So, you’re ready to swing some hammers? Transitioning from Permitting to Construction.

You've got a permit, and you're ready to knock down the walls. Not so fast. There are a few things that need to happen before you can bring in the hardhats and sledgehammers. In this blog post, we’ll review a few areas to address prior to construction that can cause stress, pressure, and schedule issues as a project transitions from permitting to active construction.

A good owner's rep project manager does a lot of planning and communicating behind the scenes that help to keep the flow of the project moving forward. This month's blog post explains some of the nuances that go into the role we play in leading the team through this critical transition.

The Common Area represents landlords, tenants, property management groups, developers, investors, governments, and other organization types. Essentially, if it's a real estate project, we will manage it! Each group has its own ways, so for simplicity’s sake, we will base this article on our role as the tenant's advisor, also known as a 'tenant-rep' (Tenant Representative) or Tenant Improvement project manager.

Timeline Pressure Starting from the Lease or Building Purchase Transaction

The leasing process often takes much longer than tenants and landlords anticipate. In a tight market, landlords are holding out to consider all possible tenant options before they provide their final offers, and tenants are also waiting to continue to review options. The contracts then go through an expensive and time-consuming negotiation process with the lawyers of both sides. If it drags on too long, the tenant will continue to get closer to their current lease expiring and could face holdover costs to stay in their existing space until the new area is complete.

This creates immense pressure on the design, permitting, and construction phases to avoid those penalty costs.

A smart tenant will include us in the building selection and lease contract negotiation process to advise on the work letter language and help analyze the costs and schedule impacts of selecting one location vs. another. For example, a newer building may be a first-generation space and would not require demolition costs; however, it requires all new HVAC systems. An older space may need some demolition, but there could be some elements that we can reuse to help weigh the differences, providing you with a conceptual budget estimate before you go too far down the lease negation path or in your build-out estimates.

We can also begin working with the tenant on the program for the new space and even engage an architect to do space plans of each option to see how your teams would fit in a given floor plate. This would also give us a head start in design.

Design Decisions are Hard

During the design phase, a client's leadership team plays a critical role. They must be decisive and understand their business and headcount growth projections so that we plan for the entire length of the lease, not just building a space that will meet the client’s needs for two years just to be renovated again. This is called a “flexible future-proofing approach to space planning.” Workplace strategy is critical to this process, and hiring a project manager like us will ensure that you have thought through all the scenarios that this build could need to consider.

Anecdotally I can share a recent experience I had with a client whose leadership team was not ready to listen to the advice we as the PM consultants or the architect design teams were giving them. We knew based on conversations with HR that they would be outgrowing their space before we were done building it. There was space available to expand their lease, but they weren't able to make the fast decisions aligned with where we were in the design phase. They were in a temporary space that was going to expire on them with nowhere to go.

We ended up having to go through several expensive redesign sessions to accommodate their changing headcounts and department adjacencies. They eventually took on additional square footage, but the schedule and the budget were already impacted. Right away, we were several months behind schedule and over budget.

There wasn't much that could be done to save them from themselves, but I use this experience now to have those tough conversations early on and spot when a client team isn't taking ownership of the important role they play in keeping a project on track. Namely, the client must provide timely and accurate responses to requests for information during planning and design. This is harder than it sounds when the client team has their jobs and business to focus on; however, if they trust us and allow their project manager to guide them, we can make it a lot easier to handle.

You have a Permit, Now Can Construction Begin?

Many people get frustrated during the permitting phase because there are so many variables that come into play in terms of how long it will take to get through a jurisdiction's plan review process. A good rule of thumb is to expect 8-10 weeks in South Florida. Depending on the relationships we have in a city, we can help speed this process along, but we have to provide detailed drawings and be timely with responses during comment review. So, you clear your last comment and hear that you have an approved permit. It's natural to then expect to start construction immediately, but in fact, there can be several day gaps between when you hear the great news and when you have all the formalities and documentation in hand.

Sequencing your general contractor bidding and award process to happen and permitting is a great approach, but not without its flaws. Not to blame it on lawyers again, but a construction contract is a big deal, and the language needs to be crafted just right for each individual project. We do have some standard AIA Format documents that are fair for all parties and great for most typical tenant Fit-out projects; however, a client may want to use a heavily modified AIA contract or have a custom contract drawn up. This can delay the time it takes to get ink on those contracts as both sides nitpick the language. Until then, we don't have a GC on board that can pick up the drawings and start the build.

One time-saving solution I recommend is allowing us to send out the GC RFP very early in the design process and have the winning pre-construction ("pre-con") bidder join some of the design meetings so that they understand how the features of the space are intended to be built and can put together a highly detailed estimate at each stage. We then gain the client sign off before moving forward. I've seen pricing come back while the plans are in for permitting and more expensive than the client wanted. We have to stop and conduct value engineering (finding ways to cut scope and select different finishes) to

get to an agreeable cost. Many times, this requires redesign fees, and the plans have to be reviewed again by permitting.

Often a client doesn't understand this strategy because they don't think we'd achieve competitive bidding. In fact, we can maintain the competitive spirit of the bidding process at the subcontractor level by selecting an open book GMP approach to the final pricing effort. I'm hosting a few webinars on just this topic in partnership with Berger Singerman in the fall, so keep an eye out for those events to learn more.

It’s Hammer Time!

Okay, great, we selected our GC, we have an active contract and just got our permit. Why don't I see the debris flying just yet?! Well, believe it or not, there is some lag in the mobilization phase in which we are preparing to start on site. While it may feel anticlimactic, it often makes more sense to get started on the submittals process, get subcontractors under contract, and schedule the safe off activity before we can get in there and start tearing it apart. Once all this is complete, yes, it is finally time to get to work – and the transition into active construction and demolition is soon underway.

Check out a recent video of the demolition phase we published here.

So, after 1500 words, are you convinced yet that you need to hire a project manager for your next office build-out? I often tell prospective clients that we will save them more than we cost them in actual savings of time, money, and the aggravation of managing the project. Even if it is a small space, the process is still the same and ripe for the opportunity to make some expensive mistakes.

Give us a call. Let's navigate this together.