All Forum Posts by: Mike Garrett

Many people consider project management to be the direct activity of engaging in a project. A kind of- it will happen no matter what, attitude. To some degree this is true, but this kind of passive stance toward project management leads to many of the typical issues we see in construction: cost overruns, change orders, schedule extensions, and scope creep. These issues plague most projects that do not have a well defined project management plan.

Project management plans can be large binded and tabbed documents, but most of the time that is not necessary. As a project manager (and if you are running your construction projects, or an owner doing some of the work on site, you are THE project manager) you need to have a plan for the entire project in 3 different areas:

Scope- what work is to be completed on the project to achieve the desired result,

Schedule- a reasonable expectation of time required to accomplish the scope,

And budget- the money needed to actualize the scope within the defined schedule

(also known as the project constraints)

There are many ways to deal with all of these constraints and different projects require different strategies, but the important thing to remember is that the 3 constraints are tied together- if one changes, the others need to adjust as well. This is why having a plan is so important. A well defined plan will establish who is responsible for what scope, when it will be completed, and what it will cost, as well as a procedure that defines the decision making process when any of the constraints are changed.

Developing and enforcing the project management plan is just one of the things a good project manager does, making your construction project successful is what a great project manager accomplishes. While there are some general contractors out there that are great project managers- most are construction managers at best (they understand what needs to be done in what order to complete the project- which is also vital!). It is important for investors and property owners to understand this division of expertise. Great project managers maintain the 3 constraints regardless of the construction process, and have their goals aligned with the owners; changes to the constraints are not of benefit to the project manager- keeping the project on schedule, within budget, and minimizing scope creep is of benefit!

As a project manager I like to provide benefits in ways that protect the investor, while allowing the contractor the cash flow to get the job completed. 

Retainage is almost always a good idea- use a sliding scale: small job higher % retainage, big job lower % retainage- never go below 5% (multi-million $ projects still have 5% retainage)

However, retainage only works for direct contracts (GC, Subs contracted by you not the GC), and retainage requires inspection and speculation of the percent complete for a job.

Pay scales- get separate line items for labor, materials, overhead and profit, and taxes. Pay for materials to get them on site then work through schedule to understand % complete projections- have a stipulation to institute a penalty for delays (note that some delays are not the contractors fault and should not be penalized). If the project stays on schedule, pay according to the payment applications with retainage (note that the payment applications should state trades completed- ensure to maintain retainage for each trade for punchlist completion). 

Add incentive- Provide an incentive for the contractor to stay on schedule and further incentive to complete ahead of schedule, not necessarily monetary. Remember we are in the people business, and we all like to have a reason to do a better job for you- especially when there is so much work to be done that jobs can get lost in the fray. 

Having a project manager can improve the construction speed, design quality, and business relationships, just as a general note. Construction Administration is complex and every job has things that require different strategies.

The contractor will have to hire an engineer anyway- you will just be paying for the contractors mark-up and coordination. As an architect here is what I advise- hire an engineer, ask him for recommendations on contractors, hire the contractor and have the 2 work together to come up with the most cost effective solution. 

Paying the contractor for some design and coordination time upfront will save them some time in the field.

Moises,

The truth really is that there are too many options for siding! Wood, fiber-cement, fiberboard, vinyl, poly-ash, the list goes on. In reality they all have different maintenance requirements and expected life duration. There is no perfect siding, some are better in certain areas, and some are more desired in certain areas. Try not to get hung up on off-gasses, and health implications. As an investor our job is to provide the market what they desire, at a price that is acceptable. If there is a better product that can meet these requirements, then by all means use it and make sure you market it in the sale! 

The IRC does not specify the spacing of the decking, but 1/2" is not uncommon- especially in our area!

Houston, welcome! I believe you are in the right place. There are many ways to structure real estate deals. Seek out a local real estate investors club (check out Meetup.com) and go talk to people. If you are willing to put in the work then you may find someone who is willing to put in the money. If you really have a calling to work cosmetically on houses and you have a good attention to detail, then you can be a real asset to someone who has the cash, but not the time to deal with the flip. 

These partnerships happen all the time. Also read Robert Kiyosaki's "Rich Dad Poor Dad" and "Cash Flow Quadrant". Intelligence will solve your financial problems and other people are key to gathering the crucial information. 

Best,

Hey Chris, I work for an architecture firm that is currently doing a lot of these kinds of projects. First thing is you need to get a unit mix consultant on board to help you understand the areas and research the demographics where you are looking to help you determine how much sf the area can absorb (size of the project). The Mini Storage Messenger is a  great resource for finding all types of consultants as well as industry data and current trends (https://www.ministoragemessenger.com/buyers-guide/...). 

Your architect is going to need the survey, geotechnical report, and program (unit mix, office sf, design styling, desired leasable sf, etc) as they are getting started. We are seeing the 'big boys' trying to build these for around $86/sf for multi story, and $45/sf for single story drive up access. They are aiming for 50-60,000 sf for single story, and 100-150,000 sf multi story. Your design fees will be between 3-5% depending on square footage. Many owners are approaching our architectural firm for full service where we help them to find everyone but the unit mix consultant and realtor. If you want help please IM me and I'll do what I can. Hope this helps!

Stacy G! Thanks for posting this. Our business provides PM services in the Seattle area and it has been a struggle to really explain the separation of duties between what we do and why it is sometimes (many times) beneficial to have us and a GC. I always get the question "why don't you just handle it?" and I have tried explaining it from the stance of liability as well as expertise, but your post is amazing for clarifying what answer I need to be giving! 

This sounds crazy to me. But this sounds like a whole other department from the planning and development department (the expiration date of your building permit should be stated on the permit) and no doubt they do not talk to each other. After a little digging the Vacant Building Registration Department's website has this to say: 

"For a construction site, if permitted construction operations have stopped, the construction site must be registered as a vacant building within 30 days" 

(https://ipiweb.cityofchicago.org/VBR/Help.aspx#gen...) in their FAQ section. If your workers have been on site and you do not meet this criteria, yet are still being hounded by this department, I would talk to an attorney. Buildings under construction are not vacant, and while SFH take less than a year to build, many projects require a permit extension from the planning department, but that is no big deal (just go in and pay- no plan review should be required as the project met code at time of issuance). This sounds like a nuisance department!

I agree with @Ori Skloot. ADU's are very area dependent, but in many areas they are being encouraged. Rooting through the zoning can be cumbersome, but the ADU can tun a non income producing property into a great asset (I have one at my house and it cuts my mortgage costs in half!). Construction costs are way up right now, and I would bank on $250/sf as well as an extended schedule. many contractors aren't taking such small projects on right now.