Archive for October, 2014

I’m surprised at how many people are unaware that as a property owner they have the right to make improvements to their property without hiring a general contractor. It’s called “owner/builder” which means that the owner will do the work or hire others to do the work by trade. But there are some rules that still apply and things the owner needs to know. Here are some things to note:

  • All work has to be done in accordance with the applicable codes and regulations.
  • The owner cannot perform any work that requires a licensed tradesman and that includes plumbing and electrical work.
  • When a contractor gives you a bid for any portion of the work, the contractor must be licensed and bonded.
  • The owner has an additional level of responsibility and risk since there is not a general contractor involved.

Only those owners that are business savvy and have some experience in construction should choose this method of getting the job done. The only reason I bring this is option up is because the owner/builder option can be an effective choice. I have seen this method employed successfully projects where a construction manager is hired instead of a general contractor (called “bid/build”). But an owner who choses this methodology and doesn’t employ a professional to manage the project will be asking for trouble. Most people think they can cut the cost of the general contractor and save money by doing it themselves but you have to understand that there are many risks to not hiring a general contractor if you do not employ a construction professional to work with you. You should hire either a general contractor (GC) or a construction manager (CM).

The type of project and the size of project are taken into consideration when deciding on whether to employ a GC or a CM. Larger or complex projects may require both a GC and a CM. When it comes to the choice between a GC or a CM, there are pros and cons both ways. Typically, the fee for a construction manager is much less than the fee for a general contractor and depending on the ability and resources of the owner the construction manager’s fee can be tailored to meet the client’s needs. But that reduced fee is offset by more responsibility and risk being taken on by the owner. I should mention that there are CM at-risk and CM not-at-risk arrangements. For the sake of this article we are talking about CM not-at-risk. Here are some key features of the owner/builder construction manager arrangement:

  • The contractors all work directly for the owner.
  • The owner pays for all materials and labor directly and is responsible for tracking payment and releases.
  • The CM acts as the owner’s representative to oversee the work, schedule and administrate the project working with the owner to deal with issues.
  • The CM provides resources such as lists of contractors and vendors, forms to be used, estimating and everything needed to do the job.

Here are some key features of the bid/build general contractor arrangement:

  • The subcontractors and vendors all work for the general contractor.
  • The GC pays all materials and labor from monies paid by the owner. The owner still has to track payments and releases.
  • The GC is responsible to oversee, schedule and administrate the project. The owner has to deal with the GC regarding all issues.
  • The GC is responsible for providing most resources for the job but the owner still has to provide so resources like testing and inspections.

There is certainly a lot more to the CM and GC methodologies but you can see from the comparison why some owners are taking advantage of the CM option.

If you have any questions about this subject, please send me an email at service@raconsulting.cc or fill out the contact form.

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If you talk to someone who’s been through a project (even a kitchen remodel) they will have a list of things they would do differently. Going in to the project it seems like no big deal and you are excited to do something new. Maybe your business is expanding so you need more room or you are succeeding and doing well so you want to improve your home or your office. But after it’s all said and done you realize there’s no magic to it. It’s a lot of work and most people are hugely disappointed in the process. Here are some common mistakes people make dealing with construction.

  1. Owners believe it’s no big deal. You pour a little concrete and you slap some wood together. It’s not that big of a deal. Perhaps it shouldn’t be but even a simple kitchen remodel has a lot of different elements to it that all have to work together and look good when it’s done. You either have to know how to get it done right or trust the contractor which leads me to #2.
  2. Owners believe the contractor. Let me say that the majority of contractors out there are honest and hard working people. But even the best of them have things come up and as a result your project may not be done when you expected and it may not look like you expected. There are all kinds of contractors out there and working with them to get what you want is not as simple as it seems it should be.
  3. Owners make changes. Most people don’t really know what they want (honesty here). Once they see how it looks and feels they want to change something. Or perhaps what they thought was a good idea turns out to not be so good. Changes are a killer to a project and change orders are often the biggest point of contention on a project. The secret is to know what you want and then not make changes during construction as much as possible.

There are a number of other things that are like landmines on a project just waiting to blow the whole thing up. Most people don’t understand things like contracting, protecting yourself against liens, managing risk with insurance, how the flow of money affects the project, etc. The business of construction can sometimes be more complicated than the actual work. That is why many owners are turning to construction managers to guide owners through the process and help make the project a success.

If you would like more information or if you have any questions, feel free to contact me via email at service@raconsulting.cc or use the contact form.