Insight as to why occupiers need professional Project Managers
1
Due Diligence Surveys
Signing an FRI (Full repairing and insuring) lease puts all the risks of the property maintenance upon the tenant, either directly or via a service charge. It is essential to manage this risk, this is done by undertaking due diligence via building and M&E surveys upon the property. Identified problems can then be addressed within the structure of the acquisition transaction or red flag the property as unsuitable for the business.
2
Contract Risk & Avoiding unforeseen problems
The building contract risks need to be managed. The risks revolve around time, cost and failure. The first step in managing this risk is choosing an appropriate contractor for the project, a contractor who is financially able to see the project through, has a demonstrable appropriate track record, and is capable of reacting to challenges – i.e. meeting deadlines by properly resourcing the job to do so. It is unwise to utilise a contractor who is reaching either financially or geographically to undertake such a project. The way the contract is procured will also dictate where these risks sit i.e. with the client or the contractor. Our project manager partners will ensure that as far as possible the risks sit with the contractor.
3
No such thing as fixed price/variations
There are always variations to a design and building contract. These variations can have a serious impact upon the contract time and cost. Indeed, contractors can “feed” off these variations and some will expect to make a big part of their profit margin because of these changes, if the costs are not predetermined.
4
Full specification based on client needs
Our Project Manager partners will undertake a very detailed needs assessment with the business to then produce a detailed “Employer’s Requirements” document. This will tell the contractor exactly what you expect. It can be quite detailed to help control the quality of finishes. This document can then be the base of any design and cost tendering by the contractors. This obviously means that the tenders are based upon the same criteria. The discipline of producing the “Employer’s Requirements” also ensures that the business thinks through all the operational needs and details thus minimising the need for variations.
5
Managing competitive design/cost tendering
Armed with an “Employer’s Requirement” document, our Project Manager partners can then run a competitive tendering process with several contractors deemed suitable for the project. This process will mean that you can capture the best design ideas via stage one and then incorporate them into a stage two tender. This process will hopefully maximise the design options and minimise the costs for the preferred design.
6
Option of having stage one workplace design
It is also possible to engage an experienced workplace designer to prepare a Stage One design (based upon employer’s requirements mentioned above) and provide the contractors with this as part of the tender documentation. Some occupiers prefer to insert this step as it enables them to visualise the initial design.
7
Cost Management (PC sums)
Contractors will often seek to build in “cost elbow room” by including PC Sums for parts of the contract. As far as possible our Project Managers will seek to remove these by agreeing either fixed prices for the finished solution, or if this is not possible then at least agreeing fixed rates for elements i.e. partitioning cost per linear metre.
8
Interim Payment Certificate (Payment providence)
An office fit-out is undertaken via a Building Contract which will have provisions for interim payments to the building contractor. When a payment is required and demanded the business needs to provide providence to the finance team that the sum demanded relate to the value of work completed and that it has been satisfactorily completed. This is achieved by our Project Managers providing a profession, independent certificate which validates the required payment.
Find out how CRE Advisors can help you with your Commercial Property move
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