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Can You Afford a Project Manager?

· 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

Watch Out for the High Price of Change Orders

Posted by Richard Cartright

· February 28, 2012

One of the most important parts of managing a construction project is keeping costs under control. Many a project throughout the years has gone over budget, always causing problems, sometimes disastrous ones. Whether you are building your home, or a skyscraper, you can pretty much count on unforeseen costs, which drive the total project price higher.

Let me tell you a secret here about contractors; many of them depend upon those extra costs to stay alive. When they bid the project, they are competing with other contractors. To win, they have to be the one who comes in with the best price, while still promising to meet all the specifications laid out in the plans and specs. That means providing a low-ball price, with minimal profits.

Once the contract is signed and the job has been started, the contractor has a captive audience. They no longer have to worry about beating other contractors to gain the contract; they already have it. So, many will provide a price for those changes that’s a bit inflated, to say the least. They are depending upon those changes to make their profits. This is where it can get dangerous for you as the property owner.

There are three causes for changes on a project:

Something was left out of the plans. While architects strive to prevent this happening, they aren’t perfect either, it does happen once in a while.
An unforeseen problem shows up in construction. This can be anything from adverse weather causing problems, to massive undiscovered rock formations getting in the way of putting in your foundation. The contractor isn’t responsible for them, because they’re not his fault.
You, as the owner, request a change. That’s under your control, so realize that when you do request a change, the contractor is going to try and take advantage of it.

Whereas the original contract will probably have been bid with a profit margin for the contractor or ten percent or less, these changes may be priced with as much as 30 percent profits or even more. While he may see that as an opportunity to make up his profits, it’s fundamentally unfair to you as the owner.

So, how do you control those costs? It actually takes a combination of things to do so. But, by following these items, you can reduce your risk:

Don’t ask for unnecessary changes. If something would be overly expensive to change later, have it done, but if you don’t need it changed, try and avoid giving the contractor that opportunity.
Ask the contractor to give all change orders with a breakdown: so much for materials, so much for labor, so much for overhead and so much for profits. He might still lie, but he’ll have to work harder at it.
Verify prices yourself. If he says that the bigger hot water heater is going to cost an extra $500 to buy, go to Lowe’s and check for yourself. If his costs don’t seem reasonable, ask him to back them up.
If you receive a large change order request, such as finding a large outcropping during excavation, which is going to require blasting; get a second opinion. Even if you have to pay another contractor a $100 consulting fee to give you an idea of what that should cost, it can save you money in the long run.

You have to realize that the contractor isn’t your friend. Hopefully, you’ll be able to develop a friendly relationship with him, but that’s not the same as being a friend. You are a customer, the source of his income. Therefore, he needs to get your money.

This problem is one of the biggest reasons why first time homebuilders will hire a construction manager. Even with paying the manager’s fees, the overall project cost can still come out lower than it would be if you managed the project yourself. Everyone else that works for you on the project is there to make money; the project manager is there to be your advocate. His knowledge becomes your protection.

Categories : Construction, Residential

Tags : Construction Management, LinkedIn, Project Management

Who’s the Project Manager?

Posted by Richard Cartright

· December 3, 2011

The television network, DIY Network, was designed to teach people a little something about residential construction. The network assumes its viewers have little to no experience in construction. Through a series of tips and tricks the program teaches basic residential construction work that can help make remodeling a home easier.

This past weekend while sitting at home, relaxing and watching television, I happened upon a show on the DIY Network that was showing people how to remodel a master bathroom, but that wasn’t the thing that caught my eye. What I noticed was that the show identified one person doing the hands on work of all the trades as, the Project Manager.

Now, at first glance one might think, ‘Well, that makes sense. A person, doing the work, leads the project, he’s the Project Manager’. As a professional project manager having worked on large commercial and institutional and governmental projects, I was surprised that they would reduce the position to one laborer doing all the work. In construction, one laborer doing the work of multiple trades is called a handy person, not a project manager.

Calling this person a Project Manager is a misnomer of the tallest order and does more damage than good. As a person with extensive hands on experience, I have often found there are issues with some of the programming on the DIY Network for various reasons. However, I was never before as taken aback as I was with watching one man perform the task of project manager and only laborer. This misrepresentation of the industry, in order to wrap a project up into a one-hour episode, does more to damage people’s perception of Project Management than to bolster it.

The main functions of the Project Manager is to help the owner create the budget, the scope of work, hire the contractors and to coordinate the trades to ensure that the owner gets what they pay for. This one laborer did not create the scope of work or determine the budget, they did not hire themselves and there were no other contractors on site. In residential renovation projects such as the ones featured on the DIY Network, the Owner should be the one identified as the Project Manager.

Categories : Residential, Uncategorized

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

A plan for the investment house.

Posted by

· April 12, 2011

There’s a certain panic in the air right now, all the lip service Ive been paying to these game changing house projects I’ve talked up.
Up to now Ive had all kinds of things in my path, like Christmas shopping- the holidays- holiday take-downs and put-aways, and finally the Super bowl. So now I think I need a plan.

Being in the industry my whole adult life, Work is work and generally I move in directions that utilize materials I have or are available to me.
Next the degree of difficulties due to obstructions. Ultimately comforts can also be measured by resetting the grief meter with nearest critics; the wife and neighbors.
So any way to get out of the hole making traction, has potential benefits.

For me this year that project is the house next door.
The house was in bad shape when we bought it, and we bought it mostly to have control over it (bad experiences with previous owners).
To date the work done consists of a new septic and sewer piping to it, and 3 new skylights.
My next project is raising the floor to take a huge dip out of it. After assessing the structural situation. The real problem with the floor leveling is the previous attempts which were done wrong and now create a huge obstacle to undo.

After looking at the problems with trying to level on top of the floor, my newest approach will be to work perpendicular creating a beam directly under a wall and jacking up the beam from 2 new concrete pads, then supporting the beam with 2 mini posts.

If I’m lucky this just may make the leveling above the floor minimal by comparison.

This is my time of year to set up mini projects with in a project, besides the floor leveling, Ive taken advantage of material sales and stock piled drywall and doors to install after the floor leveling.
Besides that, I have my eye out for deals on roofing and paint.
By procuring the material now I’m mentally committing myself plus I’m trying to thoroughly think through the mini projects and once I start up I should be able to roll from one to another.
Well I guess were all arm chair quarterbacks in January, but now that’s done and this is my plan to get on a roll!
Ill keep you posted,

Another view from a loose screw!

Categories : Planning, Residential

Tags : Project Planning

I’ve grown to appreciate Inspectors.

Posted by

· April 12, 2011

I don’t know about anyone else, but mention an inspector and my first reaction is cop! In my many years in the trades I’ve come under the scrutiny of different inspectors plenty. I really had to grow a lot not to take them personally. Imagine that, someone with the audacity not to accept judgments made by me.

On the road to here… I’ve felt picked on, and nitpicked; subjected to egos, attitude and politics. In the end I came to the conclusion, that they weren’t here to work against me ‘ but to provide a service for the public. At this point, tough doesn’t bother me as long as the inspector is consistent.

Without inspectors, the public is left to believe whatever the developer/contractor wants to tell them.

Property inspectors are very crucial at this time with an uncertain market many juicy foreclosures and a lot of pitfalls without safety nets. A property inspector could bring real sanity to a new buyer who is reaching without contingency, as to the actual condition of water heater, furnaces and appliances etc.

That’s just 1 example, but inspectors provide a valuable service and deserve a thumbs up!

Categories : Big Picture, Commercial, Construction, Residential

Tags : Construction Management, Project Management, Residential Remodel

Don’t Pay Contractors Up Front!

Posted by Richard Cartright

· April 12, 2011

I am constantly hearing stories that galvanize me to my cause.

The other day, I was talking to a client who told me this….
My client’s elderly mother wanted to have the exterior of her house painted. So she contacted a local painter who had come somewhat recommended, and asked him to come take a look and please give her a price. He gets there, they meet and talk and he says it will cost $3000, and we need to have half up front. She asks for references, which he gives her. She calls them to inquire, to which they apparently tell her the guy is great. She meets with him and says she can pay for it all up front, and Apparently, he says “No, No half is fine”, but she insists. So he walks away with the $3000. A few days goes by and ‘mom’ calls him to find out what’s going on, and he tells her he is getting materials together, and then he never shows up to do the work. My client ends up having to chase the contractor down, files a complaint with Better Business Bureau, and takes him to small claims court. After months of time and despite their win, the guy is still out there doing business and has yet to pay the money back. The money… Gone. The time… Gone.

This is the kind of story that you hear from time to time, that I hate to say I could have saw coming. Sure they can press on, spend more money, more time. Get an attorney; go back to court; get an injunction; pay the sheriff to go collect and on and on…

The real lesson is this: Keep the money in your pocket until the work is satisfactorily completed. Remember, money equals incentive. If you have the money, the contractors’ incentive is to get it from you. Some may try to talk you out of it, most will work for it, many will work both angles to some degree. The bottom line here is that maintaining control of the money will help ensure you maintain control of the project. Generally speaking, if you give up the money, you give up control. If you absolutely feel you must pay the contractor something up front, my suggestion is to limit it to $1000 or 10% of the contract amount; whichever is less.

Categories : Big Picture, Commercial, Construction, Planning, Residential

Tags : Construction Management, Project Management, Residential Remodel