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Page 18 — Office Properties Quarterly — September 2019 www.crej.com D enver is one of the hottest markets for development and construction, and con- struction pricing reflects that. If your company is relocating or growing, you need to start the dis- cussion to raise capital. Unfortunate- ly, historical data doesn’t hold water in market conditions like what we have been experiencing. Tariffs, labor shortages, uncertainty and the over- all economic boom make predicting construction costs very challenging. Understanding what your com- pany really is, what its needs are, engaging vendors early and provid- ing for contingency will allow you to budget your project successfully. The first step in the process is to identify what your organizational needs are and what your culture will look like when the project is com- plete. This is an important step in the process because how you work today may not be how you work in the future, and you need to account for that. Over the last 10 years, we have seen the shift of square footage at the individual level decrease, and the collaborative and communal areas increase. The increased square footage of these areas breeds more cost: more ancillary furniture, tech- nology and a higher level of design that would not have been incorpo- rated into budgets at your last lease renewal. It’s important to have the discussions with your department heads early to try to capture what the organization eventually will grow into. After understanding what you want out of the space, you need to identify what the footprint of each area is going to take. This is impor- tant right out of the gate to ensure you are targeting the correct amount of square footage for the organiza- tion. We call it a program, and it can be as sophis- ticated or raw as you see fit as long as you are taking the time to assign square footages to the desired areas. Simply saying that we are growing at 5% year over year, thus we need to plan for a 25% larg- er space will not get you an accurate number. Efficiencies in workstation design and denser working environments mean you can do more with less. Furthermore, trends in office space design allocate a larger amount of square footage to those small and medium-sized conference rooms than they do the larger boardroom sizes at almost a rate of 3:1. This drives cost as you’re now doing three times the amount of technology and furniture. The key to figuring out your square footage depends on taking the time to write out your areas and assign what you think you need for each. We know that our workspace is going down this path of something amazing, so how do you actually find out what it’s going to cost? If you take one piece of advice away from this article, it’s to engage your team early. You need to contract with a design- er to help get your ideas on paper and issue pricing plans. This is also critical as you are discovering what property might fit best in your pro- gram. After your design team has docu- mented the project for a pricing plan, go to the general contractor market and start soliciting budget pricing with a fee and GC proposal. Interview your teams and negotiate the terms with your general contrac- tor. The benefits are the subcontrac- tors will start to pay attention if they know they have a 1-in-3 shot. The contractor can help fill in the gray areas and document scope changes in real time as you move through the process. In addition to onboarding the design and contractor, take the time to meet with the other vendors required for your project, like furni- ture dealers, technology teams and graphic installers. This is critical because collaborative and commu- nal areas will require a more expen- sive furniture options and level of technology that the office areas don’t require. Another point of leverage to help you achieve accurate cost models is to get manufacturer suppliers on your team. Talk to the reps and work to get commitments and negoti- ate the best pricing for products required for your project. You are now at a point in the pro- cess where your teams have helped provide budgeting data for your proj- ect, but there is that unknown you need to account for. Project contin- gencies will vary by the level of deci- sions you and your teams already have made and at the level of docu- ments that have been produced. Our team will advocate for three project contingencies: design, construction and the unknown. Design contingency should account for 2-4% for scope creep and detailing, the general contrac- tor should allow for 5-10% of its cost for MEP, and, believe it or not, we are seeing tariff markup on invoices and proposals for furniture, fixtures and materials. This is the hardest unknown, but a 10% placeholder on top of the entire project at this level seems to meet the mark. As manu- facturers are engaged and timing is established, this can be re-evaluated as you move through the process. Overall, what I have outlined will help reduce pricing risk. It does take a little time. Be proactive in the planning stages so you’re entering this project with a plan and strategy. Once you’ve built out your budget, stick to your plan and let your teams meet the obligations they have pro- vided. ▲ Budgeting your tenant improvement project O ver three decades ago when I got started in this business of managing construction, coordinating national office work was quite the chal- lenge. We had master service agree- ments for national construction accounts in the telecom and finan- cial industry that were growing rap- idly across the United States. Although we had conference calls, beepers and faxes, it was cumber- some to coordinate with tenants and owners, not to mention design and construction teams. It was a lot of fast talking to get everyone on the same page. There was also a lot of down- time with miscommunications and travel. It seemed like every time you left the job walk, something else popped up that you really needed to review on site. How things have changed. Fast forward to today and, thanks to technology, we have made a quantum leap in how we coordi- nate projects. Currently, our team is working on a project in Colorado with clients and team partners in New York, California, Boston, Texas, Atlanta and Arizona. We can now get done in an hour from our office what used to take days and even weeks at times. Typical office project meetings may include a dozen or so partici- pants. When you factor in the drive and/or flight time, costs can surpass tens of thousands of additional dol- lars per meeting – not to mention the challenges associ- ated with mobile logistics. Successful busi- nesses are always looking for ways to cut costs, be more efficient and produce better results. Technol- ogy is accelerat- ing the process and reducing the overall costs for coordinating proj- ects. Following are the Top 9 ways to leverage technology for project success. 1. Conferencing capabilities. Ring Central, Zoom and Skype, I love you. I am still in awe that you can get the entire project team in the same room without leaving the office. Sharing desktop screens and seeing architectural and engineering plans change in real time keeps the entire team current with revisions. 2. Mobile phones. Mobile phones today are incredible. To have your notes, emails, drawings, camera and phone all in one device is the ulti- mate for communicating and man- aging projects with technology. 3. iPads. When I walk on job sites these days and see superintendents with iPads, I get a big smile. Having personally experienced the chal- lenges of keeping up with requests for information and design revi- sions, I know the importance of keeping the team connected. The super is always on the front line, so it is critical to keep him or her connected in real time with the cli- ent and design team for a smooth project. 4. Software. Let’s first give a big round of applause for Bluebeam. I will never forget when I saw that program in action on a shared screen. It was revolutionary for making design changes and coor- dination. Building information modeling, known as BIM, is another fabulous program for the efficient planning of projects. Procore and Fieldlens are excellent programs for collaborating and tracking proj- ects with team members across the country. 5. Video cameras. Everyone has a video camera on their desk, phone or computer, making it easier to connect live, and read facial expres- sions and body language. You can quickly use a face-time meeting with a design team or owner to see issues in the field and make informed decisions no matter where you are. 6. Job site security cameras. When you are coordinating projects with lots of materials and workers on site, sometimes accidents or theft happen. Having multiple cameras on site typically deters crime, but in the event something happens on site, you have a record of the crime or accident. Team members in other cities can log in and see the site in real time. The cameras typi- cally motivate crews and document manpower on site. It’s also fun to see those time-lapse videos where you can see the entire project come together in minutes. 7. Virtual reality. This needs to be in a category all by itself.When you can put on a headset and walk through a project before it is built in another state, it is a game changer. So many times, we all have difficulty visual- izing the outcome of a project before it is built. Virtual reality technology lets you beam yourself to the future, allowing you to take a peak and make sure you are on the right track. 8. Drones. Drones can map, track and perform site visits in those hard-to- get-to places for pennies on the dol- lar. Clients and design teams can see challenges or verify quality without leaving their office. 9. Electronic plans submissions. As much as we all appreciate how our municipal partners keep us code compliant and safe, we don’t need to visit them every time we submit for a permit. Architects from across the country can submit plans from the comforts of their office within a lot of progressive jurisdictions. This is a big-time saver for design teams and contractors. Reflecting on these amazing techno- logical advances makes me look for- ward to what the next few decades of technology have in store for us all. ▲ The evolution of coordinating national construction Project Management Eric Glatt Senior project manager, Task PM Don Fitzmartin President and CEO, Fitzmartin Consulting Co. After understanding what you want out of the space, you need to identify what the footprint of each area is going to take.