Whether it’s a new affordable housing community or an acquisition–rehab project, the lengthy construction process entails many moving parts.
Open lines of communication and collaborative partnerships early on and often are key to ensuring the development is delivered on time.Several experienced developers share their best practices for navigating the construction process from start to finish:
1. Boost Your Construction Cost Estimates
Tapestry Development Group, a nonprofit based in Decatur, Ga., aims to add at least 15% on top of its construction cost estimates in its projects’ construction–rehabilitation hard budgets. “We’ve experienced construction costs continuing to rise over the past few years, and, for those of us in the Southeast, we’re anticipating by the second quarter of 2018 both labor and material cost increases due to the demand for reconstruction from the recent hurricanes,” says principal Richelle “Shelly” Patton. “Having the discipline to add these additional costs into budgets can be a critical way in which to address rising construction costs in the market.”
2. Review Documents With Key Players at the Start
To get the best results during the construction phase, developer Dominium focuses on the fundamentals, which includes reviewing documents with the project team.
“Right before the plans go out to bid, we sit down with the architect and review documents together. This includes our construction supervisor, our architectural quality control person, the development associate, the architect, and their consultants, as necessary,” says Scott Ewing, director of construction for the Plymouth, Minn.–based firm. “This enables us to answer contractor questions in advance and finely tune the scope of work. The architect then makes the final corrections and issues the documents for bid.”
Ewing adds that once the project is awarded and the contractor is about to begin the project, the team sits down again to walk through the documents with the general contractor’s project manager and superintendent. “This ensures we point out critical details and products and ensure they understand the project scope.”
3. Select Products for the Long Term
Since Dominium is a long-term owner of affordable housing, it looks carefully for products that are durable for long-term usage and makes sure to be consistent with those products across its projects.
“Contractors always wonder why we’re so specific on things like a towel bar,” says Ewing. “First, it makes our life easier to inspect knowing the towel bar we install in Orlando, Fla., is the same in Iowa City, Iowa, and Greeley, Colo. When it’s wrong, it jumps right out at you. Second, we want it to last 20 years or more.”
4. Create a Centralized Purchasing Team
To maximize savings, Indianapolis-based Herman & Kittle Properties has a purchasing team that sends its plans out to bid for all projects and works hand in hand with individual project managers to better capture more bids for multiple projects.
“Historically, each project manager would bid his or her individual project out using various bid platforms and sources to locate qualified bidders,” says president and CEO Jeff Kittle. “This created project silos where information wasn’t always shared between managers, even though many trade partners worked in multiple states and could add value across several projects. By centralizing purchasing, we’re able to discern multiple state firms, vet groups uniformly, and create value by having a team focus on this critical stage of construction.”
5. Hold Monthly On-Site Meetings
“For each construction project, we hold monthly meetings on-site that require the physical attendance of the developer of the project, project architect, and construction project manager,” says Tom Capp, COO of Gorman & Co. in Oregon, Wis.
6. Require Weekly Labor Reports
Kittle says weekly manpower reports for all active construction projects are critical. “We’ve found that the number of subcontractors on-site can help establish metrics that lead to being able to forecast monthly construction billings, and, by reporting weekly, managers can make changes and help remove obstacles sooner rather than later and proactively versus reactively.”
7. Plan Reviews Mid-Construction
For Herman & Kittle, Kittle says construction plans are reviewed by all involved (design, property management, development, and construction) at an in-person, four-hour meeting once the project is 50% complete, to ensure that it adheres to the qualified allocation plan, green building standards, and pro formas and is cost-effective. The firm goes through a similar process at 90% complete for the prejurisdiction submission review.
8. Schedule Frame Walks
Herman & Kittle also schedules frame walks prior to drywall installation for new construction and post-drywall removal for rehabs with key trade partners, designers, property management, and construction personnel. “[The team] tours each unit type and common areas at this stage to help eliminate changes after drywall is installed to help eliminate costly changes at unit turnovers and identify potential ‘misses’ not foreseen during the design phase,” adds Kittle.
9. Stay Up to Speed With Technology
According to Kittle and Ewing, technology can help the construction and project management teams stay up to speed and connected with one another.
“Our entire team utilizes project management software as a central repository for everything from land purchase agreements, due diligence documents, construction drawings, punch lists, etcetera,” says Kittle. “This allows access for all stakeholders regardless if they are based in our home office, remote offices, or field offices that are accessible via iPad and iPhone, android phones, and so on.”
Ewing says Dominium’s staff, and some of the developer’s regular general contractors, use the Plan Grid app to remain updated on different projects in real time and to have access to all the plans and specifications. “We’re also beginning to use drones for building inspections, as [they’re] more efficient,” he adds.
10. Plan for Resident Relocation for Acq–Rehabs
To help manage the construction phase on its acquisition–rehabilitation properties, Tapestry engages in relocation planning for its residents as one of its earliest due diligence activities.
“We keep revisiting relocation phasing, construction phasing, resident notices/communications, and relocation budget often, throughout the underwriting, closing, and construction periods,” says Patton. “As part of that process, we start discussing construction phasing and relocation phasing early in the project’s development process and work diligently to facilitate open lines of communication between management, development, and construction staff throughout the pre-construction, construction, and lease-up phases.”