A potential client was about to undergo a real estate project and made us aware that, since it was a turnkey transaction and relativity small, he was going to handle the project himself. He said his past experience within facilities and overall knowledge in real estate would help him complete the project without our help.
Periodically over the next several months when we would catch up he started to ask how we could help him and how soon we could get involved. At the start of the real estate project, he was unaware of the time commitment and resources required to ensure a successful project. As change orders started to roll in during construction, he knew he was over his head. His new motto soon became, “What you don’t know… you don’t know” and asked for us to get involved.
While we were able to help him complete his real estate project there were several important lessons learned along the way.
- Our client had selected vendors solely based on lowest price. From there, he frequently negotiated vendors’ pricing down even further. At the time, he was proud of the significant savings he had recovered but, he ended up paying for it at the end. The results of hiring a non-reputable service provider based on lowest price was a final product of poor workmanship and even worse customer service and communication throughout the project. Our client had also failed to properly level the bids which resulted in the “lowest cost provider” leaving off nights/weekend rates; thus resulting in significant change orders along the way.
- Our client failed to realize the amount of time required to properly communicate with all parties/vendors throughout the project. Our client thought project communications would simply be with the architect and general contractor but failed to realize he had to communicate with the building management, IT consultant, security consultant, furniture vendor, his internal staff, etc. Emails and phone calls started to pour in and he quickly realized he had to communicate with all parties in order to keep his project on schedule.
- Our client failed to realize how important the local marketplace would impact his project. Lead times on certain items changed the way he had to schedule his project. He also failed to consider local permitting processes, labor shortages and union/non-union workforce.
Managing a real estate project isn’t for everyone and our client learned the unfortunate way. Although his general construction experience was a valuable asset, he quickly learned that managing a project requires significant intellectual capital as well as a full engagement to the project; in order to have successful.
Related: What is a real estate project