Let’s look at some of the common mishaps that can take place during the development phase.
Contractor Claims Delays
The contractor is obligated to notify the owner/project manager of a delay, and a project manager will handle independent contractor claims. A claim may be filed if there are any damages to the contractor.
The best way to remember these types of claims is by categorizing them as “acts of God.” In these cases, the property owner cannot hold anyone responsible for the delay. Examples include weather conditions, fires, and epidemics, which are beyond the control of the contractor and property owner. Some claims can be argued, however; it all depends on the situation and the project manager’s judgement.
Relief will not be provided under this category, and the contractor will need to find a way to recover time lost to avoid further delays. Some contractors might need to work around the clock, depending on the deadline and situation. Unlike excusable claims, inexcusable claims are foreseeable and could have been avoided through proper organization. The biggest worry that comes from an inexcusable claim is the amount of time lost that will need to be made up for through a budget increase or pay cut.
Communication is one of the most important, if not the most important element in determining the success of a project. Things can quickly unravel if one or multiple parties are lacking in communication.
Communication gaps between tenant, developer, and contractor
A lack of communication can result in failure to get the right information at an appropriate time. Everyone involved needs to know what is going on as a development project progresses so they can plan accordingly. If there is not enough communication involved, people can be left without critical information, which can lead to mistakes and ultimately cause costly delays. Make sure to keep everyone updated to avoid unauthorized decisions.
Improper communication causing unorganized site coordination
A lack of communication can impact those attempting to access the site, and too many workers at one time can end up impacting safety. This can quickly cause chaos and frustration, especially if workers are not able to reschedule. An example of this could be if there is a delay in window frame installation. There will need to be quick communication to the glass installation contractor before they arrive at their originally scheduled date to find glass cannot be installed yet. These types of mistakes can make your communication appear unprofessional, require rescheduling, and ultimately cause delays.
A general contractor will handle the scheduling of labor and materials. Before choosing a contractor, look into their track record, see what others are saying about their credentials, and verify their insurance.
Unfortunate circumstances leading to material shortages
Unforeseen or excusable factors can come into play that are out of anyone’s control. The Covid-19 pandemic impacted both the labor and material supply in commercial development. Many materials, such as refrigerators manufactured in China were significantly impacted by COVID-19, and their factories are still having issues ramping back up.
Labor shortages slow development
Materials and labor need to be secured prior to the start of construction to avoid unfinished projects. Waiting around for labor can easily drive up costs due to scarcity and further slow the construction timeline. The fewer workers there are available, the further your development project will be pushed back. Global health impacts take a toll on labor, making the need for workers greater than before.
Delays in Schedule
Everyone involved in a development project is on a schedule. Time is valuable because it coordinates with cost and budget. Your development project should always follow a schedule and make adjustments as needed to ensure the operation runs smoothly.
Critical delays significantly impact the completion date of a project. If a development schedule runs into critical delays, important milestones such as owner furnished equipment delivery are missed and construction can come to a halt. A general contractor might have issues trying to make up the time lost and the project timeline could be extended. Critical delays especially impact site coordination, which is why communication between parties needs to be clear and concise.
Excusable delays are out of the control of the property owner and manager. These issues can arise suddenly and are ultimately up to the property owner to resolve. An excusable delay will typically prompt deadline extensions and additional funds will have to be added to the budget. Examples include labor shortages and weather impacts.
Obviously, your budget is an important element to keep track of. If money runs out, your project can come to a complete standstill. It’s important to plan for unforeseen costs and always have a cushion to fall back on in case you find your development project is in need of financial assistance.
Cost of materials
The cost of materials can cause delays if their prices spike due to scarcity. This can directly impact construction costs. The cost of materials can ultimately cause delays if the project goes over budget. Ultimately, the cost of materials is out of the contractor’s control, so it’s best to ensure all materials are gathered prior to the start of construction and funds are set aside, should materials become unavailable.
Cost of labor
Labor shortages means having to wait longer to get construction done. With roughly 1.4 million more jobs available than there are people looking for work in 2021, construction companies can raise their prices due to having to offer higher salaries to be competitive. The cost of labor is dependent on the availability of workers and the number of contracting jobs a construction company has on their schedule. One way construction companies are working to combat labor shortages is by using a prefabrication strategy. This is when components are made off-site in a factory and then assembled on-site. This can have the potential to cut labor costs and speed up the process, but of course skilled workers will always be needed.
Ultimately, you should be prepared to navigate problems as delays can be extremely detrimental to your project. If you are aware of what to watch out for, you can be better prepared to navigate and resolve timeline delays as efficiently as possible.
bRENT ATKISSON >
Brent Atkisson is highly experienced with a strong background in development, remodeling, property management, IT infrastructures, facility management, and maintenance. He has managed projects for 75 ground up and restaurant conversions, and more than 130 restaurant remodels. Since joining SimonCRE, Brent has overseen 120+ build to suit projects including The Steelyard in Chandler, AZ, Simon Medical Center in Laveen, AZ, the Village at Prasada in Surprise, AZ, and Jackrabbit Ranch Marketplace in Buckeye, AZ.