Thought Leadership on Enhancing Your Business Through Design Build presented by Rocchi Construction.
This is a true story. In March 2015, our company was asked to provide a bid for a new dental office in Howard County. The dentist was relocating his office to a new space. We were referred from a local bank that was providing financing. The plans were sent to our office and we made arrangements to meet the client at the site to have our project manager, estimator and key subcontractors review the working conditions, landlord and owner requirements.
Nightmare #1: Upon visiting the site, we discovered that the client had already started construction. Walls were framed and ceilings were started. Ductwork, electrical and plumbing had commenced. The dentist told us that after starting construction, he realized the plans, layout and contractors were not acceptable for reasons we were never told. Several months before, the client had stopped construction and hired a new architect to redesign the space. This had delayed the project by several months.
Nightmare #2: The new design had been prepared by a firm with no attention to costs and constructability. The details called for very expensive lighting, elaborate bulkhead details and exotic finishes, to name a few. In estimating the new cost of construction, we had to include the removal of most of the previous construction. We reviewed every detail on the new drawings and also provided a list of 20 cost options to give the dentist value options to help with his construction budget. The client had directed us to provide a bid that included all elements. With our dental office experience, we also included the costs for work that would be required but was not spelled out on the drawings, along with our detailed two-month construction schedule. When we submitted our proposal, the costs were more than twice the typical cost for a dental office. Shortly afterwards, we were informed by the dentist that we were not the low bidder, but he appreciated our effort and very detailed proposal. We never asked for the name of the successful bidder or their price. We assumed case closed and the client was now on track for a two-month project turnaround and opening.
Nightmare #3: Eight months later, we received a desperate email request from the client. His project was just finishing and there were numerous issues. There were construction problems that were not getting fixed, floor tile had failed, there was paint on the carpet, and the list goes on. There were cost overruns: plumbing alone was over by $10,000. We sent him names of our key subcontractors to try and help make corrections and resolve his issues so he could get opened for business. Overall, his project was a nightmare from beginning to end: two different architects, two different unsatisfactory general contractors, probably 10 to 12 months of wasted time and many thousands of dollars down the drain.
This true story illustrates just some of the risks and issues you may be facing in your commercial construction project.
Be aware of these construction risks
Construction projects are inherently loaded with risks and can become a battleground; a war between customers, architects, contractors, subcontractors, landlords, material suppliers, and on and on. There are always many parties involved in the construction process, and sometimes the number can easily be overwhelming to an owner. For a major new building, the number can often be above 100 parties. For a small interior project, it is easy to reach 10 to 20. As a business owner, are you prepared? Do you need a whole construction department just to complete a renovation or fit-out?
In addition, there are the major obstacles and questions: Costs, design, permits, zoning, site issues, parking requirements, impact fees, traffic studies, storm water management… and schedule. How long does all this take? When you relocate, does the current lease expire ,and when do you need to move? Who will do the move, and will you be out of business? How does a business identify and address all these?
How about the building questions: Do you lease or purchase? Will there be too much space or too little? (Are there future needs?) Are you buying or leasing a money pit? How do you know your needs will fit in the space? Are there already code violations? Is the space compliant with handicap accessibility codes? What does the lease say regarding landlord responsibilities? When does your rent start? Are there environmental issues? How old are the mechanical units and who is responsible? Is the air conditioning sized to meet the new use?
What about all the little details that can turn into major issues: Is there adequate phone or data services? Are the water, gas or electric services adequate? (BGE charges a lot to upgrade and can take forever.) Are there energy code issues? (This is a big deal today.) Are fire separations, sprinkler systems, fire alarm systems in place, or are upgrades required? How about sound control? Are you the first tenant in a new building? Who are your neighbors (odors, noise, hours); could there be a future dance studio above your space? Do you have any control regarding leases with respect to future tenants?
What about the design: Does the architect understand your needs? How does the designer know what your project will cost or how long it will take to complete construction? Are they knowledgeable regarding the construction costs and schedule? Can the design be constructed economically? Is the whole design direction in your best interests?
What about the subcontractors hired by your general contractor? Do they have a proven track record? Did they bid too low and now need to cut costs or try to charge you extras? Do they have adequate and knowledgeable manpower? The project may not have started when they expected. Now are they too busy for you?
The list of issues can go on and on. Next time, we will discuss how to avoid many of these risks.