How to manage your construction project while staying in business

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You may think that managing your construction project begins with the groundbreaking ceremony. However, this is a fatal mistake that will leave you vulnerable to a project that has gotten out of hand. The decision to build or renovate must be based on a practical analysis of the projected revenue generated on the basis of services provided at a given level. A percentage of this projected revenue is then allocated to a mortgage payment that sets your initial project budget. This budget determines how much buildings, land, and equipment you can purchase for your project. Then comes the overall management of your project, which is made up of numerous elements that occur in a logical sequence that I call the “project schedule”. To help you out, I’ve broken each step down into a number of phases.

Preliminary design phase

In this phase you choose your project team, set your project goals, analyze your needs, finalize your location selection, draw up a budget and develop a schedule with critical milestones. One of your first decisions is choosing an architect. Based on his experience with veterinary facilities, the architect will support you in obtaining your municipal site planning permit, your first “permit”. You’ll also need to consider and select your financing option and develop your budget for real-world expenses such as IT systems, signage, furniture, equipment, and interest charges during construction.

One potential deal break decision is location selection. Once you’ve confirmed demographics and size, the next hurdle is zoning. Locations that are not zoned for veterinary purposes result in a time and resource consuming attempt to obtain a deviation or change. Success is never guaranteed. You will need to hire a surveyor and civil engineer to make preliminary plan drawings for the site, including leveling and drainage, building location, setbacks, parking plan, utility hookups, location of garbage bins, and any required landscaping, fences, or walls. In parallel to these efforts, a geotechnical analysis consisting of soil boreholes and tests to determine the bearing capacity of the soil for foundation planning must be carried out. Poor soils result in expensive foundations that can exceed the cost of the site itself. Contingencies in your offer to buy can allow you to cancel your purchase if any of these conditions is discovered, allowing you to find an alternate website with minimal loss.

Design phase

During this phase, your job is to review your architect / engineering team’s design solutions and give them instructions on how to complete the design to your satisfaction. As you go through the process, keep in mind that the success of your practice is largely due to your unique practice culture. You need to protect your culture with every design decision.

They also start with a more detailed breakdown of each piece of equipment to be incorporated into the design. It is important to make the device selection early and not to change it. Each specific manufacturer has different dimensions, clearances, and infrastructure requirements. New changes or waiting times that are too long can increase the likelihood of installation problems that lead to costly change requests.

It is important to decide now which construction delivery system to use. Each system from this stage onwards has different requirements for drawings, financial allocation and contractor involvement. You also have various advantages and disadvantages to consider:

  • Negotiated contract: Often best used in renovations, the architect creates preliminary design drawings that selected contractors use to create construction budgets. The owner and architect will review them with each contractor and the contractor deemed most suitable will be taken over. The contractor’s job is to stay part of the team as the drawings develop through to completion and provide input to keep the job within the original budget.
  • Design imperative: The architect and engineers prepare detailed construction / approval drawings and invite contractors to submit competitive offers based on the drawings. Usually the lowest bidder is chosen for construction. You will receive the final construction costs after the draft has been completed and the offer has been submitted. Bids over budget can lead to project cuts or additional borrowing.
  • Design build: The architect and contractor are a single team offering both design and construction at a fixed price that suits your budget. Prior veterinary experience is essential for predictable quality results. A significant benefit is knowing the construction costs at the beginning of the project.

Construction / approval document phase

The architect and engineers will now prepare and submit all necessary documents and drawings for the building permit in order to obtain the contractor’s final construction price. Your task is to familiarize yourself with all the drawings: architecture, supporting structure, heating / cooling, plumbing, electricity and lighting as well as interior design. Your team should walk you through them. Remember, if it’s not on the drawings, you won’t get it. Contractors are only obliged to deliver what is stated in the drawings.

You should also complete your construction loan. This is an interest-linked loan that is used to pay the contractor while the work is being carried out on the building. The principal will be withdrawn from your permanent mortgage at the end of the project, but interest will be paid each month equal to the current balance of funds distributed. It is important that you budget for this interest expense.

The construction phase

Once you’ve hired a contractor, your main responsibilities will be understanding and complying with specific payment terms, reviewing and approving material / color templates or replacement deliveries, overseeing the timely delivery of owner-supplied equipment, and reviewing the contractor’s monthly payment requirements . Here are some key terms to familiarize yourself with:

  • Table of values: This is a detailed listing of each item of work, its total contract value and the amount paid so far.
  • Project schedule: This is a bar graph showing the total project duration, including the time each subcontractor took to complete their trade, from start to finish.
  • Request for payment: Typically submitted on AEI Form G702, a payment request will show the total contract value, payments made to date, and payment due that month. The contractor, owner and architect must each sign this document in order for the bank to issue a payment
  • Reluctance: This is an amount (usually 5%) that is withheld from every payment request through to the last payment to ensure your financial security.
  • Deposit waivers: Each subcontractor should provide a lien release form with monthly payment requests showing that their payments have been made and waive all liens in any payment dispute.
  • Modify the order: Change orders authorize a change in the contract amount for adding or deleting work. Requests for change orders should be preceded by a request for quotation from the owner or contractor requesting that change. Once approved, the change request form can be edited and signed by the owner, contractor, and architect.
  • Hole list: When the contractor is essentially done, the architect draws up a list of defects or a hole list that needs to be corrected before the final payment.
  • Occupancy certificate: After all municipal inspections have been passed, the municipality issues an occupancy certificate that allows the building to be used.

Manage your time

Can your practice afford to lose 40 to 60% of your personal productivity during the construction period of your building? Delegation is required to avoid this loss of revenue. If not you, then who should handle the time-consuming day-to-day project management tasks? You could hire an outside site manager who might have construction skills but doesn’t understand the nuances of you or your practice. This can and has led to on-site decisions that are not always optimal for the practice or the project.

It is cheaper to delegate the project management to someone who understands the practice (e.g. practice manager, practice administrator or head technician). The architect can supplement the practical knowledge of this project manager with his structural engineering knowledge in order to guarantee a smooth process during the practical operation. In this way, you stay informed in production and about the project, and you can still make decisions on all questions. With your design team and a project manager, you can keep the practice and project at the highest level.

Wayne Usiak founded BDA Architecture in 1986 to specialize solely in animal facility design. In 1998 he founded her sister company CMP Construction to offer construction services to her planning customers. To date, over 900 systems have been completed.

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