Outside managers help public agencies process mountain of bids.

Government agencies, looking for ways to avoid delays and cost overruns on public-sector construction projects, are increasing their use of construction management firms to help sort through the avalanche of bids being submitted by work-starved L.A. contractors.

With private-sector construction work having virtually disappeared from Los Angeles, the competition for public-sector work has grown white-hot in recent months. Two to three times as many applicants apply for each government construction project today as four to five years ago, when the private sector was booming, said Los Angeles-based construction company executives.

Construction management firms are hired to assist clients write bid specifications, set qualifications, review bids and recommend specific contractors.

As private-sector construction slowed in the late 1980s, an increasing number of contractors decided to branch into construction management to shore up their sagging bottom lines. Their prime customers have become government agencies.

But now, in an ironic twist, some contractors are complaining that these construction management operations are costing them money and jobs.

Construction management fees, which typically range from $75 to $100 per hour, come out of the project budget. And that means less money available for the actual construction contract, said industry experts.

"There are a lot of companies that put up the construction management shingle so they can generate fees," groused Bob Wund, vice president of Turner Construction Co.'s Los Angeles office.

Over the past decade, the public agencies have made an effort not only to get the lowest bid, but to make sure they get quality work, Wund said.

The paper shuffling between a government agency and construction manager can add weeks to a project, further eroding a contractor's profit, added Martin LeVan, a manager with San Fernando-based contractor Bernard Brothers Inc.

Construction management firms can easily bill the client for 100 hours of "make work" that does not necessarily help the government entity build a better facility, LeVan charged.

Government agencies at all levels should standardize prequalifications, LeVan suggested.

Prequalifications are packages of forms and documents contractors must submit to government agencies prior to being allowed to bid on a government contract. Construction management firms typically decide which forms and documents a contractor must submit. And those same management firms then evaluate the "prequalification packages," on behalf of the government agency, to determine which contractors are qualified to bid.

LeVan said he has seen cases in which the same construction management firm has required completely different prequalification packages for the same type of project.

Some construction management firms that write prequalification agreements provide a good service, said LeVan, "but most of them are former construction company managers who needed a niche (when the work dried up) and are doing busy work," LeVan said. That "busy work" allows construction management firms to boost the value of their own contracts with the government agencies.

One government agency that long ago remedied the problem of "busy work" inefficiencies is the County of Los Angeles, according to Jim Abbott, the county's general manager of construction and real estate. Abbott said he standardized both request for proposals and request for qualifications when he was hired six years ago. The county usually hires construction management firms for administrative work only, he added.

Don Russell, chairman of the board for Sacramento-based Vanir Construction Management Inc., which managed construction jobs worth $1 billion in 1991 and has a major installation in Los Angeles, defended the legitimacy of most construction managers.

But he conceded: "That's not to say there are not opportunities for abuse. The construction management firm can write a qualifications package for a project so it excludes particular contractors." Although, he said he has never seen that happen.

Prequalification holds construction companies to a higher standard, Russell insisted. And that ultimately means better roads, railways, bridges, schools and hospitals, which comprise most of the public works projects in Los Angeles County.

In general, government agencies are pretty well educated about the prequalification process, argued Joseph Scarano, president of the West Los Angeles office of Lehrer McGovern Bovis, a New York-based construction management firm.

"If a construction management firm charges them too much money, the government agency will never use them again," Scarano said.

But in some cases, architectural and engineering firms who want to sell their services call themselves construction managers, Scarano added. He would not identify any Los Angeles architectural and engineering firms that are posing as construction managers.

Scarano further suggested that clients looking for a construction management firm should check to see if the applicants have managed projects equal to or greater in size. Each team member should be scrutinized.