Thinking About A New Building Project? Here Are A Few Things To Consider.

September 1, 2005
The Constructor

Are you thinking about building a new facility for your company, or expanding or renovating an existing facility?  Besides engaging a skilled, experienced contractor to handle the work, there are a multitude of issues you should consider to insure you get the results you want.  A few of those issues are discussed briefly below.

Acquiring the Site.   You will need to thoroughly investigate the site of your new project and consider related issues, including:

Project Representative. You may have limited experience dealing with real estate and construction issues.  Consider hiring an architect, construction manager or construction consultant to act as your project representative.  The project representative can help you select the right “project delivery system” (see below), provide advice on construction methods and alternatives, help you develop an overall budget for the project, assist in the development of bid documents, review and analyze contractor proposals, and monitor the progress of the work.

Project Delivery System.   You will also need to select a “project delivery system”.  In a “design-bid-build” project model, the owner engages an architect to prepare construction-ready plans and then the plans are bid on by contractors.  In a “design-build” project, the contractor serves as both designer and constructor.  A construction manager (“CM”) can be engaged in a “project representative” role as an agent for the owner (in which case the owner, with the CM’s assistance, hires separate trade contractors), or the CM can serve as general contractor and provide pre-construction services.  There are numerous payment structures, with advantages and disadvantages to each.  Will the project be constructed for a “stipulated sum” or on a “cost-plus a fee” basis?  Will there be a “guaranteed maximum price”?  An experienced project representative can help you match your needs to the most appropriate delivery system and payment structure.

Project Agreements.   Finally, you will need to negotiate the project agreements:  architect’s contract, construction contract, design-build agreement and construction management agreement, as applicable.  This often means reviewing a draft agreement proposed by the contractor.  There are a variety of pre-printed industry forms, such as forms published by the American Institute of Architects (“AIA”) and Associated General Contractors (“AGC”).  These forms are widely used and generally accepted.  However, they may need to be tailored to the specific needs of your project, and the requirements of your lender.  Sometimes the proposed form does not work well with the intended project delivery system, and no industry form is perfect.  Make sure these issues are addressed:

Thoughtful attention to these issues, in consultation with your project representative and attorney, will help insure a successful project.