, and I was immediately given a do-or-die proposition (no dead horses), to come up with a Schedule of Values for the $20 million. This essentially turned into pulling dead meat figures out of a gaggle of brilliant Einsteinian (not) subcontractors, right down to the number of 1-1/2-in. electrical conduit couplings on the project. Figures on dumpsters, as it turned out, were included. I had a drop-dead date. Do I need to explain a drop-dead date?

I suspected that the intent was that I would freak out and run away. I would not be the boy wonder to my mentor, the engineer married to a daughter of an engineer who had been employed on construction of the Verrazano Bridge (which, by the way, is a super cool structure of more significance than the marathon that crosses it annually). At the time I felt anointed. Youth and male testosterone leads to all sorts of useful, then useless, existential conclusions in relation to our world view.

So, I sat down at night with a Commodore 64, and Micro-whatever was the spreadsheet on that machine (it was prior to Lotus Symphony), and pumped out a schedule of values for the $20 million. The company (not mine), at that time, had a mini-mainframe that could only be operated by a mini-mainframe-trained guy, and it took like two weeks to issue an expense check. He had a special room, and I always wondered if it was one of those nut-suit arm-restraining padded OSHA rooms.

I won. Solid vote for math and technology. My friend who worked with me in New York at a later time, now working on solar in Nigeria (as in solar installations to provide water pumps for villages that now can provide clean water 24/7 for settlements on the 1,000 human lives scale) uses the Darwinian evolution of that 64 spreadsheet.

As postscript, and possibly memorial, years later my mentor on this project, suffered a stroke when driving from his residence through Yonkers and was severely impaired thereafter. A brave and noble Irishman, he was able to continue his reading about the Civil War, but we parted sadly when I was not willing to get on with enabling drink in mid-day. Such is the evolution of your mentors, and their well-meaning fools.