Page 18
— Retail Properties Quarterly — May 2016
A
s humans, I believe we have
an innate desire to help other
people. Having worked in
the construction industry
for around 20 years, I often
find that “fix” when I am asked to
help people coordinate a budget cost
estimate, which often is necessary to
make a deal work.
First, and foremost, I confess that
I am not an estimator, nor do I pre-
tend to be one. I do, however, get the
same satisfaction knowing I am part
of the team that is working to make
a project successful. Our company
doesn’t always get calls to do budgets.
Instead, sometimes, drawings are
complete and a “hard bid” is sought
for retail projects. In these instances,
we are engaged to provide a number
to build a project.
As a general contractor, one must to
be flexible in his approach. If we only
offered to hard bid when plans were
complete, we would be doing a dis-
service to our industry and would not
properly be doing our jobs.
What do I mean by hard bid, you
ask? Actually sending plans out to
the subcontractor market, instead of
relying on recent historical data and
adjusting for future cost changes.
There are more challenges involved
in the budgeting process than in the
hard-bid process.When we are asked
to do a budget, there are many vari-
ables, including existing conditions
and unknowns. Existing conditions
even matter when the site is just a
piece of dirt.
If, for example, the soils tests show
clay, like we have here in Colorado,
it is possible that an engineer may
require caissons or piers drilled into
the earth for building stabilization.
When a budget
is provided on an
existing building,
especially an older
one, it is very dif-
ficult to know what
might be behind an
existing wall.
Setting aside
a contingency
of money for
unknowns is a great
idea. However, I
have seen times
when the con-
tingency was not
enough or is eaten up quickly. This
makes for an even more challenging
project.Working with reputable com-
panies that understand the costs of
materials and stay close to the market
conditions can help avoid these prob-
lems.
Often solutions to unforeseen prob-
lems can be mitigated by solutions
that were uncovered during the bud-
geting phase. For example, sometimes
surprises about what is behind a wall
can be mitigated with a building’s
original set of drawings.
Getting a contractor involved as
early as possible can help with cost
control, client expectations, building
department regulations, preconstruc-
tion, budgeting and value engineering,
just to name a few.
In retail, however, contractors are
not always asked to weigh in with
their design-build experience but,
instead, just asked to provide the
lowest competitive bid they can for
construction costs and materials.
When this happens, problems can fol-
low. Often what happens is that once
a project is awarded, the contractor
alerts the client that part of the design
or some of the proposed materials
won’t comply with the city or state
codes.When this happens, new mate-
rials are requested, change orders are
made, costs run up and timelines are
pushed back.
I am going to make the assump-
tion that if you are reading this, you
understand or are familiar with the
costs involving architectural, engi-
neering, testing and inspections.
There also are many external influ-
ences that affect the price of construc-
tion, including the time of year, soil
conditions, weather, subcontractor
availability and architectural review
committees.
Building departments are busier in
the spring and summer with inspec-
tions and a higher volume of plan
submission. This usually results in
longer turnaround times for com-
ments and approval. In the flurry to
process the volume of project docu-
ments, the municipality’s comments
can be incomplete, resulting in chang-
es and delays to accommodate the
building inspector who did not catch
it in the field.
Budgeting, after all, is supposed to
help mitigate some of these things. In
a perfect world, we should have plans,
engineering and soils reports devel-
oped with a team of subcontractors
and a qualified general contractor.
Let’s face it.With all the above men-
tioned, there is a lot of cynicism and
fear associated with the overwhelm-
ing volume of tedious information,
but it is overcome with experience
and truth.
Don’t fear. I have some suggestions
for success:
• Compile as much information as
you can about the site and building.
• Establish start and finish time-
frames.
• Assess the building department’s
ability to perform during the precon-
struction process.
And one last important one – don’t
go cheap on the drawings and engi-
neering. Your change orders will be
inversely proportional to the amount
of money you spend on project docu-
ments. The accuracy of your budget
will be proportional to the amount
of accurate information you provide.
Develop a relationship with like-
minded construction professionals
who will contribute to your success as
much as you contribute to theirs.
s
Chris Strom
Business
development, Epic
Construction Inc.,
Centennial
Project Management
Often solutions to unforeseen problems
can be mitigated by solutions that were
uncovered during the budgeting phase.
