Managing Home Renovation & Construction Project Delays
If you are contemplating a new residential construction project, or even a commercial project, you can expect delays on the project, as well as cost overruns. These issues are extremely common to every construction project that is in the process of completion or in the planning stages. Construction negotiations and agreements are always based on two principal items, budget and schedule. These two specific entities of a construction project, are the leaders in driving a successful project, and are the basis for the determination by developers and owners to engage in a construction activity. If the budget is within the range of financial capability, and the schedule of the work can be incorporated into the intended use or function of the project, then the project is accepted as a successful process that should be implemented. Budget and schedule are the two principal concerns, for all owners and developers.
Based upon these facts, minimizing the budget and the schedule to complete, are the principal concerns of any contractor or builder that is interested in obtaining the contract for the construction work. In most situations, the negotiations to award the contract are centered on the budget and the schedule.
The successful contractor is normally selected, based on these two characteristics of the project, budget and schedule.
If the selection is based on budget and schedule, the minimizing of both of these issues will be the primary focus of all of the contractors, competing for the job. Based on this, all contractors will attempt to develop their budget in accordance with this objective and predict the construction schedule for the project in the most liberal and creative fashion. Make the budget as low as possible and the schedule as short as possible.
What issues does this focus on budget reduction and schedule shortening create, once the successful contractor is selected?
- The contractor that is selected for the project identified the cost as less than the other competitors. The selected contractor had the lowest of the proposals.
- The contractor that is selected for the project identified the time schedule to be less than the other competitors. The selected contractor says they can get the project done the fastest.
- The successful contractor will try to create as many reasons and excuses for additional costs on the project as well as additional time. Don’t forget, they won the project based on being lower and faster than all the other bidders.
Are they special? No, but they hope to have the best excuses.
With these realities in mind, what can the owner of this construction project do to try to mitigate the negative effects of selecting the lowest and the fastest contractor? (At least the contractor that claims to be the lowest in cost and will complete the work in the quickest manner.)
- Hire a professional construction lawyer or construction professional to consult with, when developing the actual formal contract for the work. This professional will have the experience and the credibility to ensure that the contract is developed, in accordance with your interests, as the owner.
- Insist that the entire scope of the work is clearly and accurately reviewed, prior to the formal contract agreement. Although, this is a little intimidating for the residential owner, the recording of this scope of work review is recommended. The commercial marketplace always records the formal scope of work review. Once this review is recorded and identified within the formal contract for the work, it is much more difficult for the contractor to claim that the scope of work was either inaccurate or vague.
- The scope of work that is verbally reviewed must be acknowledged and included within the formal contract, as an attachment to this contract.
- The schedule should be handled in the same manner. The schedule for the work must be clearly and accurately reviewed. The use of a professional construction lawyer of construction professional is required at this time, to properly and accurately review the schedule. Unfortunately the residential homeowner or client will have no idea if the proposed schedule is accurate or even feasible. An experienced professional must be incorporated on the side of the homeowner to properly evaluate the schedule.
- Both the cost and the schedule adherence must be supported with a legally supported damage clause. There must be a legal vehicle that the owner can implement, to ensure compliance with the budget and the schedule. Again, this legal clause must be supported by legal professionals or construction professionals. Homeowners will not have the proper experience or knowledge to accurately identify this legal clause.
- There must, either be legally established damage claims, or what is referred to as liquidated damages, if the project requires additional time to complete. These liquidated damages must be clearly noted on the contract documents. This liquidated damages clause must be supported with legal means as identified by a professional construction lawyer or construction professional.
It is my opinion that the best method of ensuring that the schedule will be adhered to, is to negotiate the contract with the contractor. There was a period of time that the use of a construction manager was the popular method of contracting. There were professional construction managers that negotiated the project with the owner. This method of contracting included the following;
- Development of the project. The construction manager was contracted by the owner, prior to the formal development of the project. The construction manager (CM) would use their expertise to evaluate, suggest, recommend and incorporate ideas and specific thoughts, into the final design of the project. In this manner the CM would be intimately involved with the project from its design and development, through the contract award, and the actual construction of the project.
- Negotiation of the project. The CM would recommend a number of contractors and builders, that in their professional opinion would be properly suited for the construction project. The CM would lead the negotiations regarding the project with the selected contractors.
- Scope of work review. The CM would emphasize the importance of the work and the inclusion of the entire scope of the project. The CM will itemize all of the work and ensure that the scope of work is clearly included in the contract and actual video of the review is implemented. The CM will have the experience and expertise to understand the required scope of work, and would not allow the contractors to verbally convince the owner, in regard to an unrealistic scope of work, that is ripe for additional work orders and change orders. Remember, the contractor that has low balled the project (lowest bid), will need to find all the additional work possibilities, in an effort to make money on the project.
- Schedule of work review. The CM would review the entire process of building the project. The construction schedule will be reviewed by the CM with the contractors, to ensure schedule understanding and compliance. The CM will have the experience and expertise to understand the required schedule, and would not allow the contractors to verbally convince the owner in regard to an unrealistic schedule. An unrealistic schedule demands the use of excuses to justify the initially unrealistic schedule.
- Final selection. Based upon the results of the scope review, the budget identification and the overall construction schedule, the CM will recommend to the owner, their recommendation for the award. The owner is the boss, and can either select to follow the recommendation of the CM, or discuss another option. In most cases, due to the involvement of the CM during all of the project’s development, the owner will follow the recommendation of the CM.
- Project completion. Once the owner and the CM have agreed on the successful contractor, the actual construction process will then be monitored by the CM. This CM will ensure that the project be accurately constructed, and the schedule and scope of work followed.
The use of a professional construction manager (CM) by the residential owner will reduce the number of additional work occurrences, as well as the continuous delays normally encountered on a residential project. It must be understood, that additional work will be encountered and delays incurred, however both issues will be professionally managed, to minimize the effects of these negative issues.
There is a reason that the reputation of most homeowner projects consists of negative issues such as budget busting and schedule extensions.
It is important that you acknowledge these issues and manage them accordingly, prior to their occurrence!