Project Management Archives

Archive for Project Management

Sometimes Going Forward Takes Compromise

· June 30, 2016

People have different reasons for wanting to get something built. Usually, there is a disconnect between what they want to build and what they can afford to build.

Recently a friend was working on a project for a non-profit, where the design committee had stated that the project budget was 20 million dollars.

Monopoly houses The project was well into designs and the design team had put together a beautiful looking project. The cost of construction was estimated to be about 18.3 million dollars, all in. The team felt great! They had successfully designed a beautiful looking project well within budget, or so they thought.

Then, literally an hour before the team went to present the project to the city board, the donor told the team the donation would be five million, not the budgeted amount.

They asked me to help figure out how they could get the entire project down to five million, so we spent the weekend crunching numbers and whittling away at the project.

That following Monday, we presented the list of suggested cuts which included reducing the square footage of buildings, reducing ceiling heights, re-positioning buildings, combining spaces, and using different materials. It was all budget driven, but the owner was still not at all happy with all the suggested cuts.

Realistically, the owner can get all of the necessary project functions into a project that will cost five million, but taking any project from 18 million down to 5 million, will drastically change the project size, scope, and quality. In the end, it may have changed everything so much that they don’t build anything resembling what they wanted.

The worst part is that now they have a design that they cannot use, have purchased land they may not use, and have spent upwards of one million dollars on everything to date.

In every project, it is of utmost importance that the people responsible for design and those responsible for funding, are on the same page.

In this case, the design committee never wanted to have the donor involved or informed, and had no other relevant donors. They were setting themselves up for a failure and didn’t even know it.

It didn’t have to happen that way. If the design committee really wanted to build something useful, they needed to compromise on the project size, scope and quality. If they couldn’t, they will have wasted a million dollars on a plan they cannot afford to build on property they cannot use.

Categories : Big Picture, Budget, Construction, Planning, Project Management, Uncategorized

Tags : Building Budget, Construction Cost Estimate, Design Your House within Budget

When do you make money on the property flip?

Posted by Richard Cartright

· December 12, 2013

Often, investors tell you that, “In real estate investing you make all your money by buying right!”

The truth is, “Buying Right” is only part of the ‘flipper equation’.

Most property flips need repairs and upgrades as part of working the flip. Even when holding property, eventually repair and maintenance is needed. This makes property flips, a three-step process: Buy, Renovate, and Sell.

If you buy wrong it’s hard – some say impossible – to turn the situation around. There is no question; flipping property starts with the buy. People have a great degree of control over the buy if they are objective and willing to walk away from the deal. The “trick” is to have solid information that makes you confident you are buying right.

The same information helps your reasonably predict, but cannot control, the sell. Selling is always subject to market changes.

You can buy right only to see the profit slip away when the renovation goes over budget, takes too long, or both. It’s easy to understand why going over budget can reduce profit, but a project is on budget, but takes too long and the market changes – taking a dive mid project. That’s what happened to thousands of flippers when the housing bubble burst in 2008.

Each of those conditions are enough to lose some or all of your profit. Both together, will have you deciding between holding and renting in hopes of the market eventually turning around, selling at a loss, or foreclosure.

That’s why controlling the renovation, is the best way to maximize profit. With the right construction management system and tools in place, you can keep competition fair and reasonable, clearly outline expectations, hold people accountable, control costs, maintain a healthy power structure, and provide checks and balances.

And with unbiased and objective support in place, you can easily sort out confusing and / or conflicting information.

With these two things, you can keep your residential and light commercial project on track, profitable and headache free.

Categories : Budget, Construction Management, Project Management, Project Manager, Uncategorized

Tags : Buy the right house, Fix & Flip, House Flipping, Real Estate Budget, Real Estate Investment

Making FF&E, Material and Finish Selections

Posted by Richard Cartright

· October 9, 2013

The term FF&E is an acronym for Furniture, Fixtures, and Equipment.

Furniture is movable items such as tables and chairs. Fixtures are the immovable items such as cabinets. Equipment is a machine such as a water-heater or air conditioner. All are used to make a house or other space suitable for living and/or working.

Materials and Finishes, are generally talked about in one of two ways; products and construction materials. Every product you choose while developing your project plan will be made of a specific material with specific finish options.

People sometimes use the terms Material and Finish, interchangeably, but they are not the same thing. Material is what a raw component is actually made of, while the term Finish describes the sheen, color, and texture.

For example, people often talk about paint as if it is a finish, which it is, but only in the context of being applied to another product, like drywall (sheet rock). However, nowadays the paint itself comes in countless finish combinations when considering available colors, texture additives (like popcorn), and sheen such as gloss, semi-gloss and flat.

Manufacturers differentiate their product lines by generally providing better materials, finishes and options in higher priced products.

The same is true in construction. The qualities of products on the market today generally fit into many different categories: Economy, Basic, Common, Deluxe, Luxury, and Custom – or other similar words. Companies can use different words to describe the same quality level, even among manufacturers of similar products.

There are incalculable combinations of Material, Finish and product combinations. There are so many, there is no way to cover all of them, but don’t let that overwhelm you.

Construction Conductor explains how you can use that to your advantage in Who Selects What.

Categories : Coordination, Planning, Project Management, Residential, Residential Construction

Tags : Bathroom Renovation, Home Remodeling Tips, Kitchen Renovation, Landscaping Renovation, Project Planning, Real Estate Investment

11 questions to ask before signing with a contractor.

Posted by Richard Cartright

· October 2, 2012

Before sending out your bid package, talk to multiple companies to get more information about each.

Give each contractor a quick call to conducting a short phone interview as you connect, or you can choose to include a questionnaire as part of a simple interview process. It’s up to you, as it is truly a matter of comfort. If you have a lot or contractors to talk to it is easier to compile the interview questions into a single document that you can ask all of the prospective bidders to fill out and return, than it is to spend a lot of time talking on the phone to each one.

Get to know each contactor by asking them some questions. Here is a list of question that you should ask in order to decide if you want to send a contractor your bid package:

1. How many years have you been in business?

You want to know how much experience the contractor has.

0 – 3 years can mean the contractor is really new to the profession.

4 – 6 years and they should have some good experience under their belt, but there are still a lot conditions they have never encountered.

7 – 10 years; most conditions are old hat and something new is usually nothing to worry about.

+ 10 years and they are well seasoned and have seen just about everything there is to see.

2. How many years of experience do you have in the construction industry?

You want to get an understanding of how skilled the contractor is beyond the existing business. More years of experience in more parts of the construction industry means the more they will recognize each aspect of the job and better respect for the needs of other trades.

3. How large is your work crew and how many are permanent employees?

You want to know how much of the work the contractor expects to handle with their own crew. The more work they do themselves the more they have control over the quality of work activities. The more they outsource, the more opportunity there is for miscommunication and poor coordination.

4. Which trades does your company typically subcontract?

You want to know how ‘involved’ the contractor intends to be in the actual labor. Are they handling the transitions? If so, they may be better able to actually see if there are quality problems. Are they outsourcing or subcontracting out most or all the trades on your project? If so, they may not be watching closely enough to spot potential problems.

5. Do you require a deposit and if so, how much and what is it used for?

You want to know how financially solid the contractor is. Do they have the resources to mobilize and start construction, or ‘do they need a deposit to get started’ or ‘to buy materials’? If they can get going without an ‘upfront’ payment then they are more financially solid than if they need a deposit. I seldom recommend giving the contractor a deposit, but even I do acknowledge that there are times when doing so can be helpful.

6. What is your current workload?

You want to get a feel for how much attention the contractor can give your project. The fewer their staff and the more projects they’re working on, the more you should be concerned they can’t focus long enough to quickly knock out your job.

7. Do you use project schedules to help manage your projects?

You want to know if this company is organized. The more organized the contractor is, the less you’ll have to worry about. It doesn’t mean you won’t have to worry about anything; you’ll still need to inspect your project. The more disorganized the contractor the more likely for there to be problems, delays and the higher the price tag.

8. If we select you, with your current workload when would you be able to start our project and how soon could you finish?

Here is where you just flat out ask them about their production ability and if they could handle your job IF you select them. You want to see if their time frame fits with your planned schedule. Plus, if you select them this gives you some good contractual start and finish dates that the contractor has voluntarily given you.

9. Can you provide references and pictures of similar work you have completed?

Of course you always want to check up on their work. So asking for references should go without saying, still it is important to ask, so we include it on the list.

10. Are you interested in bidding on the project?

It may seem funny, but I find that this is a useful question to ask. Occasionally you’ll find a contractor that actually doesn’t want to give you a bid. When you meet that contractor, they will usually let you know right away. It happens for various reasons which we’ll have to cover in another article. The point is that if they do not want to bid the project, don’t take it personally. Be grateful that you know right away. That way you can just move on and you don’t have to spend any time chasing them for a bid you were never going to get.

11. We checked and noted that you have a ____________ rating with the Better Business Bureau, can you please explain the reason you think you have this rating.

Of course, if the contractor in question is not even listed with the Better Business Bureau, then you don’t even need to worry about asking this question. However, if you checked and you find that a contractor has a bad review or bad rating, ask them about it. Anyone can have that bad experience that follows them for far longer than they’d like and contractors are no different. Maybe the company was victim of a psychopathic ex-employee, an unusually difficult situation, or maybe the bad rep is for a very good reason. You won’t know if you don’t ask.

Categories : Bidding, Commercial, Project Management, Residential Construction

Tags : Contractor Interview, Contractor Questions, LinkedIn, Project Management

How much time will it take to manage your own Construction Project?

Posted by Richard Cartright

· August 7, 2012

Some owners think a professional construction manager is not needed. They are sure that in just a few short hours per week they can keep in contact with all their subcontractors, make material choices, manage the project’s finances and even deal with the building inspectors. “It shouldn’t be all that hard,” they say to themselves, “why pay for services I don’t need?”

Okay, that’s one way of looking at it. But, before making that decision, it might be a good idea to think about it a bit more; especially to gain an understanding of everything involved in managing a construction project. There’s actually quite a bit of work that needs to be done, even before the project begins. Not only does the project need to be put out to bid, but the schedule needs to be written, the scope of each contract needs to be developed and the plans need to be drawn.

There are some things which need to be done, no matter how big or small the project. Pulling construction permits and dealing with inspectors doesn’t change with size; nor does the selection of carpet and paint colors. No matter how big the project is, these things have to be done.

On the other hand, there are items which are highly dependent upon the project’s size. Developing a schedule, project specifications, plans and blueprints are all items that are affected by the size of the project. Even though there might be an architect generally taking care of the plans and specifications, they do so with the input of the owner. The bigger the project, the more questions they’re going to have and the more time the owner is going to have to spend discussing options, making decisions and checking the plans and specifications.

Then there’s the actual management of the construction work. Communication is key to a successful construction project, not only verbal communication but written and visual communication as well. When ample time isn’t given to properly document decisions that are made and instruction that is given, there is more opportunity for misunderstandings, errors, and even law suits.

Then there’s the need for regular inspections and reports of the project’s progress. Why are regular inspections and progress reports needed? Because without regular inspections, there is no way of knowing whether the contractor is doing the work according to what is expected. How can you know if the change to a position of a wall is actually done, if you don’t check it? How can you know if the right size plumbing pipe is used without measuring it yourself? You can’t count on the contractors doing what you say, without checking their work.

There’s a great management saying, which applies very much to construction, “People do what you inspect, not what you expect.” Never assume your contractors are doing what you expect, unless you take the time to inspect their work. This would be even truer in cases where what you expect isn’t the norm. If you had the architect specify 4” drain pipes for your toilets, and the plumbing contractor is used to using 3” drain pipes, he might very well put in 3”, even though you are expecting 4”. Unless you inspect his work, you’ll never know.

The reality is that daily communication and regular inspections are an absolute necessity for any construction project. All of this needs to be thoroughly documented, to protect you as the owner. If you don’t do so, you are asking for trouble.

The real question isn’t whether or not you can manage your own construction project; it’s whether or not you have a system that helps you organize the time to do so. If you can’t dedicate a couple of hours per day to managing the project, you don’t have enough time. You won’t end up happy with the results, because your contractors will misunderstand you at every turn. Your project won’t be successful, but rather, be a series of ongoing problems for you.

That’s where Construction Conductor and Construction Coaching come in. With Construction Conductor you get a complete understanding of all the terms we talked about above. You get the secrets to using project management best practices and get the tools necessary to ensure every project is a success. You’re taught everything you need to know about practical day-to-day construction management. A dedicated Construction Coach who knows everything that needs to be done and how to do it is has the time and knowledge necessary to ensure that everything on your project is completed and inspected properly. That ultimately saves you time, money, grief and gives you a better finished project.

Categories : Construction Management, Featured, Project Management, Uncategorized

Tags : Construction Management, LinkedIn, Project Management, Project Manager, Residential Remodel

Can You Afford a Project Manager?

Posted by Richard Cartright

· March 16, 2012

Many homeowners look at the idea of hiring a Project Manager as an extra, unnecessary expense in their home building project. “After all,” they think to themselves, “I’m already paying an Architect and a General Contractor. Both of them are supposed to be managing my project, why should I hire another manager?”

That’s actually a very good question, one that I hope you’ll let me answer for you. First of all, these three people, the Architect, the Contractor and the Project Manager all have different functions, even though they look like they are all doing some of the same things. We need to understand what the difference between their different functions and different outlook is.

The Architect is concerned about the design of your home. He wants to build you something that is going to make him look good, while providing you with a home that will keep your family safe and comfortable. Although most Architects also claim to manage the construction project, what they’re really doing is making sure that your home is built according to their design and specifications; not trying to save you, the owner, money.

The General Contractor is concerned about how your home is built. More specifically, he’s concerned about how much it costs to get built. You have a contract with him, which limits the amount of money which you’ll pay for his services. So, he wants to make sure that the project costs less than that, ensuring his profit. He’ll do the best possible job, within those parameters. But, when push comes to shove, he’ll sacrifice quality to keep his profit.

The Project Manager doesn’t have to worry about the design or the profits. If you hire a Project Manager, he doesn’t need to worry about his profits, because you’re already paying him to do the job. His concern is that the whole project is completed in the best possible way, in order to make you, the customer, happy.

You see, the Project Manager is the only one of those three who is your advocate as an owner. He’s the only one whose best interests are to look out for your best interests. That makes his focus much different than the other two professionals whom you are working with.

The important thing in getting the maximum benefit from the services of a Project Manager is when in the overall project timeline the owner hires him. The greatest savings for the owner comes from hiring the Project Manager first, even before hiring the Architect. In this way, he can be proactive for the owner from the very beginning, before any other professionals are hired.

If the Project Manager is hired first, he can do the most good. As the owner’s representative, he can locate, interview and negotiate the best possible contract for the Architectural work. As part of this negotiation, the Project Manager can negotiate with the Architect to remove the extra costs associated with contract administration, communication and schedule management out of the Architect’s contract. Since the Project Manager would be handling these functions, there is no reason to pay the Architect for them as well.

By doing things this way, there is no additional cost to the owner for having a Project Manager on their home building project. In fact, since Project Managers typically charge lower rates than Architects, there would probably be an overall savings. However if the Project Manager is hired after the architect, then they are unable to negotiate the administrative savings, so the additional cost would be the cost of the Project Manager, less any savings that they can provide throughout the project. Finally, if the Project Manager is hired after the General Contractor, he is only able to provide damage control. His payment would be over and above whatever other contract costs.

If you feel that you need an advocate, someone who is looking out for your best interests in your home building project, then you need an independent Project Manager. Your Architect and Contractor may be friendly, qualified professionals; but they aren’t your best advocate, the Project Manager is.

Categories : Construction, Construction Management, Project Management, Project Manager, Residential, Residential Construction, Uncategorized

Tags : Construction Management, LinkedIn, Project Management, Project Manager, Project Planning