You can tell it’s a strong economy when a vendor tells you they are too busy.  Sometimes it can seem like winning the lottery when you can actually get someone on the phone when you need them.

When the economy is on fire, it’s important to shift your attitude if you have a new project coming up.

1) Keep relationships strong before your project requirements.  It’s really a two way street.  Not only should your contractors, consultants, and vendors be trying to stay in front of you to win future business, but you as the client need to keep in touch with people you will need to call upon as service providers in the future if you expect them to be responsive.  For example, if you expect to have a big project coming up in the next year, periodically reaching out to or meeting with potential bidders can be a great way to prepare them for your job and you are more likely to get a good response from your RFP.

2) Reconsider that long list of bidders.  Construction costs continue to escalate, and part of that is because contractors, consultants, and vendors are busier and can be more selective on which projects they spend their time on.  While intuition tells us that the more bidders we get, the better price we will get, a strong market allows bidders with a deep pipeline to be in control.  When asked to compete on projects with 3 or more bidders, vendors often will spend less time to get a handle on the project and will pad their number because they know their chances are slim.  Alternatively, a vendor may “respectfully decline” a project altogether because they don’t want to spend their resources winning business if their is so much else out their for them.  In short, negotiating an agreement with one vendor in some cases can be more financially beneficial in this environment.

3) Make your requirements very clear.  This one is a good practice regardless of the economic condition, but it is especially applicable when things are hot.  If you have a difficult time pinning down exactly what your needs are and have an internal decision making process as complex as the US Senate, vendors are not going to find you a favorable client.  When vendors have a deep pipeline they can afford to have a choice of who they work for and indecisiveness can lead to frustration, a lack of vendor responsiveness, and potentially inflated price.

4)  Don’t cry wolf.  Be careful not to waste people’s time.  Imagine calling upon a favorite contractor every time “you think you have a project” – but before you take the time yourself to vet if the project will actually happen.  Eventually contractors will lose trust and interest.  It is important in the client/vendor relationship to do your homework as well.   

By considering the above and understanding the point of view of the vendors, we can ensure we get the service and pricing we deserve.

Often when a tenant tours through potential future office space, we often find ourselves trying to take a hack at putting a budget together.  The scope of work is often extremely vague and a tremendous amount of assumptions must be made.  How do you make financial sense of a project without wasting too much time and effort to determine if you should move forward?

1) Figure out what number will kill the deal.  Tenants planning a future build-out should be transparent about their budget expectations so the teams they hire can plan accordingly.  Tenants can often spin their wheels directing vendors and waiting for pricing for budgets that are way out of their price range.  If a budget comes back and the client says that the numbers need to be cut in half, some communication clearly didn’t happen at the start.

2) Use comps from past projects before getting too far into it.  As a time saving “gut-check”, tenants planning a future build-out should ask for their vendors to provide a budget range based on some recent comparable projects that sound similar to what they are envisioning.  This can be a quick way to make sure that the scope is likely to be within the ballpark before too much design and pricing exercises occur.

3) Attempt to get input at all levels.  It’s never too early for tenants to survey their needs internally – and the review process shouldn’t take very long.  The key decision makers might think they completely understand the needs of their future office space, but they should be encouraged to run early design concepts with their teams to confirm that their new office space won’t lack functionality they are used to.  For example, imagine a team of executives tour potential vacant office space and work with a project team on some space planning.  A budget is developed based off of the layout and then the lease is signed – yet nobody else in the company gets to see the layout until its too late.  The firm’s accounting staff report that they are concerned of noise because they are planned to be by the kitchen, and others are upset that the new office won’t have the small conference rooms they utilize in their current space.  This would would have been good to know before the tenant committed to the lease terms.

4) Get a handle on what the Landlord is offering.  It’s one thing to get a good handle on what the tenant improvement costs will be, but you need to be comfortable with what the Landlord is willing to chip in.  If you get a sense early on that the Landlord is not willing to pitch in to pay for necessary improvements needed to get your space ready, perhaps the deal was not meant to be and you shouldn’t be wasting your time.