W21 We will continue to discuss the seven most common mistakes business owners make when building or expanding their facilities. Last month we discussed mistake #6 Owners hiring and/or dealing directly with contractors and subcontractors and overseeing construction themselves. This month we will discuss the final mistake, mistake #7 when owners put the wrong person in charge of the overall process.

The person that the owner designates as being "in charge" needs to have authority. If he or she cannot spend money or take a long-view for the company then they should not be the owner designee. They need to make quality time and money decisions. They need the authority and the foresight to do that, also you have to look at their motivation. Some companies we've worked with were very experienced in the construction administration, they did it all with in-house architects and engineers. But they base their project managers' bonuses on how many stores are opened by the end of the year. As an employee, architect or engineer, doing their construction administration, the more stores that you open the more money you've made. So what may happen is this project managers allowing things to get by them. They allow the contractors to charge change orders for things that they shouldn't have allowed. They were doing this because they want to expedite the process and get more stores opened so they would just approve changes instead of taking the time to challenge them.

From the company's stand point they where sophisticated builders. They where building over 100 projects a year. Even though they were sophisticated they still had to fly in the ointment so to speak, because they where motivating their people with the wrong incentive. We reviewed some of these projects and found that on a million dollar project several stores had paid $70,000 to $100,000 in change orders that were not needed. They already owned this work according to the contract documents. The managers were just to busy to check this out. If you take 100 stores a year and multiply that by $70,000 a store in change orders, you are wasting $7,000,000 a year just because someone didn't take the time to look at the documents and challenge the change requests.

The other area that causes problems is communication. Often times, because they are in a hurry, they try to communicate in short hand with the contractors. They'll do things they shouldn't because they are in a hurry to get the project built. They might use the wrong drawings to get a price from a contractor. We actually had a case where one of the managers was using the same set of drawings on three different projects and the projects were all supposed to be different. What he didn't know was the design had changed and it caused all kinds of problems. He had given the contractor the drawings from project A for locations B and C, both of which were supposed to be changed. The contractor didn't know what drawings he was supposed to follow. As a result half of the new changes were made and the other half weren't. This was done pretty much at the contractors whim and it created a disaster.

They communicated directly with the contractor and gave them the drawings "just to get a price", not realizing that they couldn't do that. The contractor really needed the exact drawings for each project and not something that was only similar. Be careful, regardless if you're a major company or not, of who you put in charge of the building process. Ask a lot of questions.

My best advice is to hire an architect that you really like to work with. Make sure it's someone that you can trust, and who will guide you through this entire process. You won't make any of these seven mistakes and in the long run it will save you thousands of dollars and much aggravation. Good Luck on your project!