Taking The Sting Out of Change Orders

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There probably aren’t two words that scares people in construction more than “Change Order”.  Many people consider a project a failure if a project has change orders.  A true failure is change orders on a project that are unbudgeted, mismanaged, and unexpected.
There are two types of change orders:
1) Unforeseen conditions (often site related) – This most often comes up when working in second generation space where surprises come up in places such as above the ceiling.
2) Design changes – During the coarse of the project, the clients often make design changes (and sometimes forget that their decisions can result in budget implications).  Also, in many cases the design for a project isn’t 100% complete when construction starts and when the final details get specified, which results in change orders.
Here are some techniques for making the inevitable sting a little less for everyone:
1) Budget for the worst.  A change order free project is unlikely, so  carry contingencies.  By properly setting expectations before the client approves moving forward, a “worst case scenario” budget can be generated.  Carry a contingency for unforeseen conditions and a contingency for design changes.  The values carried in these accounts will vary project by project, and project early in the design process will require a more generous contingency.
2) Keep a running tab.  Not asking your contractor for a regularly updated change order log, is like going to a fancy restaurant, ordering without looking at the prices on the menu, and crossing your fingers that you can afford the bill.  The change order log should not just be a historical tabulation of approved change orders but it should also forecast the potential exposure of future change orders that have come up based on issues at hand.
3) Be proactive.  It’s important in your weekly meetings with your contractor and design team to flush out potential change orders instead of just letting them happen.  Everyone will feel more comfortable if issues and changes are identified early in the project – not right before move in.  Do things such as investigate existing code compliance before the inspector visits and make sure the client approves final details before you have to backtrack in the field.
Nobody likes change orders, but by staying ahead of them, the impact on the budget can be minimized.

Cost vs. Speed

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They say you can’t have your cake and eat it too.  In construction, sometimes you can push to keep costs down or your can push to complete the job quickly, but it is difficult to make both happen at the same time.

On the surface, one would think that any good team should be able to complete a project cheap AND quick.  But what happens if meeting a big deadline is more important than trying to reduce the budget of the project?  When speed trumps cost, it sometimes makes sense to use strategies such as:

1) Developing construction drawings as soon as possible.  Lesser important design details are often not required for permit review and can be issued to the team in architectural bulletins.

2) Let availability drive materials selection.  Material arrival times can be the difference between a project that makes the deadline and one that doesn’t.  On a typical project, the client would have the luxury to wait for the arrival of any essentially product that they choose.  Projects with truncated schedules need to immediately rule skip to looking at quick ship products.

3) Sole source all vendors and contractors to avoid time intensive RFP and bid analysis processes.  Typically on a fast-track project, the cost saved in the competitive bid process is far outweighed by the cost of taking the time to perform the exercise.  Also, consider working with vendors who provide design-build or turn-key solutions.

4) Consider pre-fabricated components with to simplify. installation.  While not a good fit on all projects, innovations in pre-fabricated building components have been shown to expedite schedules.

5) Perform overtime labor hours.  While increasing labor resources to a project may seem like an obvious solution, clients often are quick to dismiss it as a strategy to achieve a fast-track schedule because the added costs associated.  What clients fail to realize, is that labor has a huge impact on project schedule and that costs to add resources should be compared with the potential losses of a delayed completion.

While these strategies will sacrifice budget and quality goals, they can be useful in meeting a tight schedule demand.  Sometimes making the sacrifice makes all of the difference.

How to Reduce Vacancy Downtimes

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If you own, manage, or lease commercial real estate there is nothing worse than having a vacant suite that nobody wants.  What can be done to reduce excessive vacancy downtimes?

If executed properly, space prep work can dramatically reduce this the time your suites stay empty  and rent is lost.  But what is the formula to success?   Spending too much could ruin future deal economics while not spending enough might not make enough impact to lure interested tenants.  Below are a few ground rules:

1) Plan your space prep before spaces become vacant.  Be proactive and don’t wait to see what kind of interest the space will have.  The space prep plans can always be put on hold or cancelled if a lease comes in sooner than expected.

2) Don’t waste money on new flooring.  I’ve learned the hard way that a tenant can love a newly refurbished suite but only want to lease it if you rip out the brand new carpet you put in.  Landlords lately have attempted to attract tenants by shelling out money to polish exposed concrete to create an industrial look.  While it certainly creates a style that many tenants like, it isn’t for everyone and might not accelerate leasing or be the reason your space is chosen by a future user.

3) Demolish the obvious.  It is important to demolish and abate anything that virtually every tenant will need removed for their future build-out.  Don’t go too crazy with the sledge hammer when if comes to removing and improvements that could be reusable, but if you can’t envision another tenant reusing it, get it out.

4) Power up.  Ensure the entire premise is well covered with necessary power outlets and lighting.  New tenants often need to do electrical work before moving in and your space needs to be equipped.

An Architect’s Perspective on Today’s Trends in Office Interiors

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We had the chance to speak with Jaclyn Guasco of Fennie + Mehl Architects (www.fm-arch.comabout today’s trends in office space designs.  Jaclyn comes from a background in interior design and had some insightful thoughts to share:

The TI Tales: How do you take cues from the culture and style of your clients to make sure you show them a palate of finishes that they will can be excited about?

Jaclyn Guasco: The client’s culture informs everything – programming, architectural expressions within the space, design concepts and the finish palette.  It’s our job to get to know our clients and to open up the dialogue with them in order to understand who they are and where they’re going. 

TTT: Have you been working with any new flooring materials that are comparable in price to standard carpet?

JG: If there’s an opportunity, we love exploring the natural concrete or wood sub-floor on our projects.  With open office configurations, carpet is a very popular acoustic-friendly choice, so there’s very rarely a project that doesn’t involve carpet in some way.  Other materials, I’m always on the hunt for are woods, ceramic tile and earth-friendly rubbers and corks.

TTT: Aside from the shift we’ve seen in more open office environments, what other innovative trends have you started to see programmatically?

JG: The line between work life and personal life is becoming more and more blurred, providing a need for spaces in the workplace that support wellness and balance.  These spaces range from privacy/ phone booths, cafes, bars, gyms, meditation rooms, yoga studios, massage rooms, bike storage and showers. We’ve found that having a choice in space is really empowering. 

TTT: It seems like LEED for Commercial Interiors (LEED-CI) hasn’t taken off as well as LEED for New Construction (LEED-NC) and other LEED project types.  Recognizing the time and budget constraints of tenant improvements, how do you foresee that future build-outs can either achieve this designation or simply be more sustainable?

JG: The new Title 24 requirements in the California Building Code are certain aspects more rigid than LEED-CI.  Which means all future build-outs in California are required to be much more energy efficient moving forward.  The need for immediate space and the cost of real estate in the Bay Area often take priority over other project parameters on commercial TI projects.  That being said, I still find that LEED certification is an admirable achievement for any project in our industry. 

TTT: Have you been using any new technologies to help you with your business that you weren’t using before 5 years ago?

JG: When it comes to new and emerging technologies, we’ve taken cues from our tech clients.  Sharing architectural plans, meeting notes and project data on the cloud has proven to be really efficient.  In addition, everyone in our office has an iPad and it’s really streamlined our note-taking and image capturing process for project meetings and site visits.  

Thanks, Jaclyn!

How to Ensure Your Lease Is Bulletproof for Construction

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There is nothing worse than having a landlord and tenant execute a lease document only for a big argument to come up afterwards.  I’ve been part of deals with poorly written leases that allow for too many grey areas or topics that are simply not addressed.  The result is that the landlord-tenant relationship is severed right as it begins.  Here are some tips that can allow for a lease document to set expectations properly so nobody has hard feelings down the road:

1) Develop a design concept that is detailed enough for an accurate budget.  Landlords and tenant often are too focused on getting a lease transaction done and not as concerned with ensuring that the Tenant Improvement Allowance (TIA) is appropriate for the tenant’s needs.  It should be insisted that a design is developed to allow for an estimator to assign a budget to the project that will fall within 10 to 15% of the actual project costs.  If the TIA is based off of pricing down from a design off the back of a napkin, it is likely that the TIA will be too high or too low.  “Garbage in, garbage out”.

2) Clearly identify who is paying for what.  In a blog post I wrote several months ago, I gave a rough outline for what landlords often pay for; though I cautiously said that this can vary based on market conditions,  existing premises conditions and lease economics.  Landlords and tenants must properly vet out the entire scope of work.  Things that often get forgotten about are pertain to the building core and perimeter conditions.

3) Make sure the lease language clearly identifies necessary timelines and deliverables.  Both tenants and landlords need to make sure that they aren’t going to be painted into a corner and that they can make commitments.  One common mistake is the lease is silent on when a landlord is required to complete their work to prepare for the tenant’s work.  If the landlord is slow on completing this and the tenant needs to be out of their old building by a particular time, conflict is sure to arise.

4) Bring your project team in as early possible to make sure lease terms are all do-able.  Imagine going to a restaurant and ordering a pulled pork sandwich from the waiter.  The waiter then hollers to the cook in the kitchen, “One pulled pork!”  The cook then shouts back, “Pork?  This is a kosher deli!”  In the same sense, a landlord or tenant shouldn’t commit to the construction section of their lease until they have consulted with construction and design professionals who are sure they can make it happen.

As a project manager, many fully executed leases have been placed on my desk in my career where had a gotten involved from the start I could have prevented lots of tenant and landlord frustration.

 

The Office of 2035?

The Huffington Post had an intriguing article about what office spaces might look like in 20 years from now.  It was suggested that the office of tomorrow would resemble more of a cafe that is geared towards fostering social interactions.  Workstations and private offices would be replaced with dining tables, lounge areas, and even other home-like atmospheres.

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The article indicated that since technology has allowed people to work anywhere, coming into the office will need to be a pleasant experience where they can take advantage of as many face-to-face situations as possible.

While many might feel the office of the future may never shift to this degree, there are some outstanding lessons learned – many of which are already common in the modern office space design.  While you don’t need to turn your office into one big coffee shop to have the ideal work space, recognizing that your staff needs an environment to foster in-person interaction is key.

Improving The Open Office Environment Experience

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Over a decade ago tenants began building out office space in a much more open environment.  This included less private offices in order to maximize density and increase collaboration.  These days we rarely come across tall cubicles, as most workstations have dividers that reach no higher than a standard monitor.  Some workstations are divided by nothing at all.

How do the actual occupants in today’s open office environments feel about their workspace and is there anything a project team can do to improve the conditions?

Harvard Business Review did research on how employees working in today’s small footprint workstations felt about their environment.

Despite the fact the results of the data showed that people in open office space might not be as cheerfully happy as we thought they were, the data was fascinating in the sense of how proper planning can improve the occupant experience.  The top five complaints about today’s high-density open style office space were:

1. Sound Privacy

2. Noise

3. Temperature

4. Visual Privacy

5. Air Quality

Contrary to what one would expect, “Amount of Space” was not part of the top five list of complaints (it was #6).  The good news is that if the project team considers these items in advance, they can mitigate future occupancy complaints.  Outlined below are ways to tackle these problems before they present themselves:

1.  Sound Privacy – Tenants should dedicate small “phone booth” size rooms or other quite spaces in the office for their staff to be able to field important phone calls, host one-on-one meetings, or conduct conference calls.

2. Noise – This common problem can be solved by a few techniques.  The most costly, but often most effective, is through acoustical treatment of the ceiling and walls – most commonly insulated paneling.  Another approach is installing an audio soundproofing speaker system to produce a white noise that allows people to focus.  The least expensive, that may or may not work for all industries, is offering a nice pair of sound canceling headsets for everyone.

3.  Temperature (and 5. Air Quality) – Tenants converting second generation office space that was previously used for a lower density often ignore the fact that the HVAC needs to be accommodated to meet the greater head count.  Equipment and controls need to be engineered to match the occupancy to ensure that the air temperature and air volume are what they should be.

4. Visual Privacy – Some office spaces are desk arrangements without panels where employees would be looking directly at each other in the eyes if there weren’t computer monitors in the way.  By working closely with a furniture vendor early in the process, creative approaches can be developed in which employees are not facing each other head-on.

 

 

 

Meetings: The Backbone of a Good Construction Project

We came across this great article about meetings and thought it would be helpful to share.  Often the difference between a successful project and unsuccessful project come down to how well the meetings are run.

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How to Run a Good Meeting

LEADERSHIP SKILLS

Most people don’t like meetings. They say they are boring, go on too long, and don’t get anything done. And often that’s the truth. So to have a good meeting, you need to make it interesting, keep it on track, and make sure something gets done. Here are eight steps toward making your next meeting a success.

  1. Make sure you need to have a meeting. Meetings are needed when a group of people must be involved in an action or a decision. Don’t schedule a meeting just because it’s time to have one.
  2. Set a goal for the meeting. Be very clear about why you’re having the meeting, and what needs to get done or be decided. Break that task into steps, or divide the discussion into sections—that’s the agenda for your meeting. At the start of the meeting say, this is our goal, and if we can get this done, the meeting will be a success. At the end of the meeting remind them that you achieved your goal. This lets everyone leave feeling successful, and they’ll be glad to come to your next meeting.
  3. Put decisions to the group. The participants own the meeting. Let them set the agenda before the meeting, or at least add to it when you begin. If decisions need to be made about the process (whether to end a discussion that’s going too long, for example) then ask that question to the group.
  4. Stay on schedule. Remember that every minute a person spends in your meeting, they could be doing other things. They’re with you because they’ve decided your meeting is important, so treat them like their time is important. Start on time and end on time!
  5. Pay attention to what’s important. Set a certain amount of time for each item on the agenda, based on how important it is. If the group starts spending a lot of time on details, ask them “Is this what we want to spend our time talking about?” A lot of details can be worked out by individuals or committees—meetings are for the decisions that need to involve the whole group.
  6. Keep the meeting on track. Your agenda is the tool you use to make sure you’re on time and on the right topic. When side issues come up, help the group get back on track. If the issue sounds important, check with the group. “We’re talking about a new issue—is this something important that we should take time to discuss?”
  7. Make sure people participate. People think a meeting is useful based on one simple thing: whether or not they talked. So everybody should have a chance to share their ideas. It’s okay to ask specific people what they think! You should also be prepared to gently remind people when they’re talking too much.
  8. Have good facilitation. The facilitator is the person who runs the meeting and acts on all the steps listed above. It’s a big job, and it usually doesn’t fit well with participating in the discussion. So if you need to have your views heard, let someone else run the meeting! Good facilitation doesn’t just happen—it’s a skill that comes with training and practice.

A Long Time Tenant

1142Let’s just say they had been there a while.  Director of Project Management Adam Felson lead the Concordia-Argonaut Club through a challenging process this past December.  After occupying 1142 Van Ness for about 125 years, the club sold the property and needed someone to help inventory its many contents and determine where everyone was to go.  The club is in a temporary location while it seeks a new home.  Adam went through everything from books to leather seating and from kitchen to athletic equipment.  Everything had to be stored for the new facility, sold, donated, disposed of.  The 50,000 building had lots of great memories and the club looks forward to what the next home will bring.

 

Fighting Today’s TI Trifecta

Companies trying to build out office space these days face a changing trifecta of challenges.  Landlord’s have the upperhand in the leasing market and don’t need to pay high TI’s to lure in tenants.  It’s busy for contractors, and therefore supply and demand means higher labor and material pricing.  Finally, employees are getting jealous when they see their friends’ offices at other companies, meaning companies must get their TI’s done right to keep up with the Joneses.

How can a tenant still afford a build-out with great design?

  • Avoid Moving the Lights: With the recently updated Title 24 changes, a project’s budget can spiral out of control if the existing light fixtures need to be relocated. If your design can prevent you from making replacements, it is wise to save your TI dollars to create greater functionality and beauty in your space verses paying for code upgrades.
  • Rethink Your Layout: Too many tenants lease more space than they really need because they attempt to transpose the space plan from their old space into their new space. Moving offices is a great way to examine techniques such as benching, hotelling, or even just larger offices that are shared could be options. Maybe you don’t need that big empty boardroom anymore and can rent someone else’s for your monthly meetings.
  • Put Your Dollars Where It Matters: In a tight budget, tenants should prioritize what office functions are the most critical and spend their money accordingly.   Don’t let that IT Manager tell you how to cool the server room – that’s the mechanical engineer’s job. If your office rarely gets visitors, just get a basic reception desk and don’t waste money on an expensive entry hardwood floor. Perhaps your company culture is to eat lunch in the kitchen – if so, spend your money on a kitchen with great amenities.
  • Create Alternative Spaces to Meet & Work: Having a casual place for meetings or to bring a laptop to work breaks up a long day for employees and creates a more comfortable environment that has tremendous value without costing lots of money.
  • Take Control of Material Specification Decisions: Make sure your design team is specifying material and equipment that meets your budget. Work closely with a contractor early in the design process to check pricing. This will give the project team an opportunity to find an alternate if needed.