What does it take to achieve success in a construction project?
Put away your textbooks for this one as we are going to be looking at the ‘softer’ side of running a construction project.
Rather than taking a one size fits all approach we must consider that the spectrum of project sizes and complexities has varying degrees of risk and associated moving parts. Large value projects could be simple in that they have one or two elements and small residential extensions could be rather complex.
For the purposes of this summary we will leave aside the governmental level infrastructure and the small two storey extension to a 3 bed-semi, and focus on the £1-10 million range of building projects for something of moderate complexity.
The plan is to split the process of a development project into 4 main stages; site acquisition, building the team, planning and execution of the project.
The process of sourcing your development site can be a frustrating one. This may be done through the typical channels of speaking to property agents, or you may be availing a part of a site you already own through some crafty asset management. Either way, there are myriad considerations to account for:-
- Financial / Market Considerations–What happens if my proposed occupier goes into administration or worse a recession? What happens if the specified sector starts to dip mid-construction? Do I have a fallback plan to convert this development to residential or industrial? Is there enough meat on the bone of this deal to stomach some of the loss?
- Timing – Am I able to sit on this site as a vacant unit for 7 years, paying the capital repayments, interest and any business rates to allow time for the development? What will the state of the proposed industry look like by the end of a speculative 3 year development period? Will I be able to secure an occupier during the construction phase?
- Specification – What sort of tenant / occupier would this be amenable to the proposed development? High end office user? Low end residential occupier? It would be pretty silly to develop a low end office building for £1 mil in an area that only has demand for high-end offices that would cost £2 mil and make the development unfeasible.
These are but a few of the minor considerations that experienced developers should be thinking about when sourcing a development site.
Building the Team
For a project to run smoothly there must be a well-balanced and experienced team that communicate well. Your team may consist of 5 or 10 different professionals from the Architect to the Acoustic Consultant and everyone in between. As the client, you will likely be exposed only to a few of these consultants and you will want to ensure that accountability for the smooth running of the project is fully considered.
The project manager should be your point of call on all elements of the project and they should be able to update you on any aspect of the project at any point during the process. It is surprising to find how lost this idea is on some project managers. This relates to a blindness in some PM’s in neglecting client care for the project management textbook approach.
The project manager should provide you with suitably vetted and appropriate suggestions for the professional team, based on cost, quality of work and delivery times. Beyond these typical considerations, it is recommended to meet with the various professionals to determine how well you will work together and whether they will be amenable to working with the remainder of the team. Unfortunately, there is no metric to assess this as of yet, but certain key performance indicators can be incorporated into the contract in relation to how often and when meetings should take place and how quick responses and information turnaround is.
When it comes to selecting the contractor, it is essential to meet the contracts manager and site manager. What is their background? Have they worked on similar projects? How long have they been with the company? Are they conscientious when it comes to health & safety, quality of work and maintaining neighbourly relations? This person will be responsible for delivering your project so you want to make damn sure they are appropriate.
It is rare to work with a property developer who is willing to attend meetings for 6-12 months after obtaining the site and planning permission before starting on site. There is a tendency to want spades in the ground the day that permission comes in, as every day that practical completion isn’t achieved is money lost. This is a false economy, because the delays and mistakes from improper planning can easily cause delays beyond this period. The work only really starts at this point. There is a significant proportion of design left to finalise, as well as site investigations, party wall awards, construction phase plans and whatever onerous pre-commencement conditions the planners require.
Starting a project without a fully developed and coordinated design can lead to numerous on-site changes, contract variations and delays which will cost the client while the contractor is awaiting further information or has to rebuild something because the interior design needed more support for the chandelier (yes this happens a lot!).
Assuming that you have planned every minute detail to a tee, the project should run itself, right?
Let’s be realistic, we can never account for every variable and can only plan for so much risk and while careful planning is the key to a successful building project, this must be propped up by regular monitoring by way of meetings and site inspections. Even when things are running smoothly, the next few steps should be accounted for. Countless times we have been involved in smooth running projects where contractors have provided assurances and evidence of orders for critical path items, only to be let down by their supply chain due to circumstances out of their control.
A good project manager has his finger on the pulse in terms of the general state of the construction industry and various supply chains. This can range from a lack of competent bricklayers in a certain town to embargoes between your country and the material supplier’s country. Rather than ignoring these factors, planning around them can be invaluable in the development process.
When everything is running smoothly on site it can be tempting to suspend meetings, but it is common for things to crop up from a general chat between the design and construction team. A good project manager ensures that meeting minutes and actions are veraciously documented and that somebody is accountable for a certain action.
These are just come of the lesser known considerations that contribute a great deal to the success of a development project, particularly in a fast-paced city like London. So before you embark on your next project have a think about what needs to happen throughout the process to make it a successful one.