Category: Construction Audit & Advisory Services

HPM Bolsters Presence in Key Markets with Round of Strategic Hires

Posted on January 14, 2022

Following a year of growth, Antonio Fratangelo, Jake Ortego and Jalal Slade to significantly broaden the firm’s offerings across several service lines.

We are pleased to announce the hiring of industry veterans Antonio Fratangelo and Jake Ortego as principals in the audit and contract services division and Jalal Slade as director of program development. Working alongside HPM Vice President of Audit and Contract Services Vinson Chapman, Fratangelo and Ortego aim to expand the division’s capabilities and service offerings for clients while expanding the firm’s geographic reach. Slade works to broaden the firm’s presence in the Metro Atlanta market, providing strategic leadership while cultivating new client engagements and strengthening existing partnerships.

Natives of Pittsburgh, Fratangelo and Ortego join the firm with a combined 45 years of experience in audit, engineering and construction project management. Throughout their careers, they have led both design and audit teams on real estate and construction projects totaling more than $2 billion. In 2014, they co-founded JA Cost Engineers and Advisors, an advisory agency providing construction auditing, management consulting, risk management and additional services for construction, development and capital improvement projects.

Antonio Fratangelo, Principal, HPM Audit and Contract Services

“Our combined passions for construction and backgrounds in engineering have equipped Antonio and me with the unique skill sets needed to assist clients along every step of a project timeline,” said Ortego. “Antonio and I have worked together for the majority of our professional careers, establishing a proven process that became the core of our firm. We look forward to bringing this shared expertise to HPM and expanding our abilities to offer a wider range of services on a larger scale.”

Fratangelo and Ortego will join the team led by Chapman, who began HPM’s audit and contract services division six years ago. Chapman previously worked with Fratangelo and Ortego on a high-profile project totaling $4B for a large tech company.

“When I knew the client needed our assistance with this massive project, Jake and Antonio are the experts I immediately turned to in order to help get the job done,” said Chapman. “They are well respected within the construction audit and cost control industry and possess a range of knowledge highly beneficial for program management. Their capabilities are exactly what HPM needs to round out our continuum of services from program development to project management and beyond.”

Jalal Slade, HPM Director of Program Development

The firm also hired Slade as director of program development in HPM’s Atlanta office, set to lead program and business development initiatives in the market. Slade has an extensive background in municipal and aviation projects within Atlanta, having previously served as assistant general manager of the Hartsfield-Jackson International Airport, where he oversaw the construction and delivery of an $8 billion capital improvement plan. He also worked as senior policy advisor for the Office of the Mayor, providing oversight and management for the city’s real estate asset holdings. He works to align HPM’s internal goals with its clients’ goals, offering leadership and expertise for project teams across all of the firm’s industry verticals. He also aims to build on HPM’s existing client relationships while forging new connections within the market.

“Heading into 2022, we look back on a year of immense growth for our firm,” said Ryan Austin, president of HPM. “With the additions of Jake, Antonio and Jalal, I am confident we are continuing this positive trajectory with the best possible team leading the way. This is an impressive group of people with a number of diverse, large-scale projects under their belts, and our firm is in good hands as we look to even more success in the new year.”

We’ve been named one of the Best Medium-Sized Companies to Work For in America by Great Places to Work multiple years running. Interested in joining our team? Learn more by clicking the button below.

Careers at HPM

Should You Consider a Specialist for Your Construction Audit?

Posted on October 27, 2021

By Vinson Chapman, Vice President, Construction Audit & Advisory Services

Auditing construction contracts can be complex. The expertise involved is significantly different than typical audits performed by CPAs and involves evaluating subjective estimates, identifying ambiguous terms of the contract, and noting contractual incentives where the owner’s and the general contractor’s interests may not be aligned. A construction audit also requires obtaining and evaluating all the appropriate evidence to support the audit findings. This is not legal work or work performed by an architect.

A detailed analytical review of completed contracts and contracts in progress will provide meaningful information and focus on potential problem areas. Our Construction Audit & Advisory Services combine the skills of owner’s advocate, owner’s representative, program manager, and construction auditor.

Case Study Example

In the case of one independent K-12 school district in northeast Texas, the review of an extension of time by the general contractor/CM and a general financial audit required the expertise of HPM’s hybrid Contract Services, which included both project management and audit expertise.

When the GC/CM fell behind on schedule, their default was to request additional time through weather delays in order to avoid liquidated damages and redirect attention to the reality of the problem areas.

The project management audit review of the contract language and the potential weather impact on the critical path of the schedule resulted in the following:

The contractor did not provide the required documentation during construction for their intent to make a claim for more time per the contract.
The contractor did not provide evidence that there were abnormal (greater than average rain days) periods of weather. This data is measurable and a typical required deliverable in a change order request by the GC/CM.
The contractor’s critical path schedule was not affected by any claimed abnormal weather after review of the installation of work.

Project management issues were the reason behind a significant portion of the Contract Services Audit resulting in a credit back to the school district from the General Contractor/CM. Additional monies were recovered from the financial audit resulting in a total of over 5% of the construction contract value being returned to the district.

This example is somewhat typical of our standard audit findings of between 1% and 5% of the contract value. Obviously, savings of this type are well in excess of the fee to perform these hybrid services. The expertise for these services was not available from the district’s attorney or architect, and without the added HPM support, the district couldn’t defend the GC/CM’s requests. Our specialized knowledge and experience made it possible.

HPM provides peace of mind and confidence you paid the right price for your construction spend.

HPM’s audit service professionals offer expertise to secure fair negotiation and billing for client contracts. We perform comprehensive reviews of job costs that often lead to a substantial net savings of project costs. As always, if we can be of service, please do not hesitate to reach out. Click the button below to be directed to our page.

Construction Audit & Advisory Services

HPM Talks Webinar: GMP Contract Negotiations: Recognizing and Understanding Potential Conflicts of Interest

Posted on November 11, 2020

In this HPM Talks, Vince Chapman, Vice President of Audit and Contract Services, talks about GMP Contract Negotiations: Recognizing and Understanding Potential Conflicts of Interest.

As an owner, when you are negotiating the terms of a Guaranteed Maximum Price contract with a construction manager or general contractor, you need to be aware of the CM/GC’s conflicts of interest. Vince examined these hidden conflicts and discusses possible solutions to these issues.

This talk focuses on conflicts due to:

– CCIP: Contractor Controlled Insurance Programs
– SDI: Subcontractor Default Insurance
– Self-Performed Work

Each of these above items has built in conflicts of interest for a CM/GC being completely transparent about the additional enhanced CM/GC fee potential. Understanding the nature of each and the various situations that may arise is key in allowing the owner to make a good decision and to negotiate the best GMP contract possible.

Download the Presentation

View the Recording

Speakers:

Vince Chapman
Vice President, Audit & Contract Services, HPM

Vince provides 100 construction audits a year for industry leaders such as Google, FedEx, Hewlett-Packard, Caesar Entertainment, Sutter Health, Genentech, Southwest Airlines and NVidia. He provides services to virtually all industry segments such as K12 education, healthcare, hospitality, sports, airlines, pharmaceuticals, higher education, oil and gas, high-rise residential and office/retail development. In the last 30 years, Vince has managed thousands of construction audits from Canada to Mexico, the Caribbean, Europe, Africa, and in virtually every major city in the continental USA.

HPM Rises to Top 25 on ENR’S Program Management Firm List

Posted on July 21, 2020

Unique standard of personal client care and the hiring of top-level talent moves HPM up 20 spots.

HPM made the top 50 on Engineering News Record’s (ENR) program management firms list for the fifth year in a row, but even more exciting is the jump we made in the ranking. HPM rose from number 42 to 22, and while we are certainly proud of this success, we recognize that it was not built overnight.

HPM’s team members located across the U.S. made this happen by building on the strategic efforts of the last five years. We have restructured our organization for success, growth, and versatility — ensuring that the best people are available to each client.

There are several strategic moves we’ve made to build this company on the service and expertise as owners’ advocates and representatives. About six years ago, HPM acquired the audit and contract services firm of Vince Chapman. He and his team provide a comprehensive approach to new and existing clients, serving all aspects of their needs for construction cost auditing and compliance services.

Greg Ellis began building a program development division based on a solid preconstruction team led by Del Buck – who in turn surrounded himself with an army of experts in estimating and scheduling as well as in subspecialties. Greg also has established a team of program development managers who provide the necessary bridge for clients who are considering capital expenditure programs and guiding them on how to define and initiate those programs. HPM moved even further left by hiring facilities planning expert and respected industry veteran Tracy Richter to lead the firm’s new Planning Services division, a move that bolsters and expands our service offerings while extending relationships with clients representing more than a dozen industries.

Last but certainly not least, we have redefined our business development and marketing strategies to be laser-focused while remaining nimble and adept at our pursuits into new industries and markets. We’ve continued to explore new ways to diversify our portfolio of clients and optimize our expanded services.

We are honored by this great recognition as being one of the top program management companies in the U.S.

“We are so appreciative that our clients continue to trust us to represent them by leading their capital building programs,” said HPM President Mike Lanier. “This recognition highlights the outstanding performance and effort of our employees across the country.”

HPM Talks Webinar: Reducing Risk on Construction Projects

Posted on May 21, 2020

Reconsidering Owner’s Acceptance of Subcontractor Bonds or Subcontractor Default Insurance During a Pandemic

As we all continue to navigate the effects of the coronavirus (COVID-19), Vince examines how owners need to take a second look at the need of their projects carrying costs for bonds for subcontractors or SDI in order to mitigate risk to construction projects. Don’t leave it up to your general contractor to make these decisions for you during these uncertain times.

In the COVID-19 environment, have you considered the increased risk of subcontract default due to:

• Loss of Productivity?
• Skilled worker impacts such as those who become ill or those who fear working around groups of people?
• Increased project costs due to non – compensable delays?
• Reduced revenue from canceled or delayed projects?
• Owner or project insolvency?

Each of these effects contributes to the overall health of subcontractors which compounded could have far-reaching impact on the success or failure of your construction project. Register today for this complimentary webinar geared toward owners of construction projects. Seats are limited and are available on a first-come, first-served basis.

Watch the Webinar

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What’s In Your Contract?: Subcontractor Procurement Strategy

Posted on May 15, 2020

HPM’s Audit + Contract Services team recently started a monthly blog series authored by one of our in-house subject matter experts – all of whom have decades of expertise providing advice on construction audits and contracts to companies and institutions throughout the US.

This second in the series features Valerie Rogers, Senior Auditor. Valerie serves owners in the areas of contract negotiations, pay app reviews, calculations of scheduled damages, claims analysis management and defense, and interim and final audits for reimbursables, fees, and savings allocations. You can reach out directly to Valerie at vrogers@hpmleadership.com or 817.941.1642.

General contractors (GCs) and construction managers (CMs) will usually prepare bid packages and a request for proposal (RFP) to be sent to prospective sub-bidders (subs) for selected scopes of work. These RFP’s will typically ask for a fixed price for performing the work. These RFP’s also will often ask for additional information from the bidders, such as corporate financial and safety related information. Sometimes, and much too often, the CM will ask the subs to quote the fees they want on change orders (COs) or ask the subs for their labor rates to be used on COs.

This later type of information is almost never used in the selection process but is nevertheless later inserted into the subcontracts as a unit cost to be used if COs occur.

Most owner contracts contain language as to how COs are to be priced. Labor, material, and equipment costs of a change is assumed to be at cost, unless there is an agreement in the owner/CM contract to price those items differently.

When the CM inserts language into its subcontracts, fixing certain costs at a predetermined amount, this causes a conflict between the CM agreement with the owner and the contract with the sub.

The CM often is attempting to fix labor rates because it makes it easier for them. Usually, there is no regard to whether these quoted rates are accurate, what cost elements might be included, or if they include fee mark up. In fact, it is very common the amounts allowed to a sub for a common wage classification — like a carpenter — is much greater than the owner allows the CM to charge for the same classification, given the CM is limited to only charging actual cost.

Case Study Example

To further illustrate this point, we recently reviewed a union electrical subcontractor selected by the CM. The CM selected the sub with the highest labor rate (greater by $10 per hour) of three bidders. The CM had agreed to these higher quoted rates and inserted them into their subcontract. As the owner’s representatives, we asked for support for the actual cost and also reviewed the RFP that originally went to the subs. It was discovered in this process the selected sub had assumed the labor rates should include overhead and profit (OH + P), while the other subs apparently did not. Also, it was discovered the actual cost of labor was $5 an hour lower than the quoted rates even after OH + P was removed from the rate.

What You Should Know

Hopefully, your take-away from this blog post is to be mindful of what is being bid versus what is simply being asked. You should try to limit the requested responses in a bid to only those items that will be used to determine which bids are lowest and most complete. Informational items such as unit cost for material or labor, in the advent of a change, should be limited unless those results are going to be factored into the low bid analysis.

As always, if any of our team members for Audit + Contract Services at HPM can help you, please don’t hesitate to find more information on our page or contact any one of us directly.

Join us next Thursday for our HPM Talks Webinar. As we all continue to navigate the effects of COVID-19, we examine how owners need to take a second look at carrying bonds for subcontractors or invest in SDI in order to mitigate risk to construction projects.

New Blog Series: What’s in Your Contract?

Posted on April 28, 2020

Achieving fair and successful contract negotiation is vital to any thriving business, but it can be trickier than it sounds. That’s why we’re rolling out an original blog series to educate readers on issues concerning construction auditing and contracts. Each post is authored by one of our in-house subject matter experts – all of whom have decades of expertise providing these services to companies and institutions.

Our first post features 40+-year industry veteran and the head of HPM’s Audit & Contract Services division, Vinson Chapman. Vince and his team of auditors serve owners in the areas of contract negotiations, pay app reviews, calculations of scheduled damages, claims analysis management and defense, and interim and final audits for reimbursables, fees, and savings allocations. They represent many Fortune 500 owners, as well as many others across the US. For many years, Vince has produced a newsletter for his clients about construction contracts and auditing and now lends his expertise and experience to educating HPM’s clients on our blog, in webinars, at association conferences as well as for in-person training sessions for clients. For more information on how to learn more or get one of our auditors to train your in-house staff, please contact Vince at vchapman@hpmleadership.com or 972.529.0855.

Auditing Guaranteed Maximum Price Contracts

Vince Chapman, Vice President of Audit & Contract Services

What are GMPs – guaranteed maximum price agreements – and how do you audit them? GMP is an acronym everyone working in design and construction should know. Still, when it comes to the details, a surprising number of contract service professionals have little more than a surface-level understanding.

A desire for risk reduction may make a project owner push for a GMP contract which, in its basic form, says the owner will pay the contractor for the costs of doing the job plus an agreed amount of markup, for overhead and profit — up to a predefined maximum level. The contractor absorbs cost overruns, but cost underruns become savings to the Owner.

Construction cost audits come in many forms and can have different objectives. Owners can audit the construction contractor, a subcontractor or supplier, or the whole construction project spend, including designers, Owners agents, and third party vendors. But in any case, there are steps to the auditing process that we use at HPM.

The First Step

Audit the contract adjustments that have led up to the final contract value. While there are many items to look at, it is most important to ensure that the change orders have been processed and calculated per the terms of the contract and that allowances have all been properly reconciled. For change orders, verify that fees and mark-ups – for both subcontractors (sub) and the general contractor (GC) – have been calculated per the contract, and that all scope deletions feature a corresponding owner-deductive change order.

What are examples of typical change order audit exceptions?

– The GC did not net additive and deductive change orders when adding fee if the contract requires them to do so.

– An allowance was not reconciled, and the actual cost to the GC was less than the allowance amount.

– The GC took a credit from a sub for a scope deletion, but that same deletion was not processed to the Owner.

Each of these types of exceptions would serve to reduce the final GMP amount while not necessarily affecting the contractor’s actual reimbursable cost.

The Second Step

Audit the reimbursable cost and final fee calculation. More than 70 percent of the contracts we review feature some sort of savings, which means the reimbursable cost and fee are less than the adjusted GMP contract amount (after change orders). Any cost included in the cost of work – that is found to be not reimbursable – will lower the ultimate final cost that the Owner owes to the GC.

What are examples of typical cost or fee calculation exceptions?

– Home office employees charged to the cost of work.

– Labor burden payroll taxes charged are more than actual payments.

– Cost charged for GC-owned equipment more than market value.

– Subguard cost charged on estimated subcontract amounts rather than on actual final subcontract amounts.

– Fee only added to additive change orders and not credited on deductive change orders.

Final Audit Reconciliation

At the conclusion of the audit, a final contract reconciliation is needed to determine if the final audited contract GMP is less than the audited reimbursable cost-plus fee or vice versa. Typically, an audit report will contain both types of exceptions, audit adjustments to the contract GMP and audit exceptions to the reimbursable cost and fee. As you can see from the discussion above, one type of exception is different from another. This is why we separate the two types of exceptions in our audit reports, so they will not be confused with each other.

About HPM’s Audit and Contract Services
HPM’s audit service professionals offer expertise to secure fair negotiation and billing for client contracts. We perform comprehensive reviews of job costs that often lead to a substantial net savings of project costs. HPM provides you with the expertise you need to be confident you haven’t overpaid. For more information about these services, please visit our Audit and Contract Services page.

No Delay of Game: Building the Atlanta Braves Spring Training Facility in North Port, Florida

Posted on May 20, 2019

The date of the opening game was set. It would be a big public relations event with 8,000 people on-site. There was no flexibility in terms of the deadline. No room for error. The Atlanta Braves’ new $125 million training facility in North Port, Florida had to be ready to go on March 24, 2019. No wiggle room.

With HPM taking the leadership role on the project, ground was broken in late fall of 2017. But according to Alan Butler, HPM’s lead on the project, the Braves’ relationship with the initial general contractor was disjointed from the start. With only 16 months left until the March 24, 2019 deadline, the Braves’ organization opted to change contractors.

This type of dramatic change would normally wreak havoc on a project schedule, but HPM kept the job moving, maintained the schedule, and the project was completed on March 1, 2019.

Butler said, “We turned a cow pasture into a stadium in 15 months, even though there was a change in contractor late in the game.”

In addition to the contractor change, many changes were made — there were more than 1,300 requests for information — throughout the course of the project as well.

Butler praised Sarasota-based Tandem Construction, who joined Southfield, Michigan based Barton Malow on the job, for their hard work and professionalism throughout the project. “They knocked it out of the park. They really performed,” Butler added.

The stadium during construction (December 2018)

The project team was able to shave roughly $13 million off the price of the project through value engineering. He explained the original budget was $125 million, but the project team got it down to $108 million initial contract value without materially changing the project.

The land for the facility was donated by private developer Mattamy Homes. The 80-acre facility features a ballpark with 6,200 seats, a three-story clubhouse, seven practice fields, and state-of-the-art meeting areas and locker rooms. CoolToday, a local air conditioning, heating, plumbing, and electrical services company, entered into a 20-year naming rights agreement with the Braves, and the facility’s official name is CoolToday Park.

One of the most fascinating aspects of the project was the field had to be exactly the same as the Braves’ home field in Atlanta, SunTrust Park.

“The stadium is the exact same dimensions as their regular season field. The sod is the exact same sod, and the infield mix is exactly the same as SunTrust Park. The team practices and trains on a field that’s as identical to their home field as possible,” he said.

The final month leading up to opening day was the most challenging. He added, “The last month was brutally busy. We were looking at everything, putting on all the final touches, making sure everything was done just right. We had to scramble to get things done very quickly. But we did it.”

“With HPM on site, the Braves’ staff could stay in Atlanta working but could still be confident their capital project was going well. We were in charge of all communications, daily quality checks, cost management, and project monitoring and reporting. We led the construction of an amazing facility for the Atlanta Braves and built a strong relationship with the organization. And we’re very proud of both.”
Alan Butler, HPM Senior Program Manager

https://youtu.be/fPDU1ydXKCM

You get the team ready for opening day…we get your facilities ready for opening day.

HPM’s Beginnings: A History Built on Standing in the Gap (Part Two)

Posted on May 15, 2019

By Mike Lanier, President

Welcome back as we turn back time with our founding president reminding us in this two-part series about how HPM was founded and how it continues to grow. You can read Part One of this series posted earlier on our blog.https://hpmleadership.com/hpms-beginnings-a-history-built-on-standing-in-the-gap-part-two/

See Part One Here

In 2013, HPM took to the skies and provided the much-needed boots on the ground in the US for the global aerospace company, Airbus. Our expert staff members embedded themselves within Airbus and became the client’s eyes and ears during the design and construction of their first US manufacturing facility, which has led us to other clients in the aerospace and aviation industry.

Along the time that HPM began making its impression in several industries signaled the time for the company to be organized into its own entity, and HPM was officially structured into an LLC, branded itself apart from the construction company, and offered services separate from industry norms.

A few years ago, HPM represented the City of Birmingham by managing the design and construction of a new minor league baseball stadium right in the middle of downtown which sparked a revitalization of the area. Now, we have lead the building of several new major and minor league baseball stadiums across the Southeast as well as numerous collegiate sports venues across the US.

As a part of our growth strategy, HPM acquired a construction audit and contracting firm which serves an impressive list of clients including Google, Caesar’s Entertainment, Southwest Airlines, Facebook and Landry’s. The team criss-crosses the country involving themselves in clients’ contract negotiations; conducting interim and final audits to determine reimbursable costs, fees, savings and savings allocations; reviewing pay applications; calculating scheduled damages; and managing claims analysis and defense. We like to say that our audit and contract services provide clients with confidence knowing you paid the right price on your construction spend.

Today, HPMers serve global clients across the US from offices and project sites dotted throughout the country. Our clients continue to work with us on new projects because we have created deep, long-lasting relationships, and we continue to attract innovative and passionate talent because our work and our teams are meaningful, interesting and fun!

HPM was founded by leaders for leaders who lead at every level. We strive to be the perfect partner in every way so that our clients’ organizations achieve success.

My talented colleagues come from all walks of life and expertise – engineers, builders, estimators and designers work alongside accountants, business managers, communications professionals and administrative experts. Every role is important in HPM’s success and our clients’ success.

I believe HPM employees are relationship-driven, problem solvers, and good stewards. We strive to have purpose in our lives and do the right things for our clients and our community. My colleagues take the time to truly get to know our clients and their businesses to provide that ultimate form of servant leadership – the trusted advisor.

HPM’s Beginnings: A History Built on Standing in the Gap (Part One)

Posted on May 14, 2019

By Mike Lanier, President

Join us on this look back in time as our founding president reminds us in this two-part series about how HPM was founded and how it continues to grow.

HPM is in the business of leading. Sometimes, that looks like shepherding more than it does signaling a full-scale charge from the front.

While others in our industry focus on getting plans on paper or aim at the best ways to compile bricks, concrete, and steel, we focus on what’s most important to our clients at any given moment. HPM serves as a trusted advisor who stands in as the owner’s advocate in a capital building program.

And that can look like a lot of different ways to lead and serve.

A Little History

Our unique story of this servant-leadership style began in 1940 when Friend Reed (F.R.) Hoar founded the F.R. Hoar Construction Company in Birmingham, Alabama. Over the decades, the company has grown across the US with new projects, new clients, and new colleagues.

I began my career with Hoar Construction in the mid-1990s doing pre-construction work in the retail industry, and very quickly, I noticed many of our clients needed help beyond that of traditional contractors. I happily provided them the guidance they needed simply because it was the right thing to do.

Rob Burton, CEO of Hoar Holdings (which owns HPM and Hoar Construction), served as the Executive Vice President of Hoar Construction at the time I joined the company. He and I recognized the market needed someone that could help clients reach success by managing all the intricacies of their construction projects – from planning, design, and construction through to owner occupancy.

After a serendipitous lunch with his daughter at her school where a construction project was in disarray, putting students at risk, Rob met with the District Superintendent and offered our services. This led us to pre-construction work for school districts and municipalities who struggled to proceed with projects because they constantly seemed to stay overbudget, behind schedule, and/or beyond their capabilities.

In 1997, Hoar Program Management (HPM) was founded as a division of Hoar Construction to serve as advocates for our clients. During this time, we guided Hoover City School District during all phases of their construction projects which put us on the map in Alabama for K12 and which has now expanded to include school districts throughout the country.

HPM team members now shepherd school superintendents and school boards through the planning, funding and site selection phases of capital bond programs through design and into construction and move-in.

In 2003, we graduated into the corporate world with our partnership with Regions Bank. Regions utilized our program management services to help stay on budget and on schedule while they rolled out new bank branches across their multi-state footprint. More than 15 years later, we still partner with Regions Bank and have expanded our services into interiors planning and move management.

In 2004, HPM made the leap into higher education when a large university in our home state hired us to provide program management support for six different simultaneous construction projects on campus. And, we’re still there today due to our deep relationships with the staff and leadership team and a successful 15-year track record. Since 2004, we have completed more than $2 billion in capital building projects to facilitate the university’s rapid growth.

And that was just the beginning…

Part Two