Are You an Owner of Choice?

by | Design-Build, Facilities

Let’s face it. The current economic environment is arguably unprecedented when considering the combination of supply chain challenges, inflation, labor constraints, and geopolitical uncertainty. Those factors combine to make it very difficult for any construction owners to attract the design and construction professional to their projects. When the owner is a nonprofit, the challenge becomes even greater. So, what can nonprofit construction owners do to attract others to their projects? Here are 6
key considerations that design and construction firms look at when assessing project opportunities:

1 – Good Existing Conditions Data
Even if a new design or construction project is not imminent, all building owners are well advised to take measures to gather current and accurate information regarding their facilities. This is critical information to have even to maintain a building and plan regular repair and maintenance. It is even more important when the time comes to hire an architect to design a building addition or renovation. One of the first questions will be what “as-built” drawings are available upon which the design can be
based. Even if all that is available is a dusty set of plans rolled up in the corner of the mechanical room, take the steps now to have those digitized and verified against actual field conditions by a design firm before they are needed. Reliable existing conditions data greatly reduces the contractor costs resulting from change orders and unknows during future building projects.

2 – Clear Documents and Scope of Work
Clear construction documents and a clear scope of work start with good existing conditions data discussed above but are also dependent on the level of detail and quality of the plans and specifications created by the architect and consultants. Those documents are then used by contractors to determine exactly what is in the scope of the project and what is not. In addition, the phasing and site logistics considerations that must be taken into account to build the project must be well-defined. Will the building remain occupied during a renovation? What are the allowable work days and hours each week? Will the contractor have to demobilize and remobilize at any point or can the work proceed continuously towards completion once started? All these and similar considerations greatly affect the price of a project and how attractive it is to potential bidders.

3 – Assurance of Project Funding
Design and construction firms want to know that they will be working for a client who has the resources to pay for the requested work. Have all funds already been raised for the project? If not, have they all been pledged? What is the expected pace of collecting those pledged funds? Will there be construction phase financing required? If so, what requirements might the lending institution have that could affect the processing of monthly applications for payment?

4 – Attractive Delivery Method and Form of Agreement
Contractors will be very interested in the owner’s proposed delivery method (Lump sum bid, negotiated construction management, design-build, etc.). They will also expect to have a very early look at the proposed contractual form of that they can review it for any unusual terms including liquidated damages, consequential damages, limits of liability, etc. Contractors will also look for any completion incentive clauses that could reward them for early completion. They will typically expect to see industry standard agreements from the AIA, Consensus Docs, or DBIA. Custom forms of agreement
will raise a red flag as they will not have been tested on past projects and will likely encounter conflicts with terms and conditions from design agreements between the owner and architect which are commonly AIA forms.

5 – Clear Point of Contact for Decisions
One of the biggest challenges non-profits face is the perception in the eyes of the design and construction community that they lack a clear decision-making structure and rarely is one person clearly in charge to make timely decisions. Committees comprised of influential church members or other stakeholders do not inspire confidence in the design and construction team unless they have relevant design and construction experience. Contractors really do not care how much money committee
members may have donated for the project. Contractors are not interested in getting bogged down in organizational politics. They desire a clear point of owner contact who represents the owner’s interests and who can make decisions and clear obstacles enabling them move expeditiously forward building the project and realizing their profit. They want to minimize delays from things out of their control.

6 – Timely Payments
Ultimately design and construction firms are in business to make a profit. Owners with friendly payment terms will be preferred owners to work for. Those owners who believe that they are somehow helping themselves by holding contractor payments beyond 30 days are not being realistic. Contractors working for owners with delayed payment terms will always increase their prices to account for the fact that an owner is expecting the contractor to be “the bank”. Don’t be that owner. Have payment terms that allow contractors to plan their cashflow and pay their own subcontractors and suppliers timely without being the bank themselves and you will quickly win their loyalty for current and future work. Being an owner of choice is itself a choice and one that nonprofit owners are encouraged to make to be the best stewards of the resources entrusted to them.

Steve Kuhn is the founder of ShareBuilt, a nonprofit organization, that directly connects those in need of new/renovated facilities to AEC organizations with resources to meet those needs and professionals called to serve their communities.

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