"The traditional approach to designing and building a home construction project creates CONFUSION, CONFLICT and DISAPPOINTMENT.
It is possible to have CLARITY, OPEN COMMUNICATION, and TRUST."
Most people begin a home construction project by hiring an architect or designer to draw a set of plans. But that architect designs what the client thinks they want, but not necessarily what they can afford. Often times, the cost of the project comes back higher than the client expected. This forces the client to give up part of their dream in order to build something they can actually afford. With this process, the client starts in a state of disappointment knowing they can’t have what they really want. It’s like test-driving a Mercedes all day, and then buying a Chevy! They are never really going to be happy with the Chevy because they didn’t get what they actually wanted to experience in a car.
The client is generally not willing to pay for enough detail in the plans to make them actually biddable, which results in the architect presenting incomplete plans to the bidding contractors. A permittable set of plans is not a complete set of plans. While there is enough detail to get a building permit, a permitted set of plans lacks interior elevations, cabinet drawings, finish specifications and fixture selections. To create all of these additional plans, costs a lot more money and most homeowners just aren’t willing to spend the money.
Typically, the next step is to go get bids from 3 contractors. But the problem is that these incomplete plans are not really biddable either. There’s just not enough detail to be able to give a complete price. So as a result, the contractors are forced to make their best guess on what it will actually cost to build the project. In this competitive bid process, the contractor knows that the client will probably choose the lowest bid so this encourages him to be overly optimistic in his pricing. The client then generally chooses the lowest priced, most optimistic and most unrealistic general contractor to build the project.
The original plans are now incomplete because the client did not want to pay the extra architectural fees to spec out every detail. This forces the building process to become a series of change orders as these details are clarified. And then people start pointing fingers – whose fault is it? Is the contractor for not putting the right cost in their bid or is it the architect’s fault for not putting enough detail in the plans. Ultimately the homeowner ends up paying the bill. You have probably heard of those horror story projects where the change orders end up more than the cost of the original project. Here’s a photo that illustrates that.
The original contract was a dinghy, but the change order made it a yacht. Some people think that the contractor only made enough money on the Original Contract to buy a dinghy but he made enough money on the Change Order to buy the yacht!
The building process becomes a series of ongoing negotiations filled with conflict until the project is completed.
Each party is defending its position in order to build the project while maintaining their own financial interests.
Under the traditional “Competitive Construction” approach, the project evolves amid this very stressful process that can damage the relationships between all of the parties involved. In most cases, the project also goes over budget and exceeds the schedule as well. This is a broken process and needs to be changed. All the parties involved can be great people with good intentions, but by the time they finish building a project using this process, they’re stressed and exhausted, with relationships permanently damaged.
Stay tuned for the next lessons...