Risk management continues to top business agendas, being regarded as critical to succeed in today’s competitive and volatile corporate environment. However, many companies leave themselves open to significant risks in the delivery of real estate projects. Risk management continues to top business agendas, being regarded as critical to succeed in today’s competitive and volatile corporate environment. However, many companies leave themselves open to significant risks in the delivery of real estate projects. To learn more about JLL's project and development services in APAC, please visit: http://bit.ly/1iEasVh

1. Who’s protecting
your blindside?
Corporate Research
December 2013
Construction
Management:
Protecting your
business from
project risk

2. Is your blindside exposed?
Risk management continues to top business agendas, being
regarded as critical to succeed in today’s competitive and
volatile corporate environment. The major risks and pressures
that many companies are grappling with include:
Top Ten Business Risks
Aon’s Global Risk Management Survey, 2013
1. Economic slowdown/slow recovery
•
Uncertain economic and political environments
2. Regulatory/legislative changes
•
I
ncreasing pace and intensity of competition
3. Increasing competition
•
W
ar on talent, speed to market, innovation and reputation
4. Damage to reputation/brand
•
H
igher levels of regulatory compliance
5. Failure to attract or retain top talent
•
C
ontinued pressure to reduce costs
6. Failure to innovate/meet customer needs
Real estate is increasingly seen as a tool for businesses to
leverage in addressing these risks. This includes workspace
continuity planning to minimize business interruption, improving
portfolio flexibility to adapt to changing space needs over time
and implementing workplace strategies to provide the most
attractive environment for ‘best-in-class’ talent.
However, many companies leave themselves open to significant
risks in the delivery of real estate projects. Despite good project
management and planning at the outset, many things can
go wrong during the life cycle of a construction project. The
potential impact on the core business and bottom line of the
organization is often underestimated.
2 | Who’s protecting your blindside?
7. Business interruption
8. Commodity price risk
9. Cash flow/liquidity risk
10. Political risk/uncertainty

3. Construction management is often
neglected
While strong project management is well understood and
usually considered critical to the success of real estate projects,
the importance of construction management is often overlooked
or undervalued.
Appointing a professional construction manager can significantly
reduce business risks arising from the project delivery process.
A construction manager is always responsible for managing the
on-site works and associated tasks such as logistics, security,
safety and communications during the construction of a real
estate project, working solely in the best interest of the client.
Too often, this role is performed by someone who lacks the
expertise, accountability or incentive to effectively look after your
interests during the construction phase.
The relationship between the project manager and the
construction manager can, to some extent, be compared with
the producer-director relationship during the creation of a movie.
While the responsibilities of the two roles during the project
are different, they share the goal of successfully completing a
movie. Both roles must be performed to reach this goal, even
though they could both be performed by the same person.
Similarly, the project manager and the construction manager
share the goal of successfully completing a project, each with a
specific area of responsibility (Fig.1).
Fig. 1: Who is Looking After the Production and Direction of Your Project?
Project Manager (producer)
Construction Manager (director)
• Obtain and interpret the brief
• Provide schedule, cost, logistics and feasibility of construction
input during design stage
• Provide independent advice and reporting
• Manage and coordinate the design
• Manage and coordinate authority approvals
• Interface with your internal team
• Administer your contractual obligations with all parties
• Link between the construction manager and the design team
• Interface with stakeholders
• Trade contractor identification, procurement and management
• Site establishment, management and coordination
• Administer trade contracts including claims and payments
• Manage the handover to owner
Source: Jones Lang LaSalle
Who’s protecting your blindside? | 3

4. Risks are hidden throughout the
construction journey
Case Study
Strong planning and project management at the outset is critical
to the success of any building project. Still, it is in managing
the delivery for the duration of the project—from initial briefing
to final project delivery—where much of the hidden risk can be
found.
Leaving room for flexibility
Why do things go wrong? The following scenarios may sound
familiar:
1. Confrontational relationships
When contractors compete on price for a specific scope of work
and are open to being penalized when they don’t deliver, it is in
their interest to do everything they can to protect and maximize
their own position. In this situation the person responsible for the
delivery is more concerned with protecting their position (often
through a significant amount of paperwork) and minimizing
cost by cutting corners in terms of time, quality and material
substitutions. In addition, managing these types of relationships
can be a significant administrative and time-consuming burden.
›› A more collaborative and transparent approach, where
shared goals are the starting point, will link rewards and
liabilities to the project outcome. This ensures that all
parties work to maximize the final result, because that is
the best way for them to both protect and maximize their
own position. Articulating what a successful project outcome
will look like and keeping all parties working toward the
common goal are key to reducing conflict along the way.
2. Lack of flexibility
Inflexibility often leads to significant problems later in the
process when changes need to be made. The potential impact
will vary depending on the relationships you have with your
suppliers. In a confrontational relationship, contractors will look
to benefit from the changes made along the way by adding
time and charging additional fees. With a more collaborative
approach, shared goals include establishing the most
appropriate delivery/contracting model that can accommodate
potential scope changes along the way.
›› Incorporating specialist consultancy from the start will help
identify potential issues that might arise so that you can
best plan for required flexibility in the project scope.
4 | Who’s protecting your blindside?
During the relocation of a large international bank
in Singapore, new layout plans were shared with
the senior employees that would occupy the space.
However, they did not really understand the implications.
When, close to completion, members of staff were
invited to view their new workspace, some were
unhappy with the layout. This resulted in a redesign of
the floor plates, which could have significantly increased
the project costs and delayed the move by months.
By having a collaborative approach, enabling the
changes to be accommodated within the existing
program and costs restricted to a minimum (net cost of
trades), these impacts were mitigated.

5. 3. Miscommunication
4. Breakdown between project phases
Communication issues between the project team can often be
the root of many major issues. This applies particularly for any
potential scope change along the way, because even fairly small
amendments (such as the addition of partitioning walls) can
impact on costs and timing if not handled correctly. Without clear
and effective communication among all participants, a project
can easily disintegrate, particularly in more complex situations
where changes are made throughout the construction phase.
The importance of solid and continuous management of all
participants across the full length of the project delivery chain is
often underestimated. There is a broad range of stakeholders
involved across the project life cycle (sample in Fig. 2), and
managing them all effectively can prove difficult. Inability to
manage these stakeholders often results in a breakdown in the
transfer between different phases, in particular toward the latter
stages of a project when in-depth, technical knowledge of the
construction process becomes critical.
›› A single point of contact for project delivery and onsite works throughout the project can help simplify
communication and clarify accountability, ultimately avoiding
delivery errors.
›› Integrating professional management across the full
duration of a project ensures a seamless link between all
phases of the project.
Fig. 2: Ability to Effectively Manage Stakeholders Crucial to Project Success
Initiate
Plan
Design
Close/Handover
• Main and trade
contractors
• Landlord
• End users
• Developer
• Facility manager
• Green authorities/
council
• Security
• Internal project team
• Finance
• Designer
• Project sponsors
(C-suite)
• Internal IT
• Vendors
• Local authorities
• Change management
• Legal
Construct
• Shipping agents
• Leasing team
• Movers
• Unions
Note: Stakeholders are often involved across multiple phases
Source: Jones Lang LaSalle
Who’s protecting your blindside? | 5

6. Case Study
5. Unfamiliar local market dynamics
Unfamiliar local nuances
Arguably, the most obvious example of differing local market
conditions is the quality of the available workforce. The skills
and availability of trade contractors can vary significantly by
country and sometimes even from project to project, which
directly impacts the level of expertise and control required. Local
nuances also include legislation such as health, safety and
environment (HSE), availability of logistics and infrastructure,
cost of trade contractors and materials, taxes, authority
approvals and regulations.
A project owner in China engaged a main contractor
to fit-out a 50,000-sq ft office space. A significant part
of the main contractor’s responsibility was to manage
the works through to completion and handover the
premises ready for occupation. However, the project
owner was unable to move in once the project had been
completed as the main contractor had not obtained
the necessary authority approvals and argued this was
the responsibility of the owner. When the space was
eventually occupied, additional issues surfaced. Sick
leave was found to be exceptionally high and constant
staff complaints were received around the smell and
atmosphere of the building, as the main contractor had
not allowed time to purge the air before occupation.
If not properly understood, all of this can easily translate into
issues such as delays, unexpected costs, on-site accidents or
poor-quality workmanship.
›› In situations where your market knowledge proves
insufficient, integrating local expertise and best practice
management is required.
Building a platform in emerging markets
Jones Lang LaSalle’s Global Corporate Real Estate
Trends 2013 report shows that portfolio growth will be
highest in the world’s emerging economies over the next
three years. These are also the world’s least transparent
real estate markets, and operating in such opaque
environments represents significant risks.
At 19%, real estate market transparency was seen as
the single most important challenge when expanding into
emerging market.
6 | Who’s protecting your blindside?

7. Case Study
6. Lack of accountability on site
Lack of accountability
It is important to have a line of sight and understand the ongoing
construction activities, risks and issues. When there is no onsite representative acting on your behalf, accidents, mistakes or
delays are likely to occur without your knowledge. You are then
burdened with addressing these issues as well as explaining the
consequences to stakeholders. This is particularly risky if you
are inexperienced with construction projects and/or unfamiliar
with local market practices.
An on-site flood during a fit-out construction project in
India damaged not only the site, but the works under
construction as well as significant elements of the
tenant space occupied below. The project owner did
not engage a construction manager to take overall
responsibility for the site and consequently suffered
significant delays while damages were rectified. As
no single company was responsible for the site, major
costs were incurred and insurances were limited to
individuals. The lack of accountability caused financial
loss and also greatly impacted the reputation of
the construction company, which was seen as the
irresponsible employer.
›› A professional, accountable representative on site looking
after your interests will keep you fully informed. Appointing
a specialist with full responsibility to identify and mitigate
risks provides quality assurance while safeguarding time
schedules and overseeing performance in areas including
safety, security and logistics.
While legally responsible, some contractors may have
conflicting demands when it comes to best practice in HSE
compliance. Reinforcing HSE efforts on site can ensure
that HSE-conscious behavior (as well as processes and
procedures) are aligned with the project owners’ standards
and significantly improve a positive project outcome.
7. Transparency and governance issues
With the strong global focus on compliance and corporate
social responsibility, it is now imperative for project sponsors
to have full transparency of cost, as well as supply and labor
resources. When main contractors are engaged, often there
is an expectation that they will take responsibility for these
requirements. While they are technically responsible, too often
you will not find out that they have not fulfilled their commitments
until it is too late, leaving your business exposed to regulatory,
legal or financial risk.
›› Appointing a professional representative to oversee all
procurement and labor management at the trade level—
including identification of material sources, control of labor
before and during construction, and competitive tendering—
will eliminate the opportunity for poor practices and provide
auditable results to satisfy the most stringent governance
requirements.
Who’s protecting your blindside? | 7

8. Your core business could take an
unexpected hit
There is a wide range of potential complications in the delivery
of a real estate project, whether it is a complex, from the ground
up construction development or a basic interior fit-out. The
potential impact on the core business of a company is often
underestimated and may threaten the position of an organization
in areas such as reputation, brand, compliance, talent attraction,
customer satisfaction, business continuity and profitability
(Fig. 3).
The success of delivering real estate construction projects
is primarily measured by the key variables of time, cost and
quality—often referred to as the ‘iron triangle’—as well as HSE.
However, the actual impact on the business goes beyond the
delivery of the finished product. For example, time issues can
delay speed to market and erode competitive advantage, cost
issues can impact cash flow and profitability and quality mishaps
can negatively impact customer experience or harm talent
attraction and retention.
In addition, a wide range of HSE issues arising during
construction can significantly impact the core business. For
example, environmental damage or health and safety incidents
can harm a company’s brand and reputation, while the financial
impact of litigation or lost productivity can substantially hit the
bottom line.
There is a real risk of your project running over time,
and beyond budget:
25% of projects overrun the initial bid margin1
40-50% of projects in the US overrun on timing and/or
costs2
92% of projects in Malaysia overrun on time or budget3
1. KMPG Global Construction Survey, 2012
2. Construction Management Association of America, 2009
3. International Journal of Advances in Applied Sciences, 2012
Figure 3: Failure to Successfully Manage Construction Projects Directly Impacts Your Core Business
CHECK
Loss of competitive advantage
LIST
FVH
FK HISO
SO
CVN
DJSK
HG
Delays in getting your
product or service to market
SGH
OOO
OSI
Failure to meet compliance
requirements
Exposure to legal action
Inability to meet customer
expectations
Reduced corporate
profitability
Damage to reputation
and brand
Disruption of business
operations
ZKDJVHS SKFGJH AKFJ SKGJHFGKJDFGH ZCV DS
DLKDFJ SLFKGJDFLKJ DFLHKGJ LDHKGD DVKJSD
DJFJFHHB O DND IDHVDDFK KSFKK HHDHDK KDKF
DFJSDJKHFDS HLSGBFJKBCXB DFGJ SGDHJ FHJ
;LGK ZSDH;LHLG
Inability to attract and
retain talent
SPOIGHSFJHSADFLIU
DJKV SDFKJALS;GKJS ALFKJF
FLKSJHD SLGKJ SDLK SDLGK
FKJH SDLGKJ SDLGJK SLDLS
KJDGSH SL SLGK SLGK GJK
SSLDKGJ SLDKGFDGJ SLD
FJFJ DJL SDJGFKHSKJ D
SKLGH KJHFG SKGJSF
DV KSDJFH
DSHJGF SIUE
AKDSYIO EIYGS DSF
DKDFLHSD
3-9589 49870 B
SKFLHSD ASFHA AWOFI
DKLFGJL SET ESTOPJT F
WANTED
STAFF
Long Term
VNBCK X,M
GSBKJ
39025 LKSRGJ
ETHEW LSGKHJFKLG DFLGJ
DFSHLK
42450 SHJK SGJFGD
AESFUITY DZZV JELKR EQWT8
CBJKH EPOURT SDGHLJF SLKG
DHKLF EIYOEG KSFLGHL SD.GKJ
JDGHFKLSDLK SELHG E;SGFJ
GSDJ SDGHLI AEFBJ AEFHL ED
320 23598- 2350- 245
DVLHJ SPEOFU AE;FKLJ
DJKVHC
FJKCVXG EWPTU F
SDKDSG
2309534905 590458 ZKDJDF
SLDHGK SED
FGKUI E EWPT
SGF SDG
DSKLHG ERPTUI RWGPO FGJHK FG SRGOIU LSRGHK
GBJ, S WEITU EKRJGH S,G W ELTIY SEFLKH NNN
Source: Jones Lang LaSalle
8 | Who’s protecting your blindside?
Impact on cash flow
and liquidity

9. Professional construction
management covers your blindside
Incorporating detailed, professional construction expertise in the
project as early as possible can greatly improve the success of
your project and reduce potential business risks (Fig. 4). This
enables you to benefit from advice on potential construction
issues during the design stage while ensuring smooth transition
between all phases of the project. For example, fully considering
up front the impact that proposed methods and materials will
have on the actual construction process will avoid unexpected
changes, claims, disputes, delays and cost increases later on in
the project life cycle. When combined with on-site coordination,
a construction manager engaged early in the project will
minimize the risk of time, cost, quality and HSE-related issues
and insulate you from the subsequent business impacts.
Fig. 4: Risk Mitigation through Construction Management
Where do things go wrong?
How can a construction
manager help?
1. Consultancy: Critical advice during
design and planning
2. Coordination: Seamless connection
across all phases
3. Control: Greater control over delivery
on site
4. Communication: Reduced conflict
between parties
5. Clarity: Continuous knowledge of
the project
• Unclear scope
• Not enough time or money
• Bad planning and scheduling
• Unexpected changes
• Local market nuances
• Poor trade procurement
• Contractors cutting corners
• No accountability on site
• Insufficient technical knowledge
• Stakeholder confrontation
• Accidents on site
What are the benefits?
• Avoid delays
• Prevent cost hikes
• Increase certainty of outcome
• Save time and costs
• Minimize claims and disputes
• Reduce HSE incidents
• Quality finished product
• Continuous knowledge of the project
Source: Jones Lang LaSalle
Who’s protecting your blindside? | 9

10. An integrated approach protects
your business
Typically, a professional project manager is engaged during the
early stages of the project, then hands over the responsibility to
the main contractor who is responsible for the project through
construction to completion. Even if a professional construction
manager is engaged, the gaps inherent in this hands-off
approach create many opportunities for risks to creep in. The
delivery of a construction project works best when both roles
work seamlessly together, and even more so, when they are
performed by the same provider (Fig. 5).
This ensures a seamless transition from project initiation all the
way through to completion and handover to operator, minimizing
the opportunity for gaps to occur that might expose your
business to risk.
Fig. 5: Seamless Delivery Through Integrated Project and Construction Management
Initiate
Plan
• Initiate project
• Assign project team
• Set up project on tool
Design
Construct
Close/Handover
• Conduct visioning
session
• Conduct design
review with client
• Landlord coordination
• O&M’s
• Execute A/E vendor
contracts
• Update project
budget and schedule
milestones
• Monitor site activity
• Punch list
• FF&E coordination
• Close-out checklist
Project Management
• Move coordination
Construction Management
• Prepare preliminary
project budget &
schedule
• Construction feasibility
advice
• Procure permits
• Invite subcontractors
to bid
• Trade contractor
procurement,
management and
administration
• Manage handover to
operator
• Site coordination/
execution
• Responsible for quality,
security and safety
Risk Management | Accountability | Best Practices | Common Tools | Shared Goals & Objectives
Source: Jones Lang LaSalle
10 | Who’s protecting your blindside?

11. Jones Lang LaSalle Project and Development Services
We provide project and construction management services
for real estate owners, occupiers and investors. With over 840
professionals in Asia Pacific, supported by a truly transparent
global platform, we provide the most consistent client
experience across more than USD 18 billion in capital works
annually. As your construction manager, we oversee all aspects
of procurement and construction—from technical engineering
and estimating, to site management, commissioning and
handover. We add value by providing construction input to the
design team at the most critical stages of the process. Through
seamless integration of project and construction management,
we reduce confrontation and improve communication throughout
all stages of your project. This helps you to achieve consistency,
increase speed to market, minimize risk and maximize
transparency.
For more information, please contact one of our
experts:
Dave Colverson
Regional Director
Construction Management, Asia Pacific
+65 6494 3786
dave.coverson@ap.jll.com
Kevin Hastings
Regional Director
Construction Management, Australasia
+61 2 9220 8655
kevin.hastings@ap.jll.com
Jipu Jose James
National Director
Construction Management, India
+91 9884 032 233
jipujose.james@ap.jll.com
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services
and investment management firm offering specialized real
estate services to clients seeking increased value by owning,
occupying and investing in real estate. With annual revenue of
USD 3.9 billion, Jones Lang LaSalle operates in 70 countries
from more than 1,000 locations worldwide. On behalf of
its clients, the firm provides management and real estate
outsourcing services to a property portfolio of 2.6 billion square
feet. Its investment management business, LaSalle Investment
Management, has USD 46.7 billion of real estate assets under
management.
About Jones Lang LaSalle Corporate Solutions
A leader in the real estate outsourcing field, Jones Lang
LaSalle’s Corporate Solutions business helps corporations
improve productivity in the cost, efficiency and performance of
their national, regional or global real estate portfolios by creating
outsourcing partnerships to manage and execute a range of
corporate real estate services. This service delivery capability
helps corporations improve business performance, particularly
as companies turn to the outsourcing of their real estate activity
as a way to manage expenses and enhance profitability.
Darren Wee
Local Director
Construction Management, Singapore
+65 64943966
darren.Wee@ap.jll.com
Author
Alexander Colpaert
Senior Manager
Corporate Research, Asia Pacific
+65 6494 7084
alex.colpaert@ap.jll.com
Who’s protecting your blindside? | 11

12. Jones Lang LaSalle Global
Argentina
latinamerica.am.joneslanglasalle.com
Germany
www.joneslanglasalle.de
Maghreb
www.joneslanglasalle.ma
Slovakia
www.joneslanglasalle-slovakia.com
Asia Pacific
www.joneslanglasalle.com/asiapacific
Hong Kong
www.joneslanglasalle.com.hk
Mexico
www.joneslanglasalle.com.mx
South Africa
www.joneslanglasalle.co.za
Australia
www.joneslanglasalle.com.au
Hotels
www.jll.com/hospitality
Middle East
www.joneslanglasalle-mena.com
Spain
www.joneslanglasalle.es
Belgium
www.joneslanglasalle.be
Hungary
www.joneslanglasalle.hu
Morocco
www.joneslanglasalle.ma
Sri Lanka
www.joneslanglasalle.com.lk
Brazil
www.joneslanglasalle.com.br
India
www.joneslanglasalle.co.in
Netherlands
www.joneslanglasalle.nl
Sweden
www.joneslanglasalle.se
Canada
www.joneslanglasalle.ca
Indonesia
www.joneslanglasalle.co.id
New Zealand
www.joneslanglasalle.co.nz
Switzerland
www.joneslanglasalle.ch
Chile
latinamerica.am.joneslanglasalle.com
Ireland
www.joneslanglasalle.ie
Panama/ Peru
latinamerica.am.joneslanglasalle.com
Taiwan
www.joneslanglasalle.com.tw
China
www.joneslanglasalle.com.cn
Israel
www.joneslanglasalle.co.il
Philippines
www.joneslanglasalle.com.ph
Thailand
www.joneslanglasalle.co.th
Colombia
latinamerica.am.joneslanglasalle.com
Italy
www.joneslanglasalle.it
Poland
www.joneslanglasalle.pl
Turkey
www.joneslanglasalle.com.tr
Croatia
www.joneslanglasalle-croatia.com
Japan
www.joneslanglasalle.co.jp
Portugal
www.joneslanglasalle.pt
Ukraine
www.joneslanglasalle.ua
Czech-Republic
www.cz.joneslanglasalle.com
Kazakhstan
www.joneslanglasalle.kz
Romania
www.joneslanglasalle-romania.com
United Arab Emirates
www.joneslanglasalle-mena.com
Egypt
Korea
www.joneslanglasallekorea.co.kr
Russia
www.joneslanglasalle.ru
United Kingdom
www.joneslanglasalle.co.uk
Latin America
latinamerica.am.joneslanglasalle.com
Saudi Arabia
www.joneslanglasalle-mena.com
United States
www.us.am.joneslanglasalle.com
Luxembourg
www.joneslanglasalle.lu
Serbia
www.joneslanglasalle.rs
Vietnam
www.joneslanglasalle.com.vn
Macau
www.joneslanglasalle.com.mo
Singapore
www.joneslanglasalle.com.sg
www.joneslanglasalle-mena.com
EMEA
www.joneslanglasalle.eu
Finland
www.joneslanglasalle.fi
France
www.joneslanglasalle.fr
COPYRIGHT © JONES LANG LASALLE 2013 All rights reserved. No part of this publication may be published without prior written permission from Jones Lang LaSalle. The information in this publication should
be regarded solely as a general guide. Whilst care has been taken in its preparation no representation is made or responsibility accepted for the accuracy of the whole or any part. We stress that forecasting is a
problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forward projections involves assumptions regarding
numerous variables which are acutely sensitive to changing conditions, variations in any one of which may significantly affect the outcome, and we draw your attention to this factor.