Reaping the Benefits of Owner Representation
Building owners and investors shoulder many responsibilities: managing tenants, maintaining the structure, paying taxes and more. When it comes to building improvement or development projects, the responsibilities of being an owner boil down to just three critical functions:
- Setting expectations and sharing them as clearly as possible.
- Making timely decisions.
- Paying people in a timely fashion.
Every owner needs to identify a leader for each project, commonly known as an owner’s representative. This representative, guided by the owner’s tolerance for risk, helps move projects forward. The representative can be an internal employee or external consultant.
The expectations for a project may be vague at the start but must become more and more refined as a project proceeds toward reality. An owner’s representative will pull the team together to define the goals and scope of the project along with the anticipated range of quality, schedule and budget. All these parameters will be used along the way to measure success or failure and enable adjustments throughout the process. And there are always expectations whether publicized or not.
We’ve all experienced setbacks when expectations aren’t clearly set forth and communicated. For example, parents of teens know that unless they stipulate when and how the trash should be taken out, the task may not be completed before the garbage truck rolls down the street. The ramifications of no or poor communications on building projects are obviously more serious. Clearly spelling out expectations to all involved is critical to the success of a project. An owner’s representative can oversee communication between all parties and make sure voices are heard and differences are sorted out, so nothing falls between the cracks. Often a hired owner’s representative helps the internal stakeholders by acting as facilitator and experienced advisor.
Making Timely Decisions
Projects are driven by a series of good or bad decisions. After setting forth expectations there are myriad of decisions to be made during design. Some are required by laws and codes, while many others are choices to be made; from significant ones, like the square feet of apartment units, to the more detailed, such as selecting the finish of door handles.
Then getting into construction, and especially renovation, the best laid plans frequently demand adjustment along the way. With home improvement shows on television, it’s par for the course when unexpected rot is uncovered on demolition day or homeowners waffle on picking paint colors. Challenges like these arise during commercial construction projects, as well. The best way to get over these hurdles is to make timely decisions. When owners or their representatives hesitate, precious time is lost. Work on the job site may come to a stand-still, which in turn can lead to cost overruns. If a building owner doesn’t have the experience or can’t dedicate considerable time to learn about and make informed decisions, he or she would benefit from hiring an owner’s representative.
The owner’s representative should think ahead to prevent issues, and once notified of problems, research solutions and recommend options to the building owner or investor. In this way, owners can feel more confident in making faster and better decisions.
Paying People on Time
While this area of responsibility is listed last, it is arguably the most important thing an owner can do. Almost every project requires specialty consultants and contractors to be part of the team. Those firms and people are hired to do a job and then expect to get paid for their service and products. Prompt payment is a highly effective way to incentivize focus and good work. An owner’s representative can help set up processes for making timely payments before design or construction even begins.
When we represent an owner or investor, we discuss the payment process, what forms and approvals are needed, and the time required to process payments, especially where building inspections are required. Establishing the procedure for receiving and paying invoices in advance will result in a smoother flow of cash through the project. Timely payment will motivate contractors and suppliers, both on current projects and any projects the owner wants to tackle in the future.
Are you wondering about the value of an owner representative? We’d be happy to discuss the benefits with you. For more information on the services we offer clients, browse some of our other articles — or give us a call at 888.357.7342.