Who You Gonna Call? When A Project Turns Troubled, SOCOTEC's Project Advisory Experts Can Help

As a sector particularly vulnerable to economic woes, the construction industry is accustomed to navigating its way through troubled waters. However, when facing a market saturated with supply chain delays, labor shortages and rising material costs, this is no easy task.

Since 2020, the cost of more than 82% of construction materials has increased significantly — by an average increase of nearly 20% — with price hikes coinciding with the start of the pandemic lockdowns. Lead times for these essential materials, such as large electrical equipment and roofing supplies, have eased slightly since the beginning of the pandemic, but can still reach up to six months or longer. In addition, the industry is estimated to need a total of more than 500,000 new workers to keep up with demand.  

All of these factors, and more, contribute to scheduling delays, job site frustrations and budget-related tensions for building owners. If the struggles resulting from such factors seem too difficult to surmount, the project may be considered “troubled” and in need of a turnaround.

When a project falls into turmoil, SOCOTEC, a nationwide firm with experts in advisory consulting, forensic engineering, and building envelope and waterproofing analysis, can help owners take action to identify and solve problems that are challenging project delivery.

“Traditionally, our team enters the equation when a project is behind schedule, over budget or is plagued with quality issues that are not being addressed by the parties that were involved in the original construction,” SOCOTEC Senior Managing Director Jason McFadden said. “By the time we get involved, there's generally significant conflict going on that must be resolved.”

McFadden said the first step to turn around a troubled project is to independently assess the situation. That way, the firm understands what’s going on as an independent party and not necessarily what it’s being told by other stakeholders in the heat of the battle. 

He added that it’s important for the firm to position itself as an intermediary. In cases where tensions are high and parties have stopped communicating with each other, having a team that’s disciplined and process-oriented makes reaching their client’s goals feasible.

Once the SOCOTEC team understands the state of the project, it develops a remediation plan with the client. This typically involves a root cause analysis of either a technical issue that’s specifically causing the problem, or a forensic analysis on a cost or scheduling issue specific to the project. 

“What we're trying to figure out is how the project got in trouble to begin with,” McFadden said. “Depending on the magnitude of the issues at large, we may also come up with a preliminary schedule and/or recommendations for other experts that may need to be brought in to evaluate the root causes of the problem.”

McFadden said SOCOTEC can source this expertise internally with its roofing, in-house concrete, scheduling and management, forensic engineering, equipment and code experts, making it easier to arrive at solutions for clients who are in an already stressful situation.

In many cases, significant conflict occurs before the owner has a chance to move tenants into a building, McFadden said. In other cases, major issues such as water leaks and mechanical malfunctions can occur after occupants have already moved in. This adds an extra layer of complexity for all parties involved, including the architect, general contractor, owner, tenants and SOCOTEC team.

“We just had a project for an owner of a six-story condominium in Texas, and the building was occupied,” SOCOTEC Senior Managing Director Alan Sides said. “Shortly after they occupied the building, some of the residents noticed that their balconies were rotating away from the building. This was a major structural issue that needed immediate attention.” 

Sides said the owner was frustrated with the original project team as the architect and general contractor were pointing fingers at each other as to whose fault it was. They both ended up walking away from the issue, leaving the owner to carry all of the weight.

SOCOTEC was engaged by the owner to assess the situation, Sides said. After performing a site walk, the team recommended that the owner immediately deal with the life safety issue posed by the structural failures by bolting all of the sliding doors closed that residents used to access their balconies. 

“Once we felt comfortable with the life safety issues, we engaged structural experts who evaluated the structural integrity of the support trusses that were under the balcony,” Sides said. “The team concluded that the trusses were manufactured improperly and did not adhere to the building’s design standards. We were able to assist with a remediation plan, which included the replacement of the trusses as well as a turnover package and compelling project documentation should it be required in support of potential future dispute proceedings.”

Sides said that while it’s common for construction to have a few minor hiccups that may affect the project schedule, there are a few things to watch out for to avoid falling into a troubled state, including poor performance from subcontractors, a lack of schedule updates/communication and quality and technical issues.

“At the end of the day, poor or even lack of communication around key project parameters creates troubled projects,” he said. “When communication stops, planning and predictability goes away, and that practically guarantees a ‘troubled project’ outcome.”

Looking forward, given the uncertainty of today’s CRE market, more troubled projects may arise, McFadden said. And with nearly 80% of construction companies having a hard time hiring workers, alongside the many experienced project managers and superintendents retiring, the industry that was long considered to be “predictable” is now dealing with more risk management, risk mitigation and anticipation of legal issues, he said.

“There was a time when we knew what the labor pool availability was and when equipment was going to get to the job site,” he said. “These labor and supply chain issues are now impacting every job we support. The complexity of these buildings are also becoming more challenging, and the labor pool is smaller. There may be a turbulent few years ahead, but SOCOTEC is here to advise its clients to steer into a more predictable and less strenuous project outcome.”

While SOCOTEC’s project advisory experience is often when a project is in a troubled situation, its team also offers project management services to proactively plan, manage and deliver a project, ultimately reducing risk and uncertainty. The firm's services also include project loss consulting to examine potential asset loss as well as CRE assessment to evaluate a building’s condition, understand capital expenditure and maintenance program implementation. 

This article was produced in collaboration between SOCOTEC and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.