How To Save $1 Million Per Project
“Hey I didn’t design this, what does this mean here? I can’t install what I don’t understand.” So we ask!
Typical contracts, even design-build, do not have all the decision makers on a project at the table at the same time, from beginning to end. Even if the CM or GC are working closely with the design team (rare) the trades and suppliers have separate contracts. This contractual “siloing” leads to RFIs. That’s because it’s inevitable that the estimates, scope, BIM or blueprints will have missing information and will not address everything. So someone documents a question, requiring someone to answer. That’s an RFI: Request for Information.
NAVIGANT STUDY OF ONE MILLION RFI’S
According to a classic, decade-old Navigant study of one million RFIs, worldwide, excluding labor, equipment, and material costs, the average response was just over nine days. The average cost for reviewing and responding to RFIs was $1,080 and the average number of RFIs per project was 796.
Those are averages. And in the ensuing decade, costs have inflated to $1,371 each in 2024.
KINETIC CONSTRUCTION’S SURVEY
Tom Plumb, President and CEO of Kinetic Construction, says, “We did our own exercise three years ago to find out what the actual cost of an RFI is, picking 10 random projects, and did interviews with consultants, engineers and owners, and concluded that $3,500 was the average cost. This is 100% waste.”
YOUR AVERAGE $46 MILLION GIG
But let’s take Navigant’s lower averages and calculate for a $46 Million project: 796 RFI’s (17.2 per Million), 9 days each to turnaround, $1,371 (in 2024 dollars) processing cost each: the project impact is $1,091,793 (that’s a Million bucks) wasted, and 7,164 days (almost 20 years) of wasted time. Now obviously, many RFI’s were asked early enough not to impact the trade work, and/or concurrently, and when it did impact the work, there were plenty of workarounds (involving additional uncounted waste). Waste. Waste. Waste.
The Master Builder
The Navigant Study authors also point wistfully to “the ‘master builder’, which concept commenced around 2680 BC when the Egyptians constructed the Great Pyramids and was formalized in 1750 BC when the Code of Hammurabi gave ‘master builders’ absolute responsibility for design and construction, there was no need for such a process. Why? Simply because the individuals who planned and designed projects also were in charge of the construction and, most likely, spent all their days on the site. They clearly understood the intent of the design and were in a position to execute to that intent eliminating the need to ask any questions.” (I’m betting my old buddy Jim Zack wrote that paragraph.)
“Despite its many successes, the construction industry is one of the most inefficient in today’s economy,” says Kinetic’s Tom Plumb. “To that end, the company prefers a lean based, Integrated Project Delivery (IPD) model he believes will not only benefit clients but could be a model that could transform the industry itself.”
The IPD team IS the Master Builder.
“Integrated Project Delivery is extremely, painfully logical,” notes Plumb. “Having all the decision makers on a project at the table at the same time, from beginning to end, is a concept that only our industry has failed to understand.”
The waste of RFI’s and all the other 8 wastes (as much as 45 per cent waste) were some of the realizations that led Plumb to become confident that Integrated Project Delivery (IPD) and the accompanying lean mindset is the only model that can address those issues and many others in the construction process, adding, “We’re very excited about it.”
Download the Navigant Study HERE:
Read the full Tom Plumb article HERE.
Learn more about IPD HERE.
*ADDITIONAL INFORMATION FROM THE NAVIGANT STUDY (page 6):
Projects between $5M and $50M have an average of 17.2 RFIs per $1 million of construction cost, whereas projects between $1 billion and $5 billion have an average of just 1.1 RFIs per $1 million of construction cost. For all projects in the sample, the ratio is 9.9 RFIs per $1 million of construction cost.