Key indicators for commercial and residential real estate development in Colorado remain strong with 4.75% annual population growth, 3% net employment growth and a current 6.2% unemployment rate. Borrowing from Jim Collin’s book Good to Great, getting the right people on the bus is the most important management tool to ensure a development project is successful. The following blog briefly outlines several key concepts to establish a qualified project team.
You have a vision and now it’s time to select an architect and engineering firms to lead the design direction. The design team drives the details and the details drive the cost, so it’s fundamental to select consultants based on their specific experience. Consider the development type, including the differentiation between urban vs. suburban, affordable vs. market, low-rise vs. mid-rise, steel vs. wood, office vs. flex. Once qualified consultants are identified, take time to evaluate and negotiate contract terms with the design team, engineers, project management and consultants. Fair but competitive contract terms can collectively save significant dollars on the front-end of the project planning phase, setting the project up for success.
Labor, drywall, concrete… the cost escalation list goes on. The best approach to manage construction costs is selecting the right general contractor. Size the project and select a contractor that fits the context. For multifamily projects, a contractor that charges $60,000 per month in GC’s is not the contractor for a 60-unit project vs. the contractor that charges $30,000 per month in GC’s is not the contractor for a 200-unit project. In a negotiated bid, request a detailed breakdown on general conditions and establish a fee on cost upfront. Interview the project team and ask that the proposed superintendent and project manager address all questions. They will run the project so it’s critical that you are comfortable with their experience and approach.
Relationships drive this business and while it’s important to address cost and qualifications per the above, previous collaboration and trust leads to future efficiency. Therefore, there is a balance between maintaining existing relationships and building new ones based on the project demands.