Faced with a $400-million program of new construction and upgrades for its correction system to meet a federal court order in 1987, the State of Tennessee knew it needed help. So it turned to private industry to provide the extra manpower needed to implement the program.

Heery International was one of several companies selected at the time for that job. But the win gave it a foot in the door for a much larger and longer-term role in managing the state's construction activities. In 1991, the Atlanta-based firm won an exclusive contract to oversee construction of all state capital projects except those for its transportation department. With two competed contract renewals since then, Heery has overseen about $2 billion in construction since then. The firm says it has saved the state about $85 million by reducing change orders, implementing more efficient scheduling and using value engineering and other total quality management efforts.

WRAPPED UP Women's prison is among the jobs supervised by Heery.

State officials are not so sure about Heery's savings claims because "they are extremely difficult to measure," says State Architect Mike Fitts, one of nine members of the State Building Commission and its chief staff official. "If we ran the same study, we probably wouldn't come up with the same amount.'' But he adds that any premium Tennessee has paid over the years for Heery's services is worth the money.

Tennessee pays Heery for a monthly number of staff hours based on work classifications. A state study last year estimates that this includes a premium ranging from 30% to 35%, says Fitts. "Justifying the premium is so hypothetical,'' he says. But the added talent and flexibility from an outside firm makes it more economical to the state in the long run.

Heery acts as the owner's representative on construction projects for all state buildings, including higher education projects. "They give us quick-strike capability to deliver the right people in the right place,'' says Jerry Preston, capital projects manager for the state board of regents, which controls design and construction of facilities for six university campuses, 20 community colleges and a number of vocational schools.

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The approach also allows the state to intervene in an emergency. "On a dormitory job in middle Tennessee, we were one or two days away from firing the contractor,'' says Preston. "Heery sent in a CM type and salvaged the job." On a science building with a complex mechanical system, the university was not comfortable with the design. "Heery brought in one of its mechanical engineers and smoothed it out,'' says Preston. Heery's primary role is construction oversight, but it also provides technical and engineering support when needed.

One of Tennessee's biggest challenges is erosion of construction quality, says Preston. "Almost 100% of our work is lump sum, low bid, and that's a risky way to do business especially in tough economic times,'' he says. Contractors, especially small ones who need the work, tend to bid on larger jobs than they are used to. "We call them bracket jumpers,'' Preston says. Heery has dealt with resulting problems and helped boost construction quality. "If we have a bad project, it can be very expensive with construction failures and suits," he says. "There have been no litigation or failures since Heery came.''

Having resources and expertise accessible at a moment's notice without cumbersome procurement or other bureaucracy keeps jobs moving as their size and frequency fluctuate, says Cliff Steger, capital projects manager for the state Dept. of Finance and Administration. Heery dispatches project managers wherever and whenever needed and recalls them when jobs end.

SPECIAL Park for state 1996 bicentennial required Heery to manage design.

"The result has been to reduce construction time a substantial amount by shortening each step along the way," says Dale Randels, Heery vice president and project manager. Heery tried formal partnering with contractors, but forming teams among members who were dependent on each other has been more effective. "We need them in order to do higher quality work, and they need us to get paid quicker. That kind of spirit makes things happen,'' he says.

Contractors say Heery managers are easily accessible to them, at least "more so than the architects that used to oversee projects," says Craig Johnson, president of RG Anderson Construction, a Nashville building contractor. "They make sure issues are resolved quickly.''

Heery determined that imperfect subcontractor coordination was leading to higher cost. It also streamlined the process for approving change orders, which had required the governor's signature. "Now we can get it done in a day,'' says Randels.

Contractors see the value to Heery's oversight. "On a job with a warranty problem, Heery steered us to a fair resolution quickly," says Jim Stivender, vice president of Hardaway Construction, Nashville. Heery's current contract expires in 2004, since state law requires contracts be rebid every five years.

One Heery challenge was to develop a process to manage personnel workload. The firm put all projects on a master schedule and assigned an intensity value to each. Using a time study analysis, Heery made sure the proper amount of effort was used to manage a project. "They make sure we're not being robbed," says Jim Gordon, Tennessee Dept. of Children Services.