Reducing Project Costs
On August 28, 2008, Tom Koulouris - co-owner of Koulouris-Freyer, Inc., (KFI), a leader in construction management services, led a webinar sponsored by E-Builder. In this webinar Mr. Koulouris detailed ways to Reduce Project Costs. REDBUD Construction Services attended this webinar. With permission from Mr. Koulouris, we have summarized some of the main points of the webinar below.
The four major components of a project are planning, design, construction, and occupancy. The owner usually has control over the planning, design, and occupancy and the costs associated with these components, but spends most of his or her time trying to control the construction costs. The construction component is defined as determining the measurable output of the design as managed by the owner. And as Mr. Koulouris stated the construction component “is pricing the work that is planned and designed.” The planning and design components are the areas where the owner should focus a majority of his or her efforts in order to ensure that the overall project costs are minimized. Read more
Leading Power Center Developer Coming to Town Creek
REDBUD Construction Services provides Project Management services to the Tetra Companies for their Town Creek Center development, and they have issued a new press release today.
Lenoir City, TN Project Accelerated With Addition of Renowned Retail Developer
LENOIR CITY, TN, September 10, 2008: The Tetra Companies-a leading real estate development and management company in the Southeast & Mid-Atlantic-today announced that a nationally recognized big box developer has contracted to develop the 88+ acre Power Center component of its 267 acre Town Creek Center development in Lenoir City, Tennessee. The Power Center Developer will announce its plan for the project upon conclusion of negotiations with key anchor tenants.
The Power Center will complement the other components of Town Creek Center which include a home improvement retail center, medical office park, multifamily community, active senior community and neighborhood commercial. The first phase of Town Creek will be open in 2009 with completion of the entire project anticipated in 2013.
Michael McNally, principal & co-founder for The Tetra Companies, said,
“We looked long and hard at a great many developers to work with on the Power Center component of Town Creek and had identified this specific player for this project. We are very pleased with the development team we have in place.”
Liabilities for Construction Owners
This article in the Business Courier lists some areas of potential liability for owners of construction projects.
“As a construction owner, you can incur liability if you fail to recognize and comply with certain implied legal obligations, many of which spring from an implied covenant of good faith. Simply put, this covenant states that neither party will do anything to injure the right of the other to obtain the benefits of the contract. An owner can be found to violate this covenant when acting intentionally, or in bad faith, to frustrate or delay a contractor.”
Here are some examples of items that an owner can provide to avoid of liability issues:
- Providing a contractor with all soil studies and relevant information.
- Provide the contractor with accurate plans and specifications.
- Include contractual language making the contractor the guarantor of the adequacy of the plans and specs.
- Obtain a peer review of the design documents.
- Respond promptly to extension requests.
“To avoid claims and unsatisfactory results, it is important to pay attention to implied obligations on construction projects. With careful planning and awareness of potential issues, you can help ensure a successful project for everyone involved.”
Read the full article here.
Privatizing Public Infrastructure
This article in the Business section of the New York Times reports on how you may begin to see many of those public infrastructure projects turn to private funds for financing.
Private funds’ “strategy is gaining steam in the United States as federal, state and local governments previously wary of private funds struggle under mounting deficits that have curbed their ability to improve crumbling roads, bridges and even airports with taxpayer money.”
Chicago’s Midway Airport and the Flordia Turnpike are two projects that could be partially funded with private monies. From the article:
“This fall, Midway Airport of Chicago could become the first to pass into the hands of private investors. Just outside the nation’s capital, a $1.9 billion public-private partnership will finance new high-occupancy toll lanes around Washington. This week, Florida gave the green light to six groups that included JPMorgan, Lehman Brothers and the Carlyle Group to bid for a 50- to 75 -year lease on Alligator Alley, a toll road known for sightings of sleeping alligators that stretches 78 miles down I-75 in South Florida.”
But how will taxpayers take to this method of financing public projects?
“And then there is the odd romance between Americans and their roads: they do not want anyone other than the government owning them. The specter of investors reaping huge fees by financing assets like the Pennsylvania Turnpike also touches a raw nerve among taxpayers, who already feel they are paying top dollar for the government to maintain roads and bridges. And with good reason: Private investors recoup their money by maximizing revenue — either making the infrastructure better to allow for more cars, for example, or by raising tolls. (Concession agreements dictate everything from toll increases to the amount of time dead animals can remain on the road before being cleared.)”
There’s a need out there and limited money to do it. According to the article, the ASCE…
…”estimates that the United States needs to invest at least $1.6 trillion over the next five years to maintain and expand its infrastructure. Last year, the Federal Highway Administration deemed 72,000 bridges, or more than 12 percent of the country’s total, “structurally deficient.” But the funds to fix them are shrinking: by the end of this year, the Highway Trust Fund will have a several billion dollar deficit.”
“The prospect of steady returns has drawn high-flying investors” , but time will tell whether the investment will be worth the wait on return and whether the politicians can get the public’s support.
Read the full article here.
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