Construction, the Building Envelope and Mechanical System Design

John Melvin – JM Engineering

  • The importance of integrating building envelope and mechanical system design.
  • Design – What should the interaction be between design of the building envelope and mechanical systems?
  • Commissioning during design – common for mechanical systems, not so much for envelopes
  • Construction – Where the rubber meets the road.
  • Best practices and common mistakes during construction
  • Maintenance and operation mechanical systems
  • Maintenance of the building envelope

About The Everything Building Envelope Podcast: Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

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Paul: Hello everyone, this is Paul Bears. Welcome to another episode of the “Everything Building Envelope” podcast. We’ve got a really interesting topic today. We’re gonna be talking about building envelopes and also mechanical systems and how they interact. Our guest is a really good friend of mine, John Melvin. Well, welcome John.

John: Hello, Paul. Thank you for having me.

Paul: Yeah, really excited about this. So, John, we’ve been going to an entrepreneurial coaching program together called Strategic Coach for like five or six years, is it?

John: That’s correct. Yes, we met in Santa Monica and really enjoyed our conversations.

Paul: Yeah. I think we can both say the program has had a really big influence on our careers and how we’re doing now. And then also, you know, we’ve had really a great group. There’s 4 or 5 of us that’ve been together the whole time. And it’s really been great to be able to bounce ideas back and forth and whatnot.

John: It sure has.

Paul: So as luck would have it, we’re in related but unrelated fields. You know, I’m the building envelope guy at GCI consultants and you’re a mechanical engineer. In fact, why don’t you tell the audience a little bit about yourself before we get into today’s topic?

John: Sure, Paul. So I’ve been a mechanical engineer for 25 years now and I have had my business, JM Engineering, for the last 15 years. And we are a firm of 10 full-time people and we have a number of virtual people working for us. We work in the mechanical, structural, and electrical consulting areas of building construction. We specialize in high-end residential projects, houses typically minimum of \$10 million a piece. And then also we do an awful lot of healthcare and educational work. So our markets that we work in are primarily the western United States. We are licensed all over the country. And we see a big variety of projects, both in our northern climate as well as in southern more humid climates.

Paul: Yeah, and I know you said that…well the high-end residential obviously, that’s a challenge in itself because the…you know, you always have high-volume spaces, lots of windows, things like that. And then, of course, the healthcare, that’s probably nothing more difficult from a mechanical standpoint then healthcare projects. They’re so complicated and whatnot. So you’re not doing the superficial stuff, you’re doing the real hard work.

John: Yeah, it is very challenging. You’re exactly right, the healthcare with the surgery suite and pharmacy clean rooms, compounding facilities. Air quality is extremely important. Same with the educational work we’re doing. We put a high emphasis on healthy learning environments for all these schools that we’re working on, making sure that the CO2 levels are not too high in the classrooms which allows the students to have a far greater learning experience.

Paul: Very cool. So, John, we’ve been talking a little bit before we did this and we were thinking it was a good idea to maybe talk about our two respective disciplines: building envelope and mechanical engineering and how they’re really very interrelated. But as we go through projects from design to construction and even operating those buildings after they’ve been built, there’s not really a lot of integration between the two. Do you see things that way as well?

John: Absolutely, Paul. The very first thing we do in a project once we have identified the mechanical systems that we are most likely to use is we go into our process of our engineering calculations to determine the cooling and heating equipment sizes. And that in large part is dictated by the building envelope. And at the time when we are starting our design, we don’t often times have all of the building envelope information that we need. The interior loads, the internal loads are pretty easy to identify with numbers of people and connected equipment. But building envelope and the mechanical systems are very much interrelated. And it becomes very important for us to know how tight the building is and what impact that has on the infiltration. That has a big impact on our ventilation.

Paul: So what’s the importance of integrating the building envelope and mechanical system design form the mechanical side of things?

John: Yeah, that’s a great question. So the building envelope is one of the bigger key components of determining the size and capacity of the heating and cooling equipment for a building. And it becomes very, very important. Small changes in insulation in the overall tightness of the building has a big impact on the chiller sizing, the boiler sizing, and the fan sizing. And one area that I think gets missed an awful lot of the time is an analysis of the building envelope and comparing that with what is required to heat and cool that building. And there’s often times trade-offs as to how much insulation can be used and where is the balance point of having the proper amount of insulation and the right envelope construction to balance the optimal boiler and chiller plant sizing.

Paul: Now can you also have situations where perhaps…and I’m just saying any mechanical engineer, not necessarily you guys but any mechanical engineer, where perhaps the mechanical systems could be…you know, assuming the envelope is gonna be XYZ when in fact it’s ABC and you end up with an over-designed or an under-designed mechanical system?

John: Yes, definitely. We have seen that in the past where we have gone into buildings that have needed retrofitting from the glass being changed as a value engineering process and they went with cheaper glass which then allowed a significant amount of solar gain into the space which then had an impact on the cooling capacity. At which ended up being a pretty big cost change in the end. And that was something that was not evaluated during the value engineering process. So the other issue that can happen is there can be assumptions made on the envelope to the point where the mechanical systems are significantly over-designed, which then the owner is paying for larger equipment than what is needed. And then what also happens is you can have equipment that is cycling on and off much more frequently because it is oversized. And that can have a big impact on the lifetime of the equipment.

Paul: So during design, what should the interaction be between the design of the building envelope and the design of the mechanical systems?

John: From our point of view, Paul, what I think the interaction needs to be is the load calculations need to be developed but then they need to be evaluated with the architect to have the architect look at different insulation and window systems to see if the envelope can be optimized for its given climate and also see if there’s a way that we can make our mechanical equipment smaller and find out if there’s a payoff and if it’s cheaper to put in more insulation in the walls and roof as opposed to putting in larger equipment.

Paul: Now, when you say cheaper that’s interesting because we see a lot of different attitudes with cheaper. Cheaper can be a \$10 million house is being built on spec. A lot of time construction cost seems to be the overriding issue. Whereas if you have a hospital or a school where you might have a long-term owner, they may be willing to invest more in the construction costs to save money over time with, you know, basically better energy bills or durability where things would last longer. So how does that play with working between the building envelope and the mechanical systems?

John: Well I think…first of all, this is something that–back to your question–is overlooked an awful lot of the time is when projects are designed, it happens an awful lot where a project comes in over budget. And unfortunately we get into a process called value engineering and I always refer to it as de-value engineering. And what people look at is just pieces of the project that can be taken out or changed or cheapened up, if you will, to bring the project within budget. And I think often times what’s missed is back to not having the proper amount of coordination between the envelope and the mechanical systems to really try and optimize what is going to be the most cost-effective solutions for the owner over the long-haul.

Paul: It’s basically a money grab.

John: It is.

Paul: Just speaking from the, you know, I’m asking all these questions about mechanical systems. So speaking from the building envelope side of things, we almost never interact with a mechanical engineer on the project. Now we go to meetings, you know, they’re sitting there, we’re sitting there. But basically they’re doing their own thing and we’re doing our own thing. They’re telling the architect what kind of glass they need to use as far as to meet the load requirements or what the calculations are based on and then the architects are picking the color. But we’re really not involved at all on that level. Who do you think…I guess…well I’ll tell you what I think and see what you agree. Seems to me there’s a better role that the architect could play here in trying to bring it all together into a global solution rather than we do our thing, you do your thing, and that’s how we get to the end of the road. And that’s why problems sometimes occur.

John: Absolutely. I think it’s something that should be done on just about every single project. There’s again, as you said, there’s usually not much coordination beyond we’re using the U-value for our windows and we’re putting in this much insulation in the walls and ceilings because this is what meets code, rather than, “Hey, what if we end up putting another two inches of insulation in the walls or roof? What if we look at going with a better performing window? Yes, it’s going to have this impact on the installed cost of the building but what impact is that going to have on the mechanical systems?”

And more importantly, for the owner, a lot of people own their buildings for a very long time. And what we find is some of these very simple adjustments can have a three-year payback or better. And that often times gets overlooked. And when engineers are doing their load calculations, at least the way we do it, the software we use, all of that information is built in. It is fairly easy to model the building over the next 20, 30 years and do a few comparisons on different windows systems and insulation systems to find out what’s going to work best.

Paul: And sadly that doesn’t seem to happen much.

John: No, it really doesn’t. But again, I think the team itself needs to be focused on what is best for the life of the building and how is that building going to perform. What’s going to give the building the least amount of maintenance and have the best efficiency for the dollars spent on it?

Paul: Seems like we should set a goal–we being the design team, with regards to energy and the envelope and mechanical systems and whatnot–we should set a goal for where we wanna end up and work towards that rather than what I see the way it’s being done now is we start in the middle and kinda work to the outside. And we end up somewhere but not necessarily…there wasn’t any intent to go anywhere, to begin with.

John: Absolutely, absolutely. And the approach we take is we, as a group here, we have in our process is we start every project with the end in mind. And when I say the end in mind, it’s 3 to 5 years down the road when the building is completed. And one of the questions we ask building owners whenever we have the opportunity is to take them into the future and ask them if we’re standing at this project in three years after it’s completed, what has to have happened for you to be really happy with this building? And you can get some great answers by asking that question but it’s a question that needs to be asked as a design team group, not just as an engineer or as an architect or as a building envelope consultant.

Paul: Yeah, really great point. It’s just the integration seems to be lacking.

John: Right.

Paul: Let’s talk a little bit about commissioning. You know, right now we’re still talking about design but…so commissioning, is it fairly common with mechanical systems?

John: Very much so. We deal an awful lot with commissioning. We do commissioning both ourselves and we work on projects that are being commissioned by a separate commissioning firm. And a lot of LEED projects require commissioning. It’s part of the LEED process.

Paul: So just to give everybody some background about what we’re talking about, that everybody in the audience may not be super familiar with commissioning, could you just kinda give a broad brush definition of what’s commissioning and kinda what’s the process for it?

John: Yes, so our two different kinds of commissioning according to LEED. There’s your standard commissioning and then there’s enhanced commissioning. What a commissioning agent is, is they are an independent third-party firm typically, that did not provide any design services. They are not contracted by the contractor, they are not contracted by the design team. Rather they are contracted directly to the owner. We typically like commissioning to happen in the enhanced format where the commissioning agent is involved at the very beginning of the project. And the commissioning agent will review the scope of the project and the design team will produce a document called “The Design Intent”. And basically what that is is a narrative of how the building is to be built, how it’s going to be constructed, the systems that are going to be installed.

And they use that document and track that throughout the project to make sure that these goals and intents are being met throughout the project. We find the commissioning as focused on mechanical systems, plumbing systems, and electrical, and some on the building envelope.

Paul: I was gonna ask you about that. You have been involved with projects where there’s commissioning for the building envelope?

John: Yes. And the level of commissioning that was done was they are providing documentation that the insulation was installed per the plans. The sealing of the envelope, the roofing systems were installed per the design documents. I have not witnessed any testing of the envelope, though, as part of the commissioning process.

Paul: There’s been an effort underway and a few years back and I assume it’s still alive. ASTM has been involved with this, the National Institute of Building Science, NIBS, and others in developing a commissioning process for the exterior building envelope. And we actually you know, tried to get involved with that. What we found was either there was no market or it was very commoditized where owners were doing it because they felt like they should do it but they weren’t looking into spending any money on it. And so, it was a superficial commissioning process at best.

What’s interesting is the scope of services that GCI Consultants provide. So when we first got into it, we said to ourselves, “What is building envelope commissioning?” In fact, I went to an ASTM meeting where it was kind of like a scoping meeting to start the whole process and try to understand what is this building envelope commissioning thing? And guess what? Nobody knew. And it turns out that the services that we deliver typically on construction projects, which is working with the design team, the architect and the design team during design, reviewing, shop drawings and submittals, performing inspections and testing, during construction, and then some sort of sign off at the end and documentation of the whole process, probably more so with when it’s so-called commissioning job than not, what we’ve been doing all along was actually commissioning. It just never became…it still hasn’t become a formal process for construction projects. And I don’t know if it’s the money thing or what. But again, the mechanical MEP stuff, mechanical electrical plumbing, obviously seems to be a lot more common than the building envelope.

John: Well, I think that it’s not embraced too well because people have this assumption that the project is being designed well and therefore it’s being constructed well and why should they have to pay a third party to go through and verify all of this work.

Paul: That’s a great point.

John: And in an ideal world you wouldn’t have to. But things happen on projects. Things get missed by either the design professionals or the construction professionals. And if I was a owner of a large building I would want that building commissioned fully. I would want the envelope commissioned. Is it sealed up? You know, if I’m paying to heat and cool this building, I want to make sure that all of the insulation is in place. I want to make sure that I’m not going to be having a roof that’s leaking or windows that are leaking over time. And the added cost for building commissioning is very small compared to these bigger fixes over the life of the project. And I think if commissioning is done well, the commissioning services will more than pay for themselves over the life of the project.

Paul: Yeah,

John: We’ve all seen and heard what lawsuits are like and no one wants to be in a lawsuit except maybe some attorneys. And I think that commissioning is a way for both an owner, a design professional, and a construction professional to give everyone a little bit better peace of mind that the project as a whole was done correctly.

Paul: Commissioning is a proactive rather than a reactive approach.

John: Very much so, very much so. We are very big proponents of it.

Paul: Yeah, I’ve had customers before, you know, contractors and owners that say, “Look, I’m happy I’ve spent a little bit of my warranty dollars up front to make sure it’s being done right and prevent the problem rather than having unhappy owners, tenants, building occupants, whatever, later on in the process.”

John: Correct. Absolutely.

Paul: So let’s talk a little bit about construction. You know, I said this is where the rubber meets the road and I know you were talking little bit about value engineering before which is…or value de-engineering, I think you called it. And…

John: De-value engineering

Paul: De-value engineering, I like that even better. So when getting into the construction phase of a project, you’ve put this really good design together and, you know, the project’s got the whole team in place, the contractor and the subs and what not, how does that go? I mean does that…do they normally build what you design or do they always build what you design? What happens during construction?

John: Well, that’s a great question. We find that really good contractors will want to have the design team involved throughout construction and have an active part in the construction process. We find sometimes less reputable contractors do not want to have engineers and architects and other consultants involved during the construction. And I take that as a bad sign. Again, back to what we discussed earlier in commissioning is, there are things that are missed during construction, either by the design team or by the build team. And I feel that it’s in every design professional’s best interest to stay involved with the construction process, whether they’re wanted there or not, to ensure that their design is being met.

Paul: If they’re not wanted, that’s definitely a red flag. We run into situations in the building envelope where the contractor, you know, usually the name of the budget, the schedule, the subs they work with, whatever, basically redesign the whole exterior wall system. You know, they get hired during pre-construction to put together budgets and the owner relies on that, usually very little information. So they’re doing a lot of the scoping themselves and then we get around when it’s time to actually build the building and then maybe it’s something seemingly innocuous, the weather barrier, fully applied waterproofing around window openings, let’s say, where the contractor didn’t put them in as part of their budget.

We get to the construction, they’re noted on the drawings or we note them in the submittal reviews and all of a sudden, the owner is calling up saying, “Hey, what is this?” And say it’s a 50 story building and it doesn’t seem like a big deal to put this stuff around the window openings but all of a sudden its \$750,000 being added to…it was a bad budget. So that happens a lot with envelopes. Do you have that happening also with mechanical system where your contractor, and I guess maybe the owner, redesign, re-jigger your design?

John: Yes, we have had that happen in the past, unfortunately. We had a project where the owner specifically requested that we were not to be involved during construction because he did not want to pay for our services. What happened on the project was the mechanical contractor did not install our design per our plans. This is a fairly complex geothermal heating and cooling system and I received a phone call from another consulting engineer about three years later who had been to the job site at the owner’s request to do an evaluation of the system, which had completely failed.

And the engineer called me to tell me that my plans were great but the project was not installed per our design. We then went to the project to verify this and the contractor had completely disregarded our plans. The contractor had taken many shortcuts and not installed a lot of the components thinking that it was overkill or redundant. And it caused several heat pumps to burn out over time. It caused tremendous amount of humidity build up in a few of the rooms and they ended up having a mold problem as a result. In the end, the mechanical contractor was sued for roughly \$100,000 for their defective work. And I feel like we could have saved all of that expense and pain to the owner had we been involved for a few thousand dollars during construction.

Paul: Do you find that when changes are made, is it motivated by money or is it ignorance? Or maybe just yes, yes and yes?

John: So we find that really depends on the contractor. We have contractors that will come to us with a change and it’s a very legitimate change. It’s something that will make the installation go better and actually be better for the project over the long term. But we also have contractors who don’t want to put something in and ask if they can make a change and it’s purely money driven. And they’ve bid the project but they want to put in a less inferior product. And we see that a lot.

Paul: So I guess the moral of the story here, and let’s say this would apply to the envelope as well is, if you’re gonna make a change perhaps you should run it by the designer of the original system?

John: Absolutely. I would definitely engage your design team first and foremost and ask them if they approve of it. And get a reason for why they think the change is good or bad. But I would definitely and always include the design team in any changes during construction.

Paul: Now, the second part of the construction thing is that obviously, even if the design is intact, everything needs to be done correctly. It needs to be installed properly, follow manufacturer’s recommendation, use best practices, all that kind of stuff. Do you…and I know the answer is gonna be yes but I’ll ask the obvious question. Do you run into those sorts of problems as well?

John: We do. And one thing that we require is on our projects, we require a factory-trained representative to start up all equipment. So you don’t just have someone out there thinking it’s all set to go and hitting the on switch and pushing the green button and hoping that it all works. We require these factory trained personnel to come in and they’ll do a complete check over of the system and make sure that…it’s also integral with commissioning as well of making sure that all of the connected components are installed the way that that manufacturers require them to be installed. Otherwise, yes. You’re going to get all sorts of problems if someone thinks that it’s installed, hits the button and walks away from it.

Paul: So let’s talk a little bit about best practices. I guess also we should talk about common mistakes that occur during construction. Let’s start with the mistakes and then we’ll go into the best practices. So on the envelope side of things, you know, the mistakes that we see are basically not paying attention a lot of times or having an untrained workforce. We may go through a whole project and design, a really nice building envelope, really careful with shop drawings and submittals, making lots of comments and, you know, making sure we’re all…have meetings, go through everything, make sure everybody is on the same page. And then we go out to do pre-construction meeting or subsequent third-party quality control inspections and the guys that are out there have never seen the design, the drawings, anything. They’re just putting it in the way that they think it should be done.

So all that good work that was being done upfront is basically ignored and guess what? Problems happen. We do a water test and water is leaking in all over the place. And it’s not necessarily bad intent, it’s just sloppiness and ignorance. And you gotta really be careful with the envelope–and I suspect you’re gonna be saying the same thing on the mechanical side–that everything gets done…you know, the best design is great. But if they don’t follow through…and the quality side, everybody should be involved with it from the installer to the supervisor to the contractor, the superintendent, the architect, the owner. Everybody needs to be…really be on it. And then you’ve got a better chance of not having an issue.

John: Absolutely. I find what works with us is having that pre-construction meeting with all of the trades that will be performing the work on our plans and having a discussion with them before they pick up a hammer or a drill or what have you and explain to them what our intent is of the system and how it is supposed to work and what the components of the system are doing. And I think if that’s something that is done with all trades at the beginning, that way the guys working in the field have a better picture and a better feel for what it is that they’re actually putting in.

But at any rate, it’s back to getting all of the subcontractors on the site, in addition to the general contractor, a picture of what it is that they’re building. So that, again, if they kind of have that same end picture in mind so that they’re not just putting a piece of pipe in, they’re not just putting insulation in, they’re building this building that is going to perform per this design we’ve put together. And I feel like if you can get some buy-in from the construction team, that goes a long way for the life of the project.

Paul: I think the keyword there is team. Everybody needs to work together.

John: Right.

Paul: So now, we have designed it, we’ve build it. Everything is good and it’s time for the owner to basically occupy and take over the building from the design and the construction team. And you mentioned hitting the little green button, so let’s talk a little bit about maintenance and operation of mechanical systems. What needs to happen for things to continue to go well?

John: Well, what needs to happen is the owner needs to have training with the contractors who installed the system. So we typically will involve the temperature controls contractor, the mechanical contractor, and the plumbing contractor. And they will spend a designated amount of time with the owner going through every system, system by system. And this is after we have done all of the testing to make sure everything is operating fine. But then the contractors will go through with the owner’s representative, whomever that may be, their head of maintenance if they have a head of maintenance for the project or the owners themselves and they will go through and demonstrate to them how each system works. And show them, if it’s an elaborate control system, how the system works, what functionality they have with the system and then also give them training on routine maintenance: items that they need to take care of or pay attention to. Simple things like changing filters, looking at if fans have belts, of making sure that the belts are tensioned properly.

The other part is making sure that the owner has a maintenance contract set up, ideally with the mechanical contractor who installed the system. But if not then he needs to have whomever is going to be doing his building maintenance involved with that training so that the maintenance personnel, again, can have a good and first-hand understanding from the installing contractors. We find that you can have a great project and have it be installed, everything is fine, it’s…everything is working wonderfully. But if the building is not maintained, you’ve just wasted all this time and effort putting in a great system. We had a simple case of a building a few years ago where we were called back because they were having these pressurization problems in the building. And so I got the controls contractor involved, we went and looked and there is all this air leaking in through doors and windows. And this is happening when that was -20° outside.

So what we found after going through and testing the whole system, we couldn’t find anything wrong. And so we got the owner back involved and asked him if he had had the system maintained and who had been doing it. And he assured us that his system had been properly maintained. What we ended up finding on this particular project was the filters in the main air handler for this great big building had never been changed since the building had been turned over. Yes, from the time it was turned over. They had done remodeling in part of the building after construction. These filters were caked completely full of sheetrock dust. And furthermore, the contractor who did the initial construction wrote the date on the filters, which is commonly done. So we could go and verify how old these filters were. And we took the filters out and put new filters in, turned the unit back on and all of his problems were fixed.

Paul: Voila.

John: Yeah, voila. Exactly. But he went through all of this headache thinking that the building wasn’t constructed right, the building wasn’t designed right, nothing was working. And the only one that was doing his job was the maintenance guy.

Paul: Which was actually the other way round.

John: Exactly

Paul: So is the maintenance guy the one who actually runs these systems or if they have a maintenance contract, who’s really in charge of running the systems? I’ve been involved in projects where the envelope has had issues due to negative pressurization and it was basically poor operation of the mechanical system. They’d actually designed it and pressurized in an addition to have built to this hospital. And then they opened the doors that led to the rest of the hospital and everything went to hell.

John: Right.

Paul: So who’s ultimately supposed to be watching after that, once the building is in the owner’s possession?

John: Typically it’s the maintenance department. Hospitals will almost always have a dedicated maintenance staff. And those guys from our experience are extremely well-trained and they know their systems inside and out. But that usually falls on them to, you know, it’s helpful if the building owner has some documentation in their hands to say, “Yes this was tested at the completion of construction. And the envelope wasn’t leaking, we weren’t negative pressure, everything was working just fine.” So that, at that point in time they can go back to maintenance and say, “The system was working, so something has changed since then.” And that happens. Damper motors will burn out or freeze up, linkages on dampers will become loose.

And it can be something as simple as that. It can be a wire to a damper motor that the screw on one of the wires was not tightened all the way and there is enough vibration to cause the wire to come loose. We’ve seen that before quite a few times. And again, it all comes back to the owner having some assurance from the design team and the build team, ideally from a commissioning agent, that his building is functioning the way everyone wanted it to when the keys are turned over to the owner.

Paul: Yeah, so you basically got a point in time where everything was good. I can see the benefit there because then you can say, “Okay, if it worked at one point, then what’s changed? And let’s go find that and remedy it.”

John: It makes it much easier to solve the problem if you know it was working fine at one point in time.

Paul: So I want to talk about maintenance on the building envelope. On the building envelope side, aside from roofs, there is very little or no maintenance typically. Now, that’s not to say that’s the case with every building but more often than not that is the case. Now roofs come with manufacturers’ warranties and they can be 10 to sometimes 20 years or longer and they require annual inspections by a third party or sometimes by the roofing manufacturer. And maintenance, and this is to maintain the warranty, which that doesn’t always get done either by the way. But if it is done then somebody is up there looking at it at least annually and is a problem develops then there’s an opportunity to correct it before it becomes a failure. Or even if there is a failure it’s isolated and not throughout the whole system.

What we see on the rest of the building, the walls, the windows, the ceilings, things like that, warranties are typically a lot shorter, particularly on windows and doors. You know, it may be a year or two for water leakage. Glass, insulated glass, laminated glass, things like that can be a 5 or a 10-year warranty but that’s just the glass itself. And then the wall systems usually is like a cornucopia of some warranty, some not. That the contractor may warranty it for a year, it may have sealants that have 20-year warranty, paint that has 5-year warranty.

So there’s a lot going on. What almost never happens is that there’s an annual inspection of the façade. It may be a one year later inspection but typically not an annual inspection. And what happens there…just like the roof. If they didn’t inspect the roofs, things start to deteriorate. Say the sealants are aged, have aged and started to have voids in them or birds are eating them or there is maybe a windstorm that causes some damage to the building or stucco cracks or whatever. It doesn’t get addressed until water is coming in the building, molds growing, your humidity levels are up, things like that. And it’s very reactive, not proactive

And I think it’s a real, there’s a real need to do better in that regard. Inspecting the façade of a large building can be very expensive because you can’t necessarily get easy access to a roof, you can walk around on the roof most of the time. You know, mechanical systems obviously are in their designated spaces. But if you’ve got a 10 story building, unless you’re Spiderman, you can’t get out there and look without a lot of equipment and whatnot. I’m hoping that now where we’re seeing drones being used a lot more…and in fact, we have our own drone, AIR GCI, that can actually go out on a regular basis, fly the drone and analyze the footage, see if any of these products have developed, any of these problems are developing. Because if you can catch problems early, you can correct them and stave off much bigger problems later. The saying is an ounce of prevention is worth a pound of cure and it’s very, very true.

So did you ever have situations, John, where problems with air quality or mold growth or whatnot, they call you out as a mechanical guy and it turns out something with the envelope is causing it?

John: Yeah, we do see that on occasion. And you’re exactly right, it becomes a reactive time rather than a proactive time, unfortunately. And I think that having the envelope inspected annually is a great idea because a lot of times, like you said, you know, mold often times does not show up in a building until two, three years after it’s completed. And if you have a one year warranty on a project and you stop doing inspections at that point in time, it’s not something that’s just going to show up right away.

So I think that you can be very proactive in having your envelope inspected on a much more regular basis. I think using a drone, and as technology improves, is going to be an incredible tool for you to use to doing envelope inspections. We have a drone ourselves and we use that for projects that we’re working on. Right now, we use it more for remodel projects, though we will fly it around the building and get documentation of what’s on the roof and what’s on the side of the building. But I think beyond that, it’s a tool that you can use with a envelope of getting very good high-quality images around windows. And whether it be on an annual basis or, in your case, after a very big storm event to do quick and accurate assessment of the envelope.

Paul: Yeah, it really works well. So, John, this has been a really great discussion. I mean, I’m passionate about this actually that I think we can do better in a lot of these areas. Having the guys on outside of the building and inside of the building working together to a common goal with an end result in mind from the beginning, I think you really have a better outcome for projects to what some are getting. You know, keeping small problems from becoming big problems and being proactive instead of reactive. So I really enjoyed our discussion.

John: I did too, Paul. This is a very great discussion to have.

Paul: So thank you so much for coming on the “Everything Building Envelope” podcast.

John: Well thank you for having me, Paul.

John, if people want to contact you how can they do that?

John: The best place, Paul, would be our website. And that is,

Paul: Great. And I can vouch for John. I know he’s doing a lot of cutting edge stuff with technology and a really great guy. So I would encourage anyone who is interested to please take a look.

Paul: And I’d like to remind everybody that if you’d like to subscribe to the “Everything Building Envelope” newsletter to text the word, “Building Envelope,” to 22828. Again, text the word, “BuildingEnvelope” to 22828. So, thank you, everyone, for listening. Really great topic we had today and I hope you enjoyed it. And this is Paul Beers saying so long until next time.

Waterproofing Structures, Products, Feedback and Scenarios

David Gehlbach – CETCO

  • What is your philosophy of waterproofing a structure?
  • Does the same product and/or systems fit all applications?
  • Is it a good idea to get several different sources of feedback when starting a project?
  • What is the most troublesome scenario that you see in today’s market with Waterproofing?
  • What is a day in the life of a manufacturer’s representative in the waterproofing world?


Check out GCI’s Article on waterproofing.

About The Everything Building Envelope Podcast: Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

*** Subscribe to the show and leave us a Review on ITunes!

Paul: Hello everyone, welcome back to the Everything Building Envelope Podcast, really excited about our guest today, David Gehlbach with CETCO. He’s technical sales manager in Florida and the Caribbean, and really has his finger on the pulse in the waterproofing business. Welcome, Dave.

David: Nice to be here, Paul. Appreciate the invite.

Paul: So before we get into talking about waterproofing, maybe you could just share a little bit of your background experience with the audience?

David: Sure, sure. I’ve got a fairly diverse background in construction industry, roughly 25 years total in the architectural and waterproofing/roofing industry. I started out…graduated from college with a degree in architecture and became a licensed architect in 1996, and then kind of transitioned into becoming a manufacturer sales rep from there. I’ve worked with deck coatings, urethane and silicone sealants, anything that’s related to a building envelope and moisture intrusion, I’ve kind of been involved with.

I worked for a major waterproofing company from 2002 to 2008, and then, from 2008 to 2012, I kind of bounced around as an independent consultant, dabbled in some concrete admixtures and moisture issues related to flooring, and then I started with CETCO in 2012, so I’ve been there for a little over four years now.

Paul: Great, and for those who aren’t familiar, I’m sure many are, could you tell a little about CETCO, who they are, and what they do?

David: Sure, CETCO is a global international company, and I am underneath the construction technologies division that is owned by a mineral tech incorporated. And the construction technologies consist of environmental sciences drilling, and a tunnel division, and then where I sit is the building products division, and that is focusing on sub-grade waterproofing with the use of active bentonite and polymer type systems.

Paul: Let’s talk a little bit about, what is bentonite?

David: Bentonite is a natural clay, it is mined out of the earth and it is processed. And I guess the best or simplest analogy would be, it’s kind of like a kitty litter. When moisture comes in contact with bentonite, it swells and hydrates and expands, and that’s basically the simplistic technology behind it.

Paul: So when you use it in a below-grade application, it’s basically put in place, and then as it gets wet it expands and sort of like it you know, seals and fills voids and whatnot?

David: Exactly, and a bentonite sheet, for example, goes on the wall, either prior to pouring the concrete, which will be blindside construction, or it gets applied to the wall after the concrete is poured, and then it always has to be under compaction, either earth or for a horizontal conditions another topping slab. So it’s always under compaction and most used in the sub-grade market.

Paul: I know with our business, GCI consultants, we see I think being used more and more where they’re trying to maximize the use of property and obviously, basements and garages and things like that probably don’t make them a lot of money, you know the dwelling spaces, so if they can put them at or below grade. I think that seems to really help their…what they’re trying to do. So it seems like there’s a lot of those type of applications these days are using that. Are you seeing that?

David: Yeah, the more you get into an urban area such as downtown Miami or downtown Jacksonville where buildings are right on top of each other, you end up producing that filling, like you said, with a sub-grade garage for parking. And it becomes a property line condition where you’re going to blindside application with either sheet piles or wood lagging or some sort of system similar to that.

Paul: So CETCO has… Their footprint extends throughout the US and beyond, is that right?

David: Correct yeah, there’s a European division as well as North American division, and we also have a South American division that’s starting up strongly as well.

Paul: So I would imagine that your turf, we’ll call it, or you’re territory, is probably one of the bigger challenges given water table is so close to the surface in Florida as compared to some other areas where it’s probably not.

David: Yeah, definitely, that’s definitely true. And that is the case in Florida, we got really practically the whole perimeter of Florida except for the Panhandle is waterfront and the state as a whole is relatively flat except for a couple areas here and there, but most of Florida, you’re right, within three feet or thereabouts.

Paul: So what’s your philosophy with waterproofing the structure?

David: Well, I think, first thing is to ask a lot of questions and understand what the individual needs are of the project and that comes from obviously, are we in the water table? Do we have a hydrostatic condition? Also what the owner is looking for, are they looking to hold onto the building after they’ve built it for 10 or 15 years or more, or are they looking to just build it quickly and cheaply and then go ahead and sell it?

Because that will kind of drive the discussion of what type of waterproofing systems they want, how long they want the warranty, what type of warranty they want, whether it’s just the material only or a no dollar limit, everything is included, type warranty. And then there’s the physical considerations, you know, where are we with the flood areas? Where are we next to other structures? Geographical areas, water test. All those type of things start to come into play as well.

Paul: Does the same product or system fit all applications?

David: I mean, that’s a double question. There’s a yes to that and there’s a no to that. As an overall answer, our products, the bentonites and the polymers, would address all the different conditions. Inside of our product lines we have different levels, we have a salt water bentonite, which is the Voltex CR, that would address a site that has a little bit higher of the salt or a contamination in the soil. And then when we go even beyond that, what we have very high salt and contamination, we have a polymer product called Ultraseal that we jump to that can address Miami Collins Avenue right on the Atlantic Ocean where we have salt contents that are fairly high. So we have different levels and different types of bentonite and polymer products to address all the situations.

Paul: What’s done differently with the Ultraseal and the high salt environments opposed to just the standard product that you may get in Atlanta or St Louis or somewhere like that?.

David: Sure, yeah, the standard bentonite on our product is 1.1 pounds per square foot, there’s other manufacturers that also have an entry level bentonite that basically addresses all your, you know, normal average salt contents and contamination contents for each site The trick is, when you get to a high salt content that bentonite can stop swelling as much as it should, it doesn’t hydrate as much as we’d like to see, so manufacturers went to a saltwater bentonite.

So a lot of products you know, you jump off to that saltwater grade. What we found, when we started getting exposed to the European market, like United Arab Emirates for example, some of those areas have a salt content in the 4% range as opposed to Miami, which is a very high salt range in the 3% range. So we went ahead about 10 years ago, somewhere around 2007 and we introduced the Ultraseal, which is a polymer based product.

So the entry level bentonites are strictly 100% bentonite at 1.1 pounds per square foot in the product. When you jump to the Ultraseal, just manufactured by CETCO, that has roughly 85% polymer, with about 15% bentonite. And the difference is the polymer hydrates and swells even in the very highest of salt contents.

Paul: Interesting, so when an owner or an architect is getting into a project, of course, you’re in there talking to them early, as the… You’re probably one of the first scope items that go in, how should they be doing their research consider the possibilities and make good decision? Is it a good idea to get several different sources of feedback when starting a project?

David: Sure, that definitely by all means. You know, one of the things that we recommend in our part of the industry is to get someone like you guys, get a waterproofing consultant involved early, who’s been down that road before and understands what should be used, and I guess, for lack of a better phrase, what shouldn’t be taken out of a project. So yeah, get advice from waterproofing consultants, bring in the manufacturer’s rep like myself and then also maybe call two or three top waterproofing contractors.

I know that when high-rises get built with glass and dow silicone, I know sometimes even two years before a project’s started they bring in a large glass contractor to kind of get an idea of what the budgeting is gonna be. And I think that’s something that GCs and owners should take advantage of. Here’s the contractors that are actually doing the work, get some feedback from them.

So I think it’s important as yes, get as many people involved upfront as possible and gather as much information as you can before you start [inaudible 00:11:09] a project.

Paul: You know, we’re big advocates of involving manufacturers, of course, but also the contractors, the guys who have to build it, and who are in the marketplace every day, and as you say, if you get all the different perspectives that everybody gets together and you know, basically can work out the best solution for a particular scenario or project.

David: Yeah, and that process also avoids some uncomfortable situations that I’ve personally been involved in where a contract is being awarded to a waterproofing group and the owner is under the impression that it’s roughly three to four times as much money as he thought it was gonna be. And the question goes back to the owner of well, you know, where did that original number come from, 16 or 18 months ago?

And there have been times where owners have said, “Well, I don’t know. We made a couple of calls and we plugged, you know, \$3 a square foot for the waterproofing.” Meanwhile, the specification has a couple of systems listed that may be in you know, \$12 per square foot range.

Paul: That’s one of my you know, pet peeves as where maybe it is that these budgets get set early during pre-construction, waterproofing and other things and then you know, comes project time and budget is inadequate and the money is not there and it really causes a lot of angst and the stress of trying to figure out you know, what we do? Do we just not do it the right way? Or how do we you know, steal money from somewhere else? And as you say it’s uncomfortable and not always resulting in a good decision.

David: Right, exactly. And we talk about the, you know, the percentage of waterproofing as a total of the project cost. For example, a condominium that someone is building near the beach, units may be going for three to four million or even more per unit, the total building cost is maybe \$120 million, and here we are sitting with the owner and they’re trying to get rid of, you know, \$300,000 worth of waterproofing, which you know is a very important entity to a building but with all the lawsuits and the liability that the architect takes on.

The 558 lawsuits, that I think most people who are listening to this understand what those are about, and it’s just important to point that out to say you know, “You’re taking out less than 1% of the total project cost for something that most times ends up being 96% to 98% at the time of the lawsuit based on moisture mitigation, mold, health hazards, issues related to that.” So I think it’s important to point that out. And you can’t do waterproofing after the fact like you can some other scopes of work. It’s a one-shot deal, you either do it or you don’t.

Paul: So have you seen scenarios where owners have…shouldn’t keep blaming the owners, where projects have omitted waterproofing materials, maybe not made good decisions? What happens then?

David: Yeah, you know, worst case scenario was… And I’ll keep the names out of it but you know, worst case scenario is the owner doesn’t have a budget for the waterproofing, and I think it was in that \$350,000, \$400,000 range, value engineer had all the waterproofing. Fast forward a couple of months we’re in the middle of the project and they just couldn’t control the water that was coming through the concrete that was poured, they ended up having to pour a four-foot tremie slab, and do the waterproofing anyway, but what that did was they lost the floor of parking which threw off their units to parking ratio.

They lost a couple units, and I think the total cost to that project was roughly 11 to 12 million after it was all said and done. Granted the total project was probably 120 million, so it was 10% of the project. But once again we go back to, how much was the waterproofing scope if they would have just left it in and did back and got a decent warranty? You know, much less than 12 million. So there have been instances where decisions get made and then 8 months to 10 months later, we get phone calls.

Either the manufacturer gets a phone call or the architect or the consultant such as yourself, get a phone call, “Hey, we need you guys out here, we’ve got leaks all over this basement.” And then the forensics start, “Well, was it waterproofed? Was it inspected? And what type of system was used?” And you go down that whole road of trying to figure out what happened. It can lead to saving a couple of dollars and then ending up spending many more dollars injecting or trying to fix those water’s intrusion points.

Paul: Penny wise and pound foolish once you get into the, “What happened phase,” it’s probably too late.

David: Right, exactly. And without trying to be perceived as a pushy salesperson, I try to educate the owners and the general contractors on the decisions that they’re making. You know, “There have been other people that made these decisions, here’s what happened. I’m not saying that’s gonna happen to you, but these are scenarios, worst case scenarios that have happened.”

So it is a little bit of a gamble when they decide to just not do anything or waterproof half of it or roll the dice because the water table is a little bit lower. Over on this half of the project versus you know, over on that half of the project, the concrete is a little lower, so we should waterproof that but not the other half.

Paul: You know, I’ve seen projects where they tried to piecemeal it, and I was gonna say, playing fire, but they’re playing with water. But it’s scary because if you blow it and as you said, as you were describing with another project, it can be pretty catastrophic.

David: Yes, can be.

Paul: So when you do get asked a question about cost by owners, architects, GC’s, how do you handle that?

David: I mean, that’s a touchy situation because costs can vary immensely depending on how many mobilizations there are to a site, access to the site, how long a job is gonna go on. So there’s a lot of variables that affect that, but I think the range of pricing and the way we used to do it with scheduled values, you’re plugging in an estimate into each one of the scopes of the work. So for example, if you’re owner and your project team is looking at a five-year warranty on the entry-level bentonite product you know, those are usually \$7 a square foot plus or minus, could be lower could be higher.

The market affects that as well. If waterproofing contracts are aggressively looking to get more work, the price is obviously gonna be lower you know, as it was in 2009, and in those times when there was not that much work around. On the flip side, if it’s a very busy as it is now, the bids tend to gravitate a little bit higher. But you know, a number within 10% or 12% to 15% of what it should be, should be an easy thing for an owner and an architectural firm and a project team to have in that box.

So you know, five-year systems, like I said, anywhere \$7 plus or minus a square foot installed, and then when you get into the 10-year systems, that’s plus or minus, you know, \$11, \$12 a square foot in that range. And once again, those could be slightly higher or lower, but that’s kind of exactly how I answer that question to an owner. You know, “Here’s your range.” What we do wanna avoid is what we discussed before is, let’s say you have a desiccation and a project team that is heading towards a special warranty in the 10-year time and they have products that are in that \$12 range, you don’t want the general contractor to just pull a number out of thin air and say, ‘Well, let’s just plug \$4 in there.”

You know, that creates those uncomfortable scenarios 18 months later where they don’t have a budget for the job, but it’s because they didn’t do the due diligence before hand and find out how much stuff should cost. You know, and that’s the same for other products that I don’t sell, deck coatings, perimeter sealants around the windows, roofing. You know, they all have their price categories and ranges, and that should be something that a project team should get a handle on early in the process.

Paul: You’re just mentioning warranties, I know CETCO has different warranties available with different products and different programs and whatnot, can you talk a little bit about that?

David: Yeah, sure, warranties are important. A lot of times the project team will focus on the year, you know is it a 5-five year? Is it a 10-ten year? Roofing and plaza decks are most commonly 20-year warranties. And although the year is important, it’s also important to ask the next question, “Okay, what type of warranty is it? What’s included in the warranty? Let’s run through some scenarios on what happens if we have leaks.”

The warranties are kept in a way where you know, a good/better/best scenario where most initial warranties are material only, and that basically states to the owner or the project team that you can prove that the material is defective in and of itself, the manufacturer will participate in that warranty. The challenge with sub-grade work is that now you have 16 or 20 feet of dirt or earth, hardscape above that in urban areas you have tight property line conditions where to dig down 20 feet to fix something is really not cost effective and is not something that you can easily do.

So a lot of times with sub-grade waterproofing, you end up addressing the leaks from the negative side which is the interior of the building. So that warranty you know, it is what it is. I guess I’ll just say that.
The next step is a material and labor warranty where the manufacturer will participate in covering the material and the labor cost. However, most commonly there’s a sentence somewhere that says, “Warranty is limited to the original purchase price of the material.” So obviously, the price of the material at X dollars a square foot doesn’t include the labor to install it or the labor to remove it if you need to replace it, because that can be you know, something that’s \$3 a square foot to buy can be \$10 or \$12 a square foot to install.

So those warranties, although they are warranties, what CETCO did about 10 years ago is kind of asked the question to ourselves, “What type of warranty could we offer if it was a no dollar limit, no questions asked, we’ll fix the building until it’s dry type warranty?” And we came up with what’s called a hydrashield quality assurance program, and in a nutshell, what that does is it basically gives a warranty to the owner and the project team that if there are any leaks in the building we fix them, no questions asked, with injection technology from the interior of the building.

And there’s a couple of things that our team put together that have to happen to get that warranty, to be eligible for that warranty. And that is hiring a certified inspector and a waterproofing consultant such as GCI, there’s a total of about seven or eight of them throughout the state that we have a list of. And then the second item is that we have to have an approved applicator who’s part of our hydrashield warranty program. And there’s about, I would say 15 to 18 contractors throughout Florida and the Caribbean that are approved applicators to do that work.

There’s a mandatory pre-con meaning that takes place prior to the start of construction and then the waterproofing consultant inspects that installation and the backfill throughout the process of the sub-grade installation. And then there’s constant communication with CETCO’s field service unit, and it’s basically a system that’s put in place to inspect all the waterproofing, make sure that it’s installed correctly prior to the backfill. So then when they’re finally done with the project, you get that no dollar limit warranty.

Paul: When CETCO [inaudible 00:23:48] no dollar limit warranty, they have good confidence going into it because of the process with having everybody involved having the independent inspections, having the technical team that it’s gonna have a good outcome and it’s gonna be a win for everybody.

David: Yeah, most likely, not just with CETCO as a manufacturer, but most manufacturers products that are tested, they work if they’re installed correctly, but it’s the penetration that was missed on a wall, it’s an electrician or a plumber drilling a six-inch diameter hole through the wall and not telling anybody. It’s those issues and the lack of communication with the project team, that’s where those leaks… In my opinion 99% of the time, leaks to a building come from those type of scenarios, not from just the product failing.

It’s usually a penetration, a missed detail, a termination bar was not done correctly, something along those lines. So with that owner hiring the independent inspector and working closely with the waterproofing contractor and CETCO field services with constant communication you know, we try to catch all those items before we backfill and before we finish a project up.

Paul: If you do have the rogue penetration, I’ll call it, that for some reason slips through the cracks for whatever reason, can that be fixed after the fact?

David: Yeah, I mean if we can get to it from the outside, that’s fine. If we need to inject it or address it from the inside we can do that as well.

Paul: So, Dave, let me ask you, what’s a day in the life of a manufacturer’s representative in your waterproofing space? What do you do on a typical, or I guess even atypical day?

David: Sure, yeah, we do a lot of different things. We have interactions with architects, general contractors, waterproofing contractors, owners, consultants. In a typical day, you may get a mixture of all those in one meeting or you may have individual meetings you know, with an architect to discuss that upcoming project. Maybe some needs that they have for you to review, their specifications or they just wanna talk about you know, something they have going in a specific project that’s already being done that they just wanna bounce an idea off of.

So we wear many different hats, you know, we can be down in a 30-foot hole looking at a sub-grade waterproofing condition and then be you know, in an owner’s office for lunch, and then be doing a presentation at a CSI event later that evening. It’s a constant juggling of what we do. The goal of what I do personally is to become a resource to the architects and the owners in the GCs and the waterproofing contractors that use our products. As I said in the beginning, I’ve been doing this for roughly 20 years or so, and I know it’s important for someone who calls up and just wants something answered, even if I don’t know that question, I pride myself in the fact that I have a lot of contacts throughout the industry and I’ll end up getting the answer for that person.

Now a manufacturer’s representative, in my opinion, shouldn’t just be pigeonholed to his one product group because construction has so many different transitions from one scope to the next, you know, for example, what happens at the top of a wall when the waterproofing ends? Do you transition into EIFS system, stucco system, a brick system, are there through wall flashings? That transition point is very important to the architect because they’re looking at the whole project. So I think it’s important to not only understand your specific product and how that is installed and how that goes in a project, but how some of the other items in the scope of your work, what touches your product? How do those transitions work? Because that’s, you know, that’s important to me.

Paul: That’s what I said when we started, you really got your fingers on the pulse I think and going on in your territory at Florida and the Caribbean and I can personally attest that a really great resource for people who need to get some good quality advice with regards to the various water proofing elements.

David: I appreciate that.

Paul: So if somebody wants to learn more about CETCO or get a hold of you, how would they go about doing that?

David: I’ve got a number of ways, everybody is welcome to call them on my cellphone, and I’ll give that number that’s 407-450-2429. Also our website is And then I’ve also got and email, it’s And my last name is G-E-H-L-B-A-C-H, and the minerals tech is basically how it sounds, and T-E-C-H at the end.

Paul: Great, so I know that it was a really good topic that we had today and I really appreciate all the wisdom that you imparted with us. I know this is a big concern and hot button with our customers that really come from something that was… I would say…was going to say obscure, but something that really wasn’t in the forefront and now it’s really out there and it’s becoming a bigger and bigger part of these projects, so I know that’s gonna be a lot of interest. And thank you very much for coming around today.

David: It was a pleasure, as I said I appreciate the invite, and happy to join you.

Paul: Great, so I’d like to remind everybody that we have Everything Building Envelope newsletter and if you would like to get on the list and receive that all you need to do is text the word buildingenvelope, all one word, buildingenvelope to 22828. Again, text the word buildingenvelope to 22828. Thank you, everyone, for listening, it was a really interesting topic again. And thank you again, Dave.

David: You’re welcome.

Paul: And until next time, this is Paul Beers saying, “So long.”

Announcer: Thanks for joining us today, please subscribe to this podcast on iTunes or Stitcher. For more information on the Everything Building Envelope, previous episodes, show notes, bonus video content and much more, check out our website

Hurricane Investigations, Construction & Consumer Recommendations

Will Smith- GCI Consultants

  • Give us a little history of your experience in hurricane investigations.
  • What have you and your peers learned from these investigations?
  • How has the construction industry responded to these findings?
  • Have these changes been effective?
  • What recommendations do you have for consumers?

About The Everything Building Envelope Podcast:
Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

*** Subscribe to the show and leave us a Review on ITunes!

The Next Generation of Construction Professionals

Dr. Mittie Cannon- Amec Foster Wheeler

  • How is the younger generation being recruited?
  • How are they being trained?
  • How can industry and trade associations impact on younger generation entering construction?
  • What are you doing as a contractor to recruit and train the younger generation? As an association?
  • Is it critical that industry and education form a relationship?
  • What role, if any, does parental involvement have on younger generation entering construction?
  • What has been your experience working with the younger generation?
  • Check out this article about this podcast. Click Here.

About The Everything Building Envelope Podcast:
Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

*** Subscribe to the show and leave us a Review on ITunes!

Paul: Hello everyone. Welcome back to the Everything Building Envelope podcast, this is Paul Beers. We have a really interesting topic today where we’re talking about the next generation of construction professionals. Our guest is Dr. Mittie Cannon and she is involved with this topic with the associated builders and contractors. Welcome Mittie.

Dr. Cannon: Thank you.

Paul: So really interesting topic, would you please tell the listeners a little bit about yourself, what you do for a living and what you volunteer and help that with ABC?

Dr. Cannon: Okay. First of all, I am Mittie Cannon which you’ve already stated and I am the Manager Workforce Development with Amec Foster Wheeler that is a global organization, where we are present in more than 40 countries. And some of the areas that we focus on is project management engineering, as well as construction services. So, there my role is to oversee our training program to ensure that our employees are working safely, they have the skillsets and knowledge they need so that we can meet the needs of our clients. So, workforce development is very important as we go forward and we realized that without that skilled workforce, they’d be as not something that’s going to be paramount, so that’s very important to our organization and to the industry.

My involvement with workforce development is what led me to opportunities to ABC, and so at ABC I’m the past Chair of the Workforce Programs and Initiatives Committee. And so I’m very involved with workforce development, not only at the national ABC level but also at the local ABC Alabama Chapter level. So, I get very engaged in workforce development opportunities and initiatives and assist with programming in different initiatives that also impact how we recruit the new generation and the next generation of skill construction professionals.

Paul: So, how is the younger generation being recruited?

Dr. Cannon: There are so different, you know, strategies that are currently being used to attract and recruit the younger generation. For instance, one of the initiatives that we’re currently using is having a simulated workplace, so we look at how we promote ourselves as an industry and take that and showcase that to parents and students as to how that is a viable career option in the career pathway for them. And show them the benefit of being a member of the construction industry and how they can still be themselves, not necessarily have gone to college and receive a degree and end up with a lot of debt from loans, but also how they can enter the workforce is still be able to use their hands and be just as productive and make how wages just like anybody else would.

And still be able to travel and take advantage of being able to meet new people, they want a different thing from building structures and have been able to look back and see that they had an active role in the completion of a project over time.

So, we look at the various things that they initially bring as benefits as a way to use those as tools to recruit others. So, having a simulative workplace is one of those tools that we have used. And kids seem to, especially at the high school level, they seem to really respected and like that because if they find themselves not doing well in academia, then what we have found is that whenever they come to a construction program, they’re doing what they would have done in academics but there’s been a more applied way. And so they can speed and better understand how the background they aren’t really works because now, in the corporate program we’re actually doing it but we’re not necessarily calling it that, so it’s more applied.

So, we’re taking a different approach to it and so they better understanding who we are because now we’re changing the language and we’re putting into a perspective that they can relate to and they can better connect to that.

Paul: It seems like over time that, you know, to learn a trade concept has really been the emphasize, you know, it seems like the big goal now for everybody is to go to college and you mention the college debt which, you know, can be staggering. And it’s almost like taboo that to say that college isn’t for everybody and it really isn’t and in a lot of cases, somebody, I feel like could be happier and more productive with the trade, as you say, still be a professional, make good money and make a stable living and, you know, basically pursuit of the American dream. Or if you’re, you know, overseas somewhere whatever, you know, at the higher standard of living is.

And it’s encouraging to hear that some things are being done to try to encourage people to look at viable alternatives that probably aren’t always presented real well.

Dr. Cannon: Right. And there’s another initiative too that ABC national has taken lead on and that is the branding campaign. So, we’re looking at, you know, we’ve been working on this, for example, a couple years where several people from industry and from the ABC chapters have come together and we’ve actually sat around a table and talked about how do we build it, better tell our story and convey who we are to the everyday people? People who don’t necessarily understand what we mean when we say a pipefitter.

So when we break that down and we talk about how pipefitter, you know, has a technical role in how they can have a professional role and we can talk about the different wages associated those different levels and what the requirements are of those different levels. But also how sorting out of the pipefitter with technical field set moving into a professional level can lead to owing a company or being a project manager or a designer.

So, there’s just so many different avenues that you could take with it and so now we’re trying to do a better job with promoting the branding of it to change the perception of the industry but, you know, also to help get kids and their parents to take second look at who we are and see us as a career option.

Paul: Yeah, you know, as you’re saying as I’m thinking there really are so many opportunities in our industry for advancement. You know, if you’re a high achiever, you’re gonna move up the ladder probably as fast or faster than you would in pretty much any other type of trade or employment. And as you say, you can end up, you know, eventually running the show being a project manager or project executive, owning your own firm, there aren’t a lot of barriers to entry with the construction trades. You obviously have to pay your dues and develop skill sets and what not along the way. But if you are a go-getter, the opportunities are there. You agree with that?

Dr. Cannon: Absolutely the opportunity is certainly there and like you said, you know, having the right attitude into desire to want to be successful, you could pave your own way. And there are so many people who are standing there waiting to help, there’s various mentoring programs you can get engaged in, there’s always professional development opportunities. So, it’s unlimited, I mean, there are just so many opportunities. And the other thing is most people don’t realize that even in the construction industry, not only are we looking for skilled professionals such as pipefitters and electricians, but it also takes other people with other skillsets to make our industry turn. It takes people with accounting and financing background, people with medical backgrounds.

So, it’s not the discount that we don’t have those people in those positions as well because it takes all of it to want a construction business. So, people definitely don’t realize that we’re more than just digging ditches and hammer, nail. I mean, it takes attorneys and it takes accounting people. It takes safety professionals with medical background, it takes a number of talented people and so there is room for everybody.

Paul: Yeah. So, this story I’ll just have to say, this story really resonates with me. Because it’s kind of my path, you know, I was attending college and I got a summer job, working in construction as a labor, which I can tell you, isn’t where I wanted to end up but it was, you know, I was making some pretty good…I was young, strong, I was making some pretty good money. And then I became a carpenter, and then I became a window installer, and then I started my own business. And then I actually became the owner at that point.

Then I started doing expert witness work and I started my own consulting firm in 1988 and, you know, today I’m a full-fledged construction professional and I own, manage a, you know, engineering and construction firm. And the path that you described and all the opportunities, they were there and it was a great ride. And that opportunity still exists, I guess, is what I would say.

Dr. Cannon: It does, the opportunity does still exist and the industry needs people. I think the missing component there is the educational component. And when I say educational component, I’m speaking of people not knowing and not having information and not been necessarily aware of what’s out there. So, I think that is probably the biggest component that’s missing. If people know more about it, then I think they tend to maybe take a second look or even consider it as an option. But when people don’t know, they typically will migrate to what they thought is that they do now.

So, I think that’s the other thing, that as an industry, that we have to do a better job of educating people about who we are and we have to educate outside of our world of the industry, we have to go outside of the construction industry and establish relationships on the outside of our world. And go into the world of other people, other sectors and educate them about who we are. So, we really need to get into the phase and space of other people, so that they can become educated about who we are and in that way they will be able to look at those different career options.

Paul: And the other thing that I think has changed a lot is, it’s not the boys’ club anymore, it’s certainly equal opportunities for women as there is for men in virtually across the board at this point.

Dr. Cannon: There is opportunity for women, like I said earlier, there’s opportunity for everybody, there’s something for everybody. And, you know, we’ve made a lot of progress over the years with women in construction. I can recall when I first started, of course, you know, I had to exaggerate somewhat stretched the truth in order to get into the industry to do what it is that I wanted to do. And so, I’ve had a very rewarding career as a female and not just as a female but I mean as an African-American female. So, women definitely have opportunity but, you know, as a woman I don’t feel that industry has been generous to me because I am a woman, but it is because I paid my dues and I earn my way.

And for the most part, if you just take the approach that you’re in it for the best, in it to make a living and to grow within it, then you can be very successful.

So, we still have a lot of work to do and long ways to go as far as women go because, you know, of course women are still under represented and I would love to see the day, don’t know if I’d see it in my life time but I would love to see the day that this industry is no longer considered to be nontraditional. So, I think with all the seeds that are been implanted and sowed, that at some point they would germinate and we can just see more and more women enter the industry. So, as we’ve come a long way but we still have a long way to go but we are making progress.

Paul: And it would be great to, as you say, to see that because we hire women obviously in our firm and they’re great. I mean, they’re looked at equally and they are. They’re looked equally because they are with what we do, I mean, everybody can do everything equally well and we’ve had some really great experiences. I wish I had more people like some of the ones that I have, they’re really great. So, once people get interested, they obviously need to acquire skillsets and be trained in what not. Well, how is that being accomplished today?

Dr. Cannon: There are different methods, you know, people being trained, you know, we have apprenticeship programs, we have fast training, even at the post secondary and secondary level. You know, there are construction programs that are also incorporated into secondary program and so, you know, students can start as early as some high school in starting rolling into programs. And the great thing about that is the industry, years ago, more than 20 years ago, came together as one and took off of their competition heads and decided they wanted to endorse and adopt a curriculum that no matter who you work for, as long as that organization was affiliated with the NCCER and we would recognize in portable training that NCCER put together for the industries that was designed for industry by industry.

So, that definitely played its role in helping to standardize into unified things for us as far as training go, so that way everybody knew that if someone had gone through NCCER’s training whether it was in a high school program, post secondary, apprenticeship program or even through a company’s craft training program, that if they had the NCCER it was almost like they had the good housekeeping seal. Because we knew they satisfy both the practical component, as well as the written component.

Paul: And as you said, it doesn’t need to be a competitive thing because raising the level of competence of the workforce helps everybody, obviously.

Dr. Cannon: Right, it does, it does. You know, we’re all fishing out at the same pond so we’re all recruiting the same people and they just make the, you know, they just make their little cycle through the process. So, at least we know that they’re trying that we know how they’ve been trying, so when they show up and then we know what to expect.

Paul: You’re fishing in a better pond, basically.

Dr. Cannon: Yes, absolutely.

Paul: You’d mentioned the word but one of my favorite words before mentor. So, at my company, we’re building envelope consultants and I can tell you if you find the curriculum for that, please let me know so I can get a bunch of people into it. So, we’re kind of, you know, we don’t fit in the box maybe as well as everybody else and our big training asset, we have a young staff member come onboard, say, engineering school graduate or action on entry level of being a construction project manager. We always assign them to somebody that’s been doing this for quite a while to mentor them. Basically, you know, help them through the different circumstances that they encounter.

And I think that that’s probably something that’s done a lot not just my company but I think that something is probably done a lot in the industry. And there’s a lot of opportunity for those of us that are already have the careers to really help bring the younger generation along.

Dr. Cannon: Yes. Chances here at my organization, Amec Foster Wheeler, one of our values is that, you know, we invest in our people. And so, when we recruit, we glad to do college recruit days we make sure that we invest in those people because we want them to be successful. Because we realize that, you know, that they’re probably gonna be then, you know, within that pool of people who will be of the next generation of leaders. So, as an industry, I know of other companies that are doing the same thing so, you know, having it mentoring program and making that investment in the people and praising diversity and inclusion, those are very, very important elements that should be a part of anybody’s value system.

So that is important and I really think that that’s gonna be the life of our industry. Because if we don’t do that and if we don’t do enough and if we don’t continue to do that, then I think what we’re going to see is, you know, a bigger gap. So, we definitely to exercise every opportunity of, you know, developing and mentoring those younger professionals, different

along the current situation, I…you know, they’re really good about having young professional summit. And so, in those summits you typically will have up-and-coming engineers, product controlled individuals who maybe entering level, coming out of school students who are now in the workforce.

And so these are high potential that someone has identified and, you know, they felt that these are young people that we needed to invest in. So, they had the opportunity of going through young professional summit and so that’s helped into develop them, there will be a mentor, their networking and meeting with other professionals from across, you know, the country from other companies as well, so they’re learning together as well.

Paul: That’s really great.

Dr. Cannon: I think by doing that, had a notion of professional summit, they’re already in the industry because that’s how they get to those summit. But I think that also helps to retain them. Because from what I can understand with working with the young generation, they want to be engaged, they want to be valued, they wanna be challenged because they’re very bright professionals. So, they want to be challenged and they want to take on those leadership roles. It’s not unusual to hear them come in and they wanna make the most money, they wanna be sitting in the number one seat. They wanna run the company.

So, I think, you know, we shouldn’t discount, you know, them wanting that. I think when we be that type of energy and interest, we need to figure out how to leverage and work with that. And I think that’s just new from my generation and other generations, so that’s what we’re seeing in a younger generation now. So, we have to learn how to deal with it and how to manage, you know, that type of energy.

Paul: Yeah. Well, I mean aspiration and ambition are great things, so is patients. You can be, you know, to be sitting in the lead chair you need to put a little time and, obviously, too difficulty where you get to that. Let me ask you this question. What role now and, if any, does the traditional education system play in developing people that may be good fits with the construction industry? I just can say, one thing that comes to mind is obviously the traditional, you know, like engineering and architecture and also building construction schools, as it learned to that? Do you have to go to college or there are other ways that the educational system does or could support the industry?

Dr. Cannon: Basically, there was a system that can support the construction industry. There are many ways in which they can support the industry and I think that goes both ways. The construction industry also needs to support the educational system because I think what we’ve experienced for years is that we, the construction industry over here and this was our world, and education was over here and they’re in their world. So, these worlds are separate, we keep them separate. You do your thing, we do our thing and they were not communicating. I think we’ve realized that we can no longer continue down that path because that that’s not working, so we found ourselves coming together and starting to communicate and establish in relationship.

And the NCCER hasn’t really well, we’re trying to bring those worlds together especially with partnering with ACTE. So, we partner with the critic side of education and their program and it pre-conferences for ACTE that industry comes to and they take part in exercises with education. So that way it forces us to communicate and to learn about each other. So, once we’ve, you know, broken those barriers and we start the communication, then we start to build those relationships and trust. And then we found that that we can work together, so that an industry can tell education what it is that we’re looking for and tomorrow’s workforce, and then we can also help to guide them with what curriculum and program that needs to look like to meet the needs that we have.

And so, it takes both of those communicating and willing to work together and to give, so that we could help each other. So, it’s not just education alone, you know, work into support industry but industry has to also be willing to flex and to give to support education. Now, we can take on role and that is industry where I think we have a presence at different levels of education locally, state, and national, where we have a voice and I see at the table so that we could be heard and see. And then we also need to do something with education bring them into our world so that they can be represented too. So that we can always keep, you know, that dialogue go on. So, I think having those two at the table together now with working in harmony, is something that’s gonna benefit both.

Paul: The building construction industry really has a lot to offer because there are plenty of college career paths where you can end up in the construction industry, engineering architecture and then as you said, all the professionals, accounting, finance, legal, human resources, you know, all those sorts of things. And then, that’s not necessary for everybody. There’s also the non-college group that you can come in and do very well with, also. And, you know, as far as having a relationship with industry and education, it seems that if all those paths were supported that would probably get the most bang for the bucks, so to speak, or getting the best result and as far as offering opportunities to the younger generation that they can embrace and really do well with.

Dr. Cannon: I agree and that’s all result of building relationship. And as I mentioned earlier, NCCER has been a great job with that especially with the career pathways, pre-conference workshop that’s done at ACTE. So, it’s gonna take initiative such as that and more but we have to be consistent with it. We just can’t make a big splash and do it one time, I think that’s gonna solve the problem. We have to continuously do that and maintain those relationships and they have to be positive. So, yes, it’s definitely doable.

Paul: So, what role if any does parental involvement have on the younger generation entering construction?

Dr. Cannon: Real involvement has a big role in our younger generation entering the industry because, as you know, the generation of our kids are most influenced by the parents. So, if you can get to the parent and educate the parent about the career options in the various career pathways that are in the industry, then you stand a better chance that the child that considering or even looking at a career in the industry. Because even though they spent a lot of time at school, that parents still has that greatest influence. And so, it’s very important that we get parents involved. And we get them involved at an early age of the child’s life, so that way they can start having these conversations.

But if parents don’t understand who we are and what we do, then I think it’s hard for them to be involved. So, again, it goes back to educating everybody that’s in their loop and educating those parents, I think, will help with parents then were comfortable, was talking about careers that in the industry.

Paul: Because the parents can be an asset but the parent can also be an impediment. Correct?

Dr. Cannon: Correct. And of course we know most parents want, you know, will say that their child’s gonna go to college. But then, you know, there’s always those opportunities that if they go to college, they may not finish, or if they go to college and finish, they may not find a job. And then, what we’ve seen is they end up going back to school and they will end up want to…some type of a, you know, vocational program, a career technical education program, looking for an opportunity in our industry.

So, it’s not unusual upon, you know, degree carry an individuals working in the construction industry. Because most of the stories have been, “Well, I ended up going to college and it was not necessarily what I wanted to do or it was the one I thought it was gonna be.” And so, they end up coming to the construction industry.

Paul: Yeah. That makes sense and it’s like work in the construction industries, so they can pay off their student loans that they committed and need to do, to begin with.

Dr. Cannon: Right. I work in the industry with a choice and moment, and I still have my doctorate. So, I understand both sides of it.

Paul: Yeah. You know, I was thinking we’re talking about the parents, you know, a lot of times they want their children to go to college so let’s get them in the building construction program.

Dr. Cannon: Yeah.

Paul: Plenty of opportunities there as well. So, what’s your experience then working with younger generation?

Dr. Cannon: So, I have worked with the younger generation in so many different ways, of course, I do a lot with State Department of Education especially on the career tech inside of the house. So, participating in workshops, careers in construction events, careers in construction days, you know, going in as a guest speaker, launching programs for girls. Most recently, power up at some of the dollar things has been probably one of the initiatives that I’ve seen more parental involvement than I’ve ever seen, and it involved younger generations.

So, for me, that was the aha moment because I got to kill several birds with one stone by having an event where parents were required to be there. And it was for young females and it was an introduction to the construction industry and to see mothers and daughters get excited, was exciting for me.

So, there has been a very positive experience for me with working with the younger generation because now, I feel like we have found a tool that has been successful in tracking them to come to an event where they can learn about the industry. And it not be a lot of pushback but they came to the industry or they came to the event not really knowing what to expect. But they when they left, they had a whole different perception of the industry and it was just really amazed at what the career options could be for them, that was very,
very rewarding for me.

Paul: Yeah. Well, you know, it’s really great because it addresses one of the biggest issues, if not the biggest issue the construction industry has, which is, you know, getting skilled workers. And it’s always a body count but if those bodies, you know, they don’t know what they’re doing it just leads to nothing but trouble with workmanship issues and things that are not up to specifications. And, you know, problems after construction that gets the lawyers and involved and make people unhappy, and so I think the more that can be done to really improve the quality of the labor force in the building construction industry right from design, engineering to construction, and all the supporting roles is really a big plus for the industry.

Dr. Cannon: Yes, yes. But I mean and, you know, there’s just so many different things that you can do with the younger generation, you know, again the young professional summit, I’ll be involved with that this coming summer, so I’m looking forward to that. I was involved with the young professional summit last year at Clemson University and it was well attended. And so, you know, it was really, really good to see the interest that the younger generation expressed. I mean, I could see that they attended, I mean, they were there because they wanted to be there. You know, they’re hungry for challenge and they’re hungry for knowledge, and they’re hungry for opportunity. So, it’s up to us to do something with that.

And so, I just get excited, you know, to even have the opportunity of being able to work with the younger generation because, like I said, they are very bright and, you know, they just wanna be challenged. So, you know, spending that time with them and getting to know them, and guiding them, and mentoring with them, and telling them about the industry, is exciting to me. So, it’s something that’s kind of fills my soul, so I think that’s what we need and, like I said, there is something that we have to continue to do and stay on top of.

Paul: So, for our listeners be that their parents or younger people that are interested in getting into the profession or somebody that knows somebody, are there any resources you could direct them to that get more information about careers in construction industry?

Dr. Cannon: Yes. So, off the top of our head there are couple websites that you can go to. You can always go to the NCCER’s website, build your future,, that is a great resource that you can go to. You can learn about the different professions, you can learn about wages, you can learn about where training opportunities are. There is all kinds of information that you can learn about the industry at that website. There is also websites like the Go Build Alabama website on that website. They provide information about training providers. It updates on what’s going on in the industry.

These websites do a really good job with promoting the industry and also highlighting the younger generation and in showing others how people who look like them are also doing well in the industry and who are also in the industry. So, those are two websites that I would definitely recommend that listeners could go and check out BYF and Go Build Alabama.

Paul: Great. So, Mittie this has really been interesting topic and very, very relevant. I know it resonates with me. And I’m sure I’m not the only one and, I mean, I know it resonates with a lot of people, business showing as good as your team. And, you know, team is everybody, not just individual people, and the more that we can do to bring talent to young people into the industry and develop them as construction professionals, it’s great for everyone. So, thank you very much again for coming on today.

Dr. Cannon: Okay. Thank you for having me today.

Paul: So, I’d like to remind everyone that we have a newsletter, “Everything Building Envelope” newsletter. If you’d like to subscribe to that, all you need to do is text the word “BuildingEnvelope,” all one word to 22828. Again, for the Building Envelope newsletter, text the word “BuildingEnvelope” to 22828. And thank you everyone for listening and it was really a very interesting topic. As I said, until next time, this is Paul Beers, saying so long.

Advantages & Limitations of PRMA, IRMA Design Configurations for Roof Covering Systems

Russel Levi – RCLA

  • Advantages and limitations of PRMA/IRMA (inverted) design configurations for roof covering systems, and waterproofing systems on plaza decks, terraces, and protected balconies.
  • Possible consequences of the typical disconnection between design, installation, performance, & building code requirements associated with flashing and drainage systems in exterior walls.

About The Everything Building Envelope Podcast:
Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

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The Everything Building Envelope Episode Transcript:

Paul: Welcome back to the Everything Building Envelope Podcast. I am really excited about our guest today, Russell Levi. Russell just started working with GCI, he brings a lot of knowledge on the roofing and waterproofing side of things. Welcome, Russell.

Russell:Hi Paul, good morning.

Paul:Yeah, really glad to have you here, and you know, we’ve, obviously, been working together for a little while now and I’m very impressed with your knowledge and abilities on it. We’ve got some difficult roofing projects that we’ve got started with, so I thought maybe that would be a good thing to talk about today. It’s interesting, we are well into the teens on the podcast episodes, and we haven’t talked about roofing yet. So, I know that there’s a lot of interest with that and the listeners will really wanna hear what you’ve got to say. So, before we do that, can you just tell us a little bit about yourself and your background?

Russell:Well, I started a roofing consulting company, by the seat of my pants, in 1986, after opening a new engineering office for a structural engineering company, back when. And I had my own company for 25 years in the Baltimore, DC, area, and structural engineering company for 9 years, under the same roof there. And most of our clientele is up and down the East Coast. We did a good number of projects in Florida, as well. But we also had to put up with things like snow and ice, and freeze and thaw conditions that you’re not so accustomed to, here, in Florida. But, for the most part, roofing principles apply the world over, and there are some advantages to certain types of roof covering systems. And we say “roof covering systems” to distinguish it from roof, which refers to the entire assembly of the structure, etc. But most of my clientele, a good mix of private and public… We’ve done a lot of work with both new construction and also existing construction, in coming up with plans to retrofit existing roofs, whether we’re removing them and rebuilding them, or redesigning them. So, we’ve had a lot of experience on coming up with solutions for existing issues, as well as new construction, and value engineering and just value. That’s what I do.

Paul:And that’s exactly what you jumped into with us here at GCI Consultants, is we’re working on a really large project, a big roof. It’s actually in Texas, not in Florida. We are addressing some issues that they’re having and how to get them the best value going forward with the repairs. So, today we are gonna talk about the advantages and limitations of PRMA, IRMA design configurations for roof covering systems. And what I wanted to ask you before we even dive into that is, could you talk a little bit about what, these are obviously acronyms, PRMA and IRMA are?

Russell:Right, well PRMA, the acronym, I think these have been around probably 25 years or so, is Protected Roofing Membrane Assembly. Where IRMA… And some people remember it by Inverted Roofing Membrane Assembly, or, it really means, Insulated Roof Membrane Assembly. But the key word here is it’s inverted. In other words, it’s an upside-down roof.

As you know, most design configurations for roof covering system is, you have your roof deck structure, you have your insulation layers, mechanically fastened or adhered, and then the membrane goes on top, whether it’s a built-up membrane or a single ply membrane, etc. So, you have roof deck, insulation, membrane on top. In an inverted system, the membrane goes directly on the roof deck. And then the insulation goes on top of the membrane, and then the insulation, which is an extruded polystyrene, you know, the blue board, like Dow STYROFOAM, or the pink board, like FOAMULAR, which is impervious to moisture, of course.

So, you have roof deck, membrane, insulation on top of the membrane, and then there’s a filter cloth, and then there’s a ballast. And it could be a crushed stone, or it can be concrete pavers, or a combination thereof, that holds the insulation down in place to keep it from floating or blowing away. And so there are many advantages of this type of configuration. So PRMA or IRMA really refers to a configuration. It doesn’t refer to any certain proprietary product. So, that configuration can be used, and it’s also often used on plaza decks, terraces, protected balconies, in a waterproofing situation that’s insulated. So, there are many advantages of this type of configuration, and there are also some limitations.

Paul:So, when you say limitations, one thing I was thinking when you talked about ballast, is that that’s a big no-no in high wind areas because, well with gravel, particularly, it can become flying debris. Is there a workaround when you get into high wind areas, to not have that issue?

Russell:There is. We’ve done many coastal… You know, along the East Coast, and Maryland etc., where we use concrete pavers. And along high wind uplift areas along the roof perimeters, sometimes there’s additional pavers, there’s additional weight, or even strapping, that you actually attach them to one another so they can’t go anywhere, and it’s proven very effective. And it’s actually… When you tackle the ballast situation on a high wind or coastal situation, it’s really a huge advantage, particularly on that type of roof, that’s subject to possibly hurricane projectile damage, impact damage, etc.

One of the many advantages is the membrane never sees the light of day, it’s never exposed to the weather directly, and it’s also fully adhered to the roof deck. So, if you have a puncture, if you have a hole, you know exactly where it is because moisture doesn’t travel between the fully geared membrane and the roof deck. Whereas in a conventional system, you punch one hole in the membrane and you can chase it forever, it will drive you nuts.

But, there are other limitations with regard to ballast. There are other limitations in that…due to the fact that one needs a ballast, the roof deck structure, the structure must be able to hold the weight of the ballast, which is never any less than 10 pounds a square foot. And depending on the pavers, or what you’re using as ballast, it may have to put up with 15 to 20 pounds a square foot. So, usually these types of configurations go over the top of concrete decks and/or I put them on metal decks too, where we add a substrate to the existing metal deck first, like a gypsum board, etc., and go to that. But many roofs are designed for a ballast load, but may not have a concrete deck, so those are workaround’s.

Paul:So, you’re talking about adhering the membrane directly to the deck?


Paul:Does the deck have to have a slope to it, or can you put it on a no slope or a flat deck?

Russell:That’s one of the beautiful things about an armor roof. You can definitely put it on a sloped deck, but in… Many older buildings, for instance, for whatever reason, have a dead level, concrete roof deck. You find that a lot in DC, Baltimore, and the Northeast concrete structures, but also coastal structures, as well. And so, the beautiful thing about this PRMA, or this inverted configuration, is that, as long as the roof drains are in at deck level, or slightly sunk into the deck, as they should always be, the water is removed from the roof by displacement.

So, what happens, imagine you have a dead level deck, you have membrane, and say you have three inches of standing water. Well, you put the insulation board, this extruded polystyrene, which actually has small channels cut out along the edges, and then you ballast it, so the water’s actually displaced. It has no place to go, displaced by the insulation, and the insulation isn’t buoyant because it’s held down by the ballast. So, the water perks down, and it’s directed to the drains, at the drainage level, at the membrane level, so the water is literally displaced. Like if you have a cup of water, you put your fist in it, and you push it down, the water comes out, it has no place to go because it’s displaced.

So, that’s one of the great advantages of, well, for a retrofit situation, and it’s a huge savings, as far as the cost of construction in coming up with lots of tapered installation, which is very expensive and labor consuming, as well, to install.

Paul:So, the insulation here, the EPS board, is that tapered or is that also flat?

Russell:Well, let’s distinguish, there’s extruded polystyrene, and there’s expanded polystyrene, and extruded polystyrene is what we’re talking about. It’s a closed cell, it’s more dense, and it has a much higher compressive strength, typically, than expanded polystyrene. So, extruded polystyrene, the pink stuff or the blue stuff, is impervious to moisture. It can be exposed to moisture indefinitely, and it doesn’t affect it whatsoever.

Whereas expanded polystyrene, as we know it, typically… Amoco sells these little plastic beads, with an air bubble inside, and they sell them to everyone. And when they’re suspended in a blast furnace, the little bubbles expand and make a little bead, the beads are compressed into a big block and are cut into all sorts of different shapes with a hot wire in the shaping room, and opened cell. So, the expanded polystyrene is an open cell material, which is derivative, typically, of Amoco’s small plastic bead, with an air bubble that is super-heated, the air bubbles expand inside the little plastic bead, that’s what’s called, “bead board.” The beads are compressed into a block, and they’re cut with a hot wire at varying compressive strengths and so forth. But expanded polystyrene, or EPS, is not impervious to moisture and it will eventually absorb moisture, and collect and retain moisture. Whereas, the extruded polystyrene, the closed cells, is not. So, that’s the difference in material.

Paul:So as far as the drainage goes, just so I understand this, are you saying everything’s flat then?

Russell:Well it certainly can be. And more times than not, in inverted system, the roof deck is either very low slope or is dead level flat. So, either way, when you have the membrane on the deck, insulation on top of the membrane, and then ballast to hold it down in place, the water is literally displaced. It perks down through the joints, in the pavers, or in the stone, perks down through the insulation joints, but it has no place to go other than be directed, or squeezed down, to the drains, if you will. And to help facilitate this, the insulation boards have a small groove cut out along one edge, typically. Such as Dow RN Board, which has been the standard for that type of thing. So, at any given time, you may have just a moisture…a film of moisture on the membrane, but the membrane is never exposed to the daylight or directly to the weather, so it’s literally displaced to the drains. And it’s a very effective way of draining a building, a roof that has little or no slope. It’s probably the most effective way.

Paul:Interesting. Are there advantages related to the ease of construction and construction cost with this kind of system?

Russell:Very much so. For instance, in a new construction situation, I’ve been involved on a number of high-rise, high profile projects, where we literally cut the cost of the new roof in half. And one of the great things is, when you have the roof decks, it’s concrete, it’s made its 28 days, or it’s cured out, you can get dried in in a hurry. You put the membrane directly on the deck, and you put some temporary protection on it, but you’re dried in, immediately. Whereas in a typical new construction project with insulation beneath the membrane, it gets damaged, it has to be fixed during construction, it has to be protected very carefully.

It’s much easier to protect a membrane that’s directly on the deck and then, you know, once any staging or construction traffic is done, you inspect it, anything that needs to be fixed, you fix it, and then you put the final layer of insulation and ballast on it, and it’s a done deal. In a replacement scenario, the same is true. Where whatever you’re removing, you’re tearing off, you may be tearing off multiple layers of materials, or maybe a lightweight insulating fill, or tapered insulation, or wet insulation, etc. But you tear it off, dry it out, and get your new roof membrane back down and get dried in very quickly.

And, again, the construction cost, just with the materials, is significantly less. And your tie-ins, when you’re removing and replacing… Of course, when you’re tearing off an existing roof, you can only tear off a section at a time, and whatever you tear off that day you have to put that back, watertight the same evening before you leave, and you have to tie it into the old roof. And that’s problematic, transferring moisture from the old roof to the new roof, if it’s conventional. So, there are many advantages to ease construction and construction cost, both in a new construction situation and in a roof replacement situation.

Paul:So how does it perform long-term and what kind of maintenance do you need to do, those sorts of things?

Russell:Well, all roofs need to be maintained, and the best maintenance is a routine, documented inspection. It’s also typically required for all manufacturers, really. But the long-term performance aspects are great because, again, the membrane is completely protected from UV, from foot traffic, from equipment, etc. It never sees the light of day, so as long as you’re keeping the drains clean, and, of course, they’re exposed, and as long as you’re doing inspections of the ballast, to make sure nothing’s shifted or moved, etc., there’s virtually very little maintenance, whatsoever, because the membrane is protected, thus the protected roofing membrane assembly. So, there’re great advantages, as far as the long-term performance and with minimal maintenance requirements.

Paul:I know everybody’s really into warranties. What kind of warranties are available with these types of systems?

Russell:Well, it really varies from manufacturer to manufacturer. I’ve gotten 20-year warranties on PRMA roofs, typically nothing longer than that. Some manufacturers, because it’s not their mainstay, they will warrant them for 10 years, or 12 years, or maybe 15 years. But one of the bugaboos in the warranty requirement is that if a manufacturer, or anyone for that matter, needs to go chase a leak someplace, then somebody has to pay for removing the overburden, for removing the ballast, which is laborious. And so, the cost of taking the ballast off, storing it temporarily, finding leak, fixing same, putting ballast back, depending on where the culpability lies, there can be a squabble between who pays for it. So, the manufacturer shies away from that particular aspect, and, sometimes, limits their warranty.

That said, I’ve never seen an inverted roof perform less than the time that I’ve been in business, which is going on over 30 years. We’ve never had… To my knowledge, they’re all still working, and for that reason, because they’re protected. And so, the paper warranty is not, perhaps, as long, in some cases, but the performance outlasts most any warranty these days. So, given that and the variety of different types of membranes, I’ve used both asphalt and coal tar pitch, built up membranes. I’ve used hot, rubberized asphalt monolithic membranes, and other types of fluid-applied membranes. A two-ply, torched down, smooth surface modified bitumen makes a great armor membrane. And many, many of those roofs that we’ve done in the early 90s, late 80s, early 90s, they’re still performing, they’re still working because those bituminous products are protected.

Paul:Interesting, and as I’m thinking about this, one of the things that we see a lot these days, on buildings, is where they try to make the roof into a functioning surface or a usable area for the building occupants. Particularly, you get into these luxury apartment, hotel, condos, where they want people… They wanna be able to use the roof because obviously there’s a lot of sun up there, and you’ve got views and whatnot. And it seems like this type of application, I know you mentioned it’s not only for roofing, but for waterproofing, and actually when you get onto the roof, I guess I would say it’s a hybrid of the two. It’s gotta serve as a roof, do all the form and function that a roof would provide, and protection, but then people are walking around on it. And it seems to me that in this situation, the ballast, I guess, would be pavers or concrete tiles, whatever. So, do you see that type of application with these systems?

Russell:All the time. In fact, the protected membrane assembly is ideal for high rise construction where you have planters or built-in seating, or lighting, promenade areas, or wherever you have pavers in a roof situation. So, let us remember, there’s a fine line of distinction between the definition of a roof covering system and an insulated waterproofing system. And the roofing industry and the waterproofing industry make this distinction. If you have the exact same membrane, the same roof deck, the same insulation, so far, it’s a roof. If you put a stone ballast over the filter cloth on the insulation, it’s a roof covering system. Whereas, if you put the filter cloth down, and then you put a protection board or pedestals, and you put pavers down, it’s a waterproofing system. And so, there’s a difference in semantics, but one of the greatest advantages in the scenario that you’re describing are flashing heights because particularly in high-rise construction…

I was involved in a new construction project in Chevy Chase, Bethesda area, when… These were premier condominiums, high-rise buildings, and we saved well over a million dollars right out of the box by converting their original design, before it was built, to this configuration. So, as we know, as we go up, floor-to-floor, every few inches we can save from floor-to-floor, gives us an opportunity to…they add-up. We can add another floor, we can do different things.

So, flashing heights, which are traditionally 8 inches along your perimeters and penetrations… Well, if you’re starting a flashing height in a configuration that’s conventional, you already have four or five inches of insulation in the membrane on top of it. So, that reduces your effective flashing height at thresholds and penetrations, and walls, etc. Whereas inverted system, you’re starting right down at the concrete deck. So, if your threshold, stepping out of the slider, can be reduced, you can have a taller door, or you can have a lower ceiling, etc. So, it opens up many, many advantages with flashing height, plus, the flashings are also, architecturally, concealed very easily, in that scenario, regardless of the wall system, whether it’s masonry, or precast, or EIFS.

So, what it does is it gives us the opportunity to also conceal and protect the base flashing membrane. And so, a typical scenario is, from the deck up, concrete deck, membrane, insulation and pavers, and the membrane flashing, by the time you’re at that height, you’re already five inches up to the wearing surface, to the pavers. And your membrane base flashing is tucked in behind it, along the edges, and it’s neatened up with a metal cap flashing along the perimeters, and it’s a done deal. You never see a roof membrane, you never see membrane flashings. And so, architecturally, it’s a dream. And the same way with your drainage elements, with your scuppers, whatever, your roof drains, they’re all concealed, you don’t see them. And so, architecturally there are advantages there. And the drainage elements are also protected and remain functional for many of the same reasons. They’re concealed, they’re doing their job, debris stays out of them, etc.

Paul:It sounds like a nice clean design.

Russell:It’s a very clean design. And it is the most used design, that I’m aware of, in that type of scenario.

Paul:And how does this type of system work if you have, what I would call, a busy rooftop, a lot of equipment, pipes, draining? I think of hospitals, or industrial buildings, things like that. A lot of complication, I guess, would be what I would call… How does it work in those scenarios?

Russell:Well, here again, for the same reasons, or similar reasons we were just discussing, typically, HVAC equipment, mechanical equipment, is going to be mounted on a curb. So, for curb-mounted fans or curb-mounted equipment, base flashings on the curbs are also mostly concealed. So, by the time you get to the top of it, your ballast is cut out or distributed around these things, so again, they’re protected. And then with the metal counter flashing that tucks down behind your ballast and your filter cloth, again, the flashings around this equipment are, for the most part, protected. So, if you have your metal counter flashing tucked down behind your ballast, the membrane flashing beneath it, which is… In any roof covering system with a lot of equipment on it, those flashings tend to be the most problematic things because of all the penetrations associated.

When those flashings, the primary membrane flashing is protected, and its counter flashed with the proper metal counter flashing that’s tucked down into the ballast, or beyond it, again, the flashing never sees the light of day. So, they’re easy to inspect, they’re easy to maintain, etc. Where you have single pipe penetrations, and so forth, the pipes may have to be extended a little bit more, say more, maybe an inch or two, at best. Typically, though, it’s ideal for that scenario. If you’re carrying piping, or gas lines, or conduits, across the roof, then putting them on top of intermittent pavers, or blocks, instead of on top of the roof membrane in a conventional configuration, there again, these things that are sleeping on the surface are sleeping on the surface of the ballast, rather than the membrane, with the insulation underneath it.

Paul:We’re seeing a lot, in buildings that we’re building these days, we’re seeing a lot of specs for TPO and EPDM roofs, and I’m guessing it’s because it’s probably budget friendly for probably a good way to say that. How does a PRMA roof compare, cost-wise, to some of the other options that are out there?

Russell:By and large, a TPO, or EPDM, PVCs, these types of single ply membranes are rarely, if ever, used in an inverted system. They’re almost always used in a conventional configuration. So, while the actual cost of the roof membrane is less, the cost of the insulation and the labor, particularly, to install all that in a conventional configuration, still comes up higher than a better, thicker, more resilient, protected membrane and the extruded polystyrene on top of it, and the ballast. So, in that scenario, if you have a wide-open warehouse or a lot of roof production type of roof to cover, then TPO or single ply membrane is still going to be more cost-effective than designing a building to take an inverted system.

So TPOs and EPDM… The EPDM market has waned dramatically in the last ten years, with the onset of TPOs and PVCs. But you’ll still find many loose-laid, ballasted, single ply membranes in a conventional configuration. In other words, a metal roof deck, insulation, EPDM, a filter cloth, and then stone ballast on top of that, in a conventional ballasted configuration. And in many of those cases, Paul, those buildings are not… Those are one or two story buildings. You know, schools, shopping centers, R&D. Those buildings are not built to necessarily handle an armor roof, but they were also built to handle that 10 to 12 pounds per square foot of ballast done in a conventional configuration, so they are convertible, case by case. And it’s definitely worth something looking into, depending on the use of the building and the economy.

Paul:So, then an inverted roof can go onto a metal roof deck?

Russell:It can, but, here again, buildings that were built up through, I’m gonna say the early 2000s, many of them were built, specifically, with an inexpensive roof covering system in mind, and the least expensive thing going there for a good 15, 20 years, was a loose-laid ballasted single ply membrane. And, typically, before TPOs and PVCs caught on in a big way, it was EPDM, synthetic rubber. And, of course, EPDM has a great elongation capacity, but as far as a long-term performance, in my opinion, EPDM doesn’t hold a candle to the more modern, single ply membranes that are reinforced, PVCs and TPOs. And, of course, most EPDMs were black, so if they were exposed, they were a huge heat gain. Whereas most TPOs, etc., we see these days are white, so they’re reflective. So, I don’t think the EPDM manufacturers would like me to say that they’re obsolete, but they’ll tell you themselves, their market share has changed dramatically, and for good reason.

But the net result of that, coming back to many of these buildings were designed to hold a 10-plus pound load per square foot on the roof, for the ballast, so many of them are converted. And I’ve converted office buildings, and condominiums, etc., with metal roof decks, where… And this is in roof replacement scenarios, where those metal decks were still flat, or they didn’t have enough slope to drain properly. And instead of investing a fortune in labor and materials of tapered insulation systems, and getting them down right, and fastened or secured to the deck, etc., we put a fire-rated gypsum board, fastened down to the metal deck, maybe reinforced it, and put our new roof membrane on that, and extruded polystyrene over top of that. So, we didn’t have to make that huge investment in labor, etc. We created a new substrate so that a membrane could be fully adhered.

And so, one of the key design issues, again, is in a protected assembly, in an inverted assembly, that membrane really needs to be fully adhered to the substrate. And, of course, again, one of the beauties is if you ever pop a leak someplace, it’s easy to find, because water doesn’t travel between a fully adhered membrane and the roof deck, particularly if it’s a bituminous product, a built-up membrane or a modified-bitumen membrane, or a monolithic hot melt, that sort of thing.

Paul:So, what are the limitations of when, where, an inverted roof and waterproofing system can be installed.

Russell:Well, here again, just to recap, remember when contemplating either new construction or a roof replacement, be it on a roof, or a parking deck, on a plaza deck, etc., the things to keep in mind is that one, the structure needs to be able to withstand the weight of the ballast. And, typically, in our higher-end areas, that’s gonna be concrete pavers, and there are many types of lightweight pavers. So, that’s the first and foremost consideration is your structural design and what the deck, be it a roof deck or plaza deck, what it’s designed to take in the first place. And, typically, these are concrete.

Another limitation is, the perimeter of the roof or the plaza deck must be contained, typically with a parapet, because you have stone or ballast and insulation on top of the membrane. So, that assembly has to be protected vertically from the side, as well. So, typically it’s gonna be installed on a construction that has a built-up perimeter. It doesn’t have to be a parapet, but it has to be a raised edge that is at least a few inches above the edge of the roof, and that’s a big consideration in high wind areas. So, if it’s a new construction, it’s built in. If it’s existing construction, we’ve done retrofits where we actually added height to the perimeter to contain the system.

So, those are the two primary limitations, is having a substrate that’s monolithic or being able to create a monolithic substrate, if it’s not already. So, concrete is ideal, or if it’s some other material, having a smooth, resilient substrate to place the membrane on. So, those are the two limitations.

Paul:Yeah, this’s really been an interesting, insightful, topic, Russell, and I thank, you, very much for coming on as a guest today.

Russell:My pleasure, Paul.

Paul:And I know, at GCI Consultants, we’re really excited to have you on board our team, bringing your wisdom and knowledge, and very excited about working on projects going forward and applying as such. So, again, you know, welcome aboard.

Russell:Oh, thanks for that. GCI has a lot going for it, so I’m really happy to help fill in this dimension across the board, Waterproofing and Moisture Protection Building Envelope. So, it starts with the roof and goes down, right?

Paul:That’s right. So, thank you everyone for listening to the Everything Building Envelope Podcast. I wanna remind the audience that we do have the Everything Building Envelope Newsletter, and if you would like to subscribe to that, please text the word, “buildingenvelope,” all one word, “buildingenvelope,” to 22828. Again, text, “buildingenvelope,” to 22828. Again, thanks everyone for listening and, till next time, this is, Paul Beers, saying, “So long.”

Effective Allocation and Management of Performance Risk in Building Envelope Design & Construction – 2

Tom Madigan – Buchanan Ingersoll & Rooney

  • In our last podcast we talked about risk allocation and risk management tools. So, now, despite having employed all of those measures, there are performance issues with the building envelope that lead to litigation. How can the parties resolve their dispute quickly and cost-effectively?
  • So, what are some strategies for resolving building envelope performance litigation early and cost-effectively?
  • Isn’t that done as a matter of course in every case? Doesn’t every party go out and get an expert to work up a theory of what went wrong and who is responsible?
  • By every one agreeing to use a single independent expert?
  • Why isn’t that done in every case?
  • How do you overcome the reluctance to do an early evaluation?
  • Let’s say you weigh the risks and get agreement to do early testing and forensic examination. What kinds of things are you trying to determine.
  • Okay, you do the testing and forensic examination and you arrive at some degree of consensus as to what the extent and cause of the problem is. Then what?
  • What are the keys to getting to a remediation plan that all parties accept?
  • Let’s say you fashion a remediation plan that gets everyone’s buy in; how do you build a settlement around it?
  • That sounds like it would be in all of the parties’ interests. When isn’t remediating the problem the best solution and what are some of the obstacles that can get in the way even when it is?
  • How do you get over those obstacles?

Tom Madigan Bio

Buchanan Ingersoll & Rooney Profile 2017

Law Firm Florida Offices

About The Everything Building Envelope Podcast:
Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

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The Everything Building Envelope Episode Transcript:

Paul: Welcome back everyone, to the “Building Envelope” podcast. We’re bringing back Tom Madigan today. He was with us in the last episode. It was really interesting, and we had a lot more to talk about. So, Tom, thank you very much for coming back today.

Tom: My pleasure.

Paul: And, I just want to remind everybody before we get into today’s discussion that we have a “Everything Building Envelope” newsletter, and to subscribe to that, all you need to do is text the word, “building envelope” to 22828. Again, that’s “building envelope,” text it to 22828. We’ll get you signed up, and if you’re in the Building Envelope community, there’ll be items of interest to you, technically and otherwise. So, “building envelope” to 22828. So, just to remind everybody from last time, in case you didn’t listen last time, He is the Chairman of the Construction Practice Group at Buchanan Ingersoll & Rooney. Buchannon is a national law firm and has six offices in Florida. So, Tom, today we’re going to discuss, talk, go into creative and cost-effective strategies to resolve building envelope performance disputes. And, in our last podcast, we talked about risk allocation and risk management tools. So now, even if our listeners have employed all those measures, there’s performance issues with the building envelope that can lead to litigation. And if that happens, how can parties resolve their dispute quickly and cost-effectively?

Tom: So, the first thing to recognize is that there isn’t any one size fits all strategy for getting out of lawsuits. If there was, you wouldn’t need lawyers who brought any value to the engagement, right? There’d be a playbook and everybody would follow it. That’s just not the case. Each dispute is unique, and each exit strategy has to be fashioned to the unique details of the litigation. Personalities involved, their historical approach to litigation, how the lawsuit’s being funded, all of those things can impact the ability to resolve the litigation effectively.

However, in general terms, the earlier you can focus on a resolution strategy, and the earlier you can resolve the dispute, the better. That is almost without exception. Lawsuits don’t get better over time. They get more expensive. They get messier. They become a bigger distraction to your business. When a lawsuit first gets filed, you know, everybody’s emotions are high. You’ve likely had, you know, discussions with the parties prior to the lawsuit. There was some effort to determine responsibility and resolve it. Those might have been very heated, very nasty. They were unsuccessful by definition, because now there’s a lawsuit.

At the start of the litigation, everybody’s in their own network chamber. They’re only talking to the people in their business and their lawyers. And everybody’s convinced that they’ve done absolutely nothing wrong. And their objective in the lawsuit is to be completely vindicated. That’s when you hear people say things like, “It’s a matter of principle.” That attitude erodes quickly as the legal bills start to come in every month. What you need to focus on early is the net cost of the litigation or, if you’re the owner, the net recovery. You measure success in a lawsuit by, if you’re a defendant, it’s the net cost. That’s the litigation cost, the lawyer’s fees, the expert fees, the cost of actually litigating the case plus the settlement cost. If you’re owner or other plaintiff, you measure success by the settlement amount minus the litigation cost, right? It’s your net recovery.

So, early on, start thinking about a resolution strategy, look at an opportunity to engage the parties in an effort of resolution as early as it’s practical, and focus on the net cost, or the net recovery, when you’re making bottom line decisions.

Paul: Yeah, so, you know, something that I always say, and, you know, this could be in a dispute or a real estate transaction or whatever, is that it’s good to try to make a business decision, not an emotional decision, because emotional decisions usually aren’t good decisions.

Tom: They’re almost never good decisions.

Paul: Yeah, and it’s tough. It’s tough. So, what are some of the strategies to resolve building envelope performance disputes and litigation early and cost-effectively?

Tom: So, as we’ve identified right out of the box, the earlier, the better. That’s a judgement in itself. Too early, and if people don’t have enough information to make informed decisions, then the likelihood of reaching a resolution is diminished. Too late, and you’ve got a lot of money invested in the lawsuit, and that influences peoples’ decisions. And it affects the net recovery or the net cost, and you miss the opportunity to maximize either. So, identifying the right time, but early, to try to get everybody working towards a joint resolution effort. And the most typical mechanism for that is mediation.

With building envelope performance disputes, because they often, you know, center on questions of, is the problem a design problem? Is it a construction problem? If it’s a construction problem, which element of the construction? Is there a product element? You know, was the right product used? Was there a manufacturing issue with the product? All those things are kind of swirling around, and being able to resolve a case starts with trying to come up with some answers to those questions. But, you got a lot of people with differing interests, right? So, but they also have common interest. And the common interest that you can work on is that idea of the net cost and the net recovery.

And, what I have employed effectively in some of these cases is a mediation involving a technical advisor and the parties’ experts. If you can get the parties to initially try to reach agreement or at least narrow the dispute as to the root cause and extent of the problem, then that allows you to start trying to develop a remedial plan. And it’s the remedial plan that can then be the focal point around which a settlement is constructed.

Paul: Can I ask a question? Is there a difference between a technical advisor and an expert?

Tom: Yeah, so, what I mean by that term is, in this context, everybody typically gets an expert, right? Every party goes out and obtains an expert, but it’s their expert. So, that expert in a litigation is working for a party. It is viewing the dispute from that party’s perspective, and it is independent, moniker notwithstanding. It’s working for that party and the goal is to assist that party reach its objective, which is either recovering the most amount of money or avoiding liability. So, yeah, there are experts involved in almost every case, but they all are aligned with a party. I’m talking, in this context, of going into a mediation and employing an independent expert to try to facilitate agreement among the various party experts. Or to be a sounding board for the various party experts’ opinions as to causation, opinions as to responsibility, opinions as to the appropriate fix.

Paul: How do you get to figuring out what the appropriate fix is?

Tom: Well, Paul, it’s what you do, right, when you’re called in to try to deal with a building that’s got a performance problem. You need to examine the documents. You need to potentially do some testing and forensic examination. All of the stuff that people are going to do or may do, during the course of the litigation in preparation for going to trial, to prove why they’re not responsible or somebody else is responsible. The same exercise, but here it’s being done with the goal of trying to reach some consensus or, again, at least narrow the dispute as to what is the root cause of the problem and how can we go about trying to fix it.

Paul: So, is there any merit in having everybody use a single, independent expert?

Tom: That’s just not feasible, and nobody’s gonna agree to that because you don’t know if the case is gonna settle. And if it doesn’t settle, you still got to gear up for litigation. So, everybody’s gonna have their own experts, but involving an expert in kind of a mediation role, typically that expert is retained by an actual mediator, although paid for by the parties. And that expert advises the mediator who then tries to work with the parties. But it’s key that it’s somebody who’s well respected, that the independent party, the party experts, will take seriously, will respect his or her opinions and recommendations. They’re a facilitator. They’re not an arbitrator. We’re not talking about bringing in somebody that everybody’s gonna agree to abide their decisions.

Paul: So, everybody has independent experts, and with not necessarily, or not usually, I guess I would say, the same opinions. There may be some agreement on some issues and there may be not so much on others. So, how do you bring that all together to basically try to make progress?

Tom: The format of mediation is very important in this regard, because the mediation process is confidential in the sense that the things that are said, the information that is exchanged, the offers and responses, can’t be used as evidence in the litigation. So, there isn’t concern that if I concede a point in my discussion or I conceptually agree to a particular aspect of a repair plan, that that’s gonna be used against me at trial as evidence that I’ve admitted to wrongdoing. So, the form of mediation is key to allowing everybody to come together to cooperate and try to reach a compromise resolution that brings an end to the litigation.

And that word, compromise, is the key. You can’t go into it with the mind that I’m gonna be proven right, that the mediator’s gonna agree with me, and he’s gonna tell everybody else that I shouldn’t be in the lawsuit. People go into the mediation with that mindset, there’s no chance of reaching a resolution. Everybody has to go into the mediation with the understanding that the purpose is not to determine who’s right and wrong, who’s liable or not liable, but to come up with a resolution that ends the litigation, stops the bleeding in terms of the cost, and, for the owner, starts them down the path towards getting the problem that gave rise to the lawsuit fixed, so they’ve got a properly performing building.

Paul: One of my favorite sayings that I’ve heard, you know, which I think probably many of the listeners have heard as well, is that a good settlement is one that none of the parties are completely happy with, which means that they made a compromise.

Tom: That’s right. But having said that, there are settlements that can leave everybody almost happy.

Paul: Well, getting out of the lawsuit would be one of the things that makes people really happy. Particularly, sophisticated folks who’ve been down that path before and have, like, another one of my favorite expressions is, “have felt the pain.”

Tom: Right. I mean if you’re…to think about it, I mean, litigation is a distraction for everybody, right? If you’re a building owner, you spent a lot of money to build the building that you, you know, expect to generate revenues for you, in terms of rent if it’s a commercial building, or to produce goods for you if it’s a manufacturing facility. And it’s not performing and it’s affecting your business. And now you’ve got the distraction of this lawsuit. If you’re a contractor, you wanna be building things, right? You don’t wanna be sitting in a courtroom with a bunch of lawyers instead of pursuing jobs, and you certainly don’t wanna be writing checks every month to a law firm.

Paul: So, with this, with the idea to have mediation as early as possible, and I know I’ve been involved in disputes where there’s reluctance to do that, then how do you overcome that reluctance?

Tom: It can be tricky, and you can’t do it in every case. That goes back to my initial comment that, you know, there isn’t a one size fits all strategy. But in my experience, the key above all else, is that somebody needs to take control. There needs to be one of the parties who takes control of the situation and gets everybody starting to think about working towards a resolution. And in construction litigation, particularly multi-party defect litigation of the kind you get with building envelope problems, you know, there’s a couple of obvious candidates.

One is the plaintiff, typically the owner. If the owner takes control of the situation, demonstrates a willingness to cooperate, demonstrate an interest in solving the problem as opposed to simply getting the largest dollar recovery. But if the owner communicates to the GC and the architect and the other parties that, “Look, my interest in here is fixing the problem so we can move on,” that, you know, goes a long way towards getting the defendants to think the same way. On the defense side, it’s the general contractor and the architect, right? General contractor in particular because he’s responsible for the entire building. But the work was actually performed by his subcontractors. The materials were provided by his suppliers. And, so he’s in a unique position to work with all of the various parties who have contributed to the problem, perhaps, but who also represent the potential for fixing it. So, you need one or a combination of those parties to really take control.

One of the biggest impediments to early resolution of this nature is, you know, the owner will sue the architect, say, “I’ve got all these things wrong with the building, and I think it’s a design problem.” The owner will also sue the general contractor, same lawsuit, but separate claims, “I’ve got all these problems with my building. It’s a construction problem.” And between the two of those, the owner’s position will be, “I know I didn’t do anything, I’m just the owner. It’s either a design problem or a construction problem. You two figure out which.” And the owner doesn’t make any effort to determine what the root cause is because from a legal stand point, it doesn’t have to, is its thinking.

Similarly, the general contractor brings every single subcontractor and supplier into the lawsuit as additional defendants. Those individual subcontractors and suppliers, their first reaction, too, is, “What did I do wrong? How is my scope of work implicated?” And the general contractor’s response is, “I don’t know because the owner doesn’t tell me. I just know, to the extent it’s a construction problem, I didn’t self-perform. It’s one of your all problem, not mine.” And that makes it very difficult to start working towards a resolution because you have no agreement or identification of what the actual problem is, whose work is implicated, who’s responsible, and what needs to be done to fix it. So, that’s why it’s so important that somebody take control of that process and start to work on figuring out what the root cause of the problem is, whose work is implicated. And, only once you do that can you start figuring out how to fix it, which is how you settle the case.

Paul: So, the party that takes control, how do they go about figuring out what the problem is and how to fix it?

Tom: Well, there’s…you know, in the litigation and the adversarial, I mean, that’s part of the adversarial litigation, right? That’s the purpose of the trial. Everybody gets their expert, they go in, they testify as to their theory about what the problem is and who’s responsible, and then the jury sorts it out. You know, 12 people who they pulled off the street who don’t know anything about building envelopes. That’s one way to resolve it.

Paul: And nobody wants to get there.

Tom: So, the other way to resolve it is for everybody to agree to go to mediation, where they bring their experts and their experts give their input. And the mediator, with the help of a technical advisor, listens to everybody’s input and then starts to try to craft some consensus on things. And, you know, the mediation doesn’t have to take place in one day. You can have an initial mediation where everyone gets their input, and you identify, “Well, we seem to have this agreement on this issue.” And the, you know, the experts or the independent consultant, if there is one, can look at that and say, “Okay, is there a way for us to answer that question? Can we go out and do some testing on the building to determine if it is in fact a problem with the sill, the sills, or if it’s a perimeter sealant problem? Where exactly is the source of the water infiltration?”

And if, you know, if the parties are working towards trying to resolve the dispute, short of going to court, they can agree on that testing, collectively fund it, get the results, factor that in to their negotiations and decision making. Hopefully, they can reach some agreement that, “Okay, we’ve eliminated the sealant. So, the sealant supplier is not somebody who we’re gonna expect to participate further.” It’s that sort of, you know, investigative process and consensus building as to what exactly is the problem, who’s potentially responsible, that that’s there before we can start talking about fixing it to resolve the dispute.

Paul: So, you do the testing and forensic examination, and you get to some degree of consensus amongst the parties as to what the extent that caused the problem is. What do you do next?

Tom: Well, if you’ve made it that far, you’re a long way because there’s usually a lot of bumps in the road to get to that point. And if you have actually gotten to consensus as to what the problem is, you have achieved a lot already, and I think the chances of your being able to resolve the dispute are very good. So now, the next step is we have agreement or some sense of agreement on what the problem is or what the likely cause of the problem is. Now we got to agree on how to fix it. What’s the most cost-effective, reasonable way to address the problem? And here, again, we’re talking compromise. So, you know, you’re not gonna get a resolution if the owner’s unrelenting position is, “I will accept nothing less than ripping the entire envelope off of the building and reinstalling the envelope with all new upgraded componentry, and I expect you to pay for it.” That’s not gonna get you a settlement.

Paul: No, and we’ve all been there, done that in that respect. And it’s funny because, you know, when they start out like that, they don’t always end up like that, obviously. And I can think of situations where, where I’ve been involved, where that would actually be the right fix. But even then, there’s no money to pay for it. And the owner ultimately accepted a reasonable settlement that was within the…within the resources that were available, I guess I would say.

Tom: And that, you’re right, Paul. And that’s why I made the comment up front about every situation is different. There are some cases where that is the right fix. But there’s probably a many more cases where it’s not necessary, there is an effective fix short of that, that will allow the building to perform adequately. It may not be…granted, it may not be what the owner had paid for, but again, we’re talking about trying to resolve the dispute and compromise that avoids the expense of the litigation, avoids the risk of pushing this decision in the hands of 12 people who don’t know anything about buildings, and increases the net bottom line for everybody.

Paul: And that’s managing risk, too, isn’t it?

Tom: Yes.

Paul: Yeah. So, let’s say that, you know, all this, everything’s go well. And by the way, this can be years in the making. Hopefully not, but it can be. And you fashion a remediation plan that everybody’s buying in on, how do you build a settlement around it?

Tom: That’s… If you’re that far, you’ve probably solved some of those issues. You know, so for example… And that can be the benefit of an early mediation, too, is identifying what the hurdles are, what the possibilities are. You know, if the owners got the case, if the owner, excuse me, if the plaintiff’s attorney has the case on a pure contingency, or if the owner’s interest really is in just in money, that’s gonna come out in the mediation. If the defendants are trying to work towards a fix, a settlement resolved around a fix, that’s gonna come out. But that’s important information to know, because now, now you know what you’re dealing with. You know where your efforts are best spent.

But we’re assuming that it’s not one of those cases. We have an owner whose interest really is in getting the problem fixed. We have a plaintiff’s lawyer who is amenable to a resolution that is not just a payment of which he gets a piece. And so then, the settlement resolves around that, the implementation of that fix. And, there’s a lot of variations on that depending on the individual facts. You know, A, you need the consultants to have some degree of comfort in both the reasonableness of the fix, that it’s not overkill, but that it’s also effective. You need to get the owner’s buy-in, obviously, that the fix, whatever it is, gives them a building that performs to its expectations or as near to those expectations as possible under the circumstances. That often requires some margin of error in the remediation plan that gives the owner the benefit of the doubt on some of the issues in the dispute. You know, you may not reach agreement that there’s a problem with a particular detail, but you can address it and compensate for it or fix it at a relatively small cost if you take that issue off the table.

You don’t reach agreement, then it’s a problem. But your fix addresses it so that if it is a problem, the owner can be comfortable that it’s addressed. That’s a key, is taking into account that there may not be agreement on what all the contributing causes are. So, you got to come up with a remedial plan that has developed some suspenders, to some degree. And not only fixes what you may think is the problem, but compensates for other potential problems. Getting the designer and the contractor’s buy-in is reasonableness and proportionality. It can’t be an economically wasteful remediation plan. It has to be cost-efficient, and it can’t represent a betterment at the contractor’s expense. If there’s gonna be a betterment element to this, the owner’s gonna end up with a better system that any contractor then paid for, then that ought to be recognized in the settlement, from a financial perspective.

Paul: And how do you make all that happen?

Tom: Magic. And a really good lawyer.

Paul: Seems like it, seems like it. But you’re the magician, right?

Tom: Yeah, I mean, I’ve actually, you know, been involved in cases that have settled this way on a number of occasions. The most advantageous way to do this, if you can, and you can’t in every case, is if the parties, the contractors, the suppliers, the architect, are actually able to provide their goods and services and materials as an in-kind settlement. Because that’s a much lower net cost to them, right? If I’m a manufacturer, the cost for me to supply replacement product is my cost, right? It’s much lower than if I have to write a check to pay for another manufacturer to make replacement materials because there’s gonna be markup and profit margin. It’s gonna be way above cost. Similarly, if you’re a contractor contributing labor, there’s a cost associated, yeah, but it’s, again, less than writing a check for somebody else to do it and make a profit on it. So, whenever it’s possible, having the parties participate in the fix is the most economical resolution.

Paul: So, is there a circumstance where remediating the problem isn’t necessarily the best solution, and if so, what are some of the obstacles that get in the way?

Tom: Yeah, I mean, there’s some initial obstacles that make it not a realistic possibility that we mentioned, where the owner isn’t interested in getting it fixed, right? They’re just looking for money because maybe they don’t own the building anymore. Maybe they sold it, and what they’re seeking to recover is the perceived diminution in the value of the building that they got less for it when they sold it. Or, there’s a plaintiff’s lawyer on a contingency fee arrangement, and it’s difficult, you know, for somebody to take 35% of the value of a fix. And that becomes, not impossible to deal with, but it can be very, very difficult to figure out how the lawyer is going to get his share of the settlement.

And then, you know, you have contractors and manufacturers who aren’t around anymore. They’re not viable, they’ve gone bankrupt, and they’re just not…they’re not available to perform the remedial work or to provide the replacement materials. You’re gonna have to come up with an alternative source of labor or materials. Where there’s really bad blood between the parties, where the discussions before the litigation got really nasty, people don’t trust each other and want nothing to do with each other anymore. That’s a particular problem for contractors and manufacturers. If they have an owner who they believe has been unreasonable, who they believe is simply looking to win the lottery in the litigation, that can be difficult to overcome even if they try to dispel that impression. And they don’t want to be involved with that owner anymore. They’d actually prefer to write a check and be done with them than to go in and provide replacement material or to do the remedial work, and then have to potentially be responsible for the replacement materials or the remedial work, right? Their concern is it’s never gonna end. They’re just gonna keep getting called back, and the owner’s gonna keep asking for more and more.

That is one of those things, that the parties have to work really hard to regain trust and to demonstrate good faith that no, you know, that the effort here is just to get it fixed and that they’re going to be reasonable to deal with going forward.

Paul: So, there are a lot of obstacles to a monetary settlement. Are there strategies for getting over those obstacles or getting around them?

Tom: There are. You need to be creative, and again, people need to be willing to compromise. And you have to maintain the trust between the lawyers, between the parties, between the consultants. You know, there’s some creative financing solutions where there is an element of payment that simply can’t be avoided as part of the settlement. You can look at the saved defense costs that you’re avoiding and that you may have reserved for or that your insurance carrier may have reserved for, and apply those reserved defense costs toward the early settlement, the financial component of it. You can explore cost sharing arrangements where, you know, the owner participates in the cost with the defendants. You can add value.

So, I said earlier that you have to avoid betterment at the contractor’s expense, but one very effective approach is to incorporate a betterment at a discount. The fix upgrades materials, enhances the design, gives the owner more value than he was actually entitled to under the contract, but at a discounted cost. So, the owner shares in the cost of the betterment as does the contractor or the supplier. They supply it at cost or at a steep discount. The owner covers that cost. It’s a win-win. The owner gets actually a better building or system than it originally contracted for, fixes its problem, and the cost to the defendants is either covered or mitigated.

Tom: Okay. The key, and I keep coming back to this, but the key to all of this, key to actually being able to achieve a resolution built around fixing the problem at an early stage of the litigation, is communication and trust. Lawyers need to be able to talk to each other. They need to row in the same direction, towards trying to resolve the litigation, not posture, not try to gain advantage. Because if they start doing that, the other lawyers are gonna see what’s going on. They’re gonna adapt similar approaches because there won’t be trust between the lawyers that they’re actually in good faith working to try to resolve the dispute, as opposed to just trying to better position themselves for the litigation as it heads towards trial.

Same with respect to the parties, to the extent that the parties communicate directly in the process. They need to convey a sincere desire to try to resolve this, to try to repair a business relationship, to try to repair or maintain a reputation in the marketplace, to maintain the trust between the parties that they’re actually trying to solve their problems as opposed to take advantage of the other side. Those two elements, open communication and trust, are the key because if you lose those, if people aren’t communicating, people don’t trust each other, then you’re not gonna be able to reach agreement. And the parties aren’t gonna be comfortable compromising because they’re gonna be fearful that they’ve just been taken advantage of. And nobody likes to feel like they’ve been taken advantage of. So, the default mechanism is to say, “Hold on. Slow down. I’m not gonna do this. I’m not comfortable.”

Paul: Tom, really great stuff. I know it’s of big interest to our listeners who obviously don’t want to be involved in litigation unless their lawyers or experts, maybe. And if they do get involved, you know, the exit strategy, the quick exit strategy’s really, really important. So, thank you very much for, you know, the time. We did two episodes which is really great. And thank you for sharing your wisdom with the listeners, with the really valuable information for them to consider and implement going forward.

Tom: Thanks for including me, Paul. I enjoyed it.

Paul: Yeah, it was great. So, I want to just remind everybody again that we have the “Everything Building Envelope” newsletter that I think that would be of real interest to our listeners. And, to subscribe to that, all you need to do is text the word, “building envelope” to 22828. Again, “building envelope” to 22828. I’d like to thank everybody for listening to the “Everything Building Envelope” podcast, and this is Paul Beers, saying, “So long ’til next time.”

About GCI Consultants: GCI’s building envelope professionals provide consulting services to ensure clients receive maximum value and return on their investment in the firm’s services, which include:

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Effective Allocation and Management of Performance Risk in Building Envelope Design & Construction

Tom Madigan – Buchanan Ingersoll & Rooney

  • What is the difference between risk management and risk allocation?
  • I think we all understand why risk management is important, but why is risk allocation important?
  • I thought the designer was always responsible for the design and the contractor always responsible for construction?
  • What are some of the performance risks that need to be allocated between the architect and contractor, with respect to the design of the building envelope?
  • So what are some things that should be taken into consideration when deciding the best way to allocate risk in the design and construction contracts?
  • What are some best practices in allocating risk between the design and construction contracts when it relates to the building envelope?
  • Let’s shift to Risk Management.  What are some examples where failure to properly manage the design and construction process can increase risk of non-performance?
  • Even when all of these best practices are employed, things still go wrong.   What about contractual remedies and guarantees?

Tom Madigan Bio

Buchanan Ingersoll & Rooney Profile 2017

Law Firm Florida Offices

About The Everything Building Envelope Podcast:
Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

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The Everything Building Envelope Episode Transcript:

Paul: Welcome back, everyone, to the “Everything Building Envelope” podcast. This is Paul Beers. I want to remind everybody, first of all, before we get into today’s topic, that we have a newsletter, the “Everything Building Envelope” newsletter. And if you would like to subscribe to it, please text the word “building envelope” to 22828. So it has technical articles and other things of interest to the building envelope community. Again, for the “Everything Building Envelope” newsletter, text “building envelope” to 22828.

I’m really excited about our guest today, Tom Madigan. Tom is a lawyer. He is the Chairman of the Construction Practice Group at Buchanan Ingersoll & Rooney. Buchanan is a national law firm and has six offices in Florida. And welcome, Tom.

Tom: Thank you, Paul.

Paul: So, Tom and I have worked together in the past. Of course, he’s the lawyer, and I was the expert, and we’re old friends in that regard. And he’s a great guy. And I think it’s really gonna be a very interesting podcast for everybody. So, Tom, before we get going, maybe you could tell the listeners a little bit about yourself?

Tom: Sure. I’m a construction lawyer. I’ve been practicing 30 years now. I am a litigator handling both the prosecution and defense of claims, many of which involve building envelope performance as well as delay claims and other performance disputes arising from construction of high-rise residential, commercial, and industrial projects across the United States. I’ve done a lot of work in the Southeastern United States on issues of water intrusion. I’ve also done work in the Northern United States on water intrusion and air intrusion and energy performance. And my work as a litigator has also given me a perspective on how to avoid some of the problems that I’ve seen. I also advise clients on the front end in terms of contract negotiations and then during projects to try to avoid disputes or mitigate them once they arise and keep them from turning into full-blown litigation.

Paul: I think that that’s really a great word, “avoid.” I know that that’s probably what the listeners are most interested in is not being involved in a long energy-sapping, expensive dispute, but rather do what needs to be done upfront to try to stay out of it.

Tom: Yes. I think that is everybody’s goal, with perhaps the sole exception of the lawyers handling the litigation.

Paul: And maybe the experts.

Tom: And maybe the experts.

Paul: So we were talking about risks and risk management. And, today, we’re gonna talk about effective allocation and management of performance risk in the building envelope and construction. And, Tom, you know, you’ve done a lot of work in buildings with building envelopes, water leakage, air filtration, things like that. Does the building envelope represent a disproportionate amount of claims on buildings?

Tom: It does in the respect that when you have a building that doesn’t perform properly and it leads to litigation, even when it’s not exclusively related to the building envelope, the building envelope seems to be involved. So, whenever there’s a water intrusion problem with a building, you can almost guarantee that the building envelope designer, supplier, installer of all the materials and systems will be named, along with the roof and some other elements. It doesn’t always turn out that the envelope was the source of the water intrusion, but those parties always get dragged in.

Paul: Yeah. Occasionally, I do seminars, speaking gigs, and things like that, and one of my favorite lines starting out is “What’s the easiest way to screw up a good construction project?” And it’s to have water leaking in at the end of the job. All hell breaks loose usually when that happens.

Tom: Well, and I think that the building envelope, with some exceptions, is typically a combination of various materials and systems. And that brings with it integration and coordination challenges, which, if not designed correctly and not installed correctly, create performance problems. So I think it’s also a product of the complexity of the building.

Paul: Well said. So let me ask you what’s the difference between risk management and risk allocation?

Tom: Sure. So risk management involves those things that I think everyone is typically familiar with, and hopefully includes in their business organization: quality assurance and quality control measures; tsupervision, inspection and testing. All the things we do to make sure that the work is of good quality and doesn’t have deficiencies. Or to catch them and correct them. And then on the far end, it involves insurance, to manage the financial loss if the risk comes to fruition.

Paul: So that’s risk management. So what would risk allocation be?

Tom: Risk allocation is simply…and here, we’re talking about contractual risk allocation…it’s the assignment of responsibility for a particular risk. Which party, contractually, will be responsible for making sure that a particular element of the building performs in accordance with the needs of the owner, and will be liable if the end result does not meet that performance requirement.

Paul: For example, say that there’s water leaking into a building, and there’s a litigation, and everybody that’s involved with the exterior of the building is named as a party. Let’s just say stucco, waterproofer, window manufacturer, and others. Is it the window manufacturer saying, “Look, my windows were perfectly fine. And even though the water is coming in near them, it’s not my fault”?

Tom: Now, that is what I would call after-the-fact assessment of responsibility. What we’re talking about with risk allocation is on the front end of the project. When the team is being assembled and the work responsibilities are being divided up through the contracts, determining which of the various trade contractors and suppliers and design professionals are going to be responsible for which elements.

So for example, to use your example where you’ve got a building envelope that involves both EIFS and window systems. Contractually, who is responsible for making sure that the window system integrates properly with the EIFS so that you don’t have a source of water intrusion at that junction. And if you do, who is called on to make it right.

Paul: So I think we all understand why risk management’s important. But why is risk allocation so important?

Tom: Because who you allocate the risk to plays a big part as to whether it is effectively managed at the end of the day. The goal of risk allocation is to place responsibility with the right party; which is the party who is in the best position to manage or mitigate the risk, or to avoid it entirely. Because that increases the chances of successful risk management.

The other goal is to place liability with the person who is best able to avoid the risk. Because that is simply equitable. And then to place it on the party who is in the best position to correct or remediate it, or to carry the financial burden of its failure of performance.

If you allocate the risk to a party who is not in a position to effectively avoid or mitigate it, or who can’t bear the cost of the risk if the performance fails, it just increases the probability that the risk is going to come to fruition, and it’s not going to be adequately remedied. And you’re going to, for example, end up in a multiparty litigation with everybody pointing fingers at each other.

Paul: But isn’t the thought that the designer is always responsible for design and the contractor is always responsible for construction?

Tom: So, in very broad general terms, that’s true. That relates to the traditional design-bid-build process, particularly in competitively bid public projects. But that’s only a general proposition. It’s not an absolute rule. Even in design-bid-build projects, where you have an architect separately contracted to the owner, and a GC under a different contract with the Owner, the responsibility can differ depending on whether you have design specifications or performance specifications.

You know, design specifications are where the plans and specs tell the contractor exactly what to build, what materials and products to use. Akin to a blueprint or a roadmap. The contractor in that circumstance, is responsible to build in conformity with the design. If the construction conforms with the design, but it doesn’t perform as the owner intended or needed, that’s not the contractor’s responsibility.

Performance specifications, on the other hand, simply set a performance requirement that the contractor must meet. But the contractor has discretion on how to best meet that requirement. He has some discretion in the choice of materials, perhaps, in the choice of systems, certainly, and in the approach to the construction. But he then bears responsibility for those choices. And if he doesn’t meet the performance requirements at the end of the day, it’s the contractor’s responsibility.

And, you know, frankly, most private projects are a combination of both. And it’s sometimes not clear whether the specifications are design specs or performance specs; whether the responsibility lies entirely with the designer, or whether it’s been delegated in some respects to the contractor, or exactly how much detail with respect to design is required of the contractor in the shop drawings and coordination drawings and submittals. Those things aren’t always clear, and they’re often the subject of litigation when things go wrong.

Paul: We see a lot of that at GCI Consultants on the construction projects we’re involved with. When a contractor takes on design responsibility or risk, how do they allocate that at that point?

Tom: Could you repeat that question?

Paul: When a contractor takes on design responsibility, how do they allocate their risk?

Tom: So the first key is for the contractor to understand that he’s taking on a design responsibility and to knowingly assume that responsibility. You know, if the building envelope component of the project is design-build and the contractor has the resources and the expertise to take on that responsibility, that’s great.

The biggest problem I see is where a contractor doesn’t understand how much design responsibility he’s taking on. You get disputes over what the purpose of the shop drawings are. The architect is expecting the contractor to provide a lot of missing design detail, to show how systems will be integrated, to show details on joinery, to show details on integration, both of different systems and with the surrounding conditions. But the contractor doesn’t understand that’s what’s expected of him. He thinks he’s just providing shop drawings that show, you know, product detail, and he’s not prepared to take on the larger design responsibility. So that’s the first key, to understand the risk that you’re assuming and make sure that you’re prepared to manage it and perform as required.

The other element that comes up often is where a contractor may agree to take on design responsibilities with the expectation that he’s going to rely on a subcontractor or a supplier to actually do the design work. He’s not actually going to do the integration details, or the design details. He is going to rely on the system manufacturer, but is then not clear in his or her dealings with the system supplier , so that the system supplier does not understand what the subcontractor expects. As a result, it doesn’t commit the right personnel or attention to the application engineering and coordination. Or the contract between the trade contractor and the supplier doesn’t reflect the allocation of design responsibility to the manufacturer, because it is a standard form contract of sale that says something like “We’re just the supplier. We just supply the materials in accordance with your takeoff.” “Application engineering is excluded. Shop drawing preparation is excluded.” So the contractor is taking on a risk it isn’t in a position to perform, and has not effectively allocated the risk downstream to the party that it is relying on.

Paul: Yeah, because if you have a scenario where, you know, let’s say that the design is vague, maybe intentionally vague, with regards to certain systems. And the contractor passes it on to a supplier or a sub or whatever without really adequately covering all the bases, shop drawings, submittals, things like that. Correct me if I’m wrong. They’re effectively letting the subcontractor ultimately design it and probably not properly allocating the risk.

Tom: Right. What happens is a couple of things, you know, because when something goes wrong…you know how this works…it flows downhill, right?

Paul: Yeah.

Tom: So if the building envelope doesn’t perform, the owner looks to the GC and the architect, because the first question is typically, is it a design problem or a construction problem? And with your hypothetical, the architect may say, “Well, I allocated design responsibility to the contractor.” The general contractor then turns around and says, “Okay, Mr. Glazing Subcontractor, I allocated responsibility to you. I don’t care if it’s an installation problem, if it’s a design problem, if it’s a product problem, because you’re responsible to me for all of those things.”

If it is a product problem, or if the subcontractor was relying on the manufacturer to do the design details and coordination, the subcontractor wants to now look to the manufacturer to offload that liability. The problem is that the manufacturer says, “Well, but our contract doesn’t allocate that liability to me. I say I’m not responsible for those things. So it doesn’t matter that you might be responsible to the general contractor for. I’m not responsible to you. I disclaimed those things contractually. The liability stops with you.” Even though the subcontractor may not have done the work, may have been relying on the manufacturer to do it, because the contracts did not line up with the actual allocation of liability, the subcontractor finds itself holding the bag.

Paul: And hence the dispute?

Tom: Yep.

Paul: So what are some of the performance risks that need to be allocated between the architect and the contractor with respect to design of the building envelope?

Tom: So, we just touched on a lot of them in that example, but it is things like starting with determining what the performance requirements are for the building based on its intended use, and based on regional and local code requirements. Where you are [Florida], you have enhanced performance requirements in coastal regions. Who is responsible for, in the first instance, determining what the level of performance is required for the building envelope and its constituent parts? Then, who is responsible for selecting the products to meet those requirements? Who is responsible for making sure that the various components are compatible with each other, and for detailing how they are going to be integrated into the complete envelope system?

You know, Paul, we’ve both seen building envelopes that have combinations of stucco, masonry, brick, metal panels, curtain wall, window wall, sliding doors, storefront. Who is responsible for making sure that each of those individual components meet the performance requirements, perform together, and are erected in the right manner?

Paul: Lots of opportunities for problems there.

Tom: But, you know, an often overlooked piece of that is the definition of the scopes of work and the sequence. And that’s an allocation issue. Is that all going to be specified by the architect? Is the architect going to specify the order in which the various components are installed? And who is responsible for flashing in which areas? Who is responsible for which caulking? Who is responsible for which integration details? Or is all of that going to be left for the general contractor to determine in how it breaks up the subcontract packages? And who is going to be responsible for making sure that the sequences are followed and the work is performed in the correct order so that the people responsible for integration can actually do what needs to be done before the successor work comes along?

Paul: Yes. Doesn’t that often or usually come down to how the contractor buys out the project as far as, you know, which subs are doing what?

Tom: That’s how it is implemented. But, you know, it has to be thought about up front, with not just respect to who’s going to give the best price, but how is this actually going to be constructed. And then during the project, there is the management of making sure that the contractors are getting to the work when it becomes accessible to them and performing their work that is predecessor to somebody else’s follow-on scope of work. You know, so you don’t have somebody coming back, trying to put flashing in after the windows have been installed.

Paul: And on top of that, we’ve got the natural tension that exists in any project between the scope of work and the budget.

Tom: Right. And that is another element of risk allocation. You know, there has to be a proportionality between responsibility and the cost of that responsibility. You know, if an owner is looking to a contractor, or an architect is expecting a contractor, to take on design risk, then they ought to be paid for that. That’s a cost.

And, you know, maybe going design build on the building envelope is the most cost-effective approach, and maybe it’s not. But you have to weigh those things. You have to weigh the potential risk of non-performance versus the cost of buying that risk or selling it to a particular party, and make an informed decision.

The real problems arise when risk is forced on someone, when it is done in a less than clear fashion, and that person doesn’t price the risk into their work. Because if they haven’t priced the risk in, chances are they’re not going to take the steps necessary to manage it effectively.

Paul: Kind of like if you want this job, you’ve got to meet the budget.

Tom: That’s always an element. And, you know, the old saying is, you can have…what is it, “Fast, cheap, or good, you can have two of the three.”

Paul: That’s right. But cheaper is always the one that I see. So what are some of the things that should be taken into consideration when deciding the best way to allocate risk in the design and construction contracts?

Tom: So, we’ve talked about some of them. Certainly, it starts with determining which of the parties – the designer, the general contractor, the glazing subcontractor, the manufacturer and supplier – which one is in the best position to avoid or manage the risk of non-performance. If it is a product manufacturing issue, obviously the manufacturer is in the best position to manage that risk. If it is an installation issue, the installer is in the best position to manage that risk.

Where it gets trickier is where things become…you know, the intersection, product selection, integration of different systems where you have multiple parties involved and there is a need to coordinate their efforts and to oversee their performance to make sure that each does what is required of them. And that’s when you need to look at things like who has the expertise to identify risk, to manage it, to correct it.

Obviously, if it is a pure engineering issue, it is the design team that holds that expertise, and has control and authority. You know, in a typical contracting situation, where the owner contracts with the architect and contracts separately with the general contractor, the architect and engineer’s ability to manage and control the subcontractor, to hold them to the design requirements, is limited. They do not have contracts with the general or subcontractors, and, most importantly, they don not control the purse strings. They do not hold the checks. That is the owner or the general contractor.

You know, sometimes, there are licensure requirements or certification requirements that dictate where the risk has to be allocated. If design drawings have to be signed and stamped, then it is the professional who signs and stamps them and puts his expertise behind the work product and warrants that it is accurate and will perform. With product certifications it is the manufacturer who tests the product and obtains the certification, and represents that the product will perform to that certification.

And then the last thing we touched on was there is a comparative cost of allocating risk. If the owner or GC is going to allocate risk to one of the parties with whom it contracts, then the contract price ought to reflect that risk in order to ensure that the party has the resources and the motivation to manage it.

Paul: So what are some best practices with allocating risk between the design and construction contracts as it relates to building envelope?

Tom: First and foremost are clear documents. If the specifications are going to delegate design responsibility to the contractor for an element of the building envelope, the documents need to make that clear. It needs to clearly specify which elements of the design are to be detailed out or finished by the contractor, so the contractor knows what is expected of it and, again, can price it into its contract.

So, you know, the documents need to be clear as to what is expected. The level of detail required in the shop drawings. If the contractor is to prepare design detailed drawings, what standard will be applied. If there are coordination drawings required, what do they cover. You know, there is nothing wrong with delegating those elements of design to a contractor, and there is nothing wrong with a contractor assuming those responsibilities. But both parties [the party delegating the risk and the party assuming it] need to understand what they are requiring and what is expected of them.

When there is design delegation, it is still important that the architect-engineer be responsible for review and approval. I think that it is also a good idea to contractually require the architect and engineer and the contractor and the appropriate subcontractor or supplier to mutually inspect the work, or do a mockup, and to accept the implementation of the delegated design into the architectural specification.

Specifically with respect to a building envelope, if I am advising an owner, one of the things I will suggest for a large construction project, particularly one that is intended to have an architectural pizzazz to it, and might have a complicated building envelope, is that when you are negotiating with the architect, or when you are interviewing the architect, I want to see a demonstrated expertise in building envelope design. And if I am not comfortable, I would consider contractually requiring the A-E to have a sub-consultant for the building envelope for the building envelope. And, obviously, that is a cost that will get passed to the owner.

The other thing to consider is single-source responsibility for the building envelope. Here, we’re talking about a design-build contract for the building envelope itself, that provides a single source of responsibility for both design and construction. You know, so when things go wrong, it eliminates the typical finger-pointing.

Paul: So let’s shift over to risk management. What are some examples where failure to properly manage the design and construction process can increase the risk of non-performance?

Tom: The big one is what I call “Frankenstein” designs or specifications, that mix-and-match components or system details or get revised, either because the architect has a particular concern from a past project or as part of the value-engineering effort. Whenever you are using multiple materials and systems as part of the building envelope, or are making revisions to standardized details, it is critically important that you involve both the manufacturer and the installer and get their input and approval. There is no surer way for an owner to end up with a lot of finger-pointing than when you have a building envelope that is the product of a whole bunch of value-engineering efforts where system components have been changed or revised and the original manufacturers and suppliers won’t take responsibility because, in the end, it is not the system they tested and warranted.

Paul: What are some of the best practices in risk management to avoid or decrease the risk of non-performance?

Tom: So, again, when we are talking about building envelope systems, particularly those that might integrate various materials or various separate systems from different manufacturing sources, integration and coordination is really the key. And there are a number of collaborative design tools now available to help with that effort.

BIM is probably the best known, Building Information Modeling. It allows for integration of shop drawing and product information into the architectural design. It will give you a depiction of the specific performance capabilities of a product in the design drawings. It will incorporate that information. It will incorporate the shop drawing details into the original design drawings, so everyone has a complete design showing all of the components of the building envelope. It will help to detect clashes between those various components at the design stage, so they can be resolved.

There is submittal management software to help track product submittal or shop drawings and their review, rejection, return, re-submittal, and ultimate approval. You know, that becomes very helpful in projects that experience delays, because it is when a project gets delayed and everyone’s hustling and trying to catch up or to avoid falling further behind that shop drawings don’t get submitted. Or they get submitted, but they get only a cursory review. Or they never get resubmitted, and noone follows up. Or product information is not closely evaluated and potential problems are not detected.

Kick-off and coordination meetings are an old-fashioned management tool. They allow you to work out all the integration and sequencing issues before the work actually starts, get everybody on the same page. Mockups and field testing of complicated building envelopes are invaluable. They allow you to actually build the thing in a smaller scale and test it to make sure that it is going to perform the way it is intended.

Paul: Those are many of the things that are near and dear to our hearts at GCI Consultants as we work on projects, you know, showing everything clearly. We used to get these flat details, 2D details, for corner conditions where a lot of materials are coming together. And there was really a lot of guesswork to try and put it all together and have it work and then getting everybody together at the beginning of the project, the beginning of design, and also the beginning of construction to make sure that all the parties know each other’s roles and are on the same page and working together.

And then, you know, doing a mockup, a lot of times, it can just be an in-place mockup on the building, as early as possible and testing it so that, if you do have a problem, you identify it and solve it before, you know, a year later, everybody’s getting ready to move in and, all of a sudden, you got to go back and do a remediation program.

So, Tom, really interesting. And, you know, I think we’ve still got a lot of things that we could talk about, particularly as it relates to the building envelope and performance and disputes and whatnot. Would you be up to doing a part two of this podcast to kind of delve a little deeper?

Tom: Sure, absolutely. It would be my pleasure.

Paul: Great. Yeah, that would be wonderful, because I know it’s really interesting. It’s great stuff. I would like very much to keep charging into it or diving deeper into it. So we’ll do our next episode. It will be a continuation of this one. And, Tom, again, thank you very much, and I really look forward to doing that with you.

Tom: Thank you.

Paul: So thank you, everyone, for listening to the “Everything Building Envelope” podcast. I wanna remind you again that we have the “Everything Building Envelope” newsletter. And if you’re interested in getting on the list, please text the word “building envelope” to 22828, again, “building envelope” to 22828, to receive the building envelope newsletter.

And that ends this episode of the “Everything Building Envelope” podcast. Thank you for listening. And this is Paul Beers saying so long, till next time.

About GCI Consultants: GCI’s building envelope professionals provide consulting services to ensure clients receive maximum value and return on their investment in the firm’s services, which include:

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Be Social With Us-

The Construction Industry, our Current Economy and some Predictions

Anirban Basu – The Associated Builders and Contractors

  • Where do interest rates head from here?
  • Is the U.S. economy poised to grow 3 percent in 2017?
  • What impact will a Trump presidency have on construction?
  • What are the construction segments that appear poised for the fastest growth?
  • Should we be worried about inflation this year?

About The Everything Building Envelope Podcast: Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

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The Everything Building Envelope Episode Transcript:

Paul: Welcome back, everyone, to The Everything Building Envelope podcast. This is Paul Beers, and today I’m really excited about our guest, Anirban Basu with the Associated Builders and Contractors, otherwise known as ABC. And ABC is a national construction industry trade association representing nearly 21,000 chapter members. They’re founded on the merit shop philosophy. ABC and its 70 chapters help members develop people, win work, and deliver work safely, ethically, profitably, and for the betterment of the communities in which ABC and its members work. ABC’s membership represents all specialties within the U.S. construction industry, and it’s comprised primarily of firms that perform work in the industrial and commercial sectors. And I’m happy to say that my company, GCI Consultants, has been a member of ABC in the Florida chapter for many years and they’re really a great group, and we’ve gotten a lot of benefit from it. One of the big benefits is the economic input that we get. Anirban, thank you again for coming on today.

Anirban: My pleasure.

Paul: Can you tell us a little bit about yourself and what you do with ABC?

Anirban: Sure. I’m an economist, and I happen to serve as ABC’s chief economist. The position of chief economist was outsourced to my consulting firm back in 2008, so we actually serve the chief economist functions for other organizations as well, but ABC is probably our most well-known client. And as I say, I’ve been serving as their chief economist for more than eight years now, which means that I was with ABC during the worst of the construction downturn and I have been around to see the subsequent recovery.

Paul: That 2008 period was not a lot of fun. I don’t ever wanna go through that again.

Anirban: And in fact, the worst years for construction followed 2008. Coming into 2008, many construction firms had significant backlog, and so they worked that backlog down in 2008, and some in 2009 as well. Many firms will tell you that their worst year was, in fact, 2010 or 2011. In fact, nonresidential construction spending hits its cyclical nadir during January of 2011. By that point, the broader economy had been in recovery for well over a year, but nonresidential construction recovery had scarcely begun by that point. And so, we have seen some downs and now we’ve seen some ups.

Paul: Well, we’ve kinda gone crazy since then, haven’t we?

Anirban: Certain segments certainly have gone crazy. You know, there is a lot of office space construction right now in America. There’s a fair amount of health construction-related spending, many hotel rooms under construction in America. We continue to see more spending on educational facilities as well, at least in the last couple of years. There are certainly some categories that have not recovered. Many of those are publicly-financed categories like water and sewer and public safety. Public safety includes elements like police stations, fire stations, the prisons, jails. And the government dollar is stretched pretty thin. Government dollars is increasingly going toward entitlements, and this is true for state and federal governments, and, to a certain extent, local governments as well. And so it’s a mixed bag out there. For all the construction, recovery has been quite soft, but there has been some segments in which recovery has been much more robust.

Paul: Yeah. I’m sitting in down here in South Florida. You know, when I said we went crazy, what I was saying was down here, it was insane how much work came. You know, we were so…I don’t wanna use the word depressed, probably a bad word. But the work was so scant and then, all of a sudden, it started up again and it was like, you know they opened the spigots and it just would not slow down. But now it does seem like it’s slowing down a little bit, so I think we’re…

Anirban: Right. So, you’re right. There were five states that were hit hardest by the real estate and construction downturn. Florida was one of them, along with Georgia, Arizona, Nevada and California. So, I became ABC’s chief economist in 2008, and by that time, Florida was really feeling the sting of the recession that began in December of 2007. And shortly after I became ABC’s chief economist, the Lehman Brothers faltered on September 15th of 2008, and that, of course, is when things got really, very difficult for construction firms across the board. Prior to that, it had really been homebuilders who had suffered. But after that, everyone suffered.

Paul: Yeah. You know, I remember the Lehman Brothers, and when they failed we had a big casino job in Las Vegas that was supposed to get their financing and get started. And the day that Lehman Brothers failed was the day that project got canceled. I don’t think they ever built it. And that was really…for us, we had work, a lot of work like that that was actually, you know, ceased to exist, that what we thought was gonna be happening we were all ready for it, and then it was gone. So, really was pretty abrupt.

Anirban: It can be. When capital dries up like that, and capitalism needs capital to operate, when the capital goes away, so too does the economic activity. Particularly, the large-scale economic activity, the things that are financed, like construction. So, yes. But now, here we are 2017 and, undoubtedly, the bulk of construction firms feel much better about economic life.

Paul: Yeah. I think everybody agrees it definitely feels better now than it did but, you know, those of us who’ve been around for a while know how cyclical things are. And you know, when things are going well, we worry about what the future holds. So, for those of us that are in the construction industry, what are the things that we should be paying attention to with regards to the economy, and trying to probably do the impossible and predict the future?

Anirban: Yeah. There are some leading indicators out there. So, one could put forth the idea that certain construction segments are now in the process of becoming overbuilt. We have added a lot of hotel rooms in recent years, we’ve added a lot of office space in recent years. Actually, despite the ongoing growth of the e-commerce economy, there’s actually been quite a bit of construction of retail space. People who work on the residential side of the industry know how many apartments have been built in metropolitan areas across the country in recent years. And I’m starting to sense that some of these markets are becoming a bit overbuilt, and so what people would wanna look for is evidence of slower rent growth for apartments, for instance, or office space.

I’d then want to see or look for indications of higher vacancy rates, slower net absorption of office space, higher vacancy rates in hotels, meaning a fall in occupancy rates at hotels. Because those types of metrics suggest that supply is beginning to outstrip demand. And when that happens, the performance of commercial properties deteriorates, because rent is not growing as quickly and there’s more vacant hotel rooms, or more vacant office space, so on and so forth. And if, after that period, when it becomes apparent to people that buildings are beginning to underperform, that capital begins to dry up. And what that leads to, ultimately, is fewer new construction starts. We’re not there yet. You know, I am just starting to sense some overbuilding in certain segments and certain geography. But for right now, capital is available, architects are busy, which is a leading indicator, and I think that most construction firms can look forward to a quite active 2017 and 2018, based upon backlog data and general business confidence. But at some point, as you pointed out, a cyclical industry, at some point the cycle will end, and I think we’re starting to see the seeds of the end of the cycle being sown right now.

Paul: Yeah, funny. So, I’m not an economist and I really appreciate the insight, but from where I sit, you know, I look at projects coming across my desk. I do a lot of business development for proposals and what not. And they still are coming across the desk and it’s very interesting because, last year, two years ago, there was a lot of residential condominiums, multifamily, stuff like that, and then it seemed to get more into offices, hotels, retail, mixed-use, that kind of stuff. And that still seems to be coming through. And I just feel I’m so gun-shy from, you know, having been in this industry for 30 years now. I just kinda keep waiting for the…no, no. I guess I probably shouldn’t say the bottom fall-out. That’s what happened last time, and I hope that we don’t have that again.

Anirban: Well, I can imagine that we wouldn’t have that again because, in that case, it came down to the notion that almost everyone’s house was overvalued. And that’s a huge bubble. And that’s very different in terms of order of magnitude, relative to, let’s say, an overbuilt hotel market in New York or an overbuilt condominium market in Miami. You know, these kind of spotty disequilibria. That was, the entire U.S. housing stock is overvalued, and that sets a stage for really tumultuous downturn. I don’t think we have bubbles that large and, therefore, that threatening.

That said, you know, one of the distinguishing characteristics of this economic cycle has been the prevalence of incredibly low-interest rates. And that has many implications, but one of them is that anyone looking for investment yield has been forced into riskier assets to find that yield. Some of that money has ended up in the stock market, of course. We know that the stock market has been hitting record levels recently, whether you measure that in terms of the S&P 500, or to the Nasdaq or the Dow Jones Industrial Average. We know that office buildings have become very valuable, apartment buildings have become very valuable based upon very low capitalization rates. And my very strong sense is that asset prices, in many cases, are elevated relative to economic fundamentals. So, I think there are some bubbles forming out there, but I don’t see a bubble of the magnitude that we saw prior to the Great Recession, which affected the entirety of the U.S. housing market.

Paul: So, with interest rates, you mentioned interest rates are very low right now and I know when we read about it almost every day that, you know, that Fed is starting to try to ease the rates up. Where do you see things going from here with interest rates, and how does that affect the economic picture for the construction industry?

Anirban: Right. So, I expect rates to edge higher over the course of the year. Part of that is due to Federal Reserve policy making. They’re going to raise short-term rates and the market guesses right now that they’ll raise short-term rates. I mean, the Fed funds raised, for instance, three times this year. And so that will have, presumably, some impact on the longer term rates at which we transact, the 5-year loan to prime businesses at that rate, or the 10-year Treasury yield, or the 15 or 30-year fixed mortgage rate. The interest rates at which we transact are likely to rise, but I think fairly gradually, as it turns out. I sense some inflationary pressures building up in the economy. A lot of talk recently about rising apartment rents, of surging health care costs, but the biggie, I think, is wage pressure. It has become very difficult to find good workers, very difficult to find workers at all. And I think that wage pressures are really building up. Part of that is due to some of the minimum wage increases we’ve seen in various markets around the country, but a lot of this is simply demand and supply.

So, if I’m right that inflationary pressures are building in 2017 and 2018, one would expect to see interest rates rising in 2017 and 2018. And you asked the question, “Well, what does that means for construction firms?” That probably softens the construction market because, once rates rise and boring costs rise, it makes it less likely that an individual project’s pro forma will pencil out, and that makes it less likely that that project will move forward. And so, one would expect to see some slowing in construction starts, let’s say, by 2018-2019, given the expectation regarding interest rates.

Paul: How’s economy look overall? What’s it supposed to do in the next couple of years? Is it like in ratio, with the inflationary growth? Or how’s that factor in?

Anirban: You know, last year, the U.S. economy grew just 1.6%, meaning in 2016. It was another disappointing year of growth. The forecast for the current year, 2017, is better. Many forecasters predict that the U.S. economy could grow between 2.5% and 3% this year. That’s probably a good guess, 2.5% to 2.6% is probably a good guess, regarding where the economy will end up but there is a lot of wildcards out there. You know, as of this conversation, we don’t actually have a corporate tax reform package in front of us to consider. We don’t know what reform there is gonna be to the personal income tax code. We don’t know if there’s gonna be an infrastructure-led stimulus package, or a border tax or all kinds of things, what immigration policy will be.

So you know, there’s a lot of uncertainty regarding policy-making. That hasn’t dissuaded equity investors, meaning stock market investors, from driving stock prices higher. There’s a lot of confidence out there regarding where we’re headed in terms of policy-making, but a lot of the policies have yet to be really promulgated and, certainly, none of them have yet been passed into law. So, I think the outlook is pretty good, but there’s a lot of good news already built into asset prices. And the new administration in Washington DC really better deliver on some of these assurances regarding tax reform and other pro-growth elements. Otherwise, we could have a real issue out there with respect to the direction of stock prices, rather asset prices, because as I say, a lot of good news is built into those prices already.

Paul: So, what kinds impact do you see the Trump presidency having on construction, given, you know, as you say, I know they haven’t done anything yet, but given what we’ve heard is possibly coming along?

Anirban: You know, I think that the impact is positive in the short-term and unknowable in the long-term. So, here’s what I mean. You know, even before the inauguration in January of 2017, the Architecture Billings Index, which is a favorite leading indicator of commercial construction, surged in December, the month after the election. Architects got busier. And the notion is that if architects get busier upstream, construction firms get busier, eventually, downstream, that first projects are planned and then they are built. And architects, of course, are part of the planning phase. And the data seemed to indicate that architects right now are very busy. That means a lot of planning is taking place. And that, since the election took place on November 8, architects have become significantly busier. So, that’s very good news and it speaks, I think, to the broader issue of growing business confidence in America.

And this is true not just among real estate developers, for instance, this is true among businesses generally. We’ve seen a pickup in hiring recently. We’ve seen a pickup in investment that takes the form of equipment purchases or software purchases recently. Businesses are responding to the new environment and the presumed policy-making to take place. So, in the near-term, it seems to me that the Trump presidency is quite good for construction volume. And by near-term, I mean 2017 and 2018. And this would be particularly true if an infrastructure-led stimulus package is passed, because this would be very good news for road builders and other folks who work on infrastructure-related projects, obviously. But then the longer term outlook is fuzzier. So, the nation is a few weeks away from a \$20 trillion national debt. What will be the impact of proposed tax cuts on the national debt? What will be the impact of increased defense spending on the national debt? Or of the repeal and replacement of Obamacare on the national debt? These things are unknown. What will the effect be of the new administration’s immigration policies? There is some talk that some of the visa programs will be adjusted, whether the H-1B visa program, H-2B, J-1, so on and so forth. And so, if fewer immigrants are allowed to come to America, including to work, what does that mean for the longer term outlook for the economy? So, there’s a lot going on here. Obviously, trade policy makes a difference too, if one presumes that, if there’s a border tax, that this will raise the price of imports and this could spark some inflationary pressures. A lot of wild cards are from the long-term perspective but what we can see right now is the short-term, and the short-term looks quite benign from a construction firm perspective.

Paul: Yeah. So, we’ve been through this period before the last election, I think, on the government side of stagnation, that they were deadlocked and they couldn’t get anything going. Now, obviously, it looks like there could be a lot of changes and, as you say, it’s creating uncertainty. I guess, the overall, from what you’re saying, the overall feeling is that there may be some helpful things coming on the horizon?

Anirban: Well, I think that that’s right. You know, you bring up a very good point. A lot of people will look back on November 8 and say that the biggest surprise was Donald Trump’s victory over Hillary Clinton, and maybe that’s true. But I think also surprising was the fact that the Republicans maintained control of the Senate, because there were a lot of predictions suggesting that that wasn’t gonna happen. That a particular Senator in Wisconsin, who is a Republican, was gonna lose his race. And the same was true of Pennsylvania, and so on and so forth. But the Republicans kept more seats than people thought. And so, not only does Donald J. Trump win the presidency, but he has a Republican House of Representatives and the Republican Senate, and so the notion is that we don’t have stagnation anymore. We don’t have divided governments anymore, and that really meaningful things that can get done. And that includes corporate tax reform and trying to re-shore offshore profits, and an infrastructure-led stimulus package, and personal income tax reform, and immigration reform, and so on and so forth, and that by and large, these things are pro-business. Things like deregulation of the banking sector, at least to an extent, deregulation of the energy sector, at least to an extent, the reform of labor laws.

And of course, many construction firms, among other firms, have complained about onerous labor-oriented regulations. Well, some of that regime is likely to be torn down and, all things being equal, that’s quite pro-business, that allows firms to save costs and enures to the benefit of the bottom line. And if firms are more confident about their financial future, they’re likely to invest more today, and we’ve already, actually begun to be that in some of the data.

Paul: You were talking about the architects are busy, and it makes total sense, so the architects are going now, then it should, in theory, trickle into the builders building later. Have we had periods where architects get busy, but then they never build it? Can we count on that or do we still need to be cautious?

Anirban: No. We always need to be cautious. So, you know, architects were busy coming into 2007. You know, asset prices were still rising then, the stock market peaked on October 9th of 2007. But two months later, we were in recession. And capital starts to dry up during the early stage of the recession and then, of course, we enter the financial crisis of September 2008. But up until that point, architects had been quite busy, and then the market changed very quickly. And so if your question is, “Could that happen again?” the answer is, of course. The market is a fickle. Right now, the market feels very good about the near-term future. The notion is that the U.S. economy is going to grow more quickly. There’s actually indications that the global economy is starting to improve as well, and that enures to the benefit of corporate earnings. That, of course, has been one of the reasons that the stock market has done so well during the early weeks of the Trump presidency, the feeling that corporate earnings growth is going to accelerate because overall economic growth is set to accelerate.

So, right now ,that’s what the market believes. And for a time, at least, it could be a self-fulfilling prophecy. If businesses expect things to get better, they will, because they’re gonna hire people and they’re going to invest in Main Street economies and things are gonna get better. But the question becomes, what is the rate of return on that investment? And so, a good example is what happened a decade ago, many people were building homes. And for a time, it seemed like a very good thing to do, to build really wonderful, beautiful homes, whether condominiums in South Beach or homes in Riverside, California. And then the market changed its mind and determined that these homes are overvalued, that the paper that is supported by the price of these homes is not worth that much, and that the insurance that’s been written against that paper, on that paper, is not worth much either and the financial crisis begins. So, yes, things can change quickly. But I think for right now, if we’re talking about 2017, we’re in pretty good shape.

Paul: Doesn’t seem like we’re…I mean, things are different now, obviously. I look at the way, for instance, luxury condominiums are financed and they’re taking a lot more money from the owners along the way, rather than 10% down and run away. And you have these empty buildings which I thought would never get flipped, but they did, actually. So it’s amazing, the resiliency that happened after all that.

Anirban: That’s a very good point. You’ve made a couple of very good points. One, of course, is that lending standards are more disciplined than they were a decade ago. You don’t hear that much about no-document loans anymore and, you know, people are having to put down larger down payments when they buy property. And the other, or the flip side of that, is that the banking system is much better capitalized than it was in 2007, 2008. You might remember that, even before the failure of Lehman Brothers, Bear Stearns, another major New York investment bank, got into financial trouble. They were excessively leveraged. Eventually, they were acquired by another firm and so the crisis was averted, but no one acquired Lehman Brothers. Lehman Brothers was allowed to fail on September 15th of 2008, and the rest is history. The full-blown financial crisis was born. It was a global financial crisis. But today, when we look at the large banks, they seem to be in much better shape from a capitalization perspective. Their balance sheets are not nearly as toxic. And that’s one of the reasons to think that when there is another downturn, and there will be another downturn at some point, it won’t be nearly as severe as the 2007 to 2009 episode.

Paul: Be softer.

Anirban: Probably a bit softer.

Paul: Yeah. That’s a good thing. from where those of us in the construction business sit. You had mentioned the infrastructure stimulus as being one of the things that has been discussed and may be coming along, so what are the construction segments going forward that appear right now or look to have the best possibilities for growth going forward?

Anirban: So I mean, I think one of the things upon which the president has focused is manufacturing. And I think that there will be some fairly meaningful growth in manufacturing-related construction in 2017. I think we’ve heard about the, you know, high-profile occurrences at Carrier and Ford, and so on and so forth but I think, in general, we will see more investment in factories and equipment in 2017. So that, I think, is one of the categories that to turn around, you know, we’ll continue to see a fair amount of investment in office space and hotels, and in retail space. The capital is out there. One of the things that owners and operators of malls are coming to realize is that they really cannot compete with Amazon in terms of merchandise. So, the only way to really compete with Amazon is the experience, and to improve the customers’ experience means having to invest in brick and mortar. And we’ve seen that, and I think we’ll continue to see that.

One segment in which we might not see much progress is healthcare-related construction. Obviously, there’s a lot of uncertainty regarding where we’re headed in terms of healthcare financing, what the replacement for Obamacare might look like. Will there be a replacement for Obamacare? What will this mean for hospital finances? And I can imagine that many major medical systems will put projects on hold until some of this is sorted out.

And then, as the final point. Absent in an infrastructural-led stimulus package, I think public constructional will continue to be soft. You know, many states are dealing with underfunded pensions. A lot of money at the state levels is going toward Medicaid expenditures, and therefore being deflected away from investment in infrastructure, again, whether it’s roads and bridges, or public safety, or water and sewer systems. And I think that that is likely to remain a weak spot, unless the Trump administration is successful in crafting an infrastructure-led stimulus package that actually passes Congress.

Paul: So we talk about…I was just reading, actually, in the paper within the last week or so, that I’ve heard a word that I haven’t seen much lately, Inflation. What’s the outlook with that, going forward?

Anirban: Yeah. I the inflationary pressures, right now, are fairly well-contained but that inflationary pressures are building. You know, healthcare costs, apartment rents, home prices are rising, of course. All things being equal, that means higher mortgage payments for those who ultimately end up buying a home. And then the biggie is wages. You know, the official unemployment rate indicates that the nation’s unemployment is below 5%. I know a lot of people look with skepticism regarding those types of numbers, but most businesses will agree that it is really difficult right now to find skilled workers. That the recovery has lasted long enough now, that virtually all of the skilled workers have been soaked up, that a lot of people looking for work right now aren’t suitably skilled, at least not for jobs in construction. And that implies that construction compensation costs are headed higher, and that’s true for many industries. That’s true for retailers, that’s true for manufacturers, that’s true for people in logistics. So, as I say, inflationary pressures are building. Things are getting more expensive more rapidly, and that’s consistent with higher interest rates and it also might, ultimately, put some pressure on asset values. Right now, again, with the stock market setting record levels, obviously the stock market is not right now fixated on inflationary pressures. It’s an afterthought. But as an economist, I can see that these pressures are beginning to build and, eventually, that’s going to make its impact felt in financial markets and in other ways.

Paul: You know, it’s funny. So, what you’re saying really resonates for me personally, because my business, on the wage side of things and the employment side of things, we are understaffed right now. And we are having a tremendous difficulty finding, you know, we like to say we like to hire A players. So we’re having a tremendous difficulty finding, you know, good fits for company and it’s because everybody so busy. And of course, you know, one way to get through that is to spend a little more money, and we’re happy to do that. But even with that, the costs on the wage side for us in the construction business are up, and everybody I talk to concurs that we’ve gotten to the point where we started out where people, anybody, you know, you had people that were overqualified taking jobs just to be employed. And now it’s gone full circle that we’re really, really having difficulty filling positions with qualified people.

Anirban: And the same is true in auto repair and in truck driving, and there’s not enough machinists, there’s not enough welders. I mean, as I say, obviously, there are many construction occupation categories implicated by this skill shortfall, but it’s hardly just construction. And ultimately, what this translates into is inflation. And if cities like Seattle or other cities say that the minimum wage worker is gonna make, ultimately, \$15 an hour, well, that means that the coffee you get in the morning is more expensive, and other things, the haircuts, and so on and so forth. It all feeds into inflation, and so the inflationary pressures are building. As I say, right now the financial markets don’t seem to be taking this into consideration very much. They are much more excited about the notion that the economy is going to grow faster, and therefore earnings are likely to also grow faster. But at some point, these inflation pressures become significant enough that the markets have to take note. And maybe that’s not a 2017 phenomenon, but it would not surprise me if we’re not talking much more about inflation in 2018 and 2019.

Paul: So, how do we keep up with all this? You know, for those of us who are not economists, I have to tell you, if you can read the news every day you would just be scared to death. Everything that’s there, I call it the bad news. But how do we get good information? I know that you put out and I’m big fan of the information that comes through ABC, but how do we keep up with economic developments and try to really get a feel for things, going forward?

Anirban: Well, a couple of things there. One, you mentioned the media, and you’re right. I mean, if you watch some of the news channels, I shouldn’t mention any but let’s say CNN, or MSNBC or whatever channels people watch, it’s pretty easy to get nervous very quickly and to think that we’re in the midst of pure dysfunction. But if you watch CNBC and watch the stock market rising to new heights, you say, “My goodness, everything is great.” So one thing, of course, is to diversify one’s source of news. And for folks who only watch one source of news, that’s probably not enough, particularly given the biases of certain news channels these days.

So how do you…you know, your question is, though. bigger than that. It’s how do we monitor these things? There are so many leading indicators out there. Some of my favorite leading indices include the Conference Board, index of leading economic indicators. The Conference Board is a private organization in New York, very solid, leading indicator, 10 components. People who are really interested in the direction of the economy should study those 10 components. The data typically come out on a monthly basis. Look at the data. The Architecture Billings Index we’ve we’ve talked about, is another wonderful leading indicator and that’s specific to the construction industry. The stock market itself can be fairly good indicator of sentiment. And of course, there’s also surveys of business confidence like the National Federation of Independent Businesses, survey of small businesses or the consumer confidence index, if people are wondering about consumer sentiment. I think all of these things are valuable, but not one measure is going to bring you home. You have to look at all these measures together and then juxtapose that against the performance of one’s own firm.

I know a lot of construction firms get nervous if business doesn’t come rolling in for a couple of weeks, and then they wonder, “Is that just us or is that happening to everyone?” I mean, you know, if one looks at the macroeconomic indicators that we’ve talked about, and there’s many others, the Baltic Dry Index, it goes on and on and on. The Federal Reserve produces many reports, including the Beige Book report. People should read those because they give you a sense of what the monetary policy makers in our country are thinking, and they’re at the cutting edge of thinking about the economy. It’s a lot sources of information. It takes time to read it all. I would not fixate so much on the television news, because people will have panic attacks if they do that. Better to look at the raw data and to make one’s own judgment.

Paul: Yeah. I’m smiling as you’re saying, panic attacks because, truly, I call it the bad news. Obviously, their job is to get ratings and I guess that’s effective. The indicators, you know, I think it’s really powerful information to pay attention to what, I guess, unbiased information. I kept hearing you say the word a lot today, confidence. And that’s got a lot do with it, doesn’t it? Just mindset and how people feel about things?

Anirban: Oh, there’s no question about it. You know, we economists have a tough time trying to quantify the effects of what we would call animal spirit, but the fact of the matter is economic decisions are often very emotional. And when a business person is deciding to move forward with a particular investment, or to buy a new vehicle for their business or whatever it happens to be, there is a part of that decision that’s rational and there’s a part of that decision that’s just their gut. And right now, their gut, in many cases, is telling them that things are gonna get better and they should go ahead and buy that vehicle because they’re gonna need it, because they’re gonna get work. And if they don’t have that vehicle, they’re not gonna be able to bid for that work. Or if they don’t hire those workers, they’re not gonna be able to bid for that work. And there’s gonna be a lot of bidding opportunities, that’s the feeling out there.

And you know, you point out yourself, it’s hard to find good workers, you’re looking for A players. And then the question becomes, “Well, my goodness, if I’m looking for A players, those A players probably work for my competitors right now. So, how much do I have to pay those A players to bring them onto my team and keep them on my team? Or do I change the business model and accept some B and C players?” Which, of course, can cost the firm in different ways. It’s a tough world out there. Even when the economy is good, it’s tough. It’s just that the challenges on a good economy are different from the challenges on the bad economy. And in general, people would like to deal with the challenges of a good economy, and that’s where we are. So yeah, confidence plays a big role. Right now, those animal spirits are at work, consumers are confident, businesses are confident, investors are wildly confident, and so it speaks to a 2017 that’s probably gonna be quite good.

Paul: That’s what we like to hear. So, Anirban, thank you so much for coming on. It’s really, really interesting and I know it’s big interest area for our listeners. Now, obviously, if the listeners wanna keep up with you and what you’re doing, I know, obviously, joining ABC is a great way to do that. Are there any other areas that they can follow you?

Anirban: Well, they can come just to and look at the website. And we, at least three times a month, post new information about the construction economy. Sometimes, we talk about investments, meaning, you know, construction starts, and how much money is being spent on putting construction into place. Sometimes, we talk about construction employment. We talk about materials prices, whether the price of natural gas, or oil, or iron ore or copper. And so we try to be comprehensive in our coverage of construction. And if they go to, they’ll see some of our ongoing writing there.

Paul: Great. Well, again, thank you very much for coming onto the podcast. It was really interesting.

Anirban: It was a privilege to be with you today. Thank you.

Paul: Okay. So thank you, everyone, for listening to The Everything Building Envelope podcast. I wanna remind that we have a newsletter, and if you’d like to get The Everything Building Envelope newsletter please text the word building envelope to 22828. Again, building envelope to 22828. And until next time, this is Paul Beers saying, “So long.”

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Construction Changes, Building Codes and Mitigating Costs in Development

Rick Chitwood – Trump Group Development

  • What is your background in the construction industry in South Florida?
  • What role do you foresee developer’s playing in the South Florida Building Code?
  • What are developers doing to mitigate the natural disasters that occur in South Florida?
  • What are the main changes you see forthcoming in the construction industry?

About The Everything Building Envelope Podcast: Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

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The Everything Building Envelope Episode Transcript:

Paul: Hello, everybody. This is Paul Beers. Welcome back to the “Everything Building Envelope” podcast. We’ve got a really interesting guest today, an old friend of mine, Rick Chitwood. Rick and I have known each other probably for longer than we care to admit. Welcome, Rick.

Rick: Good morning, Paul. How are you?

Paul: Really good. Thanks so much for coming on this morning. I know we’ve got a lot that we can talk about that would be of great interest to our audience. So Rick and I, just to give a little background, we’ve worked on a lot of high-rise condominium projects in South Florida over the years. The one that we just finished was called Mansions at Acqualina. It’s a 47-story building right on the ocean, one of the finest residential buildings in the world. How tall is that building, Rick?

Rick: Five hundred and 49 feet…I mean 649 feet, sorry.

Paul: Yeah, which is as tall as they let you build there. And then what’s the new project that’s coming up?

Rick: It is called the Estates at Acqualina. It is two 649-foot luxury condominium towers and what we call the villa, which is a \$50 million five-story clubhouse, which has our amenity packages. We are offering as amenity packages, we call Circus Maximus, which has a skating rink, bowling alley, you know, flight simulators, car simulators, golf simulators. We actually are gonna have a surf wave pool, a slide. It’s going to be more of a resort condo destination. It’s a new twist on high-end condo living on the ocean of South Florida to where you don’t need to leave the compounds of your condominium.

Paul: Wow, that sounds really cool. It sounds like fun actually.

Rick: It is.

Paul: So there’s a lot involved obviously with putting up a 50-story luxury building in South Florida. And I know that, you know, you’ve been at ground zero the whole time. In fact, I remember back…when did we start Mansions at Acqualina? Do you remember when the construction began?

Rick: It was 2013 at least, yeah. It’s ’17 now. It’s been open about a year. About 2013, we actually had the mat foundation, I believe.

Paul: Yeah. And I remember I was in your office a couple of years before that. This was when things were still really, really slow from the great construction slowdown or what I call the construction depression. You were showing me the plans for the building. I remember asking you, “Are you really gonna build this?” And sure enough, you did. In fact, it was probably one of the first buildings at the ground after the big slowdown.

Rick: Yeah, exactly right, Paul. We were probably the first to get the job on the new upswing. It ended up being very, very profitable for us. We sold the building out quite quickly. So sometimes you make the right choices.

Paul: Yeah. And the units went for some real serious money, probably set some records, didn’t it?

Rick: Yes, it did. You have to realize we do turnkey construction now. That means you get all your floorings. Everything is done down to… We give you a Fendi furniture package. So all you got to do is bring your suitcases and come in. You know, we used to build what we call condo-ready. Usually, all you got was a finished unit but no flooring or stuff. So once you closed, it took you some six months to finish your unit. But now, it’s just like going to a showroom. If you walk in and buy a unit, you can customize it. We have packages. It’s a new concept. But it does add a lot of time and effort because you’re moving probably twice as much material into the building.

Paul: How many units are in Mansions?

Rick: Total of 81.

Paul: So you basically had 81 different things you had to do too. Doesn’t it make things a lot more complicated, have 81 different finishes?

Rick: It can be. What we really learned was how important vertical transportation is in these high-rise buildings. We actually did a forensic study with another consultant. And we interviewed all the subs, all the change orders, all the consultants, trying to find out what we did wrong, because we don’t wanna do it again.

And so the two number one things from most subcontractors and general contractor was vertical transportation, because my guys have to wait forever to get up and down the building, and parking. As you know, in South Florida, especially in Sunny Isles, parking is a premium. Bussing workers was not always attractive to some of your high-end workers. The two number one concerns that we got from all our exhausted interviews, every person had that same two items as number one item.

Paul: So have you figured out a fix for that?

Rick: Yes. First off, we use more buck hoists, and we use high-speed double-rail hoists. You know, the industry has been looking at the elevator people. I’ve been trying to sell this idea that you can move the inside cars with the building, and you can use them, but I haven’t heard anybody successful with it. It needs a few more years to be perfected. But that would help, because then you could use your interior cars, you know, four or five elevators, plus your outside cars.

To me, right now, we looked at it, and we’ve talked to a couple of people that tried it. It’s a little too risky. You’re not getting returns you need yet. But it will come in the future I think, so almost like building the elevator in stages as you go up to the building. So let’s say you get to the 20th floor, you’re using the elevators already to the 15th floor, a pretty interesting concept.

Paul: It is. I know in construction, you’ve got all these things to deal with, like stuff coming down from above and what not that you have to worry about. If you think about it, I guess it does make sense. You’ve got, you know, the infrastructure there. Why not use it?

Rick: Yeah, absolutely. It makes some sense

Paul: I got a little bit ahead of ourselves here. And I wanted to tell everybody, you know, a little bit more about you. So you work for the Trump group. And just to let everybody know, I know you’re sick of hearing this probably, but it’s not the Donald. It’s a different Trump. So maybe you could just kinda tell the listeners a little bit about your background and, you know, what brought you to where you are today.

Rick: Okay. I was born and raised here in Miami, South Florida, North Dade, a little section of town called Ojus. My dad was a general contractor, him and his brother, in Miami called Chitwood Construction. They did some high rises here in Miami. They also did some high rises in the Bahamas. And we did some high rises in New Orleans. So I was raised in construction. I started when I was 12 on the sites on the weekends. My dad had me straighten nails and put it back in the box. It was a little brutal.

But then by the time I was 18, I was a full-fledged journeyman union carpenter. They had all the problem of putting me in at a young age of 15. But my dad, being a contractor, was able to pull some strings, and I was able to get a good training through the apprenticeship program. And then working up through the industries, I’ve worked for a lot of very large developers in South Florida. I have done some building in upper state New York, in Long Island, for the Holiday group, some large housing projects and some other projects. Most of my construction has been here in Miami and South Florida. Like I say, like you and me, we worked together, I was at the Ocean Club with the 11 builders. I was there nine years with Mr. Hanson, the developer.

And I am presently now with the Trump Group, vice president of construction, director of development. And I’ve been here about 12 years. As you know, the original Acqualina project, which is a five-star Forbes hotel and condo, and that’s our first project. It’s a 52-story building, but it’s a 100-foot shorter than the new building. The new building is the Mansions, which is 649. And now we have our new project coming up in the end of this year, which is the Estates. We also do building in California and New York. But I have been with Jules and Eddie Trump for the last 12 years, and they’re a pleasure to work for.

Paul: Great. So, you know, it’s interesting to hear that your father was in construction. Now, your son, Rick Junior, has a prominent role also. So it’s kind of a generation to generation thing, isn’t it?

Rick: Yes, it is. So my son actually works for me right now. He’s basically our field project manager. He kinda runs the site stuff, and I keep the legal, the paperwork, permits, and the rest of the stuff going. Then I have Eric Bartos, one of the top estimators, I think, in town. As you know, Paul, he does my numbers work.

Paul: Yeah, Eric is great. We all work together down at the Ocean Club job way back when. So you’ve got a very impressive team.

Rick: You’re right, Paul. I believe in teamwork, being an airborne ranger serving in Vietnam. I built strong teams. And then nothing gets done without a team, as you know. So, my team, we stuck together. Most of my guys had been with me at least 15 to 20 years.

Paul: Yeah. And something as complicated as these really tall buildings and these really tight sites and these very demanding specs and owners and everything else, I mean, you’ve got to have the A-team or you’re never gonna pull it off.

Rick: Yeah, correct.

Paul: So let’s talk a little bit about building these really tall buildings on really tight sites in South Florida. Let’s talk a little bit about the code, the South Florida building code. It’s unique. And how does that play into all this, with having to, you know, build these really ultra luxury buildings? What’s the developer’s role in how the building code works with it?

Rick: Well, over the last couple of years, we have informal meetings with most of the top developers in South Florida. We have a round table session. Usually, every two months or so, I started these to try to…I hate to let people make the same mistakes I made, just because I made it… You know, I keep telling these guys…yeah, we’re almost like professional coaches. We, you know, have different teams, and we do different projects. But we all have the same problems. So we should share those problems. Why should we all make the same mistakes over and over again? So I’ve been really successful with that.

And maybe who I am, because I do all of my own permitting and government approvals through all the federal state and local governments for all my projects. I am also a very strong in the developing of the Florida building code, which you know is forever changing. So we review all the changes. And, if necessary, I contact the other developers and the homebuilding associations. And we negotiate with the state to change language or tweak the code to where we think it needs to be.

What we are noticing is we think it’s an important step for us to get everything in writing, because, as you know, the industry, a lot of people we deal with everyday and have been for years are getting…like me, will get over and not gonna do this forever. So it’s a whole new generation. There’s different ideas and different ways of doing things. So some things, you know, we take for granted, we can’t do that anymore. We need to get them in writing, so we’re covered, protect ourselves against, you know, high expense and construction costs.

Just lately, we fought two different fights here. They were trying to get seismatic into South Florida building code. We’re in a zero zone. There’s really no history of ever having a quake. They’ve had one reading, but they think it was actually dynamiting of mines out in the west. So, you know, we fought that, and we won. It kinda stopped up north of Ocala. That was started by a building official in Jacksonville. I guess they might get a tremor there once in a while. But we fought that.

Again, lately, they wanted to put snow loads in South Florida building codes. I mean, that to me is ludicrous. I don’t even know how it even got on the agenda, but it did. And if it got passed, it’s just adding costs that’s not necessary to the cost of building, which then in turn I pass on to my consumers. So I’m not only protecting myself. I’m trying to protect the consumer.

And so I find these group that we’ve been doing help a lot. I’ve learned a lot of things to apply to my new building from guys experienced and the problems they’re having on their projects. And they gained the same from me. We here in South Florida, I don’t know how many people know about it, we use a lot of CPVC for fire sprinkler. There’s been a lot of claims, and there’s a lot of problems with the product. We had a major issue on one of our projects, and we have learned. We do not use CPVC for fire sprinkler anymore. We only use steel. The only person that really saved was me because it’s cost-efficient and plastic. But once you’ve been through one of these failures, it’s not cheaper. So now we’d rather pay up front and know that we do not have these problems. And we pass all that information along to the other developers and share these same ideas.

You know, once I started with Jules, I learned that through John Hanson that the Ocean Club, I believe in the good neighbor policy. You know, I try to stay in contact with my neighbors, because construction is nasty, is dirty, and is an inconvenience. So the more you can soften this up with your neighbors and your city, the better off you are. We have a real good working relationship with local governments. It’s important. You need to know who and what you’re dealing with.

Paul: What are some of the big challenges that you see with the building envelope?

Rick: As always, window openings. You know, you’re my window consultant. Actually, you do my window, roofing, and waterproofing and have for years. And all three of those are, as you know, major issues. And for people that don’t know South Florida and the condominium, we have what we call a 558, which every condominium files, which means you turn your plans and specs over to the association. They hire an independent engineering firm and come and inspect your documents and all your building and list any and all discrepancies they find. So it’s a big process. Usually, one of them is about the size of a phonebook the time you get a high-rise of this size.

So the envelope of the building is one of their primary points, you know, from stucco to windows, especially any type of water infiltration. And here in South Florida, as you know, the big item to us is waterproofing. We’ve learned through the years not to value engineer or be prudent, but don’t overvalue engineers, especially your building envelope items, especially waterproofing.

Paul: You’re talking about the part of statutes, chapter 558 claims, and you’d say that, you know…well, I know it’s not funny at all. But I had to chuckle about the phonebook of alleged defects. How many of those are real at the end of the day?

Rick: I would bet you it’s at least 65% are real, you know, because construction is not exact science, as you know. Measure every tread riser in a 52-story building of the stairs going up, and you got an eight-inch plate. It’s pretty hard to build sometimes with that, but it’s a requirement. So they’ll catch anything and everything. A lot of them, you know, you just negotiate out, because they’re not worth handling.

And the forensic engineers are very good. And we try to keep up on what they do. One of their big issues is post-tension cables and how they are terminated and patched and all of that. They actually chip pockets out, measure, and all that. And if they find something wrong, they would make you chip every post-tension pocket on the building. Well, as you know, that could be 50,000, 60,000 you’d have to chip on the exterior of the building and fix. So, being prudent as we are, we hired, again, another consultant to come out and privately inspect the cable systems, so I can protect myself a little bit.

We’ve learned now that one of their new tricks is they’ll go into a unit, finished unit. When they’re walking it, they’ll turn the air conditioning up, real down, real low, getting the whole unit real cold, turn the air off. Then they use infrared cameras to camera the walls, and they measure the screw spacings. And if the screw spacings don’t match the LOA or the specs for that installation, guess what, you’ll be going and adding screws to finished walls of units where people are living in.

So, you know, every two years or so, they’ll get a hot item, something new they can do. You know, they just follow it through. So, you know, during our developer meetings, one of the things I talk to guys about, they’re gonna come after you post-tension, you’re better off spending money upfront, get it right. Paul, as you know, anytime you got to return and swing a building and start chipping on the outside, it’s expense.

Paul: You don’t have happy people inside the building either.

Rick: Oh, no, you sure don’t. You sure don’t.

Paul: So when you got all these defects you have to deal with, how do you make them go away?

Rick: Well, subcontractors. First, I go to…as you know, we use general contractors. We don’t self-perform. We go to our general contractor, and he goes to the subs. And luckily, the fact is, you know, you did some work for us, our project little north of here, Luxuria in Boca, I just finished that 558 report, and it’s completely signed off. Like I said, they’ll bring the subs back. If it’s wrong, they got to fix it. I mean, usually, they don’t squabble. The bad part is, you know, during the turndown, a lot of subs went away. Even with Acqualina, I have some issues. And subs aren’t there anymore. So that presents a problem. But if you use a reputable general contractor, in his contract, he knows, because he knows, if he’s been to South Florida very long, he’s been through what we call the condo wars. So he’s quite used to what’s going on.

And then, of course, Paul, there’s always a little negotiation of, you know, maybe I’ll paint the building again. That’s what I did at Luxuria, because, as you know, that building got caught in the turndown. So sales dropped off. So I have so many units. It took me, you know, like, eight years to close out before I could even dip the turnover. So the building needs to be painted anyway just by longevity. So, you know, we painted the building, and I put some new cooling towers on it. And now I am released. And so it’s at least signed off, and it’s completed. It’s a long process, though, and expensive.

Paul: And the alternative is to have a big fight and get the lawyers involved, and then nobody wins.

Rick: And you go to court. You’ll probably spend more in legal fees than the whole thing would cost you anyway. I put in my budget for just, like, a building we just finished here for turnover of \$750,000 that, I, the owner, will spend to get out of it, you know, to mitigate my problems. So, now, you know, with these reports, if it’s not a construction defect, it can be a design defect, you know? So that’s another issue we deal with. A lot of times, we can deal with that in different ways.

Paul: Yeah, it’s pretty complicated.

Rick: You probably spend a lot of time in litigation like that, because I know you’re a consultant. So I’m sure you go through a lot of this with these guys, with a lot of different developers.

Paul: Well, you know, that’s right. So we do expert witness work. And I have to say you handle it as well as anybody I’ve ever seen. And one of the things that you do is you just fix. If it’s something wrong, you fix it. You don’t fight about it. You fix it. And I see, you know, the good examples, and that’s not easy. And then we get involved…on the other end, we have a developer that’s maybe new to the process or maybe just, you know, doesn’t get it, and they fight. And I tell you it ends up nobody wins in that, nobody at all, except maybe lawyers and experts.

You know, it’s unpleasant. I know you don’t wanna spend \$750,000, you know, to get through it. But you would spend ten times that much or more with the big fight and then, you know, sully your reputation you know, not have repeat buyers. I mean, there’s a million reasons why it’s worth quite a good money.

Rick: It used to be kind of practiced years ago here for these settlements like this, you just write a check. You know, “I’ll give you the \$750,000. Just go away,” you know? That’s not the answer. I didn’t buy it, you know, to where it doesn’t meet code or doesn’t work like it was designed. So why should I pay for it? I think my general contractor, subcontractors owe me what I bought. That’s the way we went about it.

Paul: Yeah. And kudos to you because, like I say, it’s a really difficult process, and I’ve seen a lot of people do it. And, as I say, you do it as well as anybody.

Rick: A secret I did learn about it with these engineers is, you know, they always say, “This doesn’t meet the code,” or “This doesn’t do the intent of the code.” Here’s what I tell them, “Well, then I have to build what I have permitted. And it was approved by the building official. And he has the right, for being the person of jurisdiction, to interpret the code. And if that’s the way he interprets it and that’s the way they permit, that’s the way I’m gonna build it.” So what I tell them is “I’m not gonna even answer these. If you want answers to why you don’t think it meets the code, you go talk to the building official and you find out, because I have no choice but to build what’s permitted. If you don’t like his interpretation of the code, I don’t know what you do about that.”

A long time ago, I’d spend a lot of money with architects and paying consultants and architects to tell them why it isn’t or is in the code. I’ve stopped doing that. I’m not gonna explain myself. The explanation is “I built what is approved. I can’t do anything different.” So it’s been a big help to me of… It probably takes, I don’t know, a third…no, I wouldn’t say a third, maybe an eighth of the items out of the report right off the bat. “I’m just not gonna address them. You go address them.”

Paul: Because they’re trying to interpret the code differently than the building official, basically.

Rick: Well, Paul, you know as well as I do, if I ask five people to interpret the code, I’m gonna get five different answers. People just read things different, and it’s the way they see it. So, you’re right. Yes, that’s exactly my point. In fact, I guarantee you, he doesn’t see it the same as the building official.

Paul: Yeah, that’s so funny. You can’t win because…

Rick: I’m not gonna fight it. You go fight it. I don’t need to fight it.

Paul: Yeah, makes sense. Let’s talk about natural disasters a little bit. You know, I used to go to the National Hurricane Conference. I haven’t been in a while. But I know you go every year. I know you’ve gotten some other major awards for the work you’ve done with them. Can you maybe tell us a little bit about that? And then we can talk about how it relates to the buildings?

Rick: Yeah. Well, first of, I got started with… And you’re right. I go every year. I’ll go again this year, because I learn a lot. I take classes, and I talk to people. And it’s a great place to network, as you know. I got started with it because of Key Biscayne. You know, it’s an island. They have their own police force, own fire department. They had a public works department of about three people. So I started an incentive with them to where I would supply all the manpower, tools, everything they needed from… Again, small building department, they had one plumbing, one electrical, one of every inspector. I started a plan with them that in a case of a disaster, we would be their relief. We would help. I would bring in my architects. They could put one of their inspectors with four of, let’s say, my architect or my structural, whoever they needed. Let’s say it was the electrical inspector that was with the team. Now, I give an architectural guy, a structural guy, a mechanical guy to walk the teams to do the assessments of the homes, because you got to assess anything before we let anybody back. So that basically gave them…went from one team to five teams. And I could supplement them on equipment and manpower and all of that. And for that, it was, you know, at no cost. We did it at no cost to the city, you know, as a part of our good neighbor policy with Mr. Hanson.

But what also that allowed me to do is they gave me and my people and my workers the same pass that any other city employee had. They’ll let you back on the island. As you know, it’s an island, so they just stop you at the bridge. Nobody comes or goes unless you have one of these. So what that enabled me to do was to get people into my project ahead of everybody else and take care of my problems. So it was a two-way street. I actually got the governor’s corporate award that year for sending us on new projects. That was in ’99, So that’s what really got me started in enjoying what we could do to help each other during natural disasters, which in South Florida, as you know, is usually storms or flooding.

I love to build to mitigate, as you know. All my buildings now, and I built in South Florida, all ground level penetrations, doorways, vents, everything gets flood barriers, flood-proof barriers, that we can install to seal the building completely, even the garage entrance as a hydraulic steel lift door that seals off that garage, where I can handle a flood surge up to about four feet and get no water in my building.

We learned, as you know, Paul, here, I can get a flash thunderstorm that can drop…you know, one that really got us…dropped 10 inches in like 10 hours. Well, Collins Avenue, FDOT, all the drainage systems, they were overtaxed. The water was everywhere. Well, it ran into my Acqualina building and, you know, caused damage to some very expensive cars in the garage. So that’s when we learned, okay, you don’t need protection just for the big storm that you could plan on, but some for the…when it comes…they tell you you got an hour till it’s coming.

Like with our garage barricades, they actually operate two ways. You can manually do them with the hydraulic or they float, because the water gets too high, it starts rushing too quick. It just floats up and closes itself. So if that flashflood gets in there and you’re not ready, it will kinda work by itself to help protect you.

You know, the other one, like you know, is wind. Like we did at Luxuria, like, try to do sometimes mostly is the code only requires, you know, large missile impact up to, what is it, 30 feet, I believe, Paul? I don’t know the exact measurement.

Paul: Thirty feet.

Rick: Yeah, somewhere along there. But, you know, to me, okay, If I was a penthouse buyer and the guy downstairs had what I can see a better product, I’d be a little upset. So, to me, I just put large impact everywhere, and everybody gets the same protection. It doesn’t cost more. But I think it’s prudent again. You know, I mean, with these storms, I’m not worried about something blowing from the ground up to the 15th floor. But I’m worried about that furniture and table on that 15th floor patio going through that glass door. So, you know, even though they’re supposed to take it all off and all that, it just sometimes don’t happen, Paul.

So we try to mitigate everything that… I can, there are natural disasters for South Florida. Why I go to these conventions, I’m looking for better ways and better ideas to mitigate water intrusion, wind damage, and those type of normal event.

Paul: Yeah. As you know, we’ve been through some storms on some of our projects before. I remember at Ocean Club at Key Biscayne, they call it the storm of the century. It was a February storm, and hurricane-like effects. I remember getting a call from Tom Moses, who was your boss at the time, and I think he said to me something to the effect of “I had six reports of leaks.” This is, you know, we had 10 buildings.

Rick: Yeah, yup. That’s why it’s important to have consultants, because, listen, these guys in the field get paid to do a job. I’m sure most of them try to do the best they can. But I think the industry has lost a lot. You know, there’s not really an apprenticeship program for very many people today. It’s just poor training. It’s not the A-team installing your windows. Let’s put it that way. That’s why guys like you… And even the waterproofer, how much do you think he pays that guy putting down that hot mix out there. If somebody’s not watching, who knows if he’s got the right mills or whatever. I mean it’s important to inspect and control the workers on site.

Paul: And like the waterproofing, to me, I mean, it’s a crappy job. It’s messy. It’s hot. It’s dirty. And you know, it’s not a career path people are choosing these days.

Rick: It goes along with your other ones, if you look at a lot of roofs. I wouldn’t wanna be a roofer myself, Paul, either.

Paul: Even a roof consultant, you know, our guys that go up on the roofs, they get to a certain point, and they don’t ever wanna go on the roof ever again. That’s why our new drones are gonna really help out because we can…

Rick: Yeah. That’s why I think, like you say, you know, there’s gonna be a lot of changes coming in the construction industry. Drones are, I think, a good one. Especially for you, I would think not having to put a guy on the roof to where he could get hurt, it’s got to be a big asset to me.

Paul: It’s a game changer, not just the roof but also the facade. You know, you think about all the effort in getting swing stages out there and, you know, and you talk about vertical access. So they’re trying to do the work, and then we need to inspect and things like that. If we can fly drones, we can cover a lot more ground a lot less expensively with, you know, zero impact, basically. I don’t know if I’ve told you this or not, but, you know, we’re FAA-certified, and we’ve already branded ourselves Air GCI, and we’re flying the drones already. And it’s a huge, huge benefit for being able to cover a lot more area a lot more cost-effectively. It benefits everybody, especially our customers.

Rick: What I build, I survey buildings of both sizes photographically. Then I set up settlement points. I mean, I try to monitor it. To me, it’s to mitigate claims later. And I think, again, the drones will help that. I mean, I had to do it with high-resolution cameras, you know? And it works good. I mean, I can see a crack on a wall. I can zoom in on anything. Again, for anything like that, for pre-construction survey of your neighbor’s building, because you know it’s gonna be a claim when you’re done. Always is, always will be.

One thing we do a little differently is we try to be proactive and get an agreement between us and our neighbors. You know, we know we’re gonna do certain things. We’re gonna get windows dirty. We’re going to get some concrete on your pavers. And I’m gonna wash about a thousand cars and things like that, things you can’t help building high-rise buildings at close proximity. So I think drones are gonna help a lot with that in the future too.

Paul: It’s exciting. So what are the changes you see forthcoming in the construction industry going forward?

Rick: As you know, it’s all electronic now. Guys can actually be in the field and have the plans on their iPad. We can actually send them RFIs so that they can read it on sight. And electronics, everything, the BIM modeling, the 3D modeling on the designs and stuff, technology is, as you know, changing leaps and bounds, which is good and bad. The bad thing is cell phone service. You know, I put a brand new building up and put the cell phone system in the building. When I bought it, the time I get it in, it’s obsolete. You know, I mean, we went from 3D to 4G. So next time, we’re gonna try a little something different. We’ll put in the infrastructure, the wiring, the cabling, and the piping and all. But don’t buy any equipment or anything until you’re ready to open. And then it’s probably only gonna be good for a couple of years anyway.

The big change in the construction industry that really hurts us is cell phones. You see, more guys standing around on cell phones instead of working. I wish there was a way to limit that. Of course, you can’t. I mean we built years and years. We didn’t have cell phones. You know, you had either radios. Or if somebody really needs it, we had megaphones, so and so, whatever. To me, if there’s a way to control that, you’d probably get a lot more productivity. But I don’t see how you do it. That’s one of the fallbacks we see. I see it all the time, everyday, somebody sitting around on their phone, instead of working. They might be calling their office. I don’t know. I don’t know. When I see guys texting and playing games and stuff when they should be working, I think it’s costing companies and people a lot of money, a wasted time.

Paul: Yeah, they’re a big distraction, no question about it. I never really thought about it. Yeah, I mean if they were doing Facebook or whatever when they should be installing things and…

Rick: And, you know, they got that phone on and their, you know, headphones on, you’re really not hearing. You know, you’re not looking, you’re not aware of where you’re at. If you’re on a construction site, as you know, it don’t take a one small thing and it could kill you. Construction sites are dangerous places. You need to be aware and on top of your game when you’re onsite. It’s my opinion.

Paul: Could you ban headphones?

Rick: Well, you know, we tried to do a lot of things. We don’t allow people to eat in the building because of rodent control in South Florida. We do a lot of rodent control. I mean, I don’t know. It’s a lot of policing, you know? One of the good things I see changing now is electronic, you know? For years, and we still do it today, everyday, the sub tells me how many people he’s got onsite, because we have to do our man count. I like to track manpower to see how many… Do I need more electricians? He’s behind or whatever. Well, that guy could tell you anything he wants. I guarantee you you don’t go around count how many plumbers there are and all. You kind of depend on them.

But now, if they all get badges and stuff and if they come through the gate, it electronically reads them, tells you who it is. And the other thing is, which is kind of neat, it tells you when they leave. If I paid him for 10 hours for the plaster work two hours overtime, but his tag went out at 3:30, why am I getting charged for 10 hours? So that’s one of the good things, because there’s a lot of information with that badge too, the name, who he works for, a lot more information, you know, just readily available to you.

And sometimes I wouldn’t doubt, Paul. The system would be able to tell you where he’s at on the job. If the plumber is supposed to be on the ninth floor, what’s he doing on the 18th floor? You know what I mean? At some point, I might think it’s gonna get that good, which I find is a helpful tool.

Paul: The cost to manage resources and make things more efficient. We don’t even know what’s coming, you know?

Rick: I know. That’s the sad part. You’re right. We can’t even think about what’s coming, I don’t think. It’s coming.

Paul: I love technology. It’s intimidating. But there’s some amazing things that you can do within this geolocating and things like that. It’s gonna be mindboggling. Artificial intelligence and all these things that sound like outer space and sci-fi are becoming real. And I think you always need people in the buildings to build them, but we can help them, you know, build better, basically.

Rick: The iPads and the information you can get to the guy in the field, he ain’t carrying around a roll of plans, not roll them out, you know? It’s a pretty cool stuff.

Paul: Yeah, because when you ask to bring the plans, you know, he’s not gonna do it. I mean, plans on these big buildings, you need a wheelbarrow, basically, to cart them around.

Rick: And they’re changing daily. It’s pretty hard to give a guy a new sheet every couple of days. It just much better just update your internet and, boom, there it is. What you got is latest and greatest. Again, probably puts into the general contractor or even like you, maybe they got to have IT people that can maintain all the stuff for you.

Paul: That’s a huge challenge. I can tell you, for us, you know, we’re using technology a lot. We have to collect all, you know, our data now on iPad, which I can tell you, Mansions, up until near the end, we weren’t doing that, because the technology wasn’t really…

Rick: Right.

Paul: Yeah. We can deliver reports, you know, same day, next day, where it used to take us a week or two. We take pictures. We take photos. We go back to the office, write the report, match the photos. Now, we can give a better report, and we can give it real-time, and it’s really spectacular.

Rick: It’s important. Like you say, it used to take us a week. So that week, there’s nothing even get done if you think about repairs. So I see that as a very positive move too.

Paul: Yeah, they cover up all the work, you know?

Rick: Because they didn’t get the department. That’s what he saw a week ago, you know? It’s crazy.

Paul: Exactly. Well, listen, Rick, this has been really, really interesting. I thank you so much for taking in the time. I know the listeners are gonna get a lot of good intel and really interesting stuff that we talked about. So thank you very much again for coming on.

Rick: You’re more than welcome, Paul. Thank you for all your support throughout the years.

Paul: Yeah, no. It’s been great. So I just wanna remind the listeners that we have a newsletter, the Everything Building Envelope newsletter. And if you’d like to subscribe to that, all you need to do is text the word “building envelope” at 22828. So for the newsletter, text the word “building envelope” to 22828. And with that, I’ll say goodbye. Thank you everybody for listening to “Everything Building Envelope” podcast. Until next time, this is Paul Beers saying so long.

About GCI Consultants: GCI’s building envelope professionals provide consulting services to ensure clients receive maximum value and return on their investment in the firm’s services, which include:

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Waterproofing, Window and Door Flashings

John Babun – Sika Corporation

  • What are the largest challenges you see right now pertaining to window and door flashings?
  • What are the benefits of liquid applied flashings?
  • What are the benefits of a cementitious waterproofing for windows and doors?
  • Is one flashing appropriate for all applications?

About The Everything Building Envelope Podcast:      Everything Building Envelope℠ is a dedicated podcast and video forum for understanding the building envelope. Our podcast series discusses current trends and issues that contractors, developers and building owners have to deal with related to pre and post construction. Our series touches on various topics related to water infiltration, litigation and construction methods related to the building envelope.

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Paul: Hello everyone, welcome back to the Everything Building Envelope podcast. I have a really interesting guest today, John Babun, with Sika, and John thanks for coming on the show today.

John: Great to be here.

Paul: So we’re going to be talking flashings for windows and doors, which is a pretty interesting topic because it’s changed a lot over the last five, 10 years, we used to cut up pieces of metal and try and piece them together and poke holes in them with fasteners and have them not leak, and now there’s a whole new family of fluid-applied materials that really make things…they’re just way better and a lot easier to do. But before we get into that, John, would you mind telling the audience a little bit about yourself?

John: Sure. I started in the industry as a regional manager for one of the largest waterproofing suppliers in Florida. I was there for about a total of 10 years, from there I started my own waterproofing and window and door installation company. And I had that for about seven years and then based on some things that ended up changing, we ended up closing that company and I’ve been with Sika now for a total of about three years. And now I’m the district manager for Sika Corporation for the Commercial Refurbishment, Ceiling and Bonding Division, as what we call it, for Florida, Georgia, Alabama and The Caribbean.

Paul: Right, I know Sika is a name I think that most listeners are familiar with, but in case they’re some that aren’t, could you tell us a little bit about Sika also?

John: I sure can. Sika is a global company, we’ve been around for about 110 years. We’re made up of about seven different target markets, and basically…I had mentioned the Commercial Refurbishment, Ceiling and Bonding, that’s one target market that deals basically with concrete repair and sealants and waterproofing products.

And then we also have a concrete division that deals with admixtures, and concrete itself. And we have a specialty flooring division which deals with interior flooring and epoxy flooring and hospital floors and all kinds of special floors. We also have a roofing division called Sika Sarnafil, and they deal with PVC roofs. And we have recently acquired L. M. Scofield, so they’re now called Sika Scofield, and then we also have Sika Greenstreak, and Sika Greenstreak is a below grade waterproofing. So basically what it allows us to do is as a company, we can single source projects really basically from the bottom-up, right, from below grade, all the way up, outside the windows, inside and up to the roof.

Paul: So like what’s the advantage of being able to single source from one manufacturer from, as you said, from in the ground right up to the roof?

John: Probably the largest advantage of a single source is we know what is compatible with what, and what adheres to what, so in other words some of the most vulnerable areas of a building envelope are the connections, from one waterproofing piece to another waterproofing piece. And when you’re dealing with multiple manufacturers, often times you run into the situation where one might not be compatible with another. And if there is a failure, you obviously run into the situation where you have the blame game, right, everyone pointing the fingers at each other.

So frankly, the largest benefit of a single source is if you use a project that goes Sika from ground-up and there is a problem on that project, there’s one call to make and one company to bring to the table. But hopefully, all the homework’s been done ahead of time and you won’t have that issue because we already know again what’s compatible with what works where. So, you avoid all those situations in the future.

Paul: Yeah, that’s well said, you know, the other thing that we run across at GCI Consultants on projects is where even if things aren’t compatible, we’ve had manufacturers. I’m not saying Sika is one of them because I’m certainly not thinking of Sika when I say this, where they basically have warranty exclusions if other materials are used adjacent to theirs, which creates problems, especially if you find out about it after you’ve already halfway through the project. So we’re gonna talk about window flashing, as we did in my little presentation when we started, about the evolution of flashings, and you agree with that, I assume?

John: Yes, yes.

Paul: Yeah, it’s really great. The fluid applied materials have really helped, from our perspective, as you know, our consultants and quality control side has really helped simplify things and helped get better results. You can…it’s a lot easier to inspect, you don’t have as much blind penetrations and putting holes in things as you used to. And you can really just tell…it’s just better technology and you can tell what you’re getting. So, and what are some of the largest challenges you see right now pertaining to window and door flashing?

John: Well, what I would say is, and I echo your comments about flashings, are really a good thing for our industry. But in that being said, as it’s become, as it’s been flourishing and there’s more and more flashings out there, more and more manufacturers are coming out with product that could be used potentially as flashings. And so there seems to be kind of a wholesale confusion almost in the entire marketplace, about flashings.

So, I mean, I would say when it comes to the challenges, the largest challenges I see personally is just a complete…the wholesale lack of education in our industry about flashings in general, and that really gets into different things, from code requirement to application techniques, just to the technologies themselves of the flashings, which technology really should be used where, you know, and how? I would say one of the biggest areas I see an issue with is the application techniques of flashings.

Since there is such a lack of education in the industry, and that’s why it’s so important that I think there is a consultant involved in a project, that is educated and understands flashings, because I see it far too often where a contractor just applies a waterproofing product around a window and door opening. And since no one on the job really understands the requirements of a flashing or the application techniques of a flashing, they may think that window or door has been properly flashed when indeed it hasn’t, because the manufacturer’s instructions or the manufacturer’s recommendations were not followed.

That lack of education in the application of flashing is a big deal, as well as the technology, you know, I know we had mentioned a little while ago compatibility, but I would say, we’re seeing significant failures in the marketplace from other manufacturers of flashings and sealants, only because what’s happening is compatibility between a parameter seal and a flashing may or may not be known.

Usually you have different trades applying…you may have a waterproofer applying the flashing and then a window installer installing the parameters, and if they’re not working together and if the specifications aren’t calling for two products that are compatible, what we’re finding is people are installing flashings that…actually there are some flashings that have an alcohol cure and as you know, Paul, that alcohol is a nemesis of sealants, right?

It’ll inhibit the cure of polyurethane-type grade, silicones, whatever it may be. And so we’ve seen many situations where people are installing these waterproofing products that have alcohol cure and then they’re caulking to them whilst those products are curing, so it inhibits the cure of the parameter seal. And so now you have a wholesale failure on the entire project of sealant that just never cures. And so a lot of pain and financial loss can certainly be averted if the proper education is there and the flashing and the sealant on a building.

Paul: And it’s a case of dotting your Is and crossing your Ts sometimes, what’s funny is when you were talking about this I was just thinking to myself, you know, there’s one other challenge that we see out there, we have clients who say, “Why the hell do I have to use this stuff at all? It’s, you know, it’s costing me a lot of money.” And we’ve had to go through, in some cases, mockup testing with and without and what not to demonstrate the need, and it is a standard of care or a state of the art in the industry now to use flashings, fluid applied, typically around window and door openings, where it used to be nobody put anything in there. And, you know, we’re building better buildings now obviously.

You were talking about failure, so what are some of the manifestations that you see in failures? I mean, one that comes to mind obviously is something doesn’t stick to something else, are there other things that you’ve seen out there, a failure [crosstalk] proper materials were used?

John: For sure, yup, and great question, probably, I would say the two largest failures we see are the…as I mentioned earlier, the incompatible parameter sealant with the flashing, so you have sealant failure and obviously water infiltration there. The second failure we see is often times Stucco is applied on top of these liquid-applied flashings. And there’s usually a special method to make sure that the Stucco adheres to the flashing, and if that method is not followed you can get a Stucco failure, to where the Stucco would delaminate because Stucco is just not gonna adhere all by itself to a liquid-applied flashing. So we certainly see that, those would be the top two failure issues we see.

Paul: What does Sika do with their application to make sure or to facilitate the Stucco bonding to it?

John: Well we have really two different options when it comes to flashings for Stucco application. For instance, our liquid-applied flashing is a product that you simply, after you spread it out, and it’s called the Sikaflex-102 EverFlash, but you spread it out and you broadcast sand into it, to refusal. The benefit of Sika’s liquid-applied flashing is that it’s a little heavier bodied than most on the market. And so albeit some other manufacturers also will recommend sanding to refusal, the issue we see over there is that there’s just not enough body, there’s not enough viscosity to their material to hold the sand. And so what happens is the sand itself releases from the flashing, and so again you have the Stucco failure.

So with the Sika product, there’s enough body that you truly can saturate the flashing with sand, usually it’s an oven dried silica sand, and then we have no issues whatsoever of Stucco adhering to it.

The other option we have is we do have a flexible cementitious waterproofing, and I do wanna emphasize the flexible because that’s very important when it comes to especially CMU, right? You wouldn’t be using a flexible cementitious waterproofing on a wood frame building obviously, but if you are dealing with CMU it’s very important that the cementitious product you use, if you are using one, is flexible and able to take some sort of, well, flex. But the benefit of that is you don’t have to do anything to it. It’s simply brush-applied around the entire window or door opening and, you know, onto the face of the CMU, and when the Stucco contractor comes along, you know, and nobody has to do anything special to it, they just simply install their Stucco as they would in a normal application.

Paul: Is one…is liquid-applied and cementitious, well, how do they compare pricewise, and one more or less than the other?

John: Yeah, you’re gonna have the…cementitious is gonna be less expensive than the liquid-applied. But you have…you always have your pros and cons, right, you’ll have your benefits of one over the other. And the benefit of a liquid-applied, obviously, is it’s seamless, but probably the biggest benefit of the liquid-applied is that you’re able, with ours, you can caulk to it with the parameter seal as quickly as two hours after application.

So for those projects that, you know, they’re taking out a window, they have to flash the opening, put in a new window and then caulk the parameter, and it doesn’t matter if you’re using…we know with our technology, with our liquid-applied flashing, if you’re using any Sika, either urethane or a Sika hybrid or a Sika silicone, all three of those technologies will adhere and are fully compatible to our liquid-applied flashing, as quickly as two hours after the flashing is installed.

So if you’re in a fast track project and you wanna get a window in and out caulked, you know, flashed and caulked, certainly liquid-applied would be the way to go. When it comes to the cementitious, the flexible cementitious, and the benefit with that product again is it’s a little less expensive than the liquid-applied, but you do need a little bit more time. So in other words after you apply the cementitious to a window or door opening, we don’t want the bucks installed or any caulking to it for three days. So you need to allow that cementitious product to cure.

So that’s where often times what we’ll see is in a new construction situation where, you know, they just need to waterproof these window openings and they’re gonna come back a few days later and install the bucks and then the windows, that’s perfectly fine and works out very well. But, you know, again when you’re in a fast track project and you don’t have three days to wait before you can install the bucks and the windows, then you just go with a liquid-applied flashing.

Paul: That’s interesting, I was talking to a contractor that we worked with on a very large high-rise building a few weeks ago, maybe a month ago, that was telling me that they had a issue, it was a different manufacturer, with the broadcasting the sand into the liquid-applied material, and the sand, you know, the workmanship wasn’t good apparently, and he was frustrated because he didn’t really have any way to co-lease it. You know, you’ve got a very large, I won’t tell how many storeys, I don’t wanna give it away, but a very high building, and we can’t watch installers the whole time, you just can’t do it. You can spot check, and things like that, and they ended up with an issue with delaminating Stucco, but on the window opening.

So I think what I’m gonna do when we finish this podcast is send him an advance copy so he can hear about the cementitious, because that was a new construction project where he would have time for that.

Interesting, with the fast cure time on the liquid-applied, you know, we have projects that we have selected waterproofing for that very reason, we did a really large out on Miami Beach that was an existing building, and this hotel, it wasn’t occupied because it was a major, major renovation, but a window had to come out and go back in the same day and you had to have a fast curing material in order to make that happen. So I think that’s something that probably comes up more than people would think and that it’s really important.

John: Yup, I agree and you know, Paul, as you mentioned earlier, what we can do, the best thing we can do is alleviate the human error, right? There are…it is human. We have to understand that this industry, you know, sometimes the application of products, and I’m talking more specifically to sand, right, sanding these liquid-applied flashings, you know, they may sand it better Tuesday, Wednesday and Thursday, you know, because Mondays the guys might be dragging and Fridays the guys might wanna be out of there. This is still…there’s human touch to standing the material. So it is important to recognize that, you know, maybe this project, if you have the time, you know, it’s better to keep it as simple as possible and as easy as possible.

Now that being said, you know, one thing I do wanna mention about our liquid-applied flashing, is we did keep that keep-it-simple mentality in mind for the workers, you know, in that our flashing is used for everything, when it comes to that window opening.

So to extrapolate on that, you know, when you’re installing a liquid-applied sealant, you need to caulk all the nineties, you need to…if there’s any cracks, you need to caulk all the cracks and then you install your liquid-applied flashing. And then when they put the buck on, they need to embed the buck in a sealant, and then they need to caulk the buck and caulk all the nineties and then flash the buck.

Now there’s many manufacturers have multiple products to do all those things. The benefit of the Sika-102 EverFlash is you use that product for everything, so you’re not mixing and matching. There’s not a chance of your guy picking up the wrong material and caulking the ninety or the crack with the wrong one, you know, or vice versa, all right? So it is a very user-friendly product or keep-it-simple product, with the exception of you do need to sand it, if you’re gonna put Stucco over it.

Paul: So I’m a huge fan of simple and easy, having seen so many projects and so many systems, right, when things aren’t simple and easy they don’t always go well. And the easier the better, I think, so using one material as opposed to two or three…if you’ve got multiple materials and a lot of workmanship involved, you’re almost guaranteed that you’re gonna have a problem, I think, maybe not but generally that seems to be the way things end up.

And this is such a critical area with, you know, keeping water out of the building, and Stucco delamination is another huge issue, and as buildings are completed, Stucco and water infiltration are probably two of the biggest drivers of post-construction claims. So it’s vitally important to really pay attention to what you’re using, how you’re doing it, and having a…I guess a reasonable plan to get it done probably.

Because, even if, you know, you’re a consultant on a job like our firm, there’s only so much we can do. We can’t sit there with the crew and watch every single opening be applied, you know, we can spot check, but you can’t keep up with it all. So it’s really that idea, good system, good QC program and easier or your…give you the best chance for success.

John: Right, I agree, and understanding the limitations of the products you’re using, as well. And, you know, and talking about the failures, one thing I didn’t mention is exactly that, the limitations of the products. Because we do find another area that we see failures is simply someone may have installed a liquid-applied flashing at the time properly. However, there is some liquid-applied flashings that are not UV-stable. And so if there’s exposed to the UV for, you know, two weeks, 30 days, any length of time, that product has already started to break down and so then when you do come in and put in the window and install the primer seal, you have an issue, because now you’re already dealing with either a chalky product or a situation where the UV has broken the product down.

So understanding the limitations of the products that you’re dealing and really using them to fit into the true schedule of the project is an absolutely critical topic, as well.

Paul: So you’re talking about UV-stable, I’m guessing your products are UV-stable?

John: Yes, both the liquid-applied and the cementitious can be exposed without issue to UV for any length of time. We really don’t have any issue. The only thing that would happen with the liquid-applied because it is white in color, is it may tend to yellow, you know, if it’s out there for six months or nine months, it might start to get a little yellow, but that’s not affecting the performance of the product nor is it affecting the ability for the parameter sealant to adhere to the product, assuming it’s a Sika parameter sealant. And the cementitious obviously we have no issues with that being exposed, as well.

Paul: It’s made me think of something else, what type of surface preparation is needed before you apply these materials to the raw, rough opening?

John: The biggest thing is just clean and dry, and you really just don’t want any lose weight inside it and you wanna dry , unless you’re installing the cementitious. The cementitious you would actually SSD, or Saturated Surface Dry is what we call it, you would moisten the concrete first and then install the cementitious. But for a liquid-applied it needs to be clean, it needs to be dry, there are a couple of things that, you know, again, if there’s cracks you wanna detail the cracks. Sometimes there may be holes, for instance there’s some projects we do when they’re carrying out a window and they pull a fastener out and now you have a hole the size of, you know, half a golf ball there.

Typically you would wanna fill that in before doing the liquid-applied flashing. Now Sika we do have products, we have very first-tier epoxy products that you would just…it shot out of a tube and you could fill a hole like that and it cures immediately, so you can just keep moving forward with it. And of course you maintain a single source warranty on the hole opening. But the most important factors are clean and dry if you’re dealing with liquid-applied.

Paul: And you mentioned warranty, what are the warranties that come with these products?

John: Well with our product we actually give a system warranty if they use both our flashing, and you use either a liquid-applied flashing or the cementitious for that matter. And one of our sealants is the parameter seal. We’ll provide a five-year window opening warranty, window opening, hard waterproofing warranty as a system. So that covers both the parameter seal and the flashing. Now there’s times that, for instance if someone uses our hybrid, our hybrid sealant, which is the SikaHyflex 150 LM, we can give a 10 year warranty on the parameter seal, and if they use one of our silicones, like the Sikasil-295, we can give a 20 year. So basically what you’re looking at is a minimum of a five-year system warranty and it could go higher than that based on the parameter sealant that’s…

Paul: And so if you’ve got this stuff on the wall with a five-year warranty and you use a 20 year sealant, it sounds like, you know, there’s a gap there, but I guess what…the reality is that obviously it lasts a lot longer than five years so if you can get through the first five years then you’re probably good to go for quite a while I would guess.

John: Absolutely, yup, you’re right.

Paul: So we talked a lot, you know, the variables with the pros and the cons with each of the…liquid applied and cementitious, can you use either one of them in all applications or what…how do you pick one or the other, I guess?

John: You know, the only one that…if you needed to use one for all applications it would be the liquid-applied and that’s because that can coat the window opening as well as the window buck, and you know, you’re fine with that. When you do use our flexible cementitious, you’re using the flexible cementitious which is the SikaTop Seal-107 around the window opening, but then the buck itself gets flashed with the liquid-applied, the 102 EverFlash. So when you’re using the cementitious it’s a combination of the liquid applied and the cementitious, and when you’re using the liquid applied, the 102, you’re only using that. So I guess if you were to use just one product, you certainly can do that with the 102 EverFlash.

Paul: And then if you were using, if your substrate was not masonry, you know, it was wood frame or gypsum sheathing or something like that then I’m guessing that the liquid-applied would be the way to go there?

John: Yes, yes, as a matter of fact the other benefit of a liquid applied is it does go over so many different…a variety of surfaces, a variety of substrates. So when you are dealing with whatever it may be, it may be wood frame and chip wood, or whatever the other substrate may be, you can certainly do that. All you do is you caulk the seams, again with the 102 EverFlash, so you’re not using multiple products, you use that product itself to caulk all the seams, everywhere there’s a connection. And then you coat the whole area with the EverFlash, so certainly when you’re dealing with multiple substrates that’s the product to go with.

Paul: So, obvious this material has really come a long way, or window flashing in general has come a long way. As I said in the beginning, I’m aging myself, but I remember back to the days when, before you even saw the window you’d have to take a piece of sheet metal and bend it and break it and put it in and seal it and it was just a mess. And it was so hard to do it correctly, and then if you had to put fasteners in, you would have, you know, you’re basically putting holes in it, and the fluid applied materials have really, really upped the game and helped the technology tremendously, so it’s great to see and it sounds like Sika has some really good solutions for our people to use that utilize the technology, basically.

John: Yup, we sure…and the other benefit of the flashing is you’re protecting the bond line of that parameter seal. You know, I mean, we see it far too often where depending on the sealant technology used around that parameter of the window opening, but for instance when it’s two…say a concrete block, it may adhere perfectly fine during the course of the project, say there’s no flashing used, that parameter sealant may adhere fine to the block.

But if there’s a failure and say there’s a…let’s say it’s Stucco and the Stucco cracks and that block gets saturated, and that sealant bond line now is essentially saturated for a long period of time, that’s sealant can lose adhesion to that concrete block, and now you have a failure, a water infiltration failure. So that’s one of the reasons I’m a big fan of flashings, is because you’re truly protecting the bond line of the sealant, because if for whatever reason water ever does get behind that flashing, and it will never get through the flashing, so you’re protected.

You’ve the protected the bond line of the sealant, which is obviously the most critical part of keeping water out of your building. So, you know, I would love to see flashings used everywhere, it’s still like pulling teeth sometimes to have people use them because they do see the extra cost, but it’s really such a long-term value for a building.

Paul: Yeah, I’m with you a 100% on that. I know you can do it, I know it’s a manufacturer’s recommendations but I’ve never liked applying sealant material directly to masonry, it just doesn’t seem like it would be an ideal bonding surface, so if you can prep that surface and then have a better material to bond it to, I’m a fan.

John: I agree.

Paul: So really interesting, really important for the listeners, I think also, to hear the reasons to use these new technology, flashing materials and as I say we’re building better buildings now and this is one of the big advances that I’ve seen over the last five or 10 years and it’s becoming a lot more widespread, and it’s really good stuff. So really interesting John, thanks so much for coming on today.

John: Thanks for having me, I appreciate it.

Paul: I’d love to get you back for another topic, because this is really interesting stuff. I know that the listeners really, really enjoy it as well, so…

John: Anytime, anytime, thank you Paul.

Paul: Okay, great. So I wanna remind everybody that we have the Everything Building Envelope Newsletter, and if you’d like to receive that all you need to do is text the world BuildingEnvelope, it’s all one word, BuildingEnvelope to 22828. So if you’d like to receive the Everything Building Envelope Newsletter, just text the word BuildingEnvelope to 22828. I’d like to thank everybody for listening, and until next time, this is Paul Beers, saying so long.

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