CREJ

Page 18 — Property Management Quarterly — April 2020 www.crej.com Project Management P ermitting, material lead times, cost increases and subcontrac- tor manpower.These are just some of the things that can take a well-intentioned project and turn it into a schedule nightmare in short order. As a general contractor we need to keep our eye on the ball, and there are a lot of balls in the air during a construction project. In the end, it’s communication and teamwork that lead to a successful project and when those things happen, a lot can be overcome. We suggest bringing the general contractor in early so these things can be accurately discussed during the pre- liminary stage of the project.The entire team (tenant, architect, owner, owner’s representative, property manager, GC and major subcontractors) can then provide guidance and feedback from the very beginning. n Permitting. We, as contractors, need to know the timing differences in each jurisdiction.The first-generation build- ing permit is different from the second- generation building permit, which is different from the fire alarm permit and the fire sprinkler permit and so forth. Know your jurisdictions and schedule accordingly. n Material lead times. This is a priority from the start. It’s like the starting gun in a race … once the GC is awarded the project, we need to move fast and con- tract the work to our subcontractors. This will get the ball rolling on submit- tals and shop drawings so the materi- als can be approved.The lead time for materials does not start until the material order has been placed from the distributor to the manufacturer and that is only after the submittals/shop drawings have been approved by the architect. Issues arise when a distributer gives the architect an eight- to 10-week material lead time from order place- ment and the steps leading up to this are forgotten.The submittal and shop drawing process will add three to six weeks to the process before the order is placed so when specifying materi- als this always needs to be taken into account. n Cost increases .We feel overall project cost increases will hold steady during 2020 after 10 years of 2 to 4% increases. n Subcontractor manpower. Material and subcontractor margin increases started right after the Great Recession but it took a few years for the subcon- tractors to get too busy – well, they have been slammed the last five or six years, which has caused severe labor demands.We now feel these pressures are easing a bit so 2020 should begin the process of normalizing labor. As a general contractor, we need to make sure that when we bring in subcontrac- tors their manpower is adequate to perform the project in a timely manner. Some subcontractors are better than others in managing their manpower – as a GC, the buck stops with us. n Cost analysis for 2020. We have provided three levels of finish costs within three office layout options in two types of buildings (see cost analy- sis chart). Keep in mind these costs do not include owner’s representative, architectural, engineering, furniture, fixtures or tenant specific equipment. I remember 25 years ago when these costs in the Denver market were half of what I have presented. n Managing change orders. Yes, I said the dirty word: change orders. Own- ers hate it, tenants hate it, property managers hate it … and, believe it or not, general contractors hate it. But it is a part of the process. Simply put, the only viable reason for a change order to the contract is because of a change in scope. A change in scope mostly occurs because of three reasons: tenant/client- driven changes, building department changes or unforeseen conditions. Unforeseen conditions essentially are items that were covered up during the bid process and uncovered during construction. If these items were not shown on the plans and specifications then the contractor would have no way of knowing to price these items into the project. Because of the build- ing department/unforeseen condition scope changes we always recommend owners add contingency to their pro forma budget. I suggest property man- agers fight for it and I hope owners understand the need for it. Contin- gency will then be used to cover these change orders if and when they are required. n The three-headed monster. Qual- ity, cost and schedule. Can we have our cake and eat it too?The answer is never.The reason GCs want to be inserted into the process early is to provide feedback on cost, schedule and material lead times to direct the tenant down the correct path.There is no need to design a space where the allowance is “X” and the budget is 1.3X and the price comes in at 2X.This will provide a confrontational environment with the tenant and does no one any Insights for your next tenant improvement project Jim Boots President and CEO, Boots Construction Cost analysis for 2020 (before the COVID-19 pandemic). Please see Boots, Page 24