Keith Schonewill, general manager of Johnson & Jennings General Contracting (www.johnsonandjennings.com), a leading San Diego-based general contracting firm, demystifies the tenant improvement (T.I.) process.
“When approaching a tenant improvement or remodeling project, what sometimes is assumed to be the best method of handling a project challenge or incorporating a money-saving idea can actually hinder the project’s success. Even the best planned and budgeted project can risk failure if it’s based on misinformation or a poorly guided assumption. And misassumptions can be very costly, especially for the project owner. By clarifying a few commonly encountered myths about tenant improvement projects, owners can sidestep many of the associated pitfalls – and meet schedule and budget constraints.
“Myth #1: Sharing the project budget with the contractor and/or architect will cost more because they will try to spend every dollar. Reality: Buying into this myth can result in the project not being designed in a timely manner, thereby delaying construction, and ultimately delaying tenant move-ins. Furthermore, the contractor can assist the architect/space planner in value engineering strategies to keep the budget intact, thus avoiding the possibility of a complete redesign.
“Myth #2: We can make up time on a behind-schedule project by cutting the bidding time to a minimum. Reality: Of all project aspects typically put under time constraints, the bidding process suffers the most. Allowing adequate bidding time assures the client sufficient coverage by all subcontractor trades, while also allowing for enough time to have questions answered by the architect. In essence, putting time into the bidding process helps assure a timely completion and can make or break a schedule.
“Myth #3: The lowest bid from a competing contractor should always be the chosen contractor. Reality: Superintendents and project managers with a history of proven experience can save many times over the minimal difference in their initial higher general conditions costs. An experienced team always will come up with creative ideas throughout the course of construction to stay on schedule, save costs, and ensure the highest quality.
“Myth #4: I can get the most bang for my buck by having the general contractor and subcontractors bid for the project all at once after I’ve finalized my plans. Reality: Bringing aboard the general contractor and subcontractors in phases can prove to be very beneficial. The general contractor, if involved early on, can assist in the preliminary planning and scoping stages to assure minimal change orders, as well as perform value engineering, which produces tighter cost estimates. Once project plans are finalized, the subcontractors can be invited to bid on the project, with all project team members involved in the selection process. This two-phase approach can yield better control, ensure quality, and avoid the use of unnecessary extras on a project team.
“Myth #5: Penalty clauses motivate the team to perform. Reality: Penalties get passed on to the subcontractors who often increase their bids to allow for potential liabilities. Furthermore, when penalties are large, all parties tend to cover their liabilities by documenting time extensions, rather then finding creative ways to make the project’s targeted completion date.”