In today’s post pandemic environment, driving project cost cutting, cost savings and cost avoidance strategies are essential to delivering maximized bottom line results. Now more than ever it is critical for owners to make prudent use of their financial resources and protect every project dollar that is budgeted and subsequently spent. To that end, savvy developers and owners understand the intrinsic value of competent owner’s representation and understand fully that projects where an owner’s rep is engaged routinely achieve aggregate project cost savings well in excess of the owner’s rep fee.
While the value of an owner’s rep is a well-established industry practice among seasoned commercial real estate developers, there remains a certain degree of confusion on what constitutes a true owner’s rep so let’s begin with a fundamental question…what exactly is an owner’s rep? An owner’s rep is an independent consultant operating as a direct extension of the owner and acts solely in the interests of the owner. The clear and omnipresent risk of entrusting unilateral responsibility of a project to a professional services provider, architect or general contractor is that those entities have a primary allegiance to the companies they represent. If a mistake, oversight or error is made anywhere along the lifecycle of a project, there is a clear and present risk that it will not be resolved in the owner’s favor. Often in many cases, the owner is completely unaware that the event which prevented a cost savings opportunity even occurred. Multiply the cost of events like that over the lifecycle of a project and you are looking at potentially significant dollars The well-chronicled value of competent owner’s representation manifests itself in form of oversight, control and value engineering at every step of the project lifecycle from inception through to project closeout. Driving value at the design phase, driving cost savings at the project budgeting phase, driving time savings on the project schedule all effectively deliver what all savvy owners/developers seek… enhanced bottom line results.
The discernible difference between an owner’s rep and a construction/project manager is that the construction manager or project manager manages the construction phases of a project. A dedicated owner’s representative provides comprehensive project oversight and coordination of all project related activities including project initiation, planning and design, pre-construction, procurement and bidding, construction and project close out. There is a lengthy list of activities which occur at each phase over the lifecycle of a project and effective management of those activities will deliver impactful results for the project owners and stakeholders of the project.
What specific activities should an owner’s rep engage in and what value do they add? Competent owner’s representation should begin with a detailed pre-mortem and risk assessment over the proposed lifecycle of a project which will uncover potential project pitfalls. Measured risk mitigation strategies can then be formulated and implemented on the front end of the project which will deliver cost avoidance outcomes. The owner’s rep will then take the baseline budget, schedule and specifications and conduct a comprehensive value engineering exercise identifying cost cutting, cost containment, and cost avoidance opportunities at each phase of the project (pre-construction, construction, and post construction). The next phase is the comprehensive formulation of the safety plan for the project utilizing standard OSHA construction site protocols. The detailed reports generated from these pre-construction activities will be delivered to the owner for review, approval and implementation planning. If needed, the owner’s rep can also collaborate with the owner’s internal team on FFE planning and cost assessments. During the construction phase of the project the owner’s rep will draft the formal communications plan, collaborate with the project team at each phase of construction execution, identifying and monitoring issues and potential issues, formulating and facilitating solutions, overseeing corrective actions, delivering timely reporting to the owner throughout the construction phase of the project. The owner’s rep will also review all RFIs and change orders over the course of the construction phase reporting to the owner on recommended courses of action.
Finally, at the conclusion of the project, the owner’s rep will conduct a full and comprehensive closeout of the project including a post construction audit of the financials, a lessons learned log and deliver a final report to the owner.
In conclusion, the owner’s rep brings relevant high-level education, technical expertise, and project management experience to the project which will protect the owner’s interests, minimize risks, and most importantly, reduce aggregate costs. Design and construction projects present a wide variety of complex tasks and transactions in which potentially costly and time-consuming disputes often arise. Dealing with such issues in a proactive manner and on a consistent ongoing basis will greatly reduce the chance that potential project pitfalls will diminish the overall project ROI. Competent owner’s representation on projects returns a decided and consistently positive ROI. The old adage is true, competent owner’s representation doesn’t cost, IT PAYS!
Owner’s representation clear cut benefits:
1) Dedicated trusted advisor with sole allegiance to the owner or developer
2) Comprehensive and ongoing value engineering initiatives -cost cutting, cost savings, cost avoidance strategies at every phase of the project lifecycle.
3) Risk profile assessment and mitigation (financial, legal, safety)
4) Full and complete project closeout protocols
This area is headed by Mark Collier, who helps businesses compete more effectively. He is a Faculty member and Business Consultant with the University of Georgia Small Business Development Center (UGA SBDC).