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FAQ: Do I Really Need Construction Management Services?

Folks in the commercial real estate industry throw around terms like “construction management” quite a bit. Many professionals don’t pay a lot of attention to the concept when relocating…until the time comes to pay the bills. But the fact is that when a change of office space occurs, good project and construction management can mean thousands of dollars in savings.

By the way, when we say “change of space,” we can mean moving your business to a new space; expansion or downsizing of current space; a repurposing of existing space (making two offices out of one, putting in a break room in place of an office or conference room, etc.) or possibly just a refresh of existing space (new paint, carpet, finishes, etc.). All of these can and often do require construction, which is where the surprise costs can begin to mount if you’re not careful.

The best way to go when facing a change of space is to let a professional handle it—be it your own, in –house real estate department or, if you don’t have that luxury, a professional brokerage. The positive results are very real:

You’ll save real money, and a whole lot of it. While your business is trying to juggle the logistics of relocation and keep the business running, any number of things can cause your costs to spiral if they’re not managed by knowledgeable pros:

Inefficient space planning: During the initial review of your new space, efficiencies can be built into the design and scheduling of the construction with the knowledge and expertise of a space planner. This not only can save time and cost of a project but can also reduce impact on personnel if the space will remain partially occupied during the construction.
Non-value engineered approach: Prior to finalizing the plan, a pro with deep knowledge of construction materials and methods can often find numerous ways to cut costs without compromising the quality of the construction.
Unmonitored design: For most architects and engineers, the priorities are aesthetics and function. Sometimes, these goals can butt heads with costs. Knowledgeable oversight in this area is beneficial to the project’s bottom line.
Lack of Scope review: Again, thorough knowledge of construction methods, materials and terminology can prove to be valuable during the bid review process. Scope items that are not included in a proposal can turn out to be costly after the contractor is assigned. “Low price is not always true cost” applies here.
Change order management: This can be tricky, even for some pros. If changes arise during construction, the contractor has the luxury of not having to compete against a competitor’s bid. Thorough scope and pricing review is crucial to ensure that the client is being provided with a cost effective solution and not just an opportunity to overspend.
Internal personnel task focus: If you’re not using a third party professional, count on having your team spend a great deal of time searching and approving contractors, developing scope of work, evaluating proposals, coordinating and communicating with contractors, attending meetings, supervising the actual build-out, reviewing/negotiating change orders, performing quality control visits and more. Unless you have a dedicated real estate department, all of these time consuming tasks will, of course, be done in lieu of the things you pay your team to do most of the time.

The bottom line is that most firms that don’t have corporate real estate professionals in-house learn the hard way that construction management is a skill that can mean huge savings. Most of the time, those savings will exceed what the firm pays a third party to manage the process for them. Many times during lease negotiations, construction management fees can be negotiated into the terms of the lease so that you don’t even have to pay for any construction out of pocket. But it takes expertise to make this happen.

The Stone Group

12912 Hill Country Blvd,

Building F, Ste. 201,

Austin, TX 78738

Phone. 512-732-8700

 

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