Construction
4 Most Important Factors for Conversations with Engineers & Architects
Engineers and Architects demand experience and coordination. Be sure you know about these important factors and many others by reading below.
It’s no secret that CRE construction projects tend to experience delays and budget overruns. According to McKinsey & Company, large projects across asset classes typically take 20% longer to finish than scheduled and go up to 80% over budget.
This is partly due to the complexity of coordinating efforts among developers, engineers, and architects. Each plays a crucial role in the successful execution of a construction project. To ensure it runs smoothly, however, developers must be selective when choosing architects and engineers for the job.
According to Barry LePatner, a construction advisor, author, and attorney who has been representing U.S. real estate developers for over 40 years, developers should discuss the following three things with engineers and architects:
1. Building information modeling (BIM)
In today’s construction environment, building information modeling (BIM) is a must. It involves creating a 3D virtual model of a building’s physical and functional features to make bids, coordinate work among different contractors, and avoid costly mistakes.
According to a 2019 National BIM Standard-United States study, BIM has led to a:
- 25% increase in productivity of the AEC sector
- 25% decrease in manpower usage
- 5% decrease in final construction costs
- 5% increase in project completion speed
And yet, most architects and engineers haven’t fully adopted BIM tech. Most still mix BIM with antiquated 2D design methods, limiting construction efficiency.
For example, most construction documents for bid reflect a level of development (LOD) of 300, which omits important design details that don’t get bid on.
“This opens the developer to the likelihood of change orders that drive up costs as much as 30% and extend project schedules by as much as 6 months to a year,” LePatner said.
2. Project management experience
Before hiring a design firm, developers should inquire about the project management experience of its architects and engineers.
“Too often, many firms send out their most junior employees to get ‘field experience’ and they have little, if any, control over the construction teams,” LePatner said. “This prevents calling early attention to small details that will cause large problems in later stages of the project.”
According to a 2021 survey, the percentage of architecture firms looking for project management skills when hiring went from 4.3% in 2020 to 61.6% in 2021. Developers should follow suit by seeking architects and engineers with extensive experience overseeing contractors to help ensure nothing falls through the cracks.
3. Design coordination
What plagues most construction project timelines and budgets is a lack of design coordination. Consequently, developers should insist that architects coordinate their building designs with those of other engineers, including structural, mechanical, electrical, plumbing, lighting, security, fire safety, and other designs.
“If you wait until construction is underway to learn that the mechanical or plumbing contractor cannot run its lines as shown on its drawings because there is a column or beam blocking the way, the resulting lack of coordination will lead to an expensive change order and consummate delay to the project,” LePatner said. “Multiply this by two dozen or more such problems due to a lack of coordination by the design team and you see what happens on most projects … financial and schedule disaster.”
According to a 2016 study, there are at least 53 coordination factors that impact the success of a construction project. By addressing them preemptively with architects and engineers, developers can avoid unnecessary delays and budget overruns.
4. Environmental risks
Lastly, developers must address environmental risks such as floods, fires, and storms with architects and engineers. After all, natural disasters are on the rise. About 43% of billion-dollar natural disaster events have occurred in the last decade alone.
Developers can collaborate with architects and engineers to optimize site selection, building design, and material selection to be resilient against such events.
In areas prone to natural disasters, developers must also account for rising property insurance costs. Since 2017, commercial real-estate insurance costs have risen an average of 7.6% annually. Furthermore, in areas hit particularly hard by natural disasters in recent years, some insurance companies have withdrawn coverage entirely.
All of this must be factored into construction plans, budgets, and timelines.
Managing project risks with a CRE construction attorney
According to LePatner, most real estate lawyers can help developers with zoning, environmental, financing, and other real estate-related issues.
However, not all real estate attorneys can help you:
- Select the right design and construction team members
- Prepare an agreement that secures a fixed price for construction, alleviates most excuses for change orders, and ensures that any failure of the construction team to complete on time and on budget falls on their shoulders
- Understand nuances such as why it is always a bad idea to use a liquidated damages clause or why you should only use arbitration in very limited circumstances
Consequently, developers should get specialized CRE construction counsel from the outset of any project.
“Too many decisions are casually made early in the acquisition phase that either lead to mistakes downstream or shackle a project with the wrong team members who are not capable of accomplishing each of the developer’s business objectives,” LePatner said.
