Risk in the design and construction process can be daunting, however manageable
if performed in the pre-development and pre-construction stages of the project.
Constructability, coordination of documents, pricing, project leadership and scheduling
issues can be best resolved during the design phase and prior to the 1st turn of the
shovel. These topics among others can be problematic if left unresolved and allowed to
run their course. More often than not, it will lead to discord among project participants
and possibly a dispute at the conclusion of the project.
A sampling of questions that warrant consideration from an owner’s perspective
encompass the following and embodied while in the preparation/assessment stages of
a Request for Qualifications (RFQ) and Request for Proposal (RFP).
Should an owner, facility manager, property manager, tenant or a CFO
be entitled to an open and through design and construction process?
What is the best form of agreement with the contractor and what risks are
associated with the various agreements?
Is the contractor or architectural/engineering fee too low? Is there a reason why?
It may not necessarily be a reflection of the economy.
Can the contractor and architect/engineers become participating partners?
Did the design and construction schedule provide enough time for a quality
review of design, pricing, comments, alternative solutions and approvals?
Is the project financially viable and do you have the ability to accept the risks?
Is there an experience management team assigned to the project to provide
leadership throughout the duration of the project?
Draft July 20, 2010
Who Is Managing the Risk?
Today’s highly volatile financial market with lenders facing 1.2 Trillion dollars of
maturing debt within the next several years combined with a limited resource of
financially stable tenants and clients will cause owners to face tough sledding in the
foreseeable future to launch projects of any magnitude. Substantive loan to value
ratio’s, completion guarantees and personal guarantees will not be going away anytime
soon. However, as the real estate industry inches towards recovery lenders, owners,
CFO’s, etc. will increase their focus on project risk mitigation to protect their investment
and pre-project risk assessment will be an important element at the forefront of the
The corner stone of any successful project begins with an understanding that all
participants from the owner and there management team to the architect, engineers,
consultants, sub-consultants and contractor has responsibility and ownership in the
planning, design and construction process to ensure the most comprehensive and cost
effective approach to the project with the least amount of disruption.
“The process is a symphony of details”. George Slye of Spaulding & Slye
To learn more about Risk Mitigation please visit www.constructionadvisory.net