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December 2018 \ BUILDING DIALOGUE \ 51 you have, the better your labor force will be. • Interpreting the numbers. When analyzing a CM/GC’s proposed fees, general conditions, and preconstruction fees, the most important con- sideration is “Are they worth it?” • CM/GC fee. The CM/GC fee is for overhead and profit. A very low CM/GC fee might raise a ques- tion: “How else is this CM/GC making money on my project?” • General conditions costs. General conditions are simply themany costs a contractor incurs by set- ting up at a job site and staffing your project. Pro- vide your proposers with a general conditions matrix that contains all possible general condi- tions categories that provides an apples-to-ap- ples comparison with no guesswork. Make sure that the general conditions your contractor is quoting adequately provide for staffing – both in time and experience levels. • Preconstruction fees. Preconstruction costs/ fees can vary widely from no charge to many thousands of dollars, with varying levels of ser- vice and benefits. Avoid this confusing scenario by requesting detailed preconstruction services breakdowns. Understand how many phases of design your CM/GC will be expected to work with, how many estimates they will be providing, how much time they will spend in value engineering and constructabil- ity review, and how much manpower they will allocate to the effort. Cost/benefit here is key: Themore time a CM/GC spends ana- lyzing your project in preconstruction, the more qualified they are to advise you on final costs. • Range estimates vs. full estimates. Range estimates are a neces- sity, but comprehensive, detailed estimates early in project de- velopment are akin to a game of liars’ poker. Asking competing teams to guess about your project costs, usually with too little design information and the possibility of delivering bad news, incentivizes CM/GCs to be low, not right. You’re better off working with a trusted, professional design and construction teamto design to your budget. The earlier you assemble your full team, the better the planning effort. And if you need to make changes, it’s cheaper and easier to change earlier rather than later. Our firm utilizes a project development manager to work with owners and architects in the earliest stages of design (and prior to CM/GC selection) to help shape the concept and pro- gram to properly align with the owner’s budget. • Escalation. Does the current design fit your budget? The an- swer may be yes today. But in today’s market, today’s dollars will quickly be a thing of the past. Construction costs are escalating at a scary rate. Just because ContractorAbuilt Project C last year at your exact budget doesn’t mean those prices will apply to your project today, and certainly not tomorrow. Your contractor must be willing to share these hard facts of escalation. • Sorting through the intangibles/predicting performance. Predicting performance is tricky, but mainly it’s about getting to know your project team. Don’t be fooled by a company’s boasts about how many of a certain project type it has completed. Look in- stead at each individual team member. Has your project team (or separate individuals on the team) worked on the same kind of project you’re expecting to build? And check references. Talk to references that have had day-in-and-day-out expe- riences working with each individual. Ask about their strong and weak points. Did the team underpromise and overdeliver, or vice versa? It’s also a strong, positive indicator if a project team has worked for repeat clients. Other key topics should include: What was the team (or indi- vidual) hired to do specifically? Howwas communication?Was there transparency? Taking ownership in your project/individ- ual tasks? Working for your best interests? Minimizing change orders? Creativity in value engineering? Promptly responses to phone calls and emails? Clean job sites? Quality control/fit and finish? Safety? Ask about issues and challenges, and focus on how the team reacted. What lessons were learned? • Self-assessment. An early self-assessment can help match a project team to the owner’s personality. What are your priori- ties? Is it all about budget? What role will quality and life-cycle costs play? How important is customer service, communication, and teamwork? Consider some hard questions: During construction, if unexpected circumstances threaten my budget, where and how would I deal with the possible cost over runs? Would I sacrifice quality or schedule? Am I comfortable collabo- rating with and trusting a project team, or would I prefer to dictate all actions? In closing, many diverse factors affect price and its in- fluence on overall project cost. We all know the old con- struction adage: Quality, schedule and budget – pick any two, but every owner deserves all three. Due diligence in understanding these factors is huge, but there is no substitute for a competent and trustworthy project team. \\ Brandon.Gentrup@pinkardcc.com ELEMENTS Contruction Cost For affordable housing projects like VIDA in Denver, the funding/preconstruc- tion process can take upwards of 30 months, so effective collaboration among the owner, architect and CM/GC is critical.