Large capital construction projects bring with them myriad risks, opportunities and potential disruptions to everyday life for both club management and the membership. As such, it is critically important that consideration is given to the individual roles and responsibilities of each member of the project team, and that the numerous third-party vendors engaged by the club to execute the work are held accountable through regular monitoring. General attributes of a successful project team are as follows:
Project manager
The project manager serves as the “quarterback” for the project, and should be an employee of the club with the availability and technical proficiency to lead a team through
a dynamic and changing environment. The project manager should host or attend regular meetings with the third-party vendor team, and is the club’s primary line of defense when it comes to third-party vendor oversight and contract compliance monitoring. A good project manager helps to keep the team on task and working to accomplish high-level project goals. The project manager should closely monitor the project’s budget and schedule, and is the primary conduit between the project and club governance (committee and board). It is the project manager’s responsibility to know current project conditions, and elevate any instances of potential delay or cost increase to club governance immediately.
Committee(s)
Committees offer a valuable extension of the board, and can provide key club stakeholders with an opportunity to dive deeper into project issues or decisions without monopolizing important board meeting time. The board should be careful to specifically define the roles and responsibilities of any committee(s), and should hold committee members accountable to staying within the scope of their charter. Committees should hold regular monthly (or bimonthly) meetings, during which they should review written reports pertaining to the project’s budget, spend and schedule. Each meeting should be documented via a set of minutes, which should be distributed to each attendee shortly after the meeting is held.
Typically, a building committee is established to provide a layer of oversight and project monitoring that falls somewhere between the board and daily project management. This committee should be careful to not involve itself in day-to-day project decision-making but should endeavor to trust the design and construction management professionals the club has engaged for those services. If detailed design issues are to be addressed by a committee, those should be established under a separate charter from the primary building committee.
Accounting
Club accounting staff can play a vital role in supporting successful construction project management if compliance
and accounting procedures are structured appropriately. Construction invoices and change orders include myriad compliance requirements, supporting documents and mathematical calculations. Determining who is going to perform simple tasks like recalculating invoices, reconciling labor records and validating the completeness of lien waivers is critical to ensuring the club maintains a complete and accurate record of the project. With more complicated contracting arrangements becoming the norm (e.g., guaranteed maximum price, design build and construction management), it has never been
more important for accounting and project management to work closely at project inception to define procedures and appropriately control the club’s financial risk during the project.
Vendor(s)
Delivering a successful capital project is the result of careful planning and execution by thousands of people, from hundreds of different companies and organizations. Selecting vendors with proven experience and who work well together is the cornerstone of a great project. Design, construction and project management professionals must work closely together to ensure the club’s vision for its project is realized, and it is club management’s responsibility to oversee this effort.
Setting clear expectations and holding vendors accountable to key deliverables required by their contract during early phases of the project is the most effective way to ensure a healthy balance of professionalism during execution. Club project management should meet with each major vendor early and often to define general reporting requirements, and to set forth the appropriate invoicing and change management protocols. This is exceptionally important for the prime construction contractor’s first invoice. Once the prime contractor is selected, a meeting should be held between the contractor and club management, the design team and the owners’ representative (as applicable) to discuss the structure of the invoice, and what will constitute acceptable support for invoices going forward.
This article is reprinted with permission from the 2019-20 Trends in Private Clubs, published by RSM US LLP. David Luker is Director of Business Risk Consulting and can be reached at [email protected].