TAKING ON the challenge of building or renovating can be an emotional roller coaster — filled with risk and heartache for business owners and investors.
Whether constructing an asset, building for business or renovating a property for commercial use — you face many decisions. Your aim is to minimise risks and maximise your long-term rewards. And the process can be overwhelming.
Every project has its issues, whether they are timing issues, cost overruns, contractor problems or regulatory problems. So it is important that you have a contingency plan and know what to do when things start to go awry.
Do Not Try to Cut Costs Mid-Project
You need to understand the contractual arrangements made with your builder.
If the contract is a hard-dollar fixed-price agreement, all parties then have a right to recover costs against any changes made.
Unless a suitable arrangement is made with the contractor, changes will generally cost you more money than whatever originally blew your budget.
Some clients will try to place these changes in the project — hoping that the contractor will then take on the problem within the project.
Making changes mid-way through a project has big ramifications for all parties, and you should avoid them.
Have Trust in Your Project Team
Construction, development and building is a team exercise. It requires many specialty trades and experts all doing their best. And goodwill is often the grease that makes the build as easy as possible.
If each one is competing against one another, then the team attitude can fall away and the building process starts to fragment.
One of the trades is left to pick up the pieces of the other team members; and the outcome is often an inferior product.
From the beginning of each project it is important that a collaborative approach is pursued.
Consider running weekly meetings, or informal discussions … where information freely flows among the team. They should not feel pressured by any over-powering personalities or difficult team members.
Clients sometimes lose confidence in the project team. Maybe the project has taken a direction that the client was not happy with, or someone in the team has made an error.
At the end of the day, we are all human and we make mistakes. Give the responsible parties the opportunity to rectify the wrongs — so the team can move forward.
Letting team players fix their problems ensures responsibility is taken for the error and generally, results in the best outcome.
BOTTOM LINE: Your contingency plan is important. You also need to make yourself aware of the various risks you can face when involved in a building project.
If you enjoyed this article, be sure to catch Part 2 for five (5) more tips to help you avoid costly construction issues.