The Construction Process: Part One

*and how to have an epiphany that's worth $$$

Hey Bright Builders!

This will be the first of two posts on the construction process.

In part one, we’ll cover HOW to oversee the process: the players, tips, and things you need to know. Part two will discuss how to PAY THE BILLS during the construction process, including loan draws from the bank and other important considerations.

Let’s get to it!

Risks and Players

How do you oversee the construction process? This is where much of the risk in development projects lies. You have a general contractor you've hired, engineers who have put together concepts, and architects who have created designs. Now, you're moving into the field, and the process is going to start. Hopefully, all the plans and preparations will be well done to allow your general contractor to build effectively.

Initial Steps: Site Work and Excavation

The first part of the construction process is the site work or demo. They’ll demo any existing buildings and perform any necessary environmental remediation. If you're doing underground parking, the next step is excavation, which is a significant risk because you don’t always know what’s underground. You've done testing and soil borings, but you don't know for sure what you'll find when you dig. So, site work and excavation are always risky parts of the construction process. Building the underground parking lot, including concrete and precast work, is also critical. They often refer to this phase as “getting out of the ground.” Once you get out of the ground, some of the risk diminishes because you then start framing, typically with wood, to build the rest of the building. So, getting out of the ground is a big milestone.

The Developer's Role

How do you oversee this as the developer? What’s your role in this process? Who are the other people involved? There are two primary ways to do it. One way, which we do at Hall Sweeney, involves in-house oversight. Jeff, myself, and our team attend every weekly construction meeting, walk the site ourselves, and ask a lot of questions. We've used the same contractor repeatedly, so we have a level of comfort with them and trust that they have our best interests in mind.

Third-Party Construction Managers

The other way to oversee construction, especially if working in a different market or with a different firm, is to hire a third-party construction manager. This consultant acts as your eyes and ears on-site. This is common for firms with multiple projects across the country, where it’s impractical for the owner to be at every project all the time. The third-party construction manager is included in your development budget and ensures someone is on-site monitoring progress.

Weekly Meetings: OAC

Weekly, there’s an OAC (Owner-Architect-Contractor) meeting, typically held on-site. During this meeting, an agenda and schedule are reviewed, and you go through the calendar, current project status, and any issues. It’s important to have these meetings weekly because problems can arise at any time. For example, if you have a meeting every two weeks, something could go wrong right after one meeting, and you won't hear about it until the next meeting, a week and a half later. Weekly meetings ensure you stay updated and can address issues promptly. There are few things worse than finding out that you’ve missed a problem between meetings that were too far apart and realizing that someone has now immortalized that problem in sheetrock or, worse, concrete :-)

Site Walks

Before each meeting, we do a site walk with the architects. As a developer, you need to know your plans and ask questions about what you see. I frequently ask WHY something is being done a certain way. Sometimes, I legitimately don’t know, but asking questions ensures the architects review and feel comfortable with the work. I know this perhaps seems weird, but supposedly “dumb” questions often reveal surprising insights about future obstacles. I’m also big on folks on my team being able to tell the story behind the build OUT LOUD.

Why?

I’m no psychologist, but it’s my observation that when folks tell a story over and over to themselves quietly, inside their head, they tend to repeat the same story they started with. BUT, when your team has to narrate out loud the rationale for why we did this, and then that, and then the other thing, they tend to catch “plot points” that just don’t make sense.

For example, there’s an editing error in this this sentence.

Did you catch it?

Nope.

Because you’re reading this in your head ;-)

Walk the site. Think out loud.

Construction Administration and RFIs

Part of your architectural contract includes construction administration, where the architect assists with oversight during construction. They typically do an additional walk separate from the owners, write a field report each week, and note any issues or items needing attention. This report is shared with the contractor and owner, keeping everyone honest and on track.

When there’s an issue or something on the plans that doesn’t work in the field, the builder issues an RFI (Request for Information). This request, usually sent to the architect, seeks clarification or additional information. The architect then forwards it to the appropriate specialist, such as an engineer, ensuring the right person addresses the issue.

Hands-On Management and Weekend Walks

Throughout the construction process, being hands-on is crucial. Visiting the construction site frequently allows you to catch issues early, preventing more significant problems later.

One tip I recommend is to walk your projects alone on weekends. It’s quiet with no interruptions, allowing you to focus on details. During the week, site walks involve groups with multiple conversations, making it hard to concentrate. Weekend walks, even for just half an hour, often reveal things others miss. I usually find a few questions or concerns to email the team about afterward.

And sometimes, just sometimes, I have something of an epiphany.

When I was walking Wakpada, I realized that we had way, WAY too many storage rooms. On one hand, storage rooms on the floors where tenants live are a big selling point as tenants can easily retrieve items without taking an elevator down to, say, the parking garage. On the other hand, your hallways can’t start looking like they are lined with multiple gateways to another dimension. I mean, at the end of the day, someone’s paying for those square feet (hint: YOU are paying for those square feet). There were enough storage rooms on floors three, four, and five and not enough tenants to monetize additional storage units. At the time, we were smack-dab in the middle of COVID, though, and what I knew was that everyone and their dog were looking for work-from-home spaces, particularly those folks who were budget-minded, aka those leasing studios.

Are you reading my mind?

Of course, you are.

I turned those additional storage units into Zoom meeting rooms.

And they were a hit.

And gave us an entirely new amenity to market.

Had I not walked Wakpada on the weekend, I would never have made that imaginative leap. In fact, I had walked the property 24 hours earlier with the entire team and simply made note of the fact that the storage rooms were where they needed to be.

Be careful that you’re not simply ticking boxes on a checklist.

If you're just checking off things on a list, you are confirming what's there as opposed to what COULD be there.