REPORT

There is a general incorporated association called Construction Project Delivery System Council (CPDS Council). The organization was founded by Index, and I am the vice chairman (the first chairman was Mr. Takeo Shiina, former chief advisor to IBM Japan, and the current chairman is Mr. Kuniaki Hanamura, who served as president and chairman of the Japan Research Institute, Ltd.) The corporation was established in May 2015, so this year marks its 11th year of existence (it became a general incorporated association in 2017).

 

The purpose of the organization is to support and train people who place orders for construction and infrastructure projects, specifically companies and corporations from different industries and municipalities, to learn and use a variety of contract ordering methods.

 

In the past, it was common practice to commission a design firm to do the design and to place the order with a construction company under a contractor agreement. However, over the past decade or so, design-build (centralization of design and construction), in which the design is left to the architectural firm, and Early Contractor Involvement (ECI), in which a contractor is brought in at the design stage to reduce costs, have taken root.

 

In addition, methods such as at-risk construction management (CM) and pure CM, in which subcontractor costs are disclosed (open book) and certain fees are multiplied, have been tried, and contract award methods for construction projects have diversified.

 

In order to optimize the quality and cost of construction and infrastructure projects, it is necessary to master the use of these contract ordering methods, but in practice, considerable expertise is required, so PM (project management) and CM experts such as ourselves are increasingly being hired to represent the client. In practice, however, considerable expertise is required.

 

In this vein, the CPDS Council was established to provide academic support for construction project management in Japan and to create a job category of construction project manager.

 

What I think the CPDS Council is evolving into now.

Nowadays, design-build and ECI have become popular options, and at-risk CM has been adopted in a small percentage of public works projects. The number of consulting firms engaged in PM and CM has increased, and the number of cases of client-side CM, in which the client manages the site as an agent of the client and cost management to verify the construction company's estimates, has also increased considerably.

 

Although there are still many clients who leave the responsibility to design firms and general contractors, I feel that the CPDS Council is achieving its original goal of creating job opportunities for construction project managers.

 

Similarly, "Modern Construction Project Management: Deciphering Increasingly Complex Issues," published in 2022 based on the results of the CPDS Council, As the 19th Japan Facility Management Award was awarded, the academic underpinnings of construction project management are also being recognized.

 

On the other hand, and already a problem, soaring construction costs are forcing the cancellation or postponement of construction and infrastructure projects across the country. Particularly problematic is the renewal of public facilities such as hospitals and schools.

 

Many hospitals and schools across the country are aging public facilities and need to be rebuilt or otherwise updated. In fact, a number of hospital renewal projects have been launched, but the projects have been stalled due to excessively high construction costs.

 

In response to this situation, the CPDS Council is also beginning to evolve its objectives. What kind of evolution is this? It is to develop human resources and design a system that can promote construction and infrastructure projects while addressing the current high cost of construction due to the high cost of living and the shortage of human resources.

 

Specifically, the relocation of client CM (cost management and on-site safety management operations) to rural areas, the adoption of open book (cost disclosure) by general contractors, the education and promotion of CM, public private partnerships (PPP), and concessions, and the privatization of facility operations and Privatization of facility operation and management.

 

Regional Development through Client CM to Compensate for Lack of Local Government Engineers.

Local governments, struggling with finances and a shortage of engineers, are increasingly hiring construction managers as advisors to help them adjust prices to soaring construction costs and price fluctuations. However, most of these consulting firms are concentrated in the Tokyo metropolitan area and Osaka, where they are taking on CM work for an increasing number of local governments.

 

On the other hand, it is said that not only public works but also construction works are decreasing in local areas, and the work of local design firms and consulting firms is decreasing. In this respect, the cost management and site management work of client CM can be adequately handled by local design firms and consultants with manuals and data, so the localization of CM work contributes to local return, which is the original role of public works.

 

The CPDS Council would like to develop and organize human resources and build a system to support local client CMs, with the specific goal of localizing client CMs.

 

Also, we intend to recommend to the government to incorporate the open book method into the bidding system for public works projects.

 

The open book method is a common ordering method in Europe and the United States, whereby the construction company, the builder, discloses all costs to the client, including the amount of the order to the specialty contractor and the cost of materials, and the CM company's reasonable costs and profit are added to it.

 

Costs currently tend to increase over the estimating phase due to price fluctuations. Many construction companies are therefore reluctant to participate in public bidding. But if the open book method, which clearly states costs and fees, is used, the reasonableness of prices and additional work due to price increases will be visualized, and the client's sense of conviction will be enhanced.

 

While the general contractor who receives the order does not make a large profit, it is a win-win situation because it ensures a reasonable profit.

 

In Japan, general contractors have long been the mainstay of contracting (a form of contracting in which the general contractor consistently promises to complete the work at a predetermined cost), but the CPDS Council would like to start by educating and promoting both local governments and general contractors about the open book method of CM, which clearly states costs and fees, starting with public works projects. The CPDS Council is committed to promoting and educating both local governments and general contractors about the open-book CM method, which clearly specifies costs and fees, starting with public works.

 

Privatization of operations to play a major role in cost savings.

One more thing I would like to convey through the CPDS Council is to consider not only the initial cost of construction, but also the running cost, or the entire life cycle, including the operation phase, to reduce costs and increase income during the operation period.

 

We are PMs on a variety of construction and infrastructure projects, and the most we can reduce by reviewing cost estimates provided by construction companies is up to 10%. Of course, a 10% reduction is a very big deal, but it is a limit to how much we can reduce the current skyrocketing construction costs.

 

On the other hand, while we are involved in PPPs for public facilities such as culture, sports, tourism, and healthcare, we have found that there is much room for improvement in efficiency and DX in procurement and office management operations during the operations (operation and management) phase after the facility is completed. Not only can costs be reduced, but revenues can also be increased with ingenuity. This means incorporating a managerial perspective into the current operation of public infrastructure.

 

The CPDA Council will continue to educate and promote construction ordering and management methods that fit the new era from the perspectives mentioned above.