Edited by Margaret M. Mitchell
Barry S. Chapler is an adjunct assistant professor in the School of Engineering Technology in the Department of Architecture and Construction Management at Farmingdale State College, State University of New York. He began his career in the construction industry as a structural designer, working his way up to a manager of project controls and a senior project manager — in charge of diverse and challenging transportation projects in the public sector.
His experience in the construction industry has enabled him to identify a novel way to study and solve problems, whether technical or financial in nature. From experience, he learned that much more can be accomplished by first identifying the facts, reflecting on the information gathered, adjusting the thought process, and finally applying the best problem-solving approach.
This method to problem solving is also one that he has developed and applied in the course CON 355 - Construction Management Financial and Accounting Principles. After teaching the class for several semesters, he saw the potential for this type of training to be applicable to other construction management classes he teaches, which then led to the question: What if the expertise of two professions — construction management and accounting — could be combined to aid in solving technical problems that have financial consequences?
And with that, his hybrid construction management “theory” was born.
It’s a combination of expertise that results in a better standard of practice for each profession, provides another viewpoint often not seen before a solution is selected, and generates a more powerful management style with very little extra effort, says Chapler.
Briefly describe CON 355 - Construction Management Financial and Accounting Principles.
CON 355 is a three-credit undergraduate course. It was first taught three years ago after administrators reviewed the curriculum and decided the class would be a good complement to other construction management courses being offered.
CON 355 covers basic construction financing and cost accounting systems, job costing approaches, project budgeting, and financial reporting procedures as they relate to how money is managed on a project. The course requires students to be out-of-the-box thinkers. It also teaches them to creatively solve technical problems that can be influenced by a company’s financial status — or as I like to call it, hybrid construction management.
Typically, the financial status of a company has been accessible only to business owners and their accountants. With the addition of some basic training in accounting and business methods, civil engineers can also access this accounting information when needed and combine it with their technical expertise to fully understand the ramifications of finding a solution to a problem that is impacted by money.
However, this will require some acknowledgement that it is OK for an ‘outsider’ — an engineer — to view another profession’s financial information when the need arises. To take full advantage of it will require business owners and accounting professionals to see the merits of making this financial information available to engineers or construction managers.
This class provides the training needed to take these additional steps and demonstrate to students that an approach like this will work, but only if they have enough drive to pursue it. By attending this class, students can gain an awareness of how to think about new concepts like hybrid construction management and maybe apply it to other subjects and topics that could benefit from this method.
What is innovative about CON 355?
In the past, construction management typically focused on the coordination of key project participants — the designers, contractors, and suppliers of equipment and materials — with its emphasis concentrated on meeting schedules and improving performance. Accomplishing these objectives required a thorough understanding of a project’s scope, schedule, and budget: the building blocks of every project. Rarely, if at all, have construction managers looked at these same elements from another perspective — their accounting attributes — when evaluating problems and arriving at their potential solutions. There is more to gain by commingling construction management (used for monitoring performance) and accounting (for providing current financial data as input toward making a decision).
Consider this example. An opportunity presents itself for a company to acquire a large amount of construction materials before they are needed at a low cost, let’s say at 50 cents on the dollar, due to the supplier going out of business. This could be a combination of framing material, rebar, plywood sheets, etc. and require an upfront cash price of $180,000 (but valued at $360,00). The thought process of the buyer is that this opportunity has the potential to yield a large profit later when the materials are used. However, the seller requires that a full cash payment be made at the time of purchase, with no refund possible.
The decision by an owner or construction manager working for an owner to proceed or not with the purchase is typically driven solely by the motive to acquire inflated profit when the materials are used and not by considering its effect on the company’s financial position at the time of the transaction. If the wrong decision is made, it could leave a company cash short with devastating consequences such as not being able to make immediate payroll or pay expenses overdue.
A mistake like this could even lead to bankruptcy and/or cause a project that is in process to be stopped or canceled.
Why would this be a good class for civil engineering majors?
It offers another perspective, including a think-out-of-the-box technique that adds basic accounting information to a student’s engineering skill set to increase their awareness and understanding of construction business operations. Understanding that the primary goal of a construction contractor is to make a profit can bolster a student’s management skills when it comes time to deal with construction contracts and people on a daily basis.
Do you provide real-world examples for students to learn from?
This class augments textbook learning with real-life contractual, technical, and physical problems that demonstrate what students can expect in the construction business environment.
What do you hope students take away from this course?
An appreciation that there are potential opportunities for improvement out there that need to be considered. Keeping an open mind to alternate approaches may yield better results than from the current practices used.
I also want them to see that this approach can be applied to other industries as well such as engineering and law, engineering and medicine, etc.
Is there anything you’d like to say that I didn’t ask about?
The use of a common coding system from an accounting structure format (a code of accounts for actual and budgeted costs) and from a database method (using a work breakdown structure to break down a project into manageable elements of work with tasks, activities, and responsibilities) are good examples of this potential cross-linking method when initiating and planning a large project.
Common coding can add benefit to the tracking of documents such as scopes of work, cost estimates, budgets, schedules, design drawings, and invoices. A common code embedded in these documents could be used to identify and retrieve them when needed. While these approaches may not be cost-effective for small projects, they can yield important related information typically difficult to obtain on larger projects.
Let’s see how this concept can benefit a scope item discussed at a monthly project meeting. All the item’s related information, including description, estimated or budgeted cost, site location, drawing location, and schedule date can be easily obtained by searching and sorting by its common code and not require supplemental follow-up activity. Having this information readily available at the time of a discussion can significantly speed up the search for potential solutions to problems.
Margaret M. Mitchell is the managing editor of Civil Engineering.
This article first appeared in the March/April 2022 issue of Civil Engineering as “College Course Teaches a Hybrid Approach to Construction Management.”
Do you have an innovative program for reaching and teaching today’s tech-savvy civil engineering students? If so, email [email protected] using the subject line “Higher Learning.”