Building Administration Arrangement Inquiry – What to do and assistance – Rating: 10

6 thoughts on “Building Administration Arrangement Inquiry – What to do and assistance – Rating: 10”

  1. Our group just got done a $10MM build and I ran the books so I may be able to help. First, how much do you have invested in this company? If it’s feasible to switch companies at this point in time, I would certainly pursue it. Any CM worth their weight realizes that understanding the project, clear communication and meeting deadlines is their job. Next, we paid for some soft costs, with crystal clear accounting (every receipt was turned over to our group for review). What specifically are you referring to when you say “overhead”? Finally our CM was comprehensive. Our contract spelled out exactly what they would perform and we were so happy with them that we are absolutely using them again. Daily project oversight, budget management, contract management and administration, accounting, materials pricing, minor engineering, meetings with city county and state officials for permitting purposes…I could go on. Granted, they were fairly compensated for their time but their services were highly valuable to our group.

  2. You could also structure to pay a maximum amount per month for CM services. We do it in a less structured way. There’s “expectations” rather than deliverables required. We do value add office multi and retail and have been doing about $7m in capex and TI work.

    On three properties, they bill either 50% or 100% of $3,000 per month depending on the level of work done that month.

  3. Noticed you mentioned CCDC so I’m assuming you’re from Canada. I work as a Project Manager for a large commercial general contractor in Calgary so I can offer some insight here:

    1. Grill them over why it’s taking so long to site plan and get permits. I completely agree with you here, these are relatively simple stages of construction which every contractor should be able to nail down.

    2. Soft costs will be incurred with every contractor. They have to pay for their own internal accountants, safety fees, insurances, software, etc.

    3. Typical CM fee is usually 3-5%, and considering the current market right now, contractors will definitely do jobs for 3%, even less. I think you’re overpaying. But yes, they do make money on the fee and the labor markup which is very common.

    Granted I don’t know the specifics of your project and the hurdles you and your contractor may be jumping through, but based on what you’re saying I’d start vetting this contractor a bit harder before you sign a contract. CCDC 5B I’m assuming? Feel free to PM with questions!

  4. The CM fees seam low IMO, to small of a project to be at that rate…..however not enough info about the project.

  5. 1. It sounds like you already know you should evaluate other options for construction. If you’re not thrilled with your relationship with them so far, you don’t want to get into bed with them for that kind of commitment.

    In any case, look into requiring performance/payment bonds for the construction if the financing party isn’t already requiring it. This will ensure that the work is done on time and to spec. The cost will end up running upstream to you, but it’s the the best way to de-risk the construction phase.

  6. I think the bigger issue here is that the group you hired is not on top do the things they need to be. They should be telling you what is going on and should be the expert on the items not the other way around. Not sure who these guys are or what their background would be but I would advise finding someone new. Things tend to get “worse” in construction not better. This should be the easy part of the job and failure now is not a good sign.

    That being said I would also validate the issue and determine the cause. It’s easy to blame the CM but if all they can do is wait for permit review it’s hard to fault them for a slow inspection process.

Comments are closed.