Over the past few years, CM-PM firms have seen their roles evolving. General project management is giving way to more complex planning, financing and cost estimating as owners’ programs grow larger and more involved. “The role of the agency CM or PM has an increasing focus on project planning, team coordination and facilitation during project development and the design phase,” says Steven Whitehead, president of Vanir Construction Management.

Part of this trend results from owners reducing internal project staff during times of economic uncertainty, says Roger McCarron, CEO of Project Management Advisors Inc. “But there has also been a growing trend of owners who are looking for expertise beyond that which their core internal resources can provide,” he says.

Professional services firms have become particularly active in the high-tech arena. McCarron says large development programs are common among owners in that sector as internal restructurings have resulted in more and more disparate information management and reporting practices, both among internal and outsourced teams.

On the private side, where firms are experiencing more financial pressure, some firms are finding that owners are turning more toward professional services firms “to advance capital projects as the third-party model provides them more flexibility around internal resources required as their capital spending varies,” says Jonathan Winikur, executive managing director at Colliers International.

Despite the surge in interest in professional services, some firms are finding increasing pressure on  their fees. “Certain agencies are placing more emphasis on cost as an evaluation criteria for selecting professional services,” says Paul Bews, division director for Ghirardelli Associates. For example, the Los Angeles County Metropolitan Transportation Authority has a policy to assign 20% of proposal evaluation criteria to price. He says agencies are looking for greater cost certainty by negotiating fixed-price costs for professional services, rather than paying by the billable hour.

Coronavirus Hits

Like all industry firms, professional services firms have felt the impact of COVID-19. But, in states where construction was deemed essential and not subject to closures, most work proceeded as “business as usual,” says Andrea Rutledge, CEO of the Construction Management Association of America, McLean, Va. Some projects have actually been accelerated, particularly in transportation, as traffic flows have declined. “In normal times, the last thing you need is a road closure on I-66 around the Beltway in Washington, D.C., but now it is not a problem,” she says.

Rutledge says that CMAA members have been pleasantly surprised at how generous industry firms have been to share best practices in safely dealing with the pandemic. She also is happy with how transparent industry firms and owners have been in dealing with the impact of the virus.

Most firms have been hit by COVID-19. “There have been delays to outright cancellations of about 10% of our backlog, but we anticipate there may be further delays and cuts when clients have a better idea of the loss of revenue to fund their capital programs,” says Blake Peck, CEO of McDonough Bolyard Peck.

Many private sector clients are pausing to see what happens as a result of the crisis. For example, “venture capital spending has started to slow as market impacts are uncertain,” says Shawn Mahoney, CEO of OAC Services Inc. This will affect private sector projects as new startups will run out of money before they determine the size of large facility build-outs, he says.

Further, owners who were on the “edge” financially are being displaced or are reorganizing to find what the new normal will mean for their markets. “They are seeking out experienced third-party professional services of all kinds to assist in navigating through the rough and uncertain conditions we find ourselves in,” says Yehudi Gaffen, CEO of Gafcon Inc.

Mahoney notes that many owners that have been hit hard by the coronavirus have furloughed and laid off their in-house design and construction resources. “As those markets re-emerge, they will likely need to engage third-party professional services,” he says.

Dealing With the ‘New Abnormal’

With projects stopping in many jurisdictions and the economic uncertainty as the market begins to come out of the crisis, owners now are in a quandary as to how to proceed. Increasingly, professional services firms are being tasked to assist.

“Our clients have leaned heavily on us as they navigate the unchartered waters of the ‘new abnormal’ to develop the proper protocols and procedures, whether to keep construction proceeding safely or shuttering projects in compliance with local mandates,” says Peck of MBP. He says MBP also is leading efforts to quantify COVID-19 impacts and how to mitigate or best address them with the construction team.

Professional services firms are becoming critical for owners to move forward. “COVID-19 is the ultimate megaproject. A third-party PM specialist, if prepared, can assist you in contingency planning and evaluating alternatives for projects to continue or pause. Any delays or claims can be tedious and messy affairs if not handled properly,” says Mahoney of OAC.

While COVID-19 has been an unprecedented event for the industry, professional services firms have applied lessons learned from past calamities. “Typically, on the tail end of a recession or crisis similar to the current COVID-19 crisis, we see an increase in both agency CM and program management services,” says Andrew Demming, senior director at Gardiner & Theobald.

As in the aftermath of a recession, many owners have reduced their internal staff to reduce overhead and will choose to outsource. “We also see an increase in this role as owners generally need assistance to re-think their projects,” Demming says. Professional services firms are a natural fit to provide professional advice and guidance on project alternatives, their budget and schedule impacts and then implementation of the changes into the design, permit or process, he says.

Dispute resolution is another area many firms see expanding in the upcoming months and years. “Our dispute resolution group has seen an increase in the level of claims support, to fairly resolve COVID-19 related cost and schedule impacts,” says Derek Hutchison, president of Cumming.

OAC Services has also noticed an uptick in dispute resolution work. “We’re seeing this now with force majeure claims and supply chain delays,” says Mahoney. Third-party professional services firms are trained to be able to find and provide solutions for the owner and all parties involved to  prevent conflicts, he adds.

PMA’s McCarron has already seen potential disputes, adding that “minimizing disputes on cost and schedule issues will require a great deal of proactive communication and analysis.” He says that if owners have not already engaged in such constructive evaluation and communication, they and the construction team will face a long and potentially costly road ahead in getting all disputes completely resolved.

For CMAA, Rutledge notes that travel restrictions and stay-at-home orders have forced it to cancel its live CM courses. Instead of holding three-day, in-person training sessions at test centers, it will now conduct five days of online training aimed toward eventual certification as a CMAA Professional Construction Manager. “We are seeing increasing interest in the CMAA certification as people understand how important CM will be as the market recovers,” Rutledge says.