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The Story
I received a call from a past client about a development project that they were working on. They had proceeded in a fairly conventional manner by having a contractor update pricing at the Schematic Phase, the Design Development Phase, and now just got the price at the Construction Document Phase.
All had been proceeding well until the final price came in. All along they had felt their construction budget of ~$18M was more than comfortable for the gut renovation of 102 townhome apartments in 10 separate buildings.
When they received their final construction budget of ~$24M everything came unglued. I had worked with Whitney Capital in the past providing similar preconstruction services but with a much different outcome. Fortunately fate played a role and a mutual business client mentioned to me their dilemma and they were trying to reach me.
Days later I was in possession of a full set of drawings and the budget. My experience with multifamily housing (cost, design, codes) allowed me to quickly understand that improvements were needed. I also had concerns that the GC was not the best match for the project.
A week later I began a weekly trek to Long Island to map out and implement a direction to achieve the goal of closing the financing in 2008. Not only did we achieve the goal of closing at the original budget but it occurred after the September 2008 financial meltdown that hit the affordable housing sector especially hard. To make this even more amazing was one of the funding sources the developer had been counting on required Davis Bacon rates and the local politicians had tagged the funding to require union workers! This minor point was not included in the GC's $24M budget.
Here are some of the brief highlights of how this was accomplished:
1. I reviewed the architectural drawings:
     a.The Architect approached the project utilizing the basic code requirements. However, in the past I have used separate provisions of the code that specifically are available when renovating existing properties. I had a preliminary discussion with a Code Consultant to confirm my opinion that the approach to be modified. Interesting enough while this approach did save some cost, its larger benefit was that closed all the noncompliant portions of the design which either would have resulted in a very large change order later or even worse not being caught and the public being put into harms way. This lead to me bringing in the Code Consultant to provide a much more extensive review and work with me and the Architect to make many changes to the drawings. The interesting was there weren't major changes made but what I referred to above as the "nickel and dime" approach.
     b. The buildings were on crawl spaces and the architect did not understand completely the of pouring a concrete slab in conditions that were not even close to being optimal based on the headroom available, utilities in the way, current uneveness of the areas, and sloped grades in a few. We looked at various options of constructability, affordability, durability, and effectiveness to come up with a revised solution.
     c. Drawings were not properly QC'd. Drawings that have many ambiguities often will scare the GC and he will but a larger cost to the project to cover the worse case condition.
     d. Constructability review: This lead to details that could be constructed vs. requiring the GC to figure out how to build something that was not reasonable to perform.
2. I reviewed the GC's information
a. Felt his estimate was not sufficient to believe he understood the project in the detail necessary to construct it.
b. I felt his qualifications and experience were not matching our needs. Experience in a particular type of project goes a long way to understanding cost. Companies that do not have that experience usually present prices that are very high or very low versus the expected range. I suggested we interview other GC's with more relevant experience.
c. Worked closely with the other Contractors that we were considering so that they clearly understood the final product. This was not easy considering the drawings they had were being revised based on the code changes.
3. Worked with the Developer to determine the best plan of attack to achieve the requirement to make the project a union only project.
     a. Work closely with all the unions to explain Davis Bacon Residential Rate versus Commercial Rates. Since residential construction is not done very often on Long Island, this was an important step.
     b. Helped the developer understand the potential risk of using tradesmen that typically did not do this type of work and the productivity decreases that occur.
     c. Worked with unions that had residential rates but had not published them with the Federal Governement. Several rates were published which not only helped our project but will help future projects.
This list is not complete and in no way represents all the challenges that actually occurred. The developer's team was putting out fires just as large on their end. White Birch is there to help you. It is best to bring us on early in the process to establish a team for success but, like above, we are willing to help at any stage.