Read about the challenges condominium managers, owners, and board members face when managing building projects on tight budgets. It highlights the importance of making wise financial decisions and navigating the balance between cost, speed, and quality. Board members should seek outside expertise, especially when projects are complex.
It compares two common project management methods: Design-Bid-Build, where design professionals guide the process and solicit bids, and Design-Build Contracts, where contractors handle both design and execution, often with fixed pricing. Both methods have pros and cons, such as the need for high-quality design in the first and potential contractor conflicts in the second.
The article stresses the importance of project management and trust between contractors, design professionals, and building management to ensure a successful outcome for all parties involved.
Smart Spending: Navigating Complex Projects with Trust and Expertise
Money is tight these days and we should all be concerned about how it’s spent.
A condominium board member has a legal obligation to make decisions in the best interest of their association. An older building has a plethora of issues that need to be dealt with.
But how do you know you are choosing the best option for the association’s money?
Even experts disagree on what constitutes the “best.” Best is a relative term, at best. It could mean a culmination of cheap, fast and good.
However, the words “cheap,” “fast’” and “good” do not often go well together. Think of the adage that says: “You can have it cheap and fast; you can have it fast and good; you can have it cheap and good; but you can’t have it fast, cheap and good.”
CONSIDERATIONS
The first thing to consider for your next project is who has the expertise to help with your project.
Many times, board members have expertise related to a project but using that expertise to run a project in-house may not be the best avenue. Unless that person is currently working in a particular field, consider seeking outside help.
Sometimes the best person to solve a building’s problem is a trusted contractor. But you must be sure to take the time and determine the contractor’s capabilities.
It’s also probably not a good idea to shop for a contractor online. Referrals are almost always the best way to find the right person for the job.
The complexity of the problem will also determine the level of professional help required.
If there’s no hot water, you call a plumber. But what if the plumber can’t figure out the problem? Sometimes an issue is too complex and requires an engineer’s perspective.
In general, it’s probably safe to assume there’s a potentially simple solution available first before working your way up.
DESIGN-BID-BUILD PROJECTS
Many older buildings are facing large capital expenditures such as plumbing replacement, painting, spalling repairs and the like. These projects require expert guidance to help decision-makers make prudent decisions.
There are several ways to attack these projects. The most prevalent way to handle a big capital improvement project is known as design-bid-build. In this scenario the association or building owner would hire a professional (such as an engineer or architect) or group of professionals to design the project.
As part of the design effort these design professionals will guide the decision-making of the building management and produce documents to obtain a building permit and solicit competitive bids for qualified contractors.
The bids are then checked by the professionals for complete[1]ness and the professionals recommend the “best” contractor. It should be noted that best does not always mean the lowest-priced contractor, although many times the lowest-priced contractor is low because they are the best.
The pros of this arrangement include the fact that the design professionals work for the building owner and are obligated to make decisions that are in the building owner’s best interest.
Also, the pricing usually comes in lower overall on the project. Bids are received and there is assurance that the comparison is fair and that apples for apples are being compared.
One con of this arrangement is that the quality of the design is paramount in making this work well. Design omissions and unforeseen conditions can lead to change orders from the contractor.
When using this method, it is prudent to vet the professionals well and have a contingency built into the cost for circumstances that cannot be foreseen.
DESIGN-BUILD CONTRACTS
Design-build contracts became popular in the 1980s because of the high incidence of change orders that negatively affected the final price of the contract.
In a design-build contract, the building management hires a professional (such as a project manager) to write up a scope of work that is then put out to bids with contractors.
The contractor is responsible for the design of the system being bid on and takes on all the risks of the job. Theoretically, the price is now fixed and there will be no change orders on the project.
The pros of this type of bid are that it should be all-inclusive and if there are any design flaws they will be the responsibility of the contractor to resolve.
The cons of this arrangement include the fact that the contractor is in control of the design and may or may not have the building’s best long-term interests in mind.
The contractor is also in control of the design professionals (such as engineers and architects). Since the design professionals will be paid by the contractor, they are obligated to watch out for the best interests of the contractor, not the building owner.
Design-build contracts also tend to cost more because the contractor must put money in for the unknowns.
The building will not really know if they are getting apples for apples pricing because each contractor is in control of the entire design for their team.
PROJECT MANAGEMENT
Regardless of the style of bidding used, someone must manage the project.
The contractor should be managing their people and the project schedule, but someone must be watching the project to make sure the contractor is building to the specifications.
If there is a bank involved, that person will be responsible for approving the contractor’s pay requests and helping resolve any issues in the project team.
The project manager should always work for the building owner and have the building’s best interests in mind.
THE BOTTOM LINE
Trust is the most important factor for these projects to be successful. Regard[1]less of the project delivery method chosen, the contractor, design professionals, project manager and building management must have high levels of trust.
A successful project means everyone involved is successful. There cannot be success at the expense of one of the team members. Everybody wins or ultimately everybody suffers.
