|Copyright 2014 by Virgo Publishing.|
|By: Bret Ellis|
|Posted on: 09/01/2000|
The most important aspect of the construction process for a self-storage developer is proper preparation. Construction should be treated like any other business venture and should be pursued with a complete understanding of the process. In order to achieve this understanding, it is imperative that proper planning is taken into account prior to incuring construction costs. Identifying the key elements involved in building your facility and providing sufficient information to achieve your vision is a difficult task and should be given its due concern and effort.
The construction process is similar to any other type of project management. The better prepared and informed the players are, the more likely they are to reach the final goal of a cost-effective solution that reflects the initial concept. Experience and research have revealed three components that, when provided for in the construction process, will yield a successful project:
A Clearly Defined Scope of Work
Pre-planning is not limited to blueprints; however, construction plans are the most effective means of delivering the owner's program to the builder, local municipalities and product vendors who will be involved in the project. Poor plans can create a domino effect that leads to delays, extra costs and even a final product that doesn't reflect what the owner wants.
A fatal mistake made by many inexperienced developers is to skimp on the architectural package. This neglect of the design package has a large impact on the overall project. Figure 1 demonstrates the most common areas for extra costs and claims in the construction industry as a whole.
A complete architectural design package defines the exact scope of work expected from your builder that will yield the final product you expect. Think of contract documents in construction as an instruction manual for insuring that your vision of the facility is what gets built. They are the translation of your ideas into a universally accepted format for construction. The plans and specs are the conduit by which your facility will be built and are an important part of your business plan for success as a self-storage facility owner. How do you achieve the goal of quality construction documents?
1. Commit the funds. Architectural fees for self-storage average nationally between 2.75 percent and 4.25 percent of the overall construction costs (exclusive of land value).
2. Pick the right architect. Has he worked in the self-storage industry before? Talk to past clients and check references. Was he prompt in responding to problems? Did he incur extra costs due to shortcomings in the contract documents? Talk to the contractors who built those projects and ask about the quality and completeness of the plans and specs.
3. Instruct the architect as to your intent. Define your program and its requirements by defining what you are trying to build. Try to provide a complete description of the physical attributes of the facility. Include services to be provided, any special construction issues, amenities of the facility, aesthetic expectations and any specific ideas you have with respect to the final product.
4. Create an exit plan. If you need to walk away from the project for any reason, you need to be able to do so amicably and without undue costs. In order to achieve this, I ask the architects I work with to divide their fee into the following categories:
5. Participate in the process. Define milestones in the design process and conduct a thorough review. If you need assistance in plan interpretation, bring in help. A qualified general contractor or construction manager can often identify shortcomings in the contract plans and specs that would later turn into change orders and extra costs to you. It is important to conduct this review often enough so your designer doesn't get off on a tangent that produces the need for corrections and the re-drawing of plan sheets. A good architect should welcome this review process, as he will want to get it right the first time. Redrawing does not make money for an architectural firm.
6. Question everything. Code interpretation is difficult at best. Looking at issues from all angles allows for different interpretations. This is specifically important when dealing with a design professional without self-storage experience. Many codes are not applicable to self-storage, but are applied because no one knew to question the interpretation or do the research. There are several standard variance requests in many municipalities that are routinely required to build self-storage.
7. Contract the work. There are several pre-written contract documents that can be used for agreements with your architect and contractor that protect everyone involved. The Architect Institute of America (AIA) has been using and supplying these contract documents for many years. They have been tried and tested in the courts and, in many legal opinions, are excellent documents to define the scope of work, methods of payment, timeframe and general conditions of the project. To get a listing or more information regarding the available documents, call the AIA at (800) 365-2724.
A Clearly Defined Schedule of Values
A schedule of values is the tool utilized by the design and construction industries to breakdown the construction estimate into understandable separate items of work. The numbering system used is called the Construction Standard Index (CSI). These are globally accepted in construction and will be consistent from coast to coast. The CSI-formatted schedule of values allows for a better understanding of the costs to be incurred and allows for a more thorough bid review. Ask your potential contractors (or your architects) to supply a breakdown in the format of your choosing to assist you in the selection process. For a listing of the minimal recommended CSI breakdown for a self-storage facility, visit www.ellisconstruction.com.
There are several distinct advantages to requiring this schedule of values from potential contractors. The developer can use this schedule of values to look for potential cost savings and/or overruns in the estimate. For instance, if your foundation costs are coming in twice as high as projects previously built, you may need to re-evaluate the design. Short items should also raise a flag, since an item of work that is under bid can also lead to delays or even costs to you before the project is over. It's important to realize that the lowest bid is not always the most cost-effective. Often a bid that is substantially lower than the competition will indicate that things were missed in the estimates that still need to be performed. A contractor that runs out of money on a project can be much more costly to a project than a bid that is initially higher but complete in the scope of work.
This schedule of values is most effective for the project in a construction-management aspect. Use the schedule to determine moneys due for monthly draw requests. If your schedule of values indicates that your contractor is 80 percent complete in item 04-200 unit masonry, for example, then it is easy to verify by onsite inspection whether this is accurate. Without the breakdown, many items might get overpaid in advance, and your ability to manage the project is decreased.
Specifically, AIA forms G702 and G703 are the preferred documents for draw requests. These documents, when used together, provide for accurate billing and payment procedures utilizing your schedule of values, retainage practices and previous billings to insure you pay the right amount against the contracted sum.
A Clearly Defined Line of Communication
Construction management is the marshaling and allocation of the resources required to build the intent of the contract documents. These resources include labor, materials, equipment, architectural and engineering services, time and money. Managing construction involves organizing a wide variety of skilled workers and specialists and leading them in the implementation of the plan, monitoring progress against baseline objectives, and making adjustments to insure that the goals originally set forth are achieved--not an easy task.
But as is true in any field, the better informed the team members are, the more apt they are to succeed. It is imperative that the proper communication conduits are determined and then utilized so that all players in the project are "in the know" as to what is expected of them, when it is expected, and how they are to accomplish it.
Verbal communication doesn't work adequately for construction, especially when it is provided at field level. It is not fair to a tradesman standing five inches deep in concrete to remember that an owner told him to tell the superintendent to tell the project manager that the paint for the office walls should be tan. Issues that are important enough to be stated in the field are important enough to write down.
That is why, over the years, there have been a series of communication tools adopted by the industry to clarify issues, stipulate intent and outline costs. Your architect and contractor should be familiar with most of them. The terms differ as you cross the country, but the intent and content remain the same:
Request for information is a standard term typically representing communication between the contractor and the architect. Information regarding plan interpretation, differing site conditions and general information required for construction is addressed in this format. As an owner, you should request that you are copied on all this correspondence in order to stay informed and understand the ongoing issues that could effect your project.
Request for pricing is originated by you or your architect when you need to know what an addition to the project will cost prior to beginning the work.
Cost proposalis the reply to that request from your contractor. You can insist that these cost proposals are also broken down into a schedule of values.
Change orders are issued after these cost proposals are agreed upon and authorized for construction, and will become a legal contract document. For this reason, the AIA is an excellent source for documents. It is also important to realize that change orders can save you money in some instances. Credit or no-cost change orders are common in construction and, in some instances, are necessary to keep a project on budget. Creative construction management or value engineering can help identify these issues.
Along with understanding and using the proper method of communication, it is important to make sure you are communicating with the right people. Always define prior to the project who will be the representative and main contact for the contractor, architectural firm and owner. Make sure these people are available, prompt, authorized to make the necessary decisions, and qualified to perform their assigned tasks. For instance, the architects draftsman is not qualified to make design decisions that relate to structural issues, code requirements or life-safety issues. Figure 2 shows management categories of cost growth and reflects what effects decision-making can have on your project costs.
Construction is a complicated process that can often lead to disputes. Following the three rules outlined above does not guarantee your projects will be problem-free, but it will reduce the number of problems you have, and will greatly enhance your ability to address and resolve those issues when they arise. This simple concept of properly planning your project, organizing your costs and informing participants is critical.
Bret Ellis is the president of Ellis Construction Inc., based in New Orleans. Ellis Construction is a full-service general contractor serving the Southeastern United States. The firm offers design consultation, project management and general contracting services. For more information, visit www.ellisconstruction.com.