Butz Construction: "Give Them Credit Where Credit is Due"

"They're just like Hess's."

That's what one smiling lady said as I stepped into the talking elevator, bringing back memories of strawberry pie, fashion models, strawberry pie, back-to school shopping, strawberry pie, the ride down the swirling parking parking deck and ... strawberry pie.

I was just across the street from that once proud department store, but was in the bowels of big business. Corporate America. I was in the belly of the beast known as Alvin H. Butz, Inc. This company has bragging rights as the oldest and largest construction company of its kind in the Lehigh Valley. Is there any large government project in the Lehigh Valley that Butz does not build? Builder of Bethlehem's $65 million Penn Forest Dam? Butz. Northampton County's over budget courthouse? Butz again. Additions and renovations at Lehigh County's courthouse? You got it, Butz has that deal, too.

Last week, I posted a blog criticizing Butz' Northampton County courthouse expansion. I claimed it was $2 million over budget because Butz and Architect RicciGreene "were milking the job and the county never had someone looking over their shoulders ... ." I relied on reports from County Controller Steve Barron and county engineer Steve DeSalva. You can read them here.

Not long after that blog, Lee Butz called and invited me to come see him. I confidently told him I had a report pointing out all the problems. This included Butz' failure to use CPM (Critical Path Method), a tool that enables a construction manager to identify untimely completion of one work activity and its effect on everything else.

"You couldn't be more wrong," Butz said, and asked me to hear him out.

On my way up in the talking elevator, I began getting cold feet. After all, these guys have real money. They probably know a lot of cement contractors. Someone might find me next to Jimmy Hoffa in a thousand years. As I pondered my demise, the talking elevator told me I was on the sixth floor. I thanked her, stepped out, and was ready to do a volte-face when a voice said, "Are you here to see Mr. Butz?" I thought it was the talking elevator, but this time it was a live human being - the receptionist. Almost immediately, a diminutive but smiling Lee Butz came out of nowhere to see me.

"Would you like a coke?," he asked. I was thirsty as hell, but said no, trying to prove I'm incorruptible, just like county exec John Stoffa.

Butz ushered me into a gigantic conference room, where we were soon joined by John Baer and Larry Rutt. These are two of the engineers who had worked on the project. After a lengthy meeting, I was convinced of one thing - I could not have been more wrong.

Butz did use the Critical Path Method (CPM) construction tool.

In Steve DeSalva's memo, he insists that part of the reason for delay was Butz' failure to use CPM, a complex depiction of the interrelating work activities, usually in the form of a large drawing or complex software program. Yesterday, Steve repeated that criticism. "Butz started it but it fell by the wayside."

Before Butz started anything, it had a CPM prepared by Wagner-Hohns-Inglis, Inc., detailing at least 450 individual activities and how each related to another. Monthly, that CPM was updated and an executive summary was prepared for the county. DeSalva was not the county engineer at that time.

When the focus of construction changed to renovation of an existing facility, the CPM was used less frequently because the work could be done more quickly than the time it would take to update the CPM. By this time, the project was already 2/3 complete. That's when Steve DeSalva came on board. As Butz explained, Steve was simply not there to see the extensive use of CPM throughout most of the contract.

The construction manager, as the owner's representative, is the clerk of the works.

DeSalva believes another reason for delay was the county's failure to have a Clerk of the Works, a person who would "ride herd over the A/E and Construction Manager." In a conversation yesterday, Steve conceded he was effectively the clerk of the works, and spent 15 hour days overseeing both the construction and all the other duties that must be performed by a director of public works.

Butz, however, believes a construction manager is the owner's agent and has a duty to minimize costs. It was Butz' job, as construction manager, to ride herd on all the contractors to ensure the work was done in a timely and cost effective manner.

John Baer inadvertently gave me an example of just how seriously Butz perceives its role. During the course of renovations to the criminal division, directly below Courtroom #1, he discovered a design defect that could have sent that historic courtroom tumbling into the basement. After determining how to overcome that design defect, his next job was to minimize the cost.

"Why would you do that?," I asked. "As long as you find a fix, what do you care what it costs?"

Baer told me he was the owner's agent and had a responsibility to find the cheapest fix possible that would work.

"What's your financial interest in minimizing cost?," I asked. "To get the next job" was Lee Butz' quick answer. Butz also noted that, had the county used a general contractor instead of a construction manager, the project would cost 8% more.

Roofing Contract Overrun

DeSalva identifies $657 thousand added to the $1.48 million roofing contract and calls it a cost overrun. Butz explains this actually saved the county money.

How?

Originally, the window contractor was supposed to do some screen walls, but felt uncomfortable doing that. So the roofing contractor agreed to do it, picking up an extra $657 thousand. The window contractor, however, lowered its price by $900,000. Instead of being an overrun, this actually saved the county $200,000.

What's the real reason for the delay?

According to Butz, the project was finished in 13 months (August '07) instead of the 11 months (June '07) originally planned. If it were not making effective use of the CPM, the project would have lasted 26 months. Here's why.

1. There was a four month delay in getting steel. As John Baer explains, "You can't do anything without a building." And you have no building without steel.

2. There was a delay in getting all the necessary approvals from fabricators, architect and county on the shop drawings. "There were over 1,000 drawings for the steel alone," said Baer.

3. There was another four month delay after the millwork contractor went bankrupt and the next highest bidder had to be begged into doing the job for the original bid.

4. There was a 2 month delay between the bids received and bids awarded. Butz would have to value engineer and try to get bids to come in at the right price. It took two months, but saved the county $2.1 million.

5. There were three months of delay in the renovation phase of the project, primarily the result of unforeseen conditions and having to adjust to the schedule of the court and other county functions. This includes the design issues in the criminal division.

Despite all these delays, Butz finished the project just two months behind schedule.

Did Butz do a good job?

Butz certainly thinks so, and "is frustrated and disappointed that people have the wrong idea about the project. It was superbly done. Glenn Reibman and John Stoffa should be extremely proud of the building they have."

What does Steve DeSalva say? Despite his criticism, DeSalva was complimentary. "Butz did a good job. They handled a messy job with a lot of changes that had to be made. Give them credit where credit is due."

Why was Butz taken off the job early? According to Steve, there were issues between Butz and the A/E. "I need the A/E."