Niagara Falls Construction Project ASLI-terkunci

For the exclusive use of U. PUTRO, 2019.
W15192
NIAGARA FALLS CONSTRUCTION PROJECT: SCHEDULING,

RESOURCES, COSTS AND BUREAUCRACY
Barry Riddell and Professor Kenneth J. Klassen wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
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University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright © 2015, Richard Ivey School of Business Foundation Version: 2015-05-29
It was May 1, 2013, and Byron Rikert just returned home from a disappointing meeting at the City of
Niagara Falls building department. He had applied for what he assumed to be a typical building permit for
a detached double garage, something he had done several times before.
Several weeks ago, when he dropped off his application along with the required plans and fees, he had
discussed the plans for the proposed garage with the staff at the building department, including the fact
that the property was zoned deferred tourist commercial. No one at the building department thought that
there would be an issue, as several neighbouring properties had similar garages.
To Rikert’s dissatisfaction, the building department advised him at the meeting that he would have to
apply for a minor variance to the zoning bylaws. The department reassured him that there would be no
resistance from anyone at the city regarding the application, and Rikert was familiar with the process
required to obtain approval of the variance. However, the process would take seven weeks, there was a
chance a neighbour might object (which would cause further delay or even cancelation), and there was an
additional cost of Cdn$1,050.1 Once the variance was approved, he would have to reapply for the building
permit.
BACKGROUND
Although this project involved just building a detached double garage, something that Rikert had done in
the past, the circumstances surrounding this particular project were unique. The proposed garage was for
his personal residence, and he was building it as a result of the negotiations surrounding the sale of the
property. Rikert and his family had decided the previous year that they wanted to move to another
neighbourhood to enable their children to attend what they hoped to be a better school.
After several months with no offers on their home, a buyer presented an offer to purchase the home, but
added a condition that it included a detached double garage. Rikert, who was a contractor, negotiated an
increase in the selling price of $10,000. Although $10,000 was far less than what he would normally
1
All currency in Canadian $ (CAD) unless specified otherwise.
This document is authorized for use only by UTOMO SARJONO PUTRO in 2019.
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charge for building a detached garage of this type, that was the maximum he could negotiate for, and
Rikert felt he could build most of it on his own time, thereby keeping the costs down. The deal closed on
April 15 and the title was scheduled to be transferred on August 30. That gave Rikert approximately 18
weeks to build the garage, which he felt very comfortable with.
Rikert and his family had already put a conditional offer to purchase another home in their desired
neighbourhood. They still had a few days to withdraw the conditional offer and cancel the sale of their
existing home. However, the family was already emotionally attached to the new home, and Rikert knew
that cancelling the deals would be very upsetting to them. On the other hand, the addition of 9 or 10
weeks to the timeline might make it impossible to finish the garage on time, thus causing him to default
on the sale of his own home.
Rikert decided to take the next two days to review the project and decide if it was feasible to move
forward or whether he should cancel it.
BYRON RIKERT
Rikert was trained as a mechanical engineering technician at college in the 1980s, which gave him
exposure to project and production management. He then spent the next 15 years as a production manager
for two different organizations, using his spare time learning and developing building skills as a part-time
renovator. He completed smaller renovation projects such as basements and bathrooms, along with
upgrading his own properties in an effort to sell them for a profit and work his way to a larger home.
By 1998, when circumstances required that Rikert leave his management career and relocate to Niagara
Falls, Ontario, he was confident in his construction skills. After a quick realization that the job market
was very soft in the Niagara region, he decided to start his own business as a contractor specializing in
renovations and additions.
As the years went by, Rikert’s business grew into a commercial construction business involving several
crews. At the peak of his contracting business, he employed between 12 and 15 full-time unionized
carpenters and was involved in several large construction projects simultaneously. The many projects
included the handrail installations at the new William Osler Hospital in Brampton, Ontario, the Ross
Memorial Hospital in Lindsay, Ontario, and St. Joseph’s Hospital in Hamilton, Ontario.
After several years of operating at this level, Rikert decided to downsize due to health issues. He went
back to working with fewer workers and doing smaller jobs such as renovations and additions, including
detached garages. In 2010, Rikert, at the age of 46, decided he would go back to school to get the
credentials employers were demanding in order to re-enter the management field he left in 1998. During
that time, he still did small renovations and took on a few larger jobs during the summer months so that
he could attend Brock University full time to complete his Bachelor of Accounting degree.
That summer, Rikert and a few of his employees had contracted to do two full basement renovations, and
he felt he would be able to handle building his detached garage on weekends and at times when he could
leave his workers. .
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THE DETACHED GARAGE
Building a detached garage — or any building — consisted of four main phases. The phases were
planning, foundation, structure and finishing. A detailed description of each phase for this detached
garage project follows.
Planning Phase
1. A set of plans was drawn detailing the proposed garage (see Exhibit 1). The set of plans consisted of a
property layout drawing, floor plans of the garage along with elevation drawings and a detailed wall
section.
2. Rikert attached the plans to an application for a building permit along with the application fee of $100
and submitted them to the City of Niagara Falls for approval.
3. The City of Niagara Falls reviewed the plans submitted to ensure that the proposed structure complied
with the Ontario building code and the City of Niagara Falls zoning bylaws. The review process
generally took from two to three weeks. If the proposed structure complied with all of the building
codes and bylaws, the city would approve the application and issue the building permit along with a
list of any requirements the city had, such as inspections that needed to be completed as the project
progressed. In a case such as this project where there were issues with compliance, either a revision
had to be made to the construction plans or an application must be filed for a variance to the zoning
bylaw. Given the constraints imposed by the property, a revision to the plans was not possible, so if
Rikert decided to go ahead, his only available option was to apply for the zoning variance.
4. The planning phase also included developing a project schedule and a list of all the building materials
required. Rikert knew from experience that the schedule must account for potentially long delivery
times for some items.
Foundation Phase
The foundation phase of any structure was a crucial element as it provided the base for everything that
followed. If there was a problem with the foundation after the structure was complete, it was very costly
to repair and could jeopardize the integrity of the entire building. The foundation phase on this structure,
which was referred to as a “slab on grade” entailed that the floor (slab) be poured at the same time as the
footings. The following steps were involved in the foundation phase:
1. Before any foundation work began, a builder must contact ON1Call online or by phone and initiate a
request to locate any infrastructure, such as hydro, water and gas lines, that might be buried in the
ground. Contractors who failed to do so faced huge financial penalties and could be liable for
negligence in the case of property damage or injury. The ON1Call provides the service free of charge
following a request to locate, but they required five full working days to come to the property and
locate the buried infrastructure. Rikert did not have to be on-site for the locate service as long as the
location of the proposed structure was clearly marked.
2. The excavating stage was a matter of stripping off the top layer of grass and soil so that the
foundation was on hard undisturbed ground. Then, a 12 inch-deep trench was needed around the
outside perimeter of the foundation for the concrete footings (and the forms that would hold the
concrete until it was cured). For a small foundation of this size, Rikert would normally dig it out by
hand, which would take two people around two days. Alternatively, a subcontractor that Rikert used
often for other jobs could come and dig it out on a Saturday using a backhoe, with Rikert just
supervising. This subcontractor was only available on Saturdays for these types of small jobs.
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3. After the excavating was done, it would take a day for Rikert and one of his labourers, Shawn Dakin,
to set the forms. Forms were built out of wood used from prior concrete pours, and they were reused
for future jobs.
4. After setting the forms, spreading the layer of gravel, which would lie under the concrete floor, would
take one person a day.
5. Once the gravel was spread, it took a day to pick up and set the rebar (a steel reinforcing rod) and
steel mesh, both of which were in stock at local retailer. Rikert preferred to set the rebar and mesh on
the jobs himself as it was something the building inspector took a close look at during inspections.
6. The city’s building inspector must inspect the foundation after the rebar was set and before the
concrete was poured. All building inspections required a phone call to City Hall and up to three
business days to complete. There was no separate cost for these — they were included in the cost of
the building permit. Rikert did not need to be on-site for any building inspections. However, it was
important to ensure all work was done prior to calling for an inspection. Although the inspector
generally took three days to show up, it was possible that the inspection would take place either
shortly after the call if the inspector happened to be in the area or in one or two days if there was
another scheduled inspection close by. If the inspector showed up and the site work was not complete,
the inspection would fail, and it might be difficult to get future cooperation from the city’s building
department.
7. Once the building inspector passed the foundation preparation, the concrete footings and floor could
be poured. Concrete was ordered from and delivered the next day by LaFarge Concrete. Pouring the
concrete would require both Rikert and Dakin for a full day. After that, the concrete required three
days to cure during which time minimal supervision was required to keep the burlap covering the
concrete damp.
8. Once the concrete was cured, the forms were removed and the foundation was complete. Rikert could
remove the forms in just a few hours.
Structure Phase
During the structure phase, the framing of the walls and roof would take place, and the exterior wood
sheathing for the walls would be installed. The steps and time requirements were as follows:
1. Rikert and Dakin required a day to frame and erect the walls, which consisted of 2”x6” studs and
2”x10” headers above all openings for doors and windows as per plans attached.
2. Another day was required for the two of them to set and secure the roof trusses, which were pre-
formed at Fonthill Lumber. Trusses were installed every 2 feet (i.e., on “two-foot centres”). This was
a standard “4/12 pitch” roof, which meant for every 12 horizontal feet there were 4 vertical feet.
3. The last step in the structure was the exterior sheathing which was 5/8” oriented strand board (OSB).
At the same time, the air barrier wrap, such as Tyvek, a breathable, waterproof fabric, was attached
on the outside of the OSB. This step would take Rikert and Dakin one day.
4. After the structure was framed, another inspection was required.
Finishing Phase
During the finishing phase, all of the exterior surfaces would be covered with weather resistant finishes.
For this job, a steel roofing system that had a 40-year warranty was chosen over an asphalt shingle roof
because it lasted longer and was much quicker to install. The following steps were required to complete
the finishing phase:
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1. The steel roofing required 1”x3” strapping to be installed horizontally on top of the trusses, on 2-foot
centres. Then the roof panels were attached to the strapping. Both the strapping and the panels could
be installed in two days by one person with minimal assistance from Rikert. In contrast, an asphalt
shingle roof would require ½” plywood to be installed over the trusses, followed by felt paper and
then the shingles — in total taking about three days for two roofers.
2. While the roofing was being installed, the single window, man door and garage door could be
installed. Rikert estimated that Dakin could install the window and doors in the same two days as the
roof was being installed if he split his time between helping Dakin to install the doors and window
and helping the person doing the roof — Rikert’s son James, if James helped. .
3. Once the roofing, windows and doors were completed, Rikert could complete the exterior soffit and
fascia in three days and the vinyl siding in seven days working alone. Or it would take two days for
the soffit and fascia and four days for the siding if Rikert and Dakin worked together.
4. Then the eaves trough could be installed, which was a one day job for Rikert and Dakin together.
5. After the exterior finishes were complete, the final inspection needed to be arranged and completed.
Additional Details for the Detached Garage Project
 The City of Niagara Falls returned the building permit application advising that the proposed garage
was in violation of two zoning bylaws and would require either a revised site plan or the approval of
two minor variances. The following issues were raised by the zoning department.
 Zoning bylaw No. 79-200 required any accessory structure to have a minimum setback of 4.5
metres from the property line at a street. The plans submitted showed a setback of only 1.37
metres (between the property line and Side D), which was the same setback as the existing
neighbouring building.
 The bylaw also allowed a maximum parking area of 40 square metres in the rear yard. However,
an earlier concern mentioned by the city officials was that they did not want vehicles backing out
onto the street at this location, and thus the proposed plans detailed 77.7 square metres of parking
space to allow room for vehicles to turn around.
Although these variances were minor in nature, the approval process would take seven weeks. There
were a number of steps, approvals and mandatory waiting periods during which neighbours could
raise objections, so the time period could not be reduced. Once the minor variances were approved,
Rikert could reapply for his building permit which would take two to three weeks.
 The original plans (see Exhibit 1) called for two windows. However, the city would not allow the
back window so close to the property line, so only the side window was installed.
 Any 2”x6” or 2”x10” was not quite 2 inches thick — actually only 1.5 inches thick. For this project,
the only place this impacted calculations was the wall height, which was the length of a stud plus one
2”x6” plate on the bottom and two 2”x6” on the top. This meant the walls were actually about an inch
more than 8 feet high, but in making calculations for materials, it could be assumed they were 8 feet.
 The original plans showed a roof overhang on both sides B and D. However, this overhang was not
built — the vinyl siding went all the way up, and there was fascia installed as well. The front and
back of the garage did have a regular overhang as shown on the plans.
Page 6 9B15D007
 The original plans called for asphalt shingles, but this was changed to metal panels as explained
above.
 Normally, Rikert and Dakin would do the roofing, but for this project Rikert was considering splitting
his time between doing the roofing with a helper and doing the windows and doors with Dakin.
Rikert’s son James had offered to come during his holidays — the first two weeks of August — and
help if needed. Rikert was comfortable with taking James up on the offer to help with the roofing,
which James had done in the past.
 It was critical that Rikert set aside the time required to supervise his crew who were working on the
two basement renovations in conjunction with this garage project. He presumed that this would
require two hours each morning from 8:00 a.m. until 10:00 a.m., which would amount to about 25 per
cent of his work day.
 Dakin was a semi-retired labourer whom Rikert had used in the past. He had agreed to work on this
garage as needed for $25 an hour. However, Dakin did not wish to work on weekends.
 Not only was Rikert not being paid for the time that he spent working on this garage, he was also
forgoing the opportunity of working on other contracts that he would normally bill his time out at $40
per hour.
 Rikert had set the deadline for the project to be Friday, August 23 so that he could do some
landscaping and clean up during the week of August 26 before the buyer came and did an
independent final inspection of the property prior to closing. Thus, it was critical that the formal final
inspection was complete by August 23, since Rikert would need to provide proof of passing the final
inspection to the buyer.
 Rikert knew from previous garage building experience that although most material was available
immediately at the local building yards, he would need to order a few items ahead of time. The garage
door, steel roofing panels and the roof trusses would each require two weeks for delivery. Although
most of the time concrete could be ordered one day in advance, it was a good idea to call Lafarge
Concrete two to three days in advance to make sure they could schedule the job into their production
run. The bill of materials is provided in Exhibit 2.
 Rikert knew from past experience with outdoor construction that he would lose work days due to
inclement weather. For this project at this time of year, there would be four to eight days when it
would not be possible to work. In addition, he would lose work days due to unforeseen circumstances
on the basement renovations that would require his immediate attention when they occurred. There
would be between five and eight days when he would not be able to work on his garage for this
reason.
THE DECISION
Rikert had two days to decide whether to cancel both the sale of his property and the purchase of his
family’s new home. He knew from his project management class that the best way to make an informed
decision was to draw a detailed schedule to see if it was feasible to complete the detached garage after the
lengthy delay for zoning approval and reapplying for the building permit.
Page 7 9B15D007
EXHIBIT 1: BUILDING PLANS SUBMITTED
FRONT
SIDE D
SIDE B
Page 8 9B15D007
EXHIBIT 1: (CONTINUED)
Fascia
Page 9 9B15D007
Page 10 9B15D007
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Source: Drawings submitted by Byron Rikert to the City of Niagara Falls as part of the building permit application.
Page 12 9B15D007
EXHIBIT 2: BILL OF MATERIALS
Item Qty. Cost ($) Description

Rebar Lot* 20.00
Steel Mesh 5.00 each Sheets are 4 ft. x 8 ft. and cover the floor area
Gravel 2 loads 300.00/load
Concrete Lot 3200.00/lot
2”x6” PT x 10ft 9.00 each Used for base plate on walls (PT = pressure
treated)
2”x6” x 10ft 7.50 each Double plate is needed at top of walls
2”x6” studs 4.50 each 92 ⅝ inches long
2”x10” headers 4.00/foot Above all doors and windows — require 2 for
each opening.
Roof Trusses 13 25.00 each
Strapping (1”x3”) 18 1.50 each
Exterior OSB 14.50 a sheet 5/8” OSB 4ft. x 8ft. Use square footage of
Sheathing overall walls (openings are cut out afterwards)
Tyvek 1 roll 300/roll
Roof Panels Lot 1200.00
Soffit 1.50/sq.ft Soffit is 12” deep on the two long sides of
garage
Fascia 12 12.00/10ft piece Include for all four sides of garage
pieces
Eaves Trough 1.50/ft On the front and back only
Window 1 40.00
Man Door 1 300.00 Complete with framing and hardware
Garage Door 1 600.00
Vinyl Siding 80.00/100sq.ft Use full wall areas (do not take away doors etc.
This will allow for trims and waste.)
Note: All missing quantities can be calculated based on information in the case.
*Lot = total needed for whole project
Source: Byron Rikert’s list of materials needed.

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For the exclusive use of U. PUTRO, 2019.

NIAGARA FALLS CONSTRUCTION PROJECT: SCHEDULING,

Copyright © 2015, Richard Ivey School of Business Foundation Version: 2015-05-29

THE DETACHED GARAGE

Additional Details for the Detached Garage Project

EXHIBIT 1: BUILDING PLANS SUBMITTED

EXHIBIT 2: BILL OF MATERIALS

Item Qty. Cost ($) Description

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