Are you an Owner of a business? A CEO of a corporation? Or just someone that wants to build something? When you start thinking about your project and what you need to do, is it like your brain is trying to analyze “Relativity” by M C Escher? Well, I’m here to tell you that you are walking into a hornets’ nest when you’re looking at building something without a seasoned Project Manager. If you’re not coming in with the proper knowledge and tools, then you’re in a position to be taken advantage of.
Just like beekeeping (I’m assuming, I’m not a beekeeper so I’m going to steer clear of this analogy moving forward), when setting out on the endeavour of constructing something, whether it be a simple office or a highly complex manufacturing facility, you need to be properly educated in the venture that you’re about to take part in or at the very least hire someone that is educated in the fine art of construction and project management.
As a business owner or a CEO or even a manager, you have had your own schooling, education, and training to get you where you are today. Much like I have gone through years of schooling, 20 years of industry experience (on the job learning), continuous formal learning, and let’s not forget those, “I’ll never do that again” moments that scar us to ensure that we truly do not do that again. Already having a full-time job to do you don’t have the time available in your ever-extending business hours to learn the ins and outs of the construction industry and what it takes to run a project from the Owner’s side. This is why you need to do your research to hire someone that has the experience the knowledge and above all the honesty, ethics, and morals to properly represent you in your construction project.
Hiring the right company (whether that is Phi Project Solutions Inc. or not) is the first step that any project Owner should consider when looking to build anything. They will be able to talk you through all of the processes required to get from the idea that’s rattling around in your head to the new corporate office, distribution centre, or manufacturing complex that you get to call your new home.
Now, the first thing that is going to come into an Owner’s mind is…you guessed it…“How much more is the project going to cost if I hire a project manager to run it?”
How much more is the project going to cost if I hire a project manager to run it?
I fully admit that it sounds like you’re going to spend more on a project if you get more people involved, however, that is NOT the case here. When you hire a third-party Project Manager such as Phi Project Solutions (I know I’m name dropping, but it is our blog!) what you’re getting is someone that is out to protect your interests. We don’t work for the design consultants or the contractors that you’re going to hire for the design and construction of your facility, we work directly for you. We are your risk mitigation.
For the following analogy, let’s identify your project value as $10 million.
During the design process we will review drawings created by the design consultants for completeness and accuracy, before they go out to contractors for pricing. Contractors don’t like to carry risks on their own backs, so what happens when drawings are incomplete, missing key pieces of information, or are contrary to one another? The contractor adds a “fudge factor” to the estimate, otherwise known as a contingency. In most contracts, you will never know that it’s there unless it is an open-book contract. By ensuring that drawings are complete and accurate we ensure that you’re getting the best prices from the contractors that are tendering your project. This could save you as much as 5-10% of the project value. Again, let’s be conservative and call it 5% or $500,000.
In addition to saving you the costs of inaccurate and incomplete drawings, throughout any project process, many consultants and contractors look for reasons to get extra money from you (see image below) which in contract lingo is the all dreaded “Change Order”. Having an advocate such as ourselves looking out for your best interests will allow us to push back on these change orders when they’re not justified and save you the costs associated with them. These savings could be anywhere in the neighbourhood of 2.5-5% of your project price, let’s be conservative and call it 1% or $250,000.
One of the last ways that we can save you money is by doing the actual work. Let’s say as a manager you’re making $100,000 a year at ABC Surplus and your company decides to build a new store. You can rely on the consultants and the contractor to do their part, however, there are going to be numerous technical questions that will come to you that you will have to answer. This will take time away from your job as a manager which means that there is a portion of your salary that is going towards the running of the project. Not only are you spending the time receiving and answering the Requests for Information (RFI’s) that are being sent to you, you are also having to research to understand the complexities of the technical information that is being requested. Between RFI’s, meetings with the designer, reviewing drawings and specifications, etc. this could take up as much as 75% of your time (let’s call it $75,000 for a 1-year project).
So if my basic arithmetic is correct, we have $250K + $500K + $75K which gives us a grand total of about $875,000 in savings on a $10MM project. Assuming an approximate cost of 3-4% of the overall project value or $300,000 – $400,000 for a third party Project Manager, you will net a savings of $425,000 – $525,000. If you don’t hire a third-party Project Manager it could put you in the hole by $825,000.
Don’t get me wrong, there are great and honest design consultants and contractors out there that will do you provide you with a solid service, but don’t you want to make sure that your risks are mitigated by hiring your own Project Manager?
