Are You Really Ready to Site Develop? – Part 1
So, you have a vacant parcel and are determined to proceed full speed ahead building your version of “Paradise”. Whoa!…. Time to pull back on the reigns for a moment. There are a few basic self-questions to answer before proceeding.
Am I new to the development game?
Do I know what is involved and what steps are typically necessary?
Do I have a reasonable concept of what the project will cost to design, construct, operate and maintain?
Do I know how long the project will take to complete?
What do I expect to get for the investment?
How do I go about getting the professional help I need?
How do I go about getting the necessary financing?
Do I have an experienced attorney to help me navigate the multitude of legal obstacles?
While you likely have answers to at least some of these questions, others are probably leaving you scratching your head. The development process can be very exciting and rewarding but it is also laden with potential pitfalls. Navigating through the multitude of tasks, processes, decisions and approvals can be a challenge for even the most experienced developer. So, saddle up and get ready for an interesting journey.
The following is intended to help to organize the journey.
The first major consideration is to figure out which Project Delivery Model best suits the project. There are three basic models to choose from, each with its inherent advantages and disadvantages.
1. Design - Bid – Build: This method involves three sequential project phases. There are typically separate contracts for the design and construction phases of the work. The phases are:
a. The design phase, which requires the services of a design professional
b. The bidding phase, where a contractor is selected
c. The construction phase
Pros- Strong owner project control, well defined responsibilities among parties, reliable project cost information.
Cons- longer project timelines, can create adversarial relationships between parties, limits constructability input from the contractor’s perspective.
2. Design – Build: This method combines design and construction services under one contract with the owner.
Pros- Faster project timelines, single point of accountability, effective solutions to changes or problems.
Cons- Less owner control, owner must make quick decisions, changes can be costlier, not best model for unusual or iconic developments
3. Construction Management: This method employs a construction manager who acts as consultant to the developer in the design phases and as the equivalent of a general contractor during the construction phase.
Pros- Incorporates contractor’s perspective in the planning and design, shorter project timelines.
Cons- Higher administrative costs, moderate owner control over work.
Once the desired Project Delivery Method has been selected, the next step is to choose the project lead. This will be the individual or organization with the necessary expertise to organize all the disciplines required for a given project. Depending on the type and size of project, the list of disciplines may include a realtor, an attorney, an accountant, an architect, an engineer(s), a surveyor, a landscape architect, a contract manager, a contractor and so forth. If you are unfamiliar with the abilities of a given professional, it is advisable to interview or accept proposals for the proposed work.
While professional services will not come inexpensively, it is important to remember that these individuals are equipped with the knowledge and experience to help guide you through a project in the most efficient and cost effective manner.
