After such achievements, what can you do for an encore?
Last summer, after one year of operation, Copper’s $980,000 capital improvement budget financed construction of two more chairlifts, seven additional trails, an experimental land transportation system, extended roads, increased parking, landscaping and a myriad of other details. Now in its second year of operation, this masterplanned ski area and mountain town is half-way through the proposed number of lifts and trails and is gaining on the goal of 6,000 beds at the base of the area.
The man who is directing this performance is Don Peterson, a Colorado contractor who had hardly looked at a ski area before he was hired by Copper as construction manager. For the actual building and expansion, he applies sophisticated planning systems like PERT (Program Evaluation and Review Technique) and CPM (Critical Path Method), but his real secret for rapid-paced construction is in the pre-planning system that he follows long before bull dozers move a smidgen of earth.
PRE-PLANNING
The pre-planning for the 1973 expansion, for example, began even before the end of the 1972 construction season ended. Typically when Peterson thinks of a project that may be needed for the following year he writes it down. “Then,” he says, “when it’s time to put project budgets together, things fall in place quickly and I know which projects demand the highest priority.”
December is the time when he and Chuck Lewis, president of Copper Mountain, begin roughing out budgets for expansion. After listing the major projects, they make broad estimates of materials, sub-contracts and labor. For the 1973 construction budget, they knew they had to keep the base area expanding and improve it to maintain Copper’s momentum. This meant extending water and sewer lines for developers to build condominiums and commercial sites, more parking, new roads, street lights and other utilities. Also high on the priority list were the two new lifts to bring the capacity up to 7,800, half masterplanned total.
“In some situations, where the money to be spent is a known quantity,” Peterson says, “an area has to figure a way to accomplish the highest priorities as well as it can. When you reach the limit of your money, that’s the end of your project list. In other cases, an area first needs to develop projects by priorities to find out how much money is needed.
“My feeling is that a manager should plan his area as if he had all the money in the world. This should be on paper so people can see it. Once it’s on paper, it’s not nearly so hard to sell someone else on the idea that X number of dollars are needed. You can converse with a banker or potential investor about what’s happening at the area currently and about plans for the future. Even a wild guess is better than no plan at all.”
He recommends that the area management make educated guesses about profits and losses early in the winter and work on the assumption that some projects will require outside money. Then, if the area has a good year, the loan request can be reduced or more projects can be added to the priority list.
Peterson feels this pre-planning for loans — with as much information compiled as possible — should begin in January. Besides having the money to assure prompt delivery of large items like lifts, area managements may be able to take advantage of pricing discounts and scheduling positions, as well as hire consulting services during the winter months when they can still see the area under snow and experiencing the climate of the winter operation. At Copper, Forest Service officials were able to ski and mark out proposed new trails in the winter of 1972 so that work order permits could be filed and completed by Spring.
In this era of shortages, Peterson was able to predict his problem spots before they occurred for the 1972 expansion. “it doesn’t take many phone calls to find out what’s liable to be short and what should be ordered for future delivery,” he says. “I talk with people in the construction industry, general contractors and businessmen in related industries to find where the shortages are going to be. Sometimes I can solve a shortage problem by finding a small warehouse that stocks the items needed or by locating equipment that can be modified. If I had to shut down and wait, the shortage problem could be expensive.
Many times in a crisis situation on orders, a supplier is likely to take care of you if you’ve worked with them early and placed your order with lead time. They may even rob another later order to complete your early order.”
Last year electrical cable, rumored to be in short supply, was ordered for Copper in March for delivery in August. Foreseeing diesel fuel shortages in Colorado, Peterson also ordered enough fuel to operate contractor’s equipment through the summer. He foresees that parts for machinery are going to be harder to find because manufacturers are concentrating on high volume money-making items instead of producing the smaller pieces still needed to make machines work.
Pre-planning sub-contracted work also has a great impact on budgets in the Copper expansion programs. Peterson often saves money by hiring a contractor with specific equipment rather than buying the machinery, but in these cases it is important to order early and get the best in the field. A second rate operator not only does a second rate job, but also may have equipment breakdowns because of old or poorly maintained machinery.
“Here the low figure is not necessarily the best, figure,” he says. “A good case in point is sewer line contractors. Anyone can put in a sewer line and make it work, but if you get a poor job and have water infiltration in the lines, the result is extra water in the plant overloading the treatment facilities and eventually you will have to re-do the system. And, the chances of finding the contractor — or if you do find him, of his being in a financially strong position — are fairly slim. It’s usually an out-of-pocket cost.”
Peterson is convinced that all this pre-planning helps him take advantage of the entire 150- to 190-day construction season. He cautions: “The shorter the season, the more prepared you have to be. There’s no room for error or you won’t get finished.”
POST-PLANNING
With loan applications made, bids and orders in, and shortages predicted, Peterson gets down to the nitty-gritty of manpower needs, material costs and outside contractor schedules for each project. Along with these items specified on project budgets, he adds interest, depreciation, overhead, payroll taxes and insurance. He also takes care to avoid one typical pitfall at this stage of the budget planning: incomplete analysis of project costs. For instance, he might calculate $60 per lineal foot for a 500-foot-long lift and estimate it’s total at $300,000. But, at this point he must also tack on the additional costs generated by the new lift, such as trails, telephones, power mazes, re-seeding, erosion control, signs and boundry markings. He also revises the operational budgets for lift operators, maintenance crews and trail grooming. The real cost may be closer to $400,000. By early analysis of project costs, Peterson avoids later shifts in priority projects as well as poorly finished work that may cause trouble during operation.
At the same time, Peterson admits that some projects are tough to budget precisely. An example was a Patrol shack that had to be moved a mile and a half to make way for a new lift. There were no roads around the site, but by a stroke of luck the lift contractor came with a large helicopter to be used for placing towers. The helicopter lifted the building to the new spot on the mountain and the budget for the project was saved.
By the end of March, each project has a budget, an account number, and a task schedule — all of which is turned over to the supervisor of the project, who then becomes, in effect, the manager of his own small business (the project). “It’s a real eye-opener to most of the guys,” says Peterson, “because they’ve never been a manager before and haven’t even thought about how to handle their family budget in some cases. We keep budgets simple. Even the summer construction budget is just a pencil budget that the supervisors feel comfortable with.
“But somewhere along the line, the supervisor has got to decide if he can complete the project within the budget. Is he going to have a little money available for someone else’s project or is he going to bust the budget? This information must be passed on to management for an immediate decision.”
To do this, project supervisors maintain a budget book and individual budget control sheets are updated on a daily basis, so that on any given day it is possible to compare the supervisor’s remaining budget to the original estimate.
The account numbers on each project are the key controls for keeping track of these expenses. Peterson tries to avoid too much detail in collecting this data so that paper work won’t be overwhelming. For example, under landscaping, the account number is indicated on time cards whenever men work on that project. The hours are summarized on the budget control sheet and are converted into dollars. There is also an account number for the purchase of materials (a sub-account number becomes the purchase order number for vendors) and for outside contractors.
If at any point a supervisor feels he is going to run out of budgeted money, Peterson must decide whether to use contingency funds or to stop the project. The contingency figure, as part of the overall budget, can salvage under budgeted projects or cover expenses that were forgotten in the original budget.
The supervisor’s other management tool is the task schedule, which shows the distribution of crews working on specific activities. Peterson has already established the priority of projects — which events must occur before other events can be completed — and tries to avoid scheduling activities adjacent or near other activities where one crew might interfere with the work of another crew. With a detailed monthly task schedule outlining work dates, crew sizes, material delivery dates and outside contractor dates, the supervisors have an overall view of the game plan.
“The schedule is flexible,” explains Peterson. “It doesn’t have to be done on the dates planned, but it should be finished on or before the date scheduled because it’s a priority.
“Now, certain things will happen to change the schedule, like a piece of equipment breaks down. Then, another project can be picked up to keep crews working. Juggling people around is important so that you utilize the same number of men each day. Sometimes employees on lift maintenance crews working under operational budgets can be moved to the capital projects when extra help is needed.”
Peterson accepts the premise that, “Work expands to fit the time frame,” and to avoid this pitfall makes sure that supervisors and crews know what the next jobs are and roughly what the plans are for the entire summer. Instead of telling a crew they have a day to clear a trail of rocks, he tells them the trail must be cleared and then reseeded. The rock clearing may take only a half a day when they know their next job.
This scheduling of man-hours over individual projects to be completed allows Copper to maintain a steady crew of 15 through the summer. The construction workers then know where to locate vital parts and machinery in an emergency during the winter season.
“All the pre-planning in the world won’t help if on the labor side your people won’t work for you,” cautions Peterson. Labor budgets are usually in the neighborhood of 60 per cent of operating and capital budgets combined. “Management needs to develop working relationships and good attitudes towards employees. Pre-planning and budgets help play a part in developing good management communications with your work force. Satisfaction among employees and supervisors is created when jobs are completed on time and within the budget. It also lets you sleep well at night.”
