Construction projects are managed chaos. If projects aren’t carefully planned and executed, they are like a slow-moving tornado of money and people and building materials. For one, contractors have earned their bad reputations. Too many contractors are nonresponsive, slow, and unprofessional. And then there’s rain. Oh yeah, and then there’s local municipalities. And bankers. And lawyers.
The good news is that construction projects are not actually that complicated if you take care of a handful of critical items. Will there still be problems? Of course. But problems and challenges can be managed in an efficient and effective manner.
We’ve been building in Texas since 1985. We’ve gotten multiples diplomas from the school of hard knocks. Lord knows we aren’t perfect, and we still make mistakes – but we try to turn our mistakes into lessons. Since these lessons we’ve learned are valuable, we would like to share them with you.
Here are the 9 Rules for Successful Construction Projects:
- Get a good banker. The lender will grease the skids of your project with money. If they are slow to respond or overly bureaucratic, the project funding will slow. If the project funding slows, the project slows. That costs everyone money. (Bonus tip: get your pay application process figured out, too. Make sure you check that your GC is billing based on work actually completed but don’t turn this into a science. Pay quickly and you’ll be happy you did.)
- Build a realistic budget. Make sure you do your homework here. Overly optimistic proformas do not hold up to the real world. If your numbers barely work with a premature guess at your building cost, you are probably in trouble. Also beware of hip-shot guesses by contractors, developers, or other real estate professionals. Draft a budget based on research and write it in pencil. Once you have bids from contractors you will then have a realistic determination of market pricing. In other words, it doesn’t matter what you think your building should cost – what matters is what someone will actually build it for.
- You get what you pay for in A&E. Your architect and engineer (sometimes under the same contract, sometimes not) will make or break your project. Do not cut corners here, as you will regret it. Get proposals from several architects and interview them. The keys here: experience, responsiveness, and attention to detail. If any of these three are missing, it’s like trying to sit on a stool with two legs.
- Find out where your utilities are. This should be assumed if you’ve satisfied #2 and you have a good civil engineer, but you need to double check. Local municipalities have utility maps that are often old or wrong. We built a car wash recently where the owner thought the water line was to the property, and it turns out it wasn’t. Delays associated with public utilities are substantial.
- Get a good contract – and a good lawyer. The standard AIA contract is just fine. You can negotiate the finer points with your GC, and be prepared to do so. The relationship between owner and GC brings risk to both parties, so both parties should be happy with the language contained therein. They say a contract is only as good as the parties signing it, and while this is true, when things go bad the contract matters very much. (Bonus tip: When negotiating your contract, do not get bogged down in minutia if you don’t first understand intent. In other words, ask “What do you think this says and what is your intent behind this provision?”)
- Pick the best GC, not your brother-in-law. Construction people are notorious for overstating their experience. Even though your friend, neighbor, or sister’s husband says they can build anything, they can’t. Look for experience and professionalism. Ask for references. Ask hard questions. In Texas, anyone can call themselves a GC because there is no license required. Do your homework and go with your gut.
- Determine the project org chart. The best way to clog the communication pipelines is through unclear expectations. Make it clear to all parties who reports to whom, and what you expect in the way of responsiveness. And make sure – seriously sure – that you, your architect, and your GC start with an outstanding foundation. Team work makes the dream work, and blame shifting creates nightmares.
- Plan a meeting cadence. You will want to schedule a preconstruction meeting, a mid-project meeting, and a meeting 60 days from completion – at a minimum. This is your project, so show up as often as you like. If your GC doesn’t like it, you are either abrasive or they have something to hide. Find out which. If you offer your time and energy as an inquisitive and helpful resource, a good GC will thank you.
- Plan for the worst, and hope for the best. As Confucius (actually Mike Tyson) once said, “everyone has a plan until they get punched in the face.” As soon as dirt starts moving on your job, your project is subject to weather and human error. You will make decisions based on your project’s completion date and you’ll probably get the wheels of your business moving long before you have a certificate of occupancy. Do not over commit yourself to a speedy completion, but be prepared as best you can. If your schedule is compromised, don’t freak out – call a meeting with your GC and work together to make sure measures are taken to accelerate as much as possible.
So there you go. The foregoing list is not exhaustive, but if you heed this counsel you will ensure your construction project moves forward in the best manner possible.
Finally, be excited about your project. If you are building something new in your community, you are adding value to people’s lives. Jobs are created, as are new opportunities for people to conduct business with one another. Good for you for risking capital to build something from nothing. Godspeed.