01 May 2011

Builders — the Good, Bad & Ugly

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How do builders want to be remembered? In the real estate service industry there are numerous ways to differentiate a builder from the competition. Service…product…ability, but every differentiation tactic involves the same strategy — managing expectations and every client and partner will measure a builder for how well he managed expectations.

The builder who keeps his promise, finishes timely and respects the project left a good impression. The builder who schedules haphazardly, builds incorrectly and finishes late left a bad impression. The builder who ignores the documents, fails to communicate and abandons the project left an ugly impression.

After an ugly meeting yesterday, I reflected on my year to identify what made five of my builder experiences memorable and how I managed client expectations.

The Good:

  • Builder calls bi-weekly to advise me of progress and schedule on-site appointments and I share the schedule with the client so we can meet together.
  • Builder reviews documents and asks questions about design intent and purpose and I clarify in writing or with diagrams.
  • Builder shares his budget worksheet and specifications so everyone knows what the project includes and I refer to it to understand the actual scope.
  • Builder issues a reasonable credit for items extracted from the project and I draft a descriptive change order to qualify the scope, cost and time.
  • Builder agrees to fund retainage so Owner can pay an unresolved contract dispute between him and a Subcontractor and I coordinate the timely payments.
  • Builder offers feedback on diagrams/details that needed clarification and I integrate the feedback into current and future documents.

 

The Bad:

  • Builder doesn’t return calls or respond to warranty requests, but I pursue him until we make contact.
  • Builder incorrectly constructed critical waterproofing components and I alerted him to the error and monitored the repair.
  • Builder communicates primarily via voicemail and email but I request on-site discussions to build the relationship.
  • Project accounting doesn’t reconcile so I keep track of the payments and credits to ensure a audit trail.
  • Builder submits unsigned documents as contracts and payments so I solicit proper signatures and coordination.
  • Builder doesn’t know contract value or payment terms so I keep track of all items and explain the payment terms.
  • Builder accepts owner’s undocumented change requests without explaining additional charges, so I draft change orders.

 

The Ugly:

  • Owner receives a subcontractor’s lien after the builder submitted a certified lien release and bills paid affidavit.
  • Builder requests additional money for an undocumented change after the fact.
  • Builder blames everyone and refuses to take responsibility for faulty or non-compliant work.
  • Builder hired Subcontractors that disrespected the Owner.
  • Builder bids a price to earn the project and increases it at award to compensate for the bid mistakes.
  • Builder submits change orders for an unrelated project.

All of these events actually happened on one or multiple projects this year. Despite comparable skill, experience and resources, each builder’s success or failure depends on one critical ability…managing expectations. An average builder can promise average service and deliver an average project to a happy client; however a premier builder cannot promise elite service and deliver an average project because he didn’t manage expectations. The best way to manage expectations is:

  • to communicate or explain what will happen
  • be reliable or do what you say and
  • communicate or explain what you did and write everything down!

Why must we write everything down? It’s because there are three sides to every story, “the builder’s side, the owner’s side and the truth.” That means despite honest intentions, none of us can accurately recall everything later. Project documentation sounds like a fancy way to “cover your butt”, but it’s actually the best way to manage expectations and is the reason I offer The Agent service to track progress, coordinate paperwork and resolve project issues. Usually the Owner hires me to observe construction, but my service benefits the Owner and Builder because I use communication tools to manage expectations.

These documentation and communication tools include:

  • Construction Schedule: A chart that shows the project work sequence, duration and simultaneous work. The builder uses the construction schedule to assign subcontactors and order material and the architect uses it to assess progress and predict completion.
  • Budget Worksheet: A line item inventory of every project bid, item or allowance and associated cost. The builder uses it to calculate the project bid and assemble the schedule of values (see below). The architect uses it to confirm the work item value and inclusion.
  • Submittal Schedule: A list of all allowance material the owner selects with due dates, selection dates and product type. The builder uses the submittal schedule to request selections and coordinate material delivery with the construction schedule. The architect uses it to help the Owner review and select materials and keep track of those selections.
  • Schedule of Values: A detailed cost estimate illustrating work item value to assess progress payments. The builder uses it to request a progress payment and the architect uses it to assess the value of completed work and recommend payments.
  • Draw Schedule: List of anticipated draw amounts and the expected payment request date. The builder uses the draw schedule to identify days he expects payment. The architect uses it to prepare for payment reviews and compare financial progress to construction progress.
  • Change Order Management: A detailed account of each contract addition or deletion and it’s affect on performance time and cost. The builder and architect use the change order to explain work deviations (owner-requested changes, differing site conditions, material deficiencies)
  • Payment Certificates: Architect’s approval of a progress payment verified with an on-site walk-thru. The builder uses the payment certificate to request a progress payment and the architect uses the payment certificate to recommend earned payments.
  • Field Visit/Reports: Weekly visits to describe progress, identify construction variances and communicate expectations to the builder and owner. The architect uses the field visit to track progress and identify compliant or non-compliant work. The builder uses the field report as a quality checklist to correct items and solicit a third-party view of project timing.
  • Memos: To explain what happened and why if not covered in one of the other tools.

My Agent service tools are a communication mechanism to manage client expectations. Each tool is a way to organize and communicate by simply taking time to write it down so everyone knows what to expect. Every builder has an opportunity to make a memory; however, the difference between being remembered as “good” and “ugly” hinges on the ability to mange expectations.

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About the Author


Your Architect is Eric Faulkner -- an architect licensed in Texas & Oklahoma with 29 years experience in design, construction observation and life.