Fast pace of development demands cautious financial planning

A specialized design-build team can accurately ‘count costs’ of a project up front

Ron Frederiksen
Guest Columnist
The Clark County commercial real estate and development market is operating at a white-hot pace. Existing buildings are being snapped up. Larger parcels of raw land are being purchased on speculation. Business owners are frantically trying to locate smaller parcels of land to construct new facilities and create jobs only to find that land is simply not available.

Against this backdrop, the possibility of making a bad investment is very real and happens every day. In fact, a recent headline read "Ridgefield project is called off" and described how the developer had already spent $150,000 only to find out that the project no longer made sense.

As the construction and development world has become more complex, all projects require highly specialized knowledge. Traditional methods utilized in the past do not suffice due to the difficulty of designing, financing, permitting and building even the simplest commercial construction project.

In order to properly count the costs of a development, project owners owe it to themselves to commit to a project team early in the process. An experienced, competent design/build contractor can bring together a team of professionals with the precise knowledge the project requires.

Most importantly, the right team will accept total responsibility to provide the project owner with absolutely accurate information to make informed and timely decisions. They will lead the project owner through the entire permitting process and will have a detailed understanding of the politics of project approvals.

They will stand beside the project owner during the entire project and they will stand behind their work. They will guarantee the project’s final costs early in the process and will manage "hard" construction costs as well as "soft" costs to make sure budget requirements are met.

Sometimes project owners are hesitant to make a commitment to a design/build team without "getting another opinion." Typically this will be just a "bid" assembled without care from a contractor who has no understanding of the owner’s needs and requirements. The contractor will prepare a low "bid" simply to entice the owner into signing a contract. The "bid" will not accurately identify the overall costs of the project and will be full of exclusions and qualifications. Because the owner does not have the expertise to understand the financial impact of the exclusions, confusion and financial ruin can be the net result.

It is human nature to simplify complex situations. Construction and development projects are no exception. "Counting the cost" is a first step in the process, but avoid the temptation to select a contractor on "low bid" alone. Be candid and realistic about your financial resources. Communicate your hopes and apprehensions. Make a commitment to a design/build contractor and their team of professionals based on their demonstrated abilities. Leverage their knowledge and experience to help you count the cost.

Ron Frederiksen is president of RSV Construction Services Inc., a Vancouver commercial and industrial design-build, tenant improvement and remodeling firm. He can be reached at 360-693-8830.

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