Trust…But Verify.

Trust…But Verify.

So, you have decided to move forward with a construction project. It may be a gut-rehab, a ground-up build, or an interior renovation, but in every case, you will need to hire a General Contractor/Construction Manager (GC/CM) to build out your vision. Unless you are experienced in evaluating construction project proposals, you just have to hope and trust that your GC/CM is going to build the right job, for the right price, on time and within your budget. That is a lot of trust to place in someone who is performing work that is difficult for a layperson to verify, due to limited knowledge of the construction process. By the time you discover that there are problems – whether it is excessive (and expensive!) change orders, a contractor who starts but never seems to finish, or legal troubles due to a lack of the correct permitting or inspections – you are already down the road on a project that is not going as you expected in terms of quality, cost, or schedule (or all three!) This is why engaging an Owner’s Representative like Venn Group at the outset of your project gives you peace of mind – we verify that project is being correctly planned and executed at every step of the process – from the initial drawings to the final punchlist.

During Pre-Construction, Owner’s Representatives can help you:

Work with your Design Professionals to ensure the overall constructibility of your plans, including adequate mechanical, electrical, and plumbing systems for your space’s intended use. Your plans should be reviewed as an entire set to ensure that missing, mismatched, or incorrect details resulting from the wrong assumptions or misunderstood expectations are found before you hire your GC/CM rather than remedied as expensive change orders after construction has already begun.

Review your plans to find areas that will benefit from ‘value engineering’. Your Design Professionals may have recommended materials or finishes that are hard-to-find, expensive, or not optimal for their intended use. An Owner’s Representative will make recommendations to reduce the overall cost of your project without sacrificing quality – whether that is suggesting a different method, a different finish, or a different material altogether. Early value engineering decisions yield the greatest financial impact. Recent management studies have found that one dollar (or hour) spent in planning saves ten dollars (or hours) of rework during design, and one hundred dollars (or hours) in construction cost.

Interview  several potential GC/CM candidates to match the right builder to your project before bidding begins. From confirming adequate insurance coverage for your GC/CM to ensuring that the submitted bids actually match what is called for on the bid set of drawings, there is a lot to consider when making a decision of this magnitude. It is critical that you take the time to evaluate GC/CM candidates prior to inviting them to bid because time spent now is both time and money saved later. An Owner’s Representative has the experience and expertise to evaluate the candidates’ qualifications and ask the right questions, as well as the time to thoroughly vet each candidate under consideration. A short list of items to consider:

• Each candidate invited to bid should be properly insured with at least the statutory minimum –  a General Liability policy of at least  $300,000 and a property damage policy minimum of $50,000. These statutory minimums are generally too low for larger construction projects, with General Liability limits over $2,000,000 preferred . In addition to ensuring that the dollar amounts of your GC/CM’s coverages are adequate, you will want to ensure that their General Liability carrier is reputable and financially solvent with better than a B++ rating.  In addition to General Liability, Property Damage, and Automobile coverage, your contractor must have Worker’s Compensation coverage in order to provide for workers who may be injured during the course of your project. Ask for a ‘Certificate of Insurance’ (COI) from all GC/CMs under consideration and have YOUR insurance agent review their coverage. Your Owner’s Representative can do the legwork of collecting the COIs and working with your agent to gather any additional information needed from each candidate in order to determine if their coverage indemnifies you against any claims made over the course of the project. Any GC/CMs who do not carry adequate insurance coverage should immediately be dropped from consideration.
  
• Your GC/CM must be properly licensed/registered in order to pull permits for your project. This can be verified with a lookup at the building department with jurisdiction over your project. You should NEVER agree to pull your own permits as you then become responsible for all work performed under that permit. Any violations, fines, or fees incurred for work performed incorrectly would then be your responsibility to resolve, rather than your GC/CM’s . For complex projects, a permit specialist, called an ‘expeditor’ is often used to ease the process of providing the documentation required for many types of permits.  An Owner’s Representative keeps tabs on the permitting process, whether they are  pulled by an expeditor or the GC/CM, and ensures that all permits are renewed as needed, that any violations or fines are resolved expeditiously, and that the permits are properly closed out at the end of your project.
  
• Beware the low-ball bidder! It is tempting to select the lowest bid submitted by your potential candidates but look before you leap! You should not make a decision until all submitted bids have been compared on a line-by-line basis or ‘leveled’  to ensure that each GC/CM priced all items called for on the drawings issued for bid. A very low bid may mean that some items that are called for on the drawings have been excluded in order to get to a ‘winning’ lower price – then the difference will be made up later by submitting costly change orders to do work that should have been included in the bid price.  Your Owner’s Representative will compare each bid against the bid drawings to ensure that no details are excluded and that the materials called for by your Design Professionals are the materials that the GC/CM has actually priced. The bids are also compared to each other to determine if there are wide disparities in the pricing of the trades, and if so, why. The goal is to verify that the bids are correct and complete relative to the drawings issued for bid as well as to market prices for labor and material. While change orders are inevitable as the job progresses due to ‘unknown unknowns’, this process will eliminate change orders for items that were clearly indicated in the bid set of drawings and should have been included in the contract price.
  

After working through the process of selecting your GC/CM, your Owner’s Representative  will assist you with the onboarding process. Before your GC/CM shows up to begin work, a number of items must be completed:

• Define and prepare your construction contract which should include, at minimum, a list of the bid drawings that indicate the total scope of work the contractor has agreed to perform per their bid, the timeline for completion/substantial completion of the project, the payment schedules, change order procedures (including allowed mark-ups), retainage amounts to be held, and the dispute resolution processes. The American Institute of Architects (AIA) provides ready-to-use contracts that cover every aspect of the construction process and can be modified for your particular needs. Your Owner’s Representative can advise you on best practices for the construction contract in order to protect your interests throughout the lifecycle of the project.
  
• Your GC/CM should prepare a ‘Schedule of Values’ (SOV). The Schedule of Values shows the amounts allocated to each trade’s work and is the basis for setting up ‘progress billing’. Progress billing should use a standard AIA  format that shows you the percentage-complete of work being invoiced for each trade on the project. Your GC/CM should submit a progress invoice monthly on a date agreed upon by contract. An Owner’s Representative will ‘walk your job’ on a regular basis to assess the progress of the work for each trade and ensure that you are not being overbilled, whether for work that is not as complete as shown on the invoice or for work that has not even begun at the current stage of the project. This ensures that you are only paying for portions of work actually complete. If your GC/CM asks for a down payment prior to starting work, your Owner’s Representative will evaluate the request to ensure that the money is being directed to down payments on ‘long lead’ items (such as HVAC systems) or to other required deposits for entities who must be paid prior to mobilization and and is not be used for other purposes..
  
• The subcontractors hired by your GC/CM should be insured with the same or similar limits as your GC/CM with proof provided to you as a COI for each entity. All COIs should be reviewed by your insurance agent prior to agreeing to allow them on the project site and should be monitored throughout the project to ensure that as policies are renewed, you are provided with updated COIs.  Staying on top of the insurances for every  company present on your job site is tedious and time-consuming but is the only way to ensure that if something claim-worthy happens, you are not left holding the bag.  An Owner’s Representative will manage and track this for you,  collecting, verifying, and monitoring the insurance coverages for all entities present on your project site, including 3rd party subcontractors and vendors, such as IT contractors, moving companies, and other entities with a role to play in the project.
  

The two happiest days in the life of any construction project are the day you start and the day you finish! It can be a long slog in between and managing the project feels like an overwhelming time-sink for most owners. An Owner’s Representative actively monitors and manages your project weekly, semi-weekly, or even daily (for very large projects), acting as your eyes and ears ‘in the field’ and protecting your interests at every step. Part 2 of this post covers the tasks you need to consider during the  construction phase of your project.

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