Newsletter
Project Design Teams Saves
Project design teams saves money, time and frustration by pooling expertise. Evaluating project feasibility and utilizing the skill sets and knowledge base of the Contractors, Architects, Engineers and the Owner provide for improved outcomes.
A simplified design process consists of the following elements:
- Owner Concept Identified
- Define the scope and design criteria around the Owner concept
- Architect to develop preliminary schematic/pricing plans
- An abbreviated plan is created of the site, floor plan, demo plan and general levels of finish
- The Owner then reviews the plans for approval.
- Once the plans are approved a construction budget can then be provided based upon the design concept.
- Next, construction documents are created to include full architectural, structural engineering plans, mechanical, plumbing, electrical and possibly site plans and civil engineering depending upon the project.
- When construction documents are roughly 75% complete the General Contractor can provide a construction estimate.
- Now it is time to submit for a building permit, as long as project costs align with funding parameters.
Save by including a General Contractor early in the process.
The contractors understanding of construction means and methods and expertise derived from constructing many, many projects is of great value. This unique field experience allows for identification of less obvious conditions and impacts that are not as recognizable to the non-builder. The collective skill of the Architect, Contractor and Engineers provides for a better end product. Quite often, an experienced Contractor can offer alternative ideas and concepts that can reduce project duration and project costs without a reduction in quality. Additionally, there are usually alternative methods and approaches, referred to as value engineering, that can be offered for consideration early in the design process that lead to improved end results.
Early engagement of a General Contractor improves results
Early involvement of a Contractor lead to more favorable results, less hassle, reduced project duration and reduce project costs.
In conclusion, bring the General Contractor to the table earlier rather than later – You will be glad you did!
Subcontracting 101 for Building Owners
The basics provided in “Subcontracting 101 for Building Owners” is a helpful primer that can make hiring subcontractors a positive experience.
Sounds simple enough; hire a subcontractor and have them perform the work that needs to be done. Saving money and keeping control seems like a reasonable and logical approach. Besides, it might be fun to play the role of general contractor. It can’t be that hard.
Dealing with subcontractors can be a rewarding experience, however, there are a number of basic steps that need to be followed to bring any level of fun or enjoyment to the process. The key basics are:
Define the Scope of Work in Advance
In order to clearly communicate the desired scope of work it is critical to put it in writing. Going through the process of putting the scope on paper requires a thoughtful approach that should follow a logical process. A sketch or concept design is a great way to help provide clarity so that various views, measurements and details are shown to show someone else the concept that initially resides as nothing more than a mental concept or idea buried deep within your mind. Subcontractors do not read minds so please get the details on paper. The more information and detail that are provided, the better the probability for a successful project and favorable conclusion. Do not skimp on this step; otherwise, there will be unintended consequences. Finally, include the scope of work as an attachment to the Subcontract Agreement and rely on it as the road map for the project.
Qualify Subcontractors
There are good people and marginal people in each and every aspect of life. Keep this in mind when you are comparing prices for the project. The last thing to be done is look at price as part of the decision process. Do not us only price as the primary driver in the decision process. Quite often there are reasons a price is substantially lower than a competitors. Here are a few steps to follow in helping determine which subcontractor to use:
- Check with the Nevada State Contractors Board (www.nvcontractorsboard.com) to see if they are licensed, insured and bonded. How long have they been in business and do they have any complaints against them from previous customers.
- It is also recommended to check with the Better Business Bureau (www.southernnevada.bbb.org) and see if they have a complaint history. If they are not a member of the BBB it only means that company did not join the BBB it should have no bearing on the quality of the business. New subcontractors and those with numerous complaints increase the likelihood of a less than satisfactory outcome.
Project Deliver
Start date, project duration and estimated project completion dates are important components to a successful project. So be sure to talk about them with each subcontractor during the bidding process and be sure to get these three time critical components in the Subcontract Agreement. Remember; start time, duration and estimated completion date.
The Final Decision
If you have done your homework you will have several quotes from qualified subcontractors that are all bidding on the same scope of work (you must verify all bids follow the scope). One more thing to consider are the personalities involved and the simple question is – Can you work with that person, do you have confidence in them to deliver, and do you like them. There is nothing worse than dealing with someone you do not feel good about working with. Human intuition is a valuable tool so use it. If it doesn’t feel right it probably isn’t right.
Getting the Work Done
By following the basics of “Subcontracting 101 For Owners” and using the Subcontract Agreement, scope of work and attachments (sketch’s and plans) the path is defined on the roadmap to achieving a successful project, as long as good decision were made along the way. It is very important the process is managed and you provide the oversight. You developed the outline that, if followed and managed, should lead to a good conclusion. Once the subcontractor starts to work it is not time to just turn them loose. This is the point in time to focus and monitor the progress. Your level of engagement is critical.
In Conclusion
Developing and communicating a good scope of work, culling through the bidding process using qualified subcontractors, insuring the subcontract agreement is thorough and complete, selecting the most qualified subcontractor, not just the cheapest one, and managing the construction process is both art and science
If you find the burden of “Subcontracting 101 for Building Owners” is more difficult than expected and would like professional help, advice or if you have questions we are here to help.
Own Instead of Rent for Small Business Owners
Own Instead of Rent & Pay Yourself First
One of the best lessons in teaching others how to save is to pay yourself first and set aside a reserve or savings for a rainy day. A similar approach is to use the same mindset and pay yourself each month by accruing equity in a building you own. Paying rent is an expense but investing in your own building is a way to accrue equity year after year. Before you know it, 10-15 years goes by and the building is yours. No mortgage!
Interest is Tax Deductible
Mortgage interest provides a tax deduction. Paying rent does not provide this added advantage.
Build Personal Wealth Incrementally
Just like paying down your house the same holds true for paying down the mortgage on your own office building. Ownership leads to equity and equity is wealth.
Throwing Money away each month
Rent is a monthly expense without any other benefits. As a commercial building owner I am happy and thankful to those that pay rent each month. Those folks payoff my mortgage payment each month and once the building is paid off the money becomes another income stream in retirement.
Depreciation Saves Money
Over the life of the building you can depreciate a part of the building year-after-year. A good way to reduce your annual tax burden.
Pride in Ownership
Owning a building is a lot better for the soul than renting. It makes you feel good and provides a certain amount of self-worth and net-worth
Flexibility as an Owner
Remodeling rental property is often very difficult to do. It requires landlord approval and any money invested in the building becomes the landlords once you move out. The money used to finance remodeling is an investment in yourself instead of a freebie to the landlord.
Value in Co-Ownership
Some businesses do not require a lot of square footage and justifying a building can become difficult. One option is to connect with your network of colleagues and business relationships and consider co-ownership to achieve mutual benefit for everyone. Sharing the risk and reward may prove to be a worthy endeavor.
Equity – Money in the Bank
So now you own the building and are ready to sell – What a great position to be in! Now the equity shown on the balance sheet can become the greenbacks in your bank account.
Owning is more Fun
Plain and simple; owning is a lot more fun than renting. The most fun is receiving rent checks for the building that is owned outright. Owning provides a great nest-egg for the future and a great way to earn income without working day-after-day.
If any of this sound appealing I am happy to put you in contact with the Brokers, Agents, and Bankers that we have come to trust over the years at AJB. Besides, AJB might be of assistance for remodeling or the new addition at some point in the future.
If enough readers express interest I am willing to put together a panel of experts and invite you to learn and discuss renting versus owning – Let me know?
The question – Give your money to someone else? Conversely, look in the mirror and give it back to the person looking back at you? You decide!
Recovery……Really?
The “Great Recession”, in Vegas, was horrific for those of us in the Construction Industry. It tested us all and few survived or are in recovery with about 70% of construction related businesses gone; either out of business or moving over the horizon. Construction unemployment was pegged somewhere between 60 – 70% for the trades and the pool of good skilled workers is almost non-existent.
The recession cleansed the market.
Marginal contractors are gone and, today, a new batch of contractors are entering the market hoping to earn a living and grow when the economic climate will allow for it.
To be in this business a person must suffer from acute optimism.
Once upon a time the glass was either half-full or half-empty. Today, the glass is cloudy and we are not sure what the level is, except to say, we are optimistic but “highly” guarded. The lessons learned are keeping most of us from becoming exuberant about new hires, equipment acquisitions and increasing overhead costs. Honestly, it is a scary thought to invest in the future with so much uncertainty.
From the acutely optimistic perspective there are a lot of great things happening. In order to be brief and to the point some of the great things are:
- There is 9 Billion Dollars in work in the planning stages or underway on the Strip
- New money is being invested in the skeletal remains of the past recession found on the Strip like the renewal of the Sahara into the SLS and the Chinese investment in the old Stardust property, the Echelon.
- For the past 3 years over 40 million visitors have come to the valley; however, they are looking for value and not leaving much money behind.
- Based on the November number for gaming, it looks like the number for Vegas are up about 4%
- Home price appreciation was enormous over the past couple of years with underwater homeowners somewhere south of 50% or better.
- Commercial lease vacancies are still high but improving
- Unemployment is improving but job creation and income levels are still low
- Our education system is another sore subject altogether.
There are threads of good news whizzing around but we are all very cautious since the sting from the recession is ever present. “We need more certainty and confidence” to jump-start those of us in the Construction Industry before investing and creating new jobs.
The big issues are, in my humble opinion, the impact of a proposed margin tax and the availability of water to sustain the current population and to sustain growth.
What are your thoughts?
The Customers Plight
Every one of us are customers. We seek out value, quality, fair and honest treatment and a positive buying experience that satisfies our expectations, regardless of the product or service. Most buying experiences really go unnoticed until something out of the norm appears or until an emotional or high value purchase is contemplated.
Today’s customers are smarter and more demanding and for good reasons. Over the years marketing and advertising has continued to refine approaches and messages to entice prospective customers into becoming buying customers. The outcome has not always matched the marketing message. It is akin to being poked in the ribs with a sharp stick each time the result does not match the message. All that you wind up with is less money in your pocket, sore ribs and the frustration of being involved in a less than satisfying buying experience. No one likes to be taken advantage of and no one cares to experience less than satisfying results. No wonder the buying public is guarded and doubtful.
My parents were raised in the mid-west and instilled a very simple and pure message that has always served me well – Treat people like you would like to be treated. A simple idea that has astounding impact on customers.
Customers are king; however, that does not give them free license to abuse, be mean spirited or disrespectful to the person on the other side of the counter. I once had a business partner that used the position as a customer as an open invitation to abuse waitresses and others over the most trivial things. It was a form of gamesmanship that had very unfavorable results for everyone. I am happy to say this person is an ex-partner and I learned from him how not to behave.
The premise of fair value and mutual benefit is important to any satisfying transaction. Whether one is buying a candy bar or a commercial building. The customer experience is everything in today’s marketplace. Keep customers happy and they will come back again and again.
At AJB General Contractors we are not always perfect but we always make things right. Eighty percent of our customers are return customers. That statistic tells our story.
How are you doing?