Project Management Institute

An analysis of a failure

the structural collapse at the Station Square development

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Showcase Project

The Structural Collapse at the Station Square Development

PART I - A SUMMARY OF THE FACTS

PART II - VIEWS OF THE PROFESSIONS

PART III - SOME INDEPENDENT VIEWS

Editor's Note: It is the desire of the PM NETwork to publish, as Showcase Projects, failures as well as successes. Some of the most poignant lessons in life come from our failures, and those lessons should not be lost due to neglect in carefully analyzing the results.

A building failed in Burnaby, British Columbia. A Commissioner was appointed to inquire into the cause and to recommend actions which would better protect the interests and safety of the public. The report which resulted is in the public domain, and there were numerous news articles on the subject.

The structural collapse at the Station Square Development in Burnaby, British Columbia spawned a number of significant results, including a great deal of (generally adverse) publicity, increased public concerns regarding building safety and construction standards, and a detailed report of the inquiry commission into the likely causes of the collapse.

The commission report represents a credible job in the attempt to reach two goals: 1) a detailed explanation into the likely causes of the Station Square collapse, and 2) the development of a series of recommendations for future construction operations with the intent of forestalling the possibility of any such future structural failures.

Although the commission report has done a thorough job of analyzing the causes of the accident, it has also made a number of specific recommendations (19, in fact) for regulating and gaining tighter control over the various activities in the construction industry.

Members of the West Coast British Columbia Chapter of PMI followed the hearing and, as individuals, submitted a brief to the Commissioner. Chris Quaife and Max Wideman urged the PM NETwork to publish a synopsis of the Commissioner's report with an analysis of the interests of various parties involved in the Inquiry. It was agreed that such an analysis of this failure was appropriate and that it should further include the comments of three theoreticians on salient points in the recommendations. These points are organizational behavior, modern quality management, and socio-political-economics.

We are pleased that so many individuals have been willing to participate in this exercise. We are grateful to those who presented the points of view of the various professional groups involved, the theoreticians for reflecting on the issues, and especially the members of the West Coast BC Chapter of PMI for seeing this as an issue with which PMI members should be concerned.

We regret that the incident happened. It might have been the proverbial “accident waiting to happen.” Many people were hurt in various ways. We have no desire to add to the hurt. Therefore, rather than use the names of the people involved, we have used generic names of the contributors.

Readers are urged to consider the issues involved and express their opinions in letters to the editor with regard to what governments, industries, and professions, and especially the Project Management Institute, should say or do about any aspect of this type of incident. (A panel discussion of this issue is being considered for ΡΜΓ90 in Calgary).

All project managers, whatever the industry, should read this Showcase Project, substituting the relevant words and concepts for the technologies of the projects they manage . The general lessons are universal in their applicability.

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The Station Square Incident

Edited by Max Wideman, Consultant, Author, Past President and Chairman of PMI

THE PROJECT

Land assembly, consolidation and rezoning for the $100 million Station Square project at the Metro Town development in Burnaby, British Columbia was started in 1985 by an investment firm (Investors). An architectural design firm (Architects) was retained to prepare preliminary conceptual design drawings of a community shopping center.

Early in 1986, two other firms (Developers) bought the project and retained tlie original Architects as designer and project coordinator from the planning stage through to construction. The project, when completed, is to be a mixed-use shopping center complex and will include a hotel, apartment towers, commercial retail units, theatres, and office buildings as well as the store which is to be the flagship of a supermarket (Tenant) food chain. The Tenant was not involved in the construction of the building. This supermarket is one of nine operated under the Tenant's banner and one of 57 stores operated by the Tenant's Parent Division of a major corporation.

On April 23, 1988, Tenant opened a new store at Station Square. The building, a single-story steel frame structure approximately two acres (90,000 square feet) in area, is located at the southeast corner of MacKay Road and Kingsway. It is about 25 feet high and contains rooftop parking for some 235 cars.

THE OPENING

The first customers arriving by car were directed by commissionaires to the parkade on the roof of the store. There was a light drizzle and some customers complained of having to park on the roof when covered parking was available in the adjoining three-level parkade. The third and fourth parking rows were about half full when customers were allowed to park elsewhere.

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The W24x76 beam supporting a portion of the roof, fails over the column.

Following an official opening ceremony, the store was quickly filled with an estimated 600 senior citizens attracted by special discounts. About 370 employees were on hand to greet them. William Baxter was picking up an English cucumber, Eva Howie and her friend were buying fish and Arthur Pastro was checking the price of lettuce when they were asked to leave the store.

Shoppers heard a loud cracking and banging noise. Many thought it was a display that had tumbled to the floor. At the same time, an overhead pipe burst open and sprayed water over the bulk foods area near the cheese delicatessen counter. Employees started to usher the confused and reluctant customers out of the area.

On the rooftop parkade, photographer Greg Kinch was putting his camera gear away when he heard a crunch which sounded like a large truck hitting a cement barricade. He turned around to see what had happened and saw two rows of cars “bouncing up and down.”

In the store, Burnaby Mayor Bill Copeland, on hand for the opening ceremonies, saw that a ventilating duct had sagged, and water was running from the ceiling. Utility clerks began mopping up the water. On hearing “popping, cracking noises,” the mayor, a former fire fighter, suggested that the employees leave the area because “something may come down on you. I could see the distortion of the post, and looking up from that you could see that there was distortion above, on the beam, and I knew at the moment that something disastrous was going to happen.”

Meanwhile, everyone was being told over the public address system to move to the front of the store, and Copeland immediately began helping store employees move people away from the area. When customers were told over the P-A system to move to the front of the store, retired engineer Ernie Mason told his wife that they'd best get out of the store. They went through checkout counter 13 which stamped the time on their bill: It was 9:11 AM.

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On hearing the initial appeal over the public address system, a vice-president for the Tenant's Parent Division headed for the produce area to find out what was happening. “I noticed the beam was rotating, and there was a leak in the pipe in the ceiling at the location. I knew exactly what was going on. I knew we had a cave-in problem,” he said.

Everyone was then told over the P-A to leave the store immediately.

Trevor Burkitt, an amateur photographer and photo-technician at another of the Tenant's stores, was drawn to the area by the running water and started taking pictures when he saw “that there was something terribly wrong.” He was right underneath the beam and zoomed in for a close-up: “It was then that it started to appear to me that there was a major problem, and that I was really in the wrong place.” Burkitt heard a crack “and I aimed around and aimed my camera at the roof, and then there was a tremendous roar as the roof sagged and just fell right in.”

Estelle Birch and a girlfriend watched the ceiling “come down very slowly, and (we) got out of there fast. They gave us a choice to go out the left or the right, and my girlfriend and I chose the right which was a good thing because everything was flying at the other end. And that's when that air hit everybody, just like a tornado going through.”

Elsie Barber said the gust knocked her down “and then all I knew, people picked me up, then I looked, my feet were wet, but my shoes were off my feet.

The blast of air and the water on the floor caused Molly Jensen to fall on the floor where she broke her elbow.

“The gush of air that came out of the building... with a nutmeg smell... blew us out,” said Bud Smallwood. He was helping pick up an elderly lady “when another woman fell over the top of both of us. I could see that there was going to be a pile-up in front of the door, so I stayed there to help the people, drag them out.”

The exodus was orderly and everybody was well behaved. Testimony showed that the quick and courageous action on the part of the employees and the mayor saved many customers from injury caused directly by the collapsing roof. Utility clerk Larry Nichols, who was in the danger zone cleaning up, did not get out in time, and his hips were pinned under bent steel and broken concrete. Firemen and emergency health services personnel used two pallet jacks to remove him from under the rubble. He suffered a crushed pelvis.

At about 9:15 AM, approximately ’6,400 square feet of the roof structure fell into the produce area. Twenty cars parked on the roof fell into the opening and 21 people were injured.

There were no fatalities.

The seniors who lost their cars in the collapse were upset at having to accept considerably less than they feel their vehicles were worth. “We had no way to protect ourselves, and I think they should look after us,” said Annabel Mc-Daniel who did not have comprehensive insurance. “I went in with a car; I don't see why I can't come out of there with a car.”

THE COLLAPSE HISTORY

Architect, as the architect and project coordinator, solicited proposals for the mechanical, electrical and structural engineering, and selection of the consultants was made by the owners. Eight bids were received on the structural engineering work and a firm (Engineers), the third lowest bidder was chosen. Their bid was in the amount of $20,500 for the $5.4 million Tenant's building. This fee was subsequently negotiated down to $17,000 by the Developer's development manager.

The Developer pre-qualified the contractors as to ability to build a project of this size and financial ability, and chose a firm (Constructors) which was the lowest of six bidders. Constructors in turn hired the sub-contractors including a firm (Erectors) to provide and erect the steel. Erectors hired another firm (Fabricators) to design and supply the open web steel joists and a designer (Detailer) to detail the connections.

Original plans for the Tenant's building did not include parking on the roof, and in December, 1986, one of the contractors bidding for the contract suggested the rooftop parkade during prequalifications. Both Architects and Engineers reviewed the proposal and reported that it was feasible. Discussions were held with the Tenant and the idea was adopted. A travelator was to take people from the floor of the store to the roof.

All plans, drawings and specifications were finally signed off by the Tenant on July l6, 1987.

The Engineer provided the Municipality of Burnaby with a letter indicating that the building construction would be supervised by a structural engineer. Building permits were issued for a fee of $30,235, and construction started July 17, 1987.

The sidewalk on the parking deck was originally five feet six inches wide as shown on architectural drawing A5.5. On July 6, 1987, revision six was issued extending the sidewalk three feet on each side for a total width of 11 feet six inches. Drawing S5.5 provides an edge detail of the sidewalk showing the sidewalk six inches above the finished roof-parking surface with an edge thickness of 10 inches and a center core of six inches of Styrofoam insulation. Constructors proceeded with the rooftop construction and poured the three feet extensions on each side of the sidewalk in solid concrete.

The designer, an engineer-in-training at the Engineer, said the edge detail on drawing S5.5 should have prevailed, and the additional weight would have been minimal. Engineer would not have agreed with the addition of six feet of concrete six inches deep had they been consulted on that point. The additional weight of the sidewalk supported by the beam became 24,500 pounds, a significant increase in weight and a contributing factor to the eventual collapse.

The extra weight, although in place, was ignored by another firm of consulting engineers (Consultants) that did a subsequent structural review.

Meanwhile, Fabricators started design of the open web steel joists and in September and October was requested by Engineers to add bottom chord extensions to 29 locations. There was a note on one of the structural drawings requesting that bottom chord extensions also be placed where applicable.

Fabricators informed the consultants that the extensions would involve extra costs, and tlie consulting engineers decided that these would not be required to provide stability for the columns.

“The omission of the extension at the critical column location had a very significant effect,” said the consulting engineer in charge of the remedial work in the store. “It's my belief that had the extension been in place, the beam would have been still very severely over stressed, but it would probably not have collapsed on that day. We may very well have been shopping in that store today unaware of the level of distress in the roof structure above us.”

There were no problems until November, 1987, when a beam in the area of the travelator deflected about two inches, tilting the housing. The owners asked Engineers to review the problem and remedial work was recommended and done. Several beams were strengthened, some columns were added; a new reinforced concrete beam constructed; and some details modified.

Station Square decided to get an independent opinion of the structure and hired Consultants to review this area and to look at the building and the design drawings for problems. In a Dec. 24, 1987 letter, Consultants submitted a report identifying the beams that they found to have “insufficient capacities,” discussed the remedial action carried out, or proposed, by Engineers; and agreed with it. Letters from both firms confirmed that the remedial work had been done.

In March, the Tenant became concerned about deflections of certain roof beams and hired the Consultants to conduct a design review of the entire building. “We didn't set a time limit on it, nor did we set a dollar value on what’ we were prepared to pay,” said the vice president of the Parent Division. “The main thing was to get a good second opinion on the safety of the building.”

In a report dated March 30, 1987, Consultants reported that two beams had “insufficient capacities.” One was the W24x76 that later collapsed. The report recommended remedial measures, and Developers, the architects and both engineering firms initiated steps to effect this remedy. The following day, the owners were advised that the remedial work would not be required because a mill certificate provided by Erectors to Engineers indicated a yield strength of 55,700 per quare inch (psi). The design was 44,000 psi. “On the basis of this information, we conclude that the beams in question are at least 26 per cent stronger than the specified strengths and are satisfactory to resist the design loadings imposed,” said a member of Consultants in April 7 letter to the Parent Division. “This new information is a blessing for all concerned.”

Construction was completed on March 18. Engineers informed the Municipality on April 14 that the building had been built according to its drawings and specifications and to the National Building Code of Canada. A temporary occupancy certificate was issued by the Municipality on April 22.

On April 23, shortly after the official opening, the beam and an area of approximately 6,400 square feet collapsed.

COLLAPSE MODE

The W24x76 beam supporting this portion of the roof failed over the column at grid lines S513.13 and W110.84 on the architect's drawing.

The investigation determined that the beam failure probably involved at least two modes, beam bending with buckling of the lower flange and buckling of the beam-column assembly as a result.

For reasons not fully known, the beam was changed from W24xl04 to a W24x76 - a beam too small even if laterally supported. When doubt was raised, a series of recalculations was made.

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There are nine factors involving the design engineer — assumptions, decisions, judgement of miscalculations — each of which reduced the safety margin:

  • A design change from a two-inch to a three-inch top slab wearing surface increased the dead load from 80 psf to 90 to 95 psf. The open web steel joists were designed for this heavier load but the beam design was not changed.
  • As built, slab thicknesses were greater than design, increasing the dead weight load to about 100 psf. There was no provision for this additional concrete.
  • No allowance was made for the weight of the walkway, either as designed or as built (concrete where styrofoam was specified).
  • The beam, originally sized at W24×l04 based on deflection criteria, was incorrectly reduced to a W24×76 as a result of a change in the deflection from l/240th of span to l/360th of span length stemming from a discussion about economy.
  • The live load was incorrectly assumed to be 43.7 psf due to incorrect identification of loaded area and failure to note a constraint on an unbraced live load.
  • In calculating the bending moment at the column centerline, a fourth calculation reduced the moment to that at the face of the column cap plate (where it is appreciably less than at the centerline), proceeding with design of a strengthening bracket ... to make up the small deficiency introduced.
  • The assumption made by the engineers — that the “guaranteed” minimum yield strength of a beam can be upgraded to the value given by one value or the lowest of several given by mill tests — is unsupported for two reasons: sample location on the beam and variations in chemical composition.
  • The structural engineer did not study the reduced capacity of the W24×76 caused by lack of lateral support which were originally specified for some columns (not the one that collapsed) and later cancelled due to extra cost.
  • The requirement for lateral support was not studied in part due to conflicting assumptions about responsibility by the structural engineer and the detailer and without knowledge of as built thicknesses and weights of the extra walkway.

Any one of these alone would not have resulted in collapse, being partially compensated for by factors of safety. However, taken together, failure was inevitable.

The underdesign was due to miscalculations in the office of the structural engineer. It was compounded by a similar miscalculations by the structural engineer who was called in to review the structure after deflections were noticed in some beams supporting the travelator in the store.

The investigation of the cause of this incident concludes that, “The need for greater care by all parties in communicating special and unusual requirements to suppliers and designers is of vital importance on all building projects.”

INQUIRY RECOMMENDATIONS

While the underdesign was due to a miscalculation made in the structural engineer's office, this was not the only error made on the project. Facts presented in evidence showed that there was a definite lapse of communication and instruction between the parties involved in the building process.

Throughout the hearings, and in many submissions, the responsibility and obligations of the owner received considerable attention. From this it was concluded that owners must establish clear lines of communication and responsibility for all those involved in their projects.

The role of the municipality who issued the building permit was strictly administrative, and there was no suggestion that it was deficient in discharging its duties. Contrary to public perception, building inspectors do only a cursory inspection of large buildings. However, municipal departments are the last check points before a building is built and any necessary additional checks must be introduced into the process at either the design stage, by architects and engineers, or at the stage of the permit application to the municipality.

The response of emergency teams, fire, police, ambulance, was prompt and efficient.

Clearly, the matter of public safety is a paramount consideration by all those involved in building projects, especially those intended for public use. With this in mind, the Inquiry Commissioner made a number of important recommendations as follows:

  • Provision must be made for the audit of structural engineering drawings and calculations for major buildings selectively chosen by municipalities for review by independent engineers, with the cost borne by a special levy on municipal permits.
  • Structural engineers should be required to pass a special examination before becoming professionally qualified and should be required to carry specified limits of professional liability insurance.
  • A provincial manual of recommended construction practices and procedures should be developed to clarify responsibilities of owners, architects, engineers, contractors and suppliers in construction projects.
  • Standard documents (Letters of Assurance) under the building code should be used throughout the province for major buildings, to assign responsibilities among owners, architects and engineers.
  • Architects and engineers should be primarily responsible for ensuring compliance with the building code for major buildings, with building inspectors playing a secondary, administrative role.
  • In addition to the registration of individual engineers, engineering firms should also be registered with the professional association, to strengthen standards within the engineering profession.
  • Provincial standards of practice should be established for major building design, drawings and calculations.
  • Steel industry construction manuals should be revised to provide more accurate assistance to engineers.
  • The Minister responsible for municipal construction should appoint a three-member task force to oversee implementation of these recommendations.
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Legal Proceedings: An Inevitable Result of a Failure

By Doug F. Robinson, Lawson, Lundell, Lawson & Mclntosh Vancouver, British Columbia, Canada

Within minutes of the collapse of the roof on April 23, a number of lawyers were busily reviewing both insurance and lease documents in order to determine the potential rights and liabilities of any of the parties involved. While this process continued, there was convened by Order in Council made May 6, 1988, a Commission under the Inquiry Act to report to the provincial government on the circumstances of the collapse. Considering the complexity of the legal issues raised, the Closkey Commission held 10 days of hearings between May 30 and July 6, 1988. The report of that commission appeared in printed form in August of 1988 after hearing a total of 47 witnesses.

By October of 1988, Statements of Claim were issued by Station Square Developments Inc. (the developers of the Station Square development at Metro Town) and Jim Pattison Industries (the owners of Save-on-Foods) filed Writs in the Supreme Court of British Columbia against the Municipality of Burnaby, the general contractor and the subcontractors involved in the steelwork as well as the architects and all of its sub consultants.

Beginning in December 1988, a Discipline Committee, a panel of the Association of Professional Engineers of the Province of British Columbia, held inquiries charging engineers with incompetence, negligence or misconduct in relation to the design, inspection and supervision and review of the Station Square Development. On June 12, 1989, the Discipline Committee found a number of the engineers had been responsible of misconduct or breaches of the Code of Ethics of their association.

At present, a trial involving all the parties to settle the legal liabilities arising out of the collapse will begin in

Vancouver on January 22, 1990. This trial is presently scheduled to take 10 weeks of trial time. Before a Justice of the Supreme Court of British Columbia more detailed evidence will be heard. Monetary judgments against various plaintiffs could be assessed aggregating to several millions of dollars.

Will ultimate responsibility rest solely with the engineers? Will there be some liability assessed against the general contractor or its sub contractors? Indeed will some fault lie with the developers and in the manner in which they conducted themselves? The answer to these questions will soon be known. The consequences of these answers for the construction industry will be more long lasting.

The chart on the following pages illustrates the complexity of and the number of parties involved in bringing this case to resolution.

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PART II - VIEWS OF THE PROFESSIONS

An incident such as the failure of the Station Square building has widespread effects. Included in these are effects on various professional societies, how they perceive themselves, how they are perceived by others, and how they need to behave to warrant recognition as a “profession.” The following are the views of several informed individuals from this arena. In each case the positions presented are the views of the individual authors.

A PROFESSIONAL ENGINEER‘S VIEW

By C. Peter Jones, Consultant to Jones, Kwong, Kishi; Structural Engineers Past President, Association of Professional Engineers of British Columbia (APEBC)

The Commissioner Inquiry investigated not only the Save-On-Foods collapse but construction practice generally in the commercial, developer-driven field. Its 19 recommendations were based on the latter as much as the former.

The recommendations can be categorized in several ways. In this article they are discussed as they relate to responsibilities of the various parties involved in construction.

RESPONSIBILITY OF THE OWNERS

The convoluted lines of responsibility among owner, developer, project manager, prime consultant, architect, design engineer, contractors, engineers, and even the tenant of a purpose built structure were a cause of concern to the Commissioner, a cause of concern, even through at the Inquiry hearings few of the parties other than the engineers appeared. With potential litigation pending, few parties came forward and participated in cross examination of witnesses. Nevertheless the Commissioner wrote “The three practices — fast tracking, bidding for professional services, and fragmentation — cause me a great deal of concern. The role played by the owners in the construction process places them in key position to influence the quality of construction and, thus, the safety of the public. . .”

Despite the lack of input by these other parties, the Inquiry recommended that a manual of construction practices and procedures should be developed. This manual should address the responsibilities of the owner, the developer, and the other parties.

It is interesting to note that unknown to the Inquiry, the American Society of Civil Engineers was completing its manual of professional practice Quality in the Constructed Project - A Guideline for Owners, Designer and Constructors — in a preliminary edition issued in late 1988 for trial use and comment.

In the process of controlling the purse strings, the owner (or the developer) must be responsible not only to the other parties but to the public. The buck should stop at the owner unless this responsibility is clearly and definitely delegated. And with this responsibility, the authority to make decisions must be delegated, including ones with economic impact, to a project manager, or in a more traditional job organization, to a prime consultant.

To competently assume the responsibility, an owner must be knowledgeable about the construction process from concept to completion. If the owner is not competent in this regard, then one person (a project manager or a prime consultant) should be engaged to whom responsibility and authority is delegated - including the responsibility to coordinate the work of the design team, of the construction team, and of the two teams together. The owner should avoid delegation to more than one party. It is not uncommon for the owner to engage and pay, for example, a project manager, an architect, various professional engineers and one or more contractors. Each of these may be fully competent, but even if their term of engagement requires them to coordinate with all the others, they cannot provide overall coordination for the entire job.

The owner's responsibility includes that of ensuring coordination. Either this responsibility must be assumed by the owner or must be clearly delegated, and then monitored, as if it had been sub-delegated clown through the hierarchy or other organization of the many parties.

RESPONSIBILITY OF THE DESIGN ENGINEER

Engineers or architects may be the prime consultant or project manager and have the above overall coordinating role. In any case they are responsible, within their own discipline, for the technical content and the coordination of design.

The Inquiry recommended that this responsibility not be muddied by government inspection - that the building inspectors responsibility be secondary and “limited to ensuring that the appropriate design professionals have clearly accepted prime responsibility.”

The Inquiry made several recommendations for stiffening of standards by the engineering profession. Some resulted from the brief submitted to the Inquiry by APEBC. Included are:

1. Structural calculations should be submitted together with (in addition to) drawings, specifications and building permit applications. It is believed that this will encourage careful practice by the hurried engineer and will require little extra time of the engineer with good office procedures.

2. Registration of companies, partnerships, and other groups that provide professional engineering services to the public. Such groups to be subject to deregistration for unethical, unprofessional or incompetent practice.

3· Structural engineers be required to meet higher standards than required for registration as a Professional Engineer.

APEBC action on 2 and 3 has been to endorse 2. In place of 3 the APEBC is proposing that engineers of all disciplines who offer their service to the public be required to obtain a permission to consult including the following provisions:

  • Applicants for a permission to consult shall demonstrate comprehension, competence and a depth of experience beyond that required for registration as a professional engineer including:

    - 5 years additional experience

    - be technically current

    - possess a record of ethical behavior and good practice.

  • Permission to consult will be valid for 5 years. Renewal requires a new application.
  • Applicants shall submit a list of projects for which they have been responsible. APEBC will select one or more of these for a review by a peer. The review may be considered in the manual of a permission to consult.

4. Construction documents should meet a provincial standard of practice.

APEBC has extended this to standards for construction review as well as documents. It has a manual of guidelines for structural engineering in draft form at time of writing.

5. That the structural design of about 10% of all projects be reviewed by an APEBC panel.

The APEBC has proposed an alternate with two components. The first is that, with the building permit application, the design structural engineer be required to submit evidence that the design and drawings have been checked by a second engineer. This is considered good practice and as such should apply to 100% of jobs.

The review panel recommended when examined in detail led to excessive bureaucracy, division of responsibility, delays, and cause for disputes. The APEBC‘s alternate second component is discussed under the next heading.

RESPONSIBILITY OF GOVERNMENT

The secondary responsibility of the building inspector is discussed under Responsibility of the Owners above. However, two considerations still arise.

1. The building inspector may notice or suspect some error even though he is not responsible. His concern may be removed by discussion with, and possible explanation or modification by, the engineer of record. What if his concern persists?

2. Although the design professional is responsible, government can still do checks.

The second component of the APEBC recommendation is that the provincial Building Safety Branch of the Ministry of Municipalities establish a rotating panel of structural engineers. Any building inspectors having a concern may obtain the service of a panel member to review that concern. The review should not delay issuance of a pennit, but the owner and design engineer must be informed of the review. There should be a second review if the first review is adverse and the design engineer not agree with the findings. Should the matter not be resolved during these procedures then the building inspector can decide whether to revoke the building permit or lay a complaint with the APEBC against the design engineer.

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A CONSULTING ENGINEER‘S VIEW

by John Watson, PE, Vice President of Engineering,Wright Engineers Ltd. Past President, Consulting Engineers of British Columbia

The Station Square collapse raises a number of concerns for those of us in the practice of professional consulting engineering. The events should make us all think seriously about our own internal design procedures, the commercial environment in which we are working, the ethical issues affecting our profession and the pressures upon the public authorities to “do something” to ensure that such an event never happens again.

PROCEDURES

It is clear from an examination of the inquiry documents, that the initial design process was not carried out with the diligence one would expect. A reasonably senior engineer relied upon a well-educated but inexperienced graduate engineer to perform the design. The more senior engineer clearly had respect for and relied upon the graduate engineer, not uncommon for those of us who have experienced working with bright, young, people. However, whether it is a graduate engineer or even a more experienced engineer, that does not mean that we should be cutting back our formal office procedures to the point of not performing a proper detailed, “yellow pencil,” check of all of our work.

Even the most senior person can make an arithmetic error in any design, and, certainly, there are times when we get led up blind alleys and look too much at the detail and forget to look at the general overall engineering concepts involved to make sure that we are dealing with a basically stable structure to begin with.

Clearly, the support beams in question at Station Square were under-designed, but also, the lack of compression flange support is a basic conceptual error as much as it is a detail design error. Undoubtedly, the design was rushed, and good practice was truncated for competitive reasons. This brings us to the next major issue resulting from Station Square.

THE ENGINEERING ENVIRONMENT

Consulting engineers, particularly in the structural area, are under great pressures due to the competitive environment in which we work, to reduce the cost of the design process and to produce a minimum cost structure. Basically, these two requirements are at odds with each other. Clearly, the focus of the marketing of engineering services has recently been on the cost of engineering and not on its value. It is possible, with good engineering, and with adequate time, to optimize the design of the final product so that a minimum cost structure could be produced. However, when one is faced with trying to keep the design fee as small as possible in order to stave off competition, opportunities to optimize the design of the product are lost.

Station Square clearly is a case where the consultant was trying to produce a minimum cost building while maintaining a minimum design fee. In this instance, these motivations seem to have been carried to the extreme. One wonders why the consultant was even attempting the exercise.

THE ETHICAL ISSUES

All of which leads us to the basic ethical issues involved at Station Square.

The Quick Check

As the building was going up, people were becoming concerned about the deflections being experienced to the point where the workers were becoming quite vocal. As a result, an independent engineer was engaged by the ultimate lessee of the building in order to check the structure..

How many of us realize the awesome responsibility we take on when we are called in to “give a quick check” of someone else's work? Clearly, what we are being asked is to accept a very minimum fee and take on the total responsibility that rightly belongs to somebody else.

An Error is Discovered?

The next major ethical question which results is what to do when an error is discovered. The error was discovered. There is evidence in the Commissioner's Report that the designers recognized that they had a problem with at least an undersized beam. The question of the stability of the compression flange may or may not have been noticed, but certainly they recognized that the beam was undersized. These problems were “rationalized” away by accepting that the material was somewhat higher in strength than the minimum specified, therefore, “everything would be all right.”

To this writer, this is the ultimate question when one calls himself a professional: What do you do when you realize that you may have done the job improperly? Do you hope that everything will be OK, and place a number of lives in danger. Or do you have the courage to face up to the mistake having been made, knowing that it is going to cost somebody some money, and that the somebody may be you, the consulting engineer? It is a difficult dilemma but it cannot be left unattended.

Clearly, the parties involved were under tremendous pressures to make everything all right, so as not to delay the completion of the building. There were some pretty severe consequences to all involved if they were to replace structural members at a very late stage of the project. It is also clear, however, that the consequences of not doing that have been far more disastrous in this case.

Professionalism cannot be legislated. People either think and act professionally, or they don't.

The Role of the Authorities

All of which comes to the dilemma now facing the Provincial Government, the Association for Professional Engineers and all of us who practice consulting engineering. Because the final actions to be taken are still under discussion, I will not discuss what actions are required, but the questions posed to us are quite interesting.

1. Can “Professionalism” and “Ethics” be Legislated?

2. What do we do with people who are found guilty of unprofessional and unethical conduct?

If we do not deal very severely with these issues as they arise, I would suggest that we will not have a profession, and, we will not be entitled to receive the professional respect with which we are so concerned at the present.

We have asserted that “professionalism” cannot be legislated. The body of knowledge and the understanding to judge “professional behavior” is too vast, technical, and changing to expect governmental bodies of legislators to comprehend the complexities involved. Further, such legislative actions can “freeze” a field of endeavor in a manner to inhibit, if not prohibit, creativity, innovation and even technical advancement.

The responsibility for ensuring professionalism is assigned to the respective professional societies. Similarly, a “Code of Ethics” is an inherent responsibility of the professional society. It is in the “Code of Ethics” that the standards of the profession are enunciated to ensure that every member of the profession has a clear understanding of the standards and to provide the legal basis by which the standards of the profession are enforced.

The Association of Professional Engineers has a difficult problem here. It appears that there may be members who are not doing the quality of work that is required to ensure public safety. Members of the profession do not want to report on each other, but to do less will mean that we all suffer in terms of reputation of the profession. Much more important, the public will suffer from the consequences of inadequate engineering.

The government authorities are looking to the profession to tell them what we are going to do to ensure that such a disaster does not happen again. Should the government authorities perform detail design checks? Should they step in and do the work of the professional bodies? Clearly, there are expectations that we in the profession will institute “iron clad” procedures which will ensure that this can never happen again.

It is also clear to this writer that such procedures, no matter how “iron clad,” will not replace the need to have members of the profession act as professionals. Can we demand less of our members?

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AN ARCHITECT'S VIEW

By Derek Neale, MAIBC, Neale, Staniszkis, Doll Architects and Michael A. Ernest, MAIBC, PMI, Michael A. Ernest & Associates

INTRODUCTION

In any given construction project, there is a set of tasks to be performed to ensure its success. As amazing as it may seem to those who are not tally familiar with our industry (i.e. most owners; many self-styled managers; and some regulatory officials) those tasks and their appropriate pattern of undertaking are generally well-known to architects, engineers and builders.

Who gets to do those tasks, under contract to whom, in what sequence, for how much money and under what terms of reference, however, is the source of much frantic energy these days, especially in the private sector. Owners are often motivated to minimize their short-term costs (as opposed to obtaining greatest long-term benefit) and are advised to maximize their control by breaking down the process into its smallest units, working at greatest speed. Unfortunately, reputed advantages are often illusory because the natural outfall consists of larger numbers of working units, many more points of contact (read: gaps), loss of time for due consideration, and unhealthy pressure—without proper contractual definition.

It then becomes exceedingly difficult to ensure responsible action and coordination. When that is further compounded by low-bidder selection, the die is cast. “Cheap professional advice” is inherently contradictory. The Station Square delivery system had all the ingredients for trouble. Unfortunately, this time the recipe boiled over.

MANAGEMENT BY DESIGN

It is the AIBC‘s belief that while there were a host of factors variously contributing to the collapse—from technical incompetence to playing ostrich— those factors are all byproducts of a more profound problem, i.e. fragmentation of the “traditional” delivery process, especially as it relates to the design and construction of the project for the owner. That process is becoming increasingly ill-defined by market forces (not public interest) and “bought” in shifting guises by uninformed or poorly advised owners, within an insufficiently monitored and controlled operating context. Frequently, so-called “project managers” are no small part of the problem and give “project management” a bad name.

Let us make no mistake: the process-model by which specific people cause a project to happen is something which must not be allowed to happen by accident. What is needed is Management By Design so that there is a well communicated and understood clarity of roles and relationships that has been designed by persons who know what is necessary and how to achieve that in the best interest of all affected parties.

It is indeed possible and practical to have someone provide overall coordination at least as far as the efforts of the “design” consultants are concerned; as to their review and certification of construction; and the Owner's related role. Most architects are darn good at it. That's a fundamental part of our background, approach and skill.

In those areas, other layers of management are both redundant and counterproductive. In fact, it is folly to allow the Owner or an unqualified manager to define and allocate such project responsibilities (which happens now all too often).

MOTIVATION AND TRUST

Very often the Owner has little or no long-range commitment to the project, its users or the public interest, seeking short-term gains and frequently for a quick flip (re-sale) at which point it becomes someone else's problem.

The licensed consultant, however, is in for the long-run and has public responsibility along with its attendant accountability and potential liability— even to his estate after death. The consultant (unlike the Owner, the builder and the manager) is regulated and could (should) stand on those grounds supported by his professional association and enforced government legislation, in opposition to unwise owner-parameters.

The authorities and any consumer (2nd or 3rd parties) are. entitled to expect and to receive ethical, technically sound actions. Policing of that has to come from the professions. No other body is qualified.

RESPONSIBILITY AND REGULATION

The missing components in the overall system are: responsible owners, licensed constructors and authorities’ enforcement of regulations, all in the public interest.

Responsibility cannot be delegated. Notwithstanding the industry-paranoia often fostered by insurance companies and legal counsel (all who urge parties to back away from responsibility), someone has to take charge of things and provide (or ensure) sufficient checks and balances. Whatever may be the scope of government inspection, the involvement of such authority does not alter the architect's or engineer's responsibility, already derived from licence and well-defined under statute.

The typical (commercial) owner is in it to make money but is a construction-process innocent. That's a large problem in an entrepreneurial society, wherein we cannot feasibly regulate an owner's competence, knowledge or attitude. What we could do is regulate an owner's actions. That way, an innocent (or avaricious) owner and/or an unsuspecting public would not be victimized by recommendations to install fragmented delivery models that have the appearance of saving time and money but which effectively reduce coherence and quality while increasing risk unnecessarily.

Owners should be required to file (with the local authority) undertakings as to the project's delivery model, including roles and relationships of all consultants; nature of construction contract(s); and primary activity sequences. At the very least, the authority should be empowered to require that professional statutes and building regulations be adhered to and (in the event of a non-traditional model) that its appropriateness be demonstrated— all as a condition of permitting the project to proceed.

FIRST PRINCIPLES

Let us not forget that in advance of the real need for a proper checking regimen, there are a whole series of creative, constructive, integrative and progressive tasks—i.e. the generation of ideas and the construction itself— which are far more difficult, time-consuming and valuable than any after-the-fact monitoring.

That is where the best management energies and strategies are needed; that is where professionals and owners need to make informed judgments first. And that is where we need to ensure that proper standards of engagement (including remuneration) and practice are both invoked and enforced.

It is absolutely essential that there be sound application of professional service; proper application of risk; and appropriate government involvement. All the participants need to understand roles and relationships; responsibility and liability.

The “Save-On-Foods” roof collapse or similarly unfortunate event must not be allowed to recur. There is a real need to ensure clarity and quality in the public interest.

BIOGRAPHY

Derek Neale, MAIBC, is a partner in Neale, Staniszkis, Doll Architects, a full service architectural firm; the elected vice-president of the AIBC Council; former chairman of its Examining Board; and chairman of its Station Square Task Force.

Michael A. Ernest, MAIBC, PMI, is the principal of Michael A. Ernest & Associates, an architectural management firm; serves as Director of Professional Services for the AIBC; is a member of its Station Square Task Force; and is an adjunct professor at the University of British Columbia, teaching professional practice in the architectural school.

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Figure 1. Traditional Design and Construction Roles.

  • All lines of communication and responsibilities are clear and benefit from a tune-tested family of contract documents and contract administration practices.
  • In this traditional model, the coordination responsibilities of all participants and their interface are standards that are well-defined under a set of complementary, time-tested contract documents.
  • Many of the recommendations of the Commissioner Inquiry directly address problems associated with deviations from the traditional model.
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Figure 2. Sample Alternate Design and Construction Roles

  • Prime consultant's role is compromised by lack of standard contracts, reduced control, unclear and divided coordination roles,
  • Confusion of roles occurs particularly with respect to implications and coordination of changes to construction during fast tracking.
  • Absence of contract administration (e.g. coordination/impact of changes) by architect weakens control over quality and process, hence the need arises for letters of professional assurance.
  • Real Issue; Developer has assumed certain responsibilities from prime consultant yet it is unclear precisely what and how they will be managed. Inevitably, individual persons who must actually function in a manner consistent with the project's terms of reference are unable to do so in the absence of articulate mechanisms.

Frequently, persons who initiate “alternate” models are unaware that such problems exist or resist such a fact. The ensuing chaos undermines quality assurance; is contrary to objectives of project efficiency; and exacts an unnecessary toll in human relationships.

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A PROJECT MANAGEMENT VIEW

By Chris Quaife, Project Management Consultant associated with Deloitte & Touche

INTRODUCTION

The Project Management Institute (PMI) is committed to “building professionalism in project management.” This includes the setting of appropriate performance standards by professionals, and assuring compliance. The standards include all aspects of public and worker safety through the development, design and implementation phases of a commercial project and its public use after completion.

The Station Square Inquiry has identified improvements needed in the British Columbia construction industry. The Inquiry expressed concern over the blurring of responsibilities for the coordination and direction of design and construction and stated a major concern that the owners carry out their responsibilities from the concept stage (at which the so-called “construction” project commences). This highlights the need for the professional practice of project management, originating with the owner. Conditions must be avoided which tend to increase either the risk of error or the difficulty of detecting and correcting errors that have already occurred.

Assurance of the required performance depends on clear lines of authority and responsibility, and effective communication, originating from the owner. This is essential if external professional influences (code of ethics and discipline) or technical controls (enforcement of codes and statutory regulations) are to be effective.

The typical chain of controls on quality requires four components:

  • A standard against which actual qualifications or performance can be measured,
  • A method of measuring actual qualifications or performance,
  • A method for comparing actual and standard, and
  • Decision criteria by which actual is accepted or corrective, and/or disciplinary, action taken.

Controls may operate:

  • Before design and/or construction begin (e.g. professional qualifications, building permit, allocation of responsibility, quality assurance program);
  • During design and construction (e.g. quality control);
  • After design and/or construction (e.g. consequences of liability, professional disciplinary action). After-the-fact controls provide incentive during the work to avoid later ill effects, however they may be less effective than more direct controls.

Technical controls (enforcement of statutory regulations, codes, and specifications) have the most direct effect on quality of project design and then ensuring that construction is performed in conformance with the design specifications. However, for these to be fully effective, there must be two preconditions:

1. Authority and responsibility to plan, design, construct, inspect and coordinate must be clear to all parties working on the project.

2. Those performing and checking the design and construction work must be qualified.

Regulations are unavoidable where safety can be threatened (knowingly or unknowingly), by owners and/or the parties with whom they contract, taking responsibility greater than their capabilities warrant or performing below requirements

The main purposes of any project organization structure are to integrate the responsibilities and efforts of those involved and resolve any conflicts, giving proper weight to public and worker safety.

A framework is needed for regulating the timely assignment of responsibility by the owner to people qualified by training and experience. Some project activities must be performed by the owner, but most may be transferred to consultants and contractors. Applicable responsibilities must be clearly assigned before each project phase so that efforts of the designers and constructors to achieve project safety are not threatened by poor organization.

The regulatory framework would satisfy the two preconditions identified above and assure that the owner initiates professional management of the project from the outset. Of course, assurance does not guarantee elimination of risk. A reasonable balance must be maintained between continual pursuit of risk minimization and acceptable cost. The desired product is effective technical control.

Also, regulating the assignment of responsibility would reinforce any related steps by government. For example the City of Vancouver has taken steps to improve the administration of project technical controls and the communication of project responsibility.

THE ROLE OF GOVERNMENT

The Inquiry called for a Provincial Manual of guidelines for construction practices and which would include some assignment of responsibilities. The Inquiry's insights imply that a step not contained in their recommendations would be needed if timely assignment and communication of the responsibilities which are critical to safety are to be assured. This could take the form of a new “Responsibility Code” to:

  • Lay out specific primary responsibilities for which assignment on each project must be timely and clear,
  • Define qualifications necessary to accept technical responsibilities,
  • Use language suitable for insertion into contracts and employee job responsibilities, and
  • Be enforced through the approvals and sanctions of the permit process.

The objectives of the code would be to;

  • Minimize organizational confusion, especially where the owner's representatives are not regular participants in the construction industry,
  • Reinforce proper assignment of responsibility (whether by contract or to employees), and
  • Dovetail with professional controls (which are being improved as a result of the Inquiry) and with existing technical and regulatory controls.

Good practice in the assignment of responsibility may be covered by a Provincial Manual, but will not be followed voluntarily if many that need to comply with it do not read it or support it. Support may come most readily from those who already follow good responsibility assignment practices and are therefore not the crucial audience for such a manual.

SPECIAL CASE OF THE STRUCTURAL DISCIPLINE

The structural discipline is one of those for which the consequences of failure can be extreme. It is, however, a special case because:

  • Structural design, including foundations, cannot be readily confirmed as satisfactory by comparison to easily interpreted codes, and
  • The capability of the finished structure to meet ultimate performance requirements cannot be fully verified by testing under actual or simulated operating conditions.

The verification problem places the structural discipline as the first priority for the responsibility code. This priority parallels the Inquiry emphasis on structural concerns.

Implementation of a structural responsibility code would provide a useful precedent for other disciplines. An owner who is required to make proper allocation of project structural responsibilities may see the advantage of doing the same for other disciplines, also. However, a responsibility code for more than the structural discipline as a first step would be complex and would delay attention to the safety problems for which the Station Square Inquiry advocates expeditious solution. Similarly, solution cannot be expeditious if it must wait for a Manual to be drafted and then followed voluntarily.

We support steps that are being taken to strengthen the professional letters of assurance for all disciplines. These letters apply to issue of the occupancy permit and support the project technical controls. Similarly, technical assurance would be enhanced by the possibility of independent audit/review of design assumptions and calculations, arranged through local government (if recommended by the engineering profession).

We emphasize coordination and quality assurance responsibilities among (structural) Responsibility Code items as follows:

1. Define and detail the scope of the project and define the structural design requirements and assumptions.

2. Specify a program for structural quality assurance and control.

3. Appoint an individual to coordinate all structural design concerns, including effects on the structure from other disciplines (e.g., architectural, mechanical, plumbing, electrical, elevators, boilers and pressure vessels).

4. Carry out the structural design including changes.

5. Check the structural design assumptions and calculations.

6. Construct/manufacture each structural component.

7. Assure worker safety during construction.

8. Oversee structural quality control and inspection, acceptance of the structure, and coordination of associated documentation.

When responsibility is delegated to a design professional, constructor, or independent manager, it would include the obligation to follow the Responsibility Code.

GOVERNMENT ACTIONS

The Inquiry recommends that the role of government be to receive assurance of proper control by professionals, not to participate directly in project control. Government should have a similar role for responsibility controls, based on the permit submissions and approval process which is in widespread use in British Columbia. It includes a;

1. Development Permit at project inception,

2. Building Permit prior to commencement of project construction, and 3. Occupancy Permit prior to building occupancy.

Local government permit and licensing authorities have the opportunity, and hence the obligation, to obtain evidence that safety is assured.

A condition for issue of a Development Permit would be the owners’ commitment to the Responsibility Code, including timely submission and updating of a report explaining how the code items are to be allocated into contracts or retained by the owner.

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Conditions for issue of a Building Permit would be: demonstration of code compliance through proper assignment of design responsibilities; and submission of details of actual or planned compliance for construction.

Occupancy permit conditions would, on the surface, remain unchanged; i.e. professional letters assuring compliance with quality requirements. However, these would have greater certainty due to being tied to clear responsibility/authority for quality through use of specific wording from the Responsibility Code.

A procedure would be needed for government to verify the full assignment of responsibility to people with the required qualifications. This verification of compliance would not be onerous.

THE ROLE OF THE PROFESSIONAL ASSOCIATIONS

The Inquiry recommendations place specific obligations on the Association of Professional Engineers. Administration of qualifications attaching to a Responsibility Code would add to these obligations as well as those of the Architectural Institute.

Each professional body would have to establish qualifications for acceptance of responsibility and then invoke disciplinary or preventive measures in answer to complaints.

The Engineers are already reviewing structural design qualifications and also the complex issue of whether fees should be regulated. There is no question that the temptation to underperform to conserve mark-ups would be significantly reduced. Nevertheless, the primary control must be on adherence to defined requirements.

THE ROLE OF THE OWNERS

The probability of safety is significantly improved when there is a positive quality and management environment from project inception. Only the owner can initiate this, often with assistance from a consultant. From project inception onwards the owner should delegate overall project responsibility to one person with the title “Project Director”, who may be a different person at different times, and need not be an employee of the owner. (The title “project manager” is often held by several people on a project, and does not necessarily apply to the whole project).

As the project progresses the owner, through the project director, makes organizational decisions; contracts with engineers, architects and contractors; and delegates responsibilities to his own employees.

It is essential that there be proper priorities between project quality, cost and time objectives supported by proper organization from project inception. Otherwise, engineers, architects and contractors may face confusion, voids or inappropriate assignment of responsibility when they first become involved with the project. They may have little power to remedy the situation.

THE ROLE OF THE DESIGN PROFESSIONALS

Project managers may not have expertise in engineering design and construction. Practices must be maintained which the engineering profession is satisfied best protect public and worker safety and which are assured through codes of ethics and disciplinary action.

Of special interest are the profession's recommendations regarding checks on the structural design assumptions and calculations. Where quality assurance, or quality control checks, are to be carried out by an independent engineer this will impact the organization and management of a project. A checking process must be an integral part of the quality assurance program.

THE ROLE OF THE CONSTRUCTORS (including component manufacturers)

Constructors’ communications responsibilities requires receipt and return of information. This involves trades forces (sub-contractors and suppliers), since they can be the first to know when quality does not conform to requirements. Proper allocation of responsibility identifies the person to whom concerns should be brought.

Pressure from an inspection authority can be necessary before some constaictors meet quality requirements. This situation can relate to a conflict of interest with the profit motive. Heavy reliance on inspection must continue.

CONCLUSION

The introduction of controls through a Responsibility Code would induce practices which would significantly improve the conduct of projects which might otherwise be poorly organized. These improvements include effective organization, open communication, a positive attitude toward quality as conformance to properly defined requirements/specifications, and the proper distribution of authority and responsibility.

It is difficult to escape the conclusion that these desirable elements were missing on the Station Square Project. The compounding of errors leads inevitably to this conclusion.

The full allocation of responsibility using clear language, with the support of sanctions administered through the permit process, provides:

  • Local government with a net decrease in workload,
  • Owners with improved probability of project success (although short-term outlays may increase), and
  • Designers, constructors and independent managers with the opportunity to work more professionally and productively.

Implementation originating with the owner, for the recommended (structural) Responsibility Code, would improve management practice on projects. This would reduce threats to quality and therefore to public and worker safety. At the same time it would provide a net benefit to the project participants.

ACKNOWLEDGEMENT

The assistance with the above article from Bob Curry, West Coast B.C. Chapter President, and other members of the Chapter Project Management Issues Committee is gratefully acknowledged.

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PART III - SOME INDEPENDENT VIEWS

The purpose of this section is to present independent observations by persons having no direct interest in this particular incident or the specific professions involved. The objective of these articles is to bring attention to theoretical concepts and alternatives relevant to the incident and the Commissioner's recommendations. These ideas are presented to stimulate further thinking relative to certain aspects of these recommendations.

The opinions expressed are those of the authors based solely on the Commissioner's report and on an in depth knowledge of theory and practice in the respective areas. Each of the concepts are in fact practiced in some industries or organizations.

ORGANIZATIONAL BEHAVIOR EFFECTS

By Jeffrey K. Pinto, Ph.D., University of Maine

The purpose of this article is to analyze some of the commission's recommendations and their implications for the future operations of project organizations. Of specific concern are tlie potential impacts on organizational effectiveness and the project organization's ability to maintain the flexibility necessary to adapt to a dynamic and changing environment.

APPLICATION OF ETHICAL STANDARDS

One of the more interesting aspects of the report is the commission's focus on attempting to adjudicate the activities of all parties involved in new construction except the owners of the buildings. The report rightly points out that owners “who erect buildings on their own land have legal responsibilities to ensure they are structurally safe” (Pg. 41). The report then discusses three new practices that have been emerging in the construction industry over the last few years:

  • Fast-tracking - Beginning actual construction before the design itself is completed. In an effort to save time and money, some projects get under way with only the general layouts completed.
  • Bidding for Professional Services - Owners are increasingly calling for competitive bids from engineering firms. This increased competition has driven down fees and, potentially, the quality of professional services in structural analysis.
  • Fragmentation of Activities - Because of all the parties involved in construction projects and the high level of sub-contracting used, there is a very real blurring of lines of authority and responsibility for specific construction activities.

The report concludes (rightly, in my opinion) that these pressures have had a significant impact on the construction industry and are potentially dangerous for structural safety. However, in discussing the role owners should play in construction safety, the report dodges the central questions of their specific culpability by throwing responsibility for maintaining standards of ethical behavior back into the laps of the professional groups, including architects and engineers. Because, the report contends, owners are not governed by standards of ethical practices and are not a clearly defined group in the community, there is no need to attempt to regulate their activities.

This series of conclusions and qualifications as to the exact responsibilities of building owners raises a number of very real concerns from an organizational theory perspective. The most obvious concern with the commission's conclusions lies in the fact that professional groups, such as architects and engineers, are engaged on a contractual basis by owners who, implicitly or explicitly, determine the standards of behavior expected from these professional groups. To illustrate, consider the owner's practice of encouraging competitive bidding for services. In the interest of maintaining adequate profit margins, there is a strong potential for the organization which wins a contract as the lowest bidder to offer a less costly and less rigorous performance of their services.

In initially offering this recommendation, the commissioner needed to be aware of an important principal of organizational theory, namely, that organizational adaptation and the development and perpetuation of new services occur as the result of external demands; in this case, the demands of the building's owners. The commission would have done well to consider this point. To say that professional organizations should be governed by standards of ethical practices is correct and fair. To suggest that their employers, those who contract for the professional's services and pay their fees, should not be held to a similar level of ethical behavior is a short-sighted and highly questionable conclusion.

RESPONSIBILITIES OF PROFESSIONAL FIRMS

A second recommendation of the commission that has serious and, I suspect, unconsidered implications for project organizations suggests that in addition to the ethical standards required of individuals, companies should face deregistration for unethical or incompetent practice. In effect, rather than punishing the unethical individual within the company, professional firms should be required, through the threat of deregistration, to regulate the behavior of their members.

This recommendation has the advantage of ensuring that firms adopt company-wide standards of ethical behavior and, further, that they regulate and police themselves. A possible disadvantage (from the point of the architectural or engineering firm) lies in the strong potential for over reactions (beyond good engineering practice) resulting in significantly increased lead times required for the completion of activities by professional groups. To illustrate, as a result of this commission recommendation, many firms would find it prudent to install committees of review for every piece of contracted work performed by members of the company. Rapid turnaround of designs and specification checks, so important to many developers and building owners, would be largely impossible under the new approach.

CREATION OF A MANUAL OF CONSTRUCTION PRACTICES

A final recommendation of note has to do with the practices and procedures engaged in by construction firms. The commission report points out that because of the “fragmentation” discussed above, lines of authority and responsibility tend to blur, with the result that contractors and engineers are responsible for the work of others, often without guaranteeing adequate checks of the quality of materials provided and the construction performed. As a result of the problems inherent in fragmentation, the commission report suggests the creation of a manual of recommended construction procedures and practices. The intent of the manual would be, in effect, to standardize the activities of the various sub-contracted groups and make clear the lines of authority and responsibility for all activities.

This recommendation has the benefit of ensuring that there is little likelihood that minor, sub-contracted work can “fall through the cracks.” That is, by maintaining performance specification standards and clear lines of responsibility, it is unlikely that different project groups will be unaware of their responsibilities and the activities of other groups—a major contributing factor in the Station Square collapse.

From an organizational perspective, one implication of this recommendation for creating a manual of standard practices is the potential impact on the professional commitment levels of a project organization's members. Standardization, as a practice, is a well-recognized means of regulating the behavior of the organization and its members. For years, bureaucracies have been set up on the principle that behavior can and should be regulated as a means of ensuring that activities are standard, uniform, and predictable. The major drawback of the bureaucratic approach has been the consistent finding that when rules and procedures are established to regulate operating decisions, there tends to result a concomitant over-reliance on the use of these procedures for every situation, no matter how inappropriate. Standardization eliminates accountability, thus reducing an organizational member's professional commitment to a project.

A second potential drawback lies in the use of standardized practices in a rapidly changing environment. The obvious implication of the development of a set of standard practices is to decrease the flexibility of the organization to respond to external threats and opportunities, particularly in addressing innovative or non-traditional projects. The manual has never been created that anticipated future changes or allowed project managers to consider new or different approaches to performing their job. It is a pity that the commission did not consider the implications of this recommendation for the long-term viability of project organizations.

In anticipating the potential impact of increased bureaucratic controls on project organizations, tlie commission would have done well to consider the events transpiring in several of the “Eastern Bloc” countries, including the Soviet Union. The world is currently witnessing the collapse of the bureaucratic model—with its emphasis on centrality of control and standardization—fueled by its failure to allow for innovation and change in response to external forces. Historically, bureaucracies have proven incapable of anticipating or even keeping up with changes in the company's external environment.

I wish to make clear that there are some advantages to the development of a standardized manual for construction procedures. The commission makes a strong case for the potentially adverse effects resulting from the fragmentation of the construction industry. A manual of procedures could, at the very least, define the lines of authority and responsibility for the various subcontractors. The commission needs to be aware, however, that an over-emphasis on the creation of a manual of construction practices represents a short-term quick fix at the expense of long-term solutions. Certainly, it is desirable to standardize those activities which require “sign-offs” from appropriate professional individuals (engineers, architects, etc.). On the other hand, over-reliance on the use of standardization in all aspects of construction practices is potentially damaging to the long-term viability of construction organizations through discouraging innovation and adaptability.

IN SUMMARY

The commission of inquiry has performed a complex task in a generally thorough manner. They have proposed several recommendations for improving the operations of professional and construction firms in an effort to ensure that disasters like the

Station Square collapse do not happen again. It is unfortunate that, in performing their tasks, the commission did not see the usefulness in consulting individuals who could have offered advice on the potential impact of their recommendations on project organizations. The commission needed to be made aware that the specific recommendations they have proposed have important implications for the organizations and their ability to adapt and operate in a dynamic and changing workplace. This section was intended to offer an organization theory perspective on the findings of the commission of inquiry; in effect, to make the commission aware that suggestions offered to improve specific aspects of construction firms’ operations may have added undesirable side effects that the commission has not considered and project organizations are currently not in the position to address.

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RESPONSIBILITY FOR QUALITY IN A PROJECT

By Tim Kloppenborg, Assistant Professor, University of North Carolina - Charlotte Francis M. Webster, Associate Professor, Western Carolina University

The Inquiry Commissioner quite correctly focused recommendations on improving the safety of the product of a project. The purpose of this portion of the examination of the incident and the subsequent recommendations is to clarify the opportunities for managing the overall quality, including safety, of the product of a project in light of recent developments in quality management in industry in general.

MODERN QUALITY MANAGEMENT

The management of quality has been, for the last decade, one of the most dynamic areas of concern in many industries. In volume production industries, the relevant measure of defects has changed from percent (parts per hundred) to ppm (parts per million). The “costs of quality” have been reduced from 15 cents to only 3 cents out of every sales dollar. These statistics can easily be misunderstood because the “costs of quality”, or really the costs associated with trying to achieve quality have changed dramatically during the decade. While we have traditionally accounted for only those costs associated with quality control, the “costs of quality” is a much broader concept today resulting in magnitudes which are startling at the least. The above numbers seem small when expressed in cents but when seen as $15 million out of a $100 million project, the magnitude of the Station Square development, it is easily seen as potentially greater than the profit from such a job. Thus, not only must the objective of the Inquiry be to ensure the safety of the public but to also permit the realization of the savings available from the approaches of modem quality management (MQM).

It is necessary to recognize exactly how such savings are realized in company after company in the volume production industries to understand how it can be achieved in project oriented endeavors. There are four basic costs of quality—internal failure, external failure, appraisal, and prevention.

The failure costs include costs of correcting defects during the project, as well as, after project completion. The costs of prevention and appraisal include quality control and inspection but go beyond conventional concepts of even these areas.

Under the classical approach to quality, failure costs have typically been 80% of total quality costs, about equal between internal and external. By this experience then, these could have been a total of about $12 million for Station Square. Appraisal and prevention have accounted for about 10% each, or perhaps $3 million for this development. After complete installation of MQM, experience has shown that the total amount spent for appraisal and prevention is actually reduced somewhat but the failure costs are reduced dramatically. Thus, it is conceivable that quality costs might have been as little as $3 million, a savings of $12 million on this project.

The definition of quality has changed from “fitness for use” to “conformance to requirements/specifications.” The rationale for this is well documented in “A Case History” in Chapter 4 of Quality is Free [1, pp. 41-49] · The implications of this change are somewhat more subtle, however, and require more consideration than is appropriate in this article. Some essential concepts of MQM are that:

  • Quality cannot be inspected into a product, it must be designed in.
  • To achieve quality output, attention must be focused on the process, i.e., process control, and generally statistical process control.
  • The standard for quality is zero defects. To expect less is to ensure that less will be achieved.

To control the process then it is necessary to focus on the process using a systems view. The systems view is generally described in terms of “Input — Process — Output.” In the past, the Focus has been on the input and the output with too little attention paid to the process. MQM focuses on the process, understands its variability, reduces the variability, and measures the output of the process to ensure that it stays in control. This is especially complex in projects due to the difficulty of establishing standards by which to manage change itself, the inherent characteristic of projects.

THE MANAGEMENT OF CHANGE

Indeed, it is this very characteristic which creates the dilemma in the Station Square project. While the mission of this effort was to change the nature of a piece of real estate to create a major commercial development, it was the changes in the requirements defined for this development which lead to its difficulties. This is a paradox of project management, i.e., the management of change, that changes of any kind in the project are most likely to lead to difficulties in the project.

The standard method for managing changes in the requirements in a project is “change control.” A properly designed change control system provides careful checks and balances on all changes whether they be requirements, methods, materials or assumptions. Change control systems tend to be very formal in large organizations. They are more likely to be informal the smaller the organization. This appears, based on the information in the Commissioner's report, to have been a major problem at Station Square. Significant changes in requirements were followed by significant changes in assumptions with less than adequate checks and balances. Even two reviews of design calculations and assumptions failed to bring these errors to light. Thus, a possible recommendation might have been to require that a more formal change control and documentation (as built) system be used on all projects involving “major buildings” as defined by the Commissioner.

STANDARDS

The failure of the design reviews suggests that more rigor was needed in this process. This must be approached cautiously lest the reviews and process control increase the costs and time required for the design process in a prohibitive manner. A deceptively simple solution to this is to develop manuals of recommended practices, standard documents and practices, and predetermined methods. While these have the obvious advantage of ease of administration and avoidance of risk, they have some inherent disadvantages.

As pointed out in a companion article in this .set, such an approach tends toward bureaucratization and rigidity. While such standards are certainly appropriate, care must be exercised in their prescription. To rigidly define responsibilities at the macro level is sure to reduce flexibility, innovativene.ss, and creativity in adapting to the changes in technology, requirements, and opportunities in the future.

The costs and time for applying such standards can be .substantial and different standards are often conflicting. What can be overlooked, however, are the chances that excessive dependency on such standards can lead to a “mental laziness” which results in failure to check for effects of interactions in a specific design. An approach is needed which avoids excessive costs and time and provides the highest possible assurance of identifying the really serious consequences of errors. Such an approach is well documented and practiced in many organizations today.

THE INDEPENDENT QUALITY ASSURANCE MANAGER

An independent quality assurance manager must ensure that work performed on a project conforms to an array of standards while not incurring exorbitant cost. Some of these standards are client requirements, guiding physical principles, legal requirements, specifications, and drawings. To ensure that quality standards are met, a quality assurance manager must both design a process in an appropriate level of detail and use that process to control quality. The following four step approach can be used to both design and control the appropriate process for meeting quality standards on projects. The steps are;

  • Identify the relevant quality issues for the particular project.
  • Categorize the issues according to their levels of importance.
  • Audit the process to determine whether the standards/specifications are met.
  • Use information regarding any deviations from standards for the twofold purpose of correcting the immediate problems and preventing a reoccurrence from happening.
images

Figure 1 - Potential Quality Problems: Probability vs Consequence

IDENTIFY POSSIBLE QUALITY PROBLEMS

The potential quality problems can be considered according to the probability that they will occur and the consequences if they do occur as shown in Figure 1. [2, p,194 ].

CATEGORIZE THE PROBLEMS

The second step in managing a quality process is to categorize the quality problems so that conformance with quality standards can be maintained at a low cost. If all quality problems were treated the same, the cost of 100% inspection would be prohibitive. Yet it certain types of quality failures occurred, the results could be catastrophic. Therefore, potential quality problems should be categorized in such ways that facilitate the economic attainment of quality standards. These problems can first be categorized according to the level of consequences should they occur. The potential quality problems can be categorized as to consequences using the following four seriousness classes as follows.

“Class I. Negligible. Will not result in personnel injury or product damage.

Class Π. Marginal. Can be counteracted or controlled without injury to personnel or major product damage.

Class III. Critical. Will cause personnel injury or major product damage, or will require immediate corrective action for personnel or product survival.

Class IV. Catastrophic. Will cause death, severe injury to personnel, or product loss.” [2, p. 197]

Next, the causes of the potential quality problems should be identified using techniques such as Failure Mode and Effect Analysis and Fault Tree Analysis [2, p. 183 & p. 197]. Generally, as shown above, the potential problems will have different probabilities of occurrence and, therefore, must be sought out with differing intensities.

A project manager is often faced with making tradeoffs between cost, schedule, and performance. The logic behind Figure 1 can be used to help a project manager decide whether to make performance tradeoffs. Negligible technical performance issues (Class I) > might deal with issues such as aesthetics or minor rework. The consequences of these could often be accepted even though the probability may be high. Marginal quality issues such as level of achieving non-critical specified performance can sometimes be accepted. As quality defects move toward the catastrophic consequence end of the spectrum (Class IV), they should never be compromised.

The consequences of quality problems can be viewed along several different dimensions. One dimension is the clarity of problem definition. A poorly understood problem has a greater chance of having unexpected consequences and, as such, should be considered quite seriously. To ensure proper recognition of consequences any tradeoff affecting quality should be accomplished by rewriting the specifications rather than failing to meet them.

Another dimension is the function of a particular part, assembly, or system. Any part of a building that is overhead (such as the parking deck) is more prone to causing a catastrophic problem than an area that is underfoot. Likewise, other specialties on a project (such as electrical or high pressure gases) have potentially serious problems.

A third dimension to consider in looking for quality problems is the process of designing and producing the project. Certain design activities are more critical than others. For example, the calculations and assumptions used to determine the sizes and strengths of the structural elements were highly critical.

Yet another way to consider potential problems is their systemic effect on a project. One type of systemic problem is how different subsystems interact with each other. Another type of systemic effect is how the build-up of multiple small problems results in a large problem. Both of these systemic effects occurred on the Station Square project as changes in the parking system interacted with the structural system. Further, systemic problems can be in the customary way of performing tasks. The sidewalk contractor, accustomed to being penalized for underbuilding, erred in favor of over building. The variability of the process was too great and failure resulted.

AUDIT THE PROCESS

The next step is to audit the process to determine whether quality standards are being achieved. There are several methods of auditing the process including peer review, preaward surveys, postaward conferences, self inspection, etc. Regardless of the auditing method that is used, a process must be devised to determine which quality standards to inspect and how frequently. As stated above neither 100% inspection nor simple random sampling is cost effective. What should be used instead is stratified random sampling similar to that shown in Figure 2.

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Figure 2. Sampling Frequency vs Potential Quality Problems

This is actually a variation of stratified random sampling since it prescribes 100% inspection for catastrophic problems and progressively less inspection as the consequences of failure decrease. Since the probability of failure is highest for Class I failures, the smallest sample sizes are required to detect these problems. As the seriousness of the consequences increase the probabilities of them occurring decrease. Therefore, greater precision is required in sampling to identify them. Class IV failures, although potentially catastrophic, seldom have high probabilities. Therefore, 100% inspection is probably warranted.

The viability of the concept of random sampling has been recognized as a practical tool in accounting for nearly three decades as indicated by the discussion of it in a popular cost accounting text [3, pp. 746-61]. The advantages of stratified random sampling are also well documented in texts on sampling techniques [4, pp. 65-110]

FIX THE PROBLEM AND THE CAUSE

The final step is to use the knowledge of quality problems to correct mistakes and to prevent the same problems from happening again. One aspect of prevention is to maintain discipline and ethical standards within the profession. Competitive pressures can erode these standards, however, so it is essential to follow one of the central precepts of quality assurance, i.e., separation of responsibility.

A major requirement of the Nuclear Regulatory Commission imposed on all projects under its supervision is that the Quality Management function cannot report to the position which is responsible for performing the work. While the work on Station Square is not as critical as that on a nuclear power station, neither is the complexity of the quality assurance function. Thus, an individual not otherwise associated with performing the work of the project could provide this function in a manner consistent with this requirement for separation of responsibility.

SUMMARY

Many organizations are turning to modern quality management methods to deliver quality products at reasonable cost. As an example, the Department of Defense (DOD) has recently adopted a total quality management approach in dealing with contractors. The emphasis has shifted from inspection of final output to analysis of the production process in order to identify the causes of quality problems. There are high hopes that this shift from old to new quality approaches will lead to better products at lower cost. If a large bureaucratic organization like the DOD can effectively use modern quality approaches, small contractors should easily be able to adjust to these ideas and benefit handsomely.

BIBLIOGRAPHY

1. Crosby, Phillip B.. 1979. Quality is Free. New York: McGraw-Hill.

2. Juran, J. M., & Gryna, Frank M. Jr.. 1980. Quality Planning and Analysis, 2nd Ed., New York: McGraw-Hill.

3. Horngren, Charles T. 1962. Cost Accounting, A Managerial Emphasis. Englewood Cliffs, N. J.:Prentice-Hall, Inc.

4. Cochran, William G.. 1953· Sampling Techniques. New York: John Wiley & Sons, Inc.,

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Socio/Economic/Political Implications

By Fred Thayer, Professor, Graduate School of Public and International Affairs, University of Pittsburgh, Pittsburgh, Pennsylvania

In the case of the Station Square roof collapse, it is not necessary to range far afield in a search for underlying causes. So far as I can determine, these words are the only words in boldface type in the Final Report of the Inquiry Commissioner:

The three practices -- fast-tracking, bidding for professional services and fragmentation...cause me a great deal of concern, (p. 42)

In this brief commentary on the “Socio/Economic/Political Implications” of the tragedy, I shall build upon the Commissioner's conclusions, indicating why I think his analysis, while on the mark, did not go far enough in exploring the underlying problems— problems I take to be increasingly universal, indeed inevitable, when competitive bidding and contracts are combined.

PRESSURES OF COMPETITIVE BIDDING

From my perspective, the stage was set for disaster very early on. When eight bids were received on the structural engineering work, the third lowest bidder ($20,500 for a 5.4 million building) was chosen, perhaps because the owners considered this firm more qualified than the others (the Commissioner gave no reason for the choice). More to the point, the winning bid was “negotiated down to $17,000, perhaps because the owners assumed that the winning bidder had overstated costs, the lowest bid was the correct price (even though the bidder was rejected), or both. This initial and relatively petty form of corner-cutting flew in the face of what is widely known among those associated with competitive bidding practices.

If the bidding process is conducted according to normal rules (sealed bids, no discussion among bidders and assuming comparable technologies by all bidders), each bidder knows that he can increase the probability of winning the contract by planning to do less work than is reasonably required or lying about the cost of doing that work.

Once a lower price is forced upon a bidder who initially presented a higher cost, it follows that the “successful” bidder will feel compelled to cut costs. This may be done through better methods and techniques. Failing that, there is a strong motivation to do less than first-rate work (in the form of shoddy supervision, inattention to details, or countless other ways) in order to make up for the cut-rate price (a 17 percent reduction in this case). If the winning bidder had not consented to a lower price, the owners might well have chosen another engineer.

In the absence of collusion or bid-rigging among construction companies (the Commissioner gave no such indications), the choice of the lowest bidder among six construction companies makes a supra facie case that the winner understated the costs of doing a good job. The entire project, therefore, was launched on a cut-rate basis and, as the Commissioner implied, this widespread use of competitive bidding (especially among engineers) may be driving prices to dangerously low levels. Under the very best of circumstances, this form of all-out competition leads more often than not to collapsing bridges, roads and buildings, but “fast-tracking” and “fragmentation” were then added to this dangerous stew.

FAST TRACKING

“Fast-tracking” (p.4l) occurs when construction begins before design is complete, and “fragmentation” (p. 42) refers to the spreading of work and responsibility among numerous contractors and sub-contractors in a situation where both owners and prospective tenants (a super-market in this case) constantly are thinking out loud about possible design changes or directly proposing them to architects, engineers, construction companies, subcontractors of all three, and anyone else who happens by. One such change, that apparently involved no consultation at all with the consulting engineer, widened the sidewalk with solid concrete rather than with a styrofoam core, adding significantly to the load over that anticipated on the roof and that was “a contributing factor to the eventual collapse” (p. 4).

The Commissioner correctly noted the confusion and inadequate coordination and consultation among contractors, subcontractors, owners and tenants, but suggested (incorrectly in my view) that the problem could be solved by a return to a system of “prime contracting” in which one firm retains total responsibility for the entire project. This yearning for a centralized hierarchy tends to overtook, I think, the problems of subcontracting.

SUBCONTRACTING

The fascination with “subcontracting” is only a superficially attractive version of “piecework” or, at its ultimate, hiring workers from any “temporary help” agency. Why have any full-time employees in any organization if they can all be replaced by those who will be paid by the hour, the day or the job? This pursuit of the Holy Grail of “efficiency” is increasingly popular because those who let contracts need not worry about “fringes” (health, pensions). And, so long as economic activity can be kept suppressed so as to depress inflation by depressing wages, salaries and professional fees (a policy of both Canadian and U.S. governments, widely supported by economists of all ideological persuasions), the “sovereign consumer” and “sovereign taxpayer” can be promised the “lowest price” and the “lowest tax.” In this world of runaway pursuit of “efficiency,” it becomes impossible to operate an effective system of “coordination,” “consultation” or “teamwork.”

Generally speaking, any one contract involves only two parties, and the “responsibilities” outlined in each contract are, by definition, much narrower in scope than are actually required. Indeed, a contract constructively prohibits each party from moving beyond the narrow limits of the contract itself. Each party must remain constantly aware of the fact that legal and financial responsibilities may ultimately be subject to litigation, and that only the contract language will govern. In this case, twelve individual subcontractors were involved in the roof structure alone, so that one can only imagine the impossibility of detailed coordination when every contract is, legally speaking, an isolated two-party agreement (p. 42).

This problem, of course, is greatly magnified by “fast-tracking,” because owners and prospective tenants are likely to spend their time looking for “add-ons” that will not involve new costs. In the U.S., officials at the National Aeronautics and Space Administration (NASA) recently worried out loud about the virtual removal of civil service capabilities in the agency. The widespread practice of “contracting out” had left the agency with not enough in-house ability to even supervise all the contractors and subcontractors. The costs of adequate supervision are seldom if ever included when economists calculate the “efficiencies” of contracting out.

Many such problems are often attributed to “greed” or runaway “profit motivations,” but this amounts to a too easy acceptance of standard economic theories. The problem, I fear, is not in the people but in the system. In a “normal” competitive bidding situation, contractors are under enormous pressure to do “cut-rate” work, to mistreat employees via traditional “speed-ups,” and to hope that they will not make mistakes sufficient to cause the deaths of innocents. If they are lucky, they will not get caught, but they will not make huge profits. If they are unlucky, they will go to jail, a fate which perhaps should befall the economic theoreticians who profound these spurious concepts of “competition.”

WHISTLE BLOWERS?

Nor would it be helpful, in a world increasingly dominated by dog-eat-dog competition, to rely upon government protection for “whistle-blowers” who will step forward with evidence of managerial abuse and cheating. In this particular case, a careful reading of the Commissioner's Report convinces me that nobody was fully aware of the dangers, hence there was not even a potential “whistle-blower” available. The problem, to repeat, is in the system, not in the people. What then can be done?

WHAT IS THE SOLUTION?

The Commissioner, in the most powerful section of his analysis, provides both a sound conclusion and a sensible first-step proposal. Having dissected the initial proposals made by structural engineer, he decided that “all companies did not intend to provide the [necessary] services with the same degree of diligence” (p.50). Using conservative estimates of the worth of engineering services ($50 per hour), he calculated that the amounts of services the bidders could provide varied from 260 to 640 hours, (“negotiating down” wiped out 70 hours of engineering services out of the 410 hours estimated by the winning bidder) and he also concluded that “failure to carry out some of the [necessary] steps with unhurried precision led to this event ... the situation ... simply cannot be tolerated.” Using standard factors, that is to say, the low bidder could have delivered only 40 percent of the services that the high bidder could have delivered. If the Commissioner could figure this out, those awarding contracts could have done the same. Why didn't they?

The agencies that award contracts, public or private, are under great pressure to accept low bids (usually a matter of national policy and accepted economic theory), to seek credit for keeping their budgets in check, and to take comfort in a contractor's acceptance of legal responsibility for meeting specifications. If the system incites bidders to lie in order to win contracts, it virtually compels awarding agencies to avoid the simple calculations the Commissioner performed.

The Commissioner's recommendation was that the British Columbia Legislature authorize the Association of Professional Engineers of British Columbia “to enforce a schedule of minimum fees, to be approved by the Lieutenant-Governor-in-Council” (p.50). This practice had been in effect before 1976, when the federal Competition Act barred such “service” groups from “price fixing.” The Commissioner noted that the federal authorities are reluctant to take action against fee schedules when provincial legislatures authorize the practice. The relative political strength of Canadian provincial governments (U.S. state governments are weaker) is responsible for this, but the Commissioner recommended this method of bypassing national “competition policy,” admitting in effect that while the Holy Grail of competition policy was obvious nonsense, it status in federal policy could not easily be removed.

LEGALIZED COLLUSION

In economic parlance, the Commissioner recommended that engineers be permitted to engage in “collusion” or a “conspiracy” in order to “fix prices” for their services, and that the government should support the engineers when they punish individual members for deviating from the price standards. “Collusion” and “conspiracy,” in other words, are far superior to normal competitive bidding, and therein lies yet another tale.

Government agencies in the United States spend countless millions investigating “collusion,” “conspiracy,” “bid-rigging” and “price-fixing” in all sorts of industries ranging from local dairies that furnish milk to schools to defense manufacturers who produce expensive weapons. Contractors are regularly indicted, held up to public ridicule, convicted and thrown into already overcrowded jails. (As this is written, a new investigation in this city, Pittsburgh, Pennsylvania, focuses on “conspiracy” in contracting for demolition contracts). Yet these “conspiracies” exist because they are the only reasonable way to ensure effective contract performance within the contemporary world of chaotic competitive bidding. “Conspiracy” and “collusion” are synonyms for planning, and the Commissioner recommended only that the “schedule of minimum fees” for engineers be subjected to public review. Obviously, all contracts should be awarded in processes that might be described as “legalized open collusion to fix prices and divide business, as a matter of public interest.”

The British Columbia Commissioner probably was vilified for making his modest recommendations, especially by the economists who have spent their lives nurturing the absurd myths of their discipline. Most of the economists I know well are quite decent people but, as professors with tenure, they fully understand the benefits of restrictions on all-out competition, even though the restriction have the effect of raising tuition (prices) for students. The high tuition is justified in the service of quality but, as the Commissioner noted, “this even [roof collapse], but for an incredible stroke of luck, would have had consequences too ghastly to contemplate, (p.50).

Nominating Committee Seeks Candidates For Election to 1991 PMI Offices

There are four officer positions open for election:

President

Vice President-Public Relations

Vice-President-Administration

Vice-President-Region II

Individuals must send suggestions for nominees or statement of intent to Chairman, PMI Nominating Committee. An election packet will be provided to each selected candidate.

All nominations and candidate information must be received no later than May 15, 1990.

Please address all nominations and inquires to:

Douglas S. Egan Jr.

Chairman, PMI Nominating Committee

P.O. Box 110

Ardmore, PA 19003

Refer to the election announcement in the November 1989 PM NETwork page 39, for complete position descriptions and PMI Candidate Policy.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

February 1990

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