Well That Went To H*ll In A Handbasket…

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Disciplined | Reliable | Honest


Look, we tried to steer them away from the cliff, but sometimes the pull of cheap is just too strong. Ouch…

“My business was growing at a quick rate, and I needed a larger space to run our marine composites and manufacturing operations. We had considered using Pivotals’ project management and relocation services to help with the build out and prep of the industrial space, and our subsequent relocation, but as business life goes, we felt we would have the time and capacity to attend to these needs with our own team. In reality, we learned the value of Pivotal’s services the painful way. The buildout process consumed MUCH more of my time than I expected or had to give, and we somehow busted our relocation budget by $100k. My guys were tied up meeting production and repair schedules for customers, so we adopted the ‘whatever it takes’ approach to the relocation. In hindsight and foresight, I will never try to relocate my business again without engaging a Project Management group like Pivotal—worth every penny, and we didn’t use them!”

—R. Fleming, Fleming Marine Composites

Convenient if you can afford it? Or simply the cost of doing business…

Have you ever bought a tool or resource to fix a problem, only to find it takes you twice as long or costs you twice as much to complete? Ever consider it might be because the tool or resource you used was simply ‘convenient’ or a cheap fix? Let’s scale that…

One hard lesson I think we have all learned in business is that you get what you pay for (even if you didn’t pay for it). So goes the hard lesson in commercial real estate projects. What am I talking about? Simple—it’s the very common assumption that certain costs are ‘hard wired’ into a commercial real estate project, and simply unavoidable, vs. ‘convenience costs’ that are viewed as a nice Cadillac service if you’ve got some extra coin to afford ‘em.

Land or property purchase? Sure, it’s negotiable, but you’ve actually got to put some money out there to buy it. Property taxes? We’d highly suggest you consider those as part of the deal. Broker fees, attorney fees, architect and engineering fees, permit fees, contractor fees, all relevant and all are critical (please don’t skip the attorneys’ fees—there’s a reason they are so expensive).

But I’m willing to bet once you’ve looked at your overall project line item budgets (and see that the square peg does not fit the round hole), the Project Management expenses, or even yet, Relocation Management expenses are the first to see the guillotine—am I right? For many, they may not have wound up on the line item budget in the first place, or, an idea popped up to give the office ‘go-getter’ a real opportunity to prove themselves, yeah?

We can easily state that our #1 competitor is… the Client themselves! Unfortunately, we can also state that the best non-Client referral resource is the business owner who tried to save the budget by doing it themselves or clipped their own wings by clipping the Project Manager from the budget.

Before this walks off in the wrong direction, I’d like to clarify something—by no means are we so arrogant or ignorant to state that every commercial real estate development project, tenant improvement, or commercial relocation project requires Pivotal’s services. They don’t. At Pivotal, we take deep pride in our principals of Disciplined/Reliable/Honest. Our integrity is founded in honesty. If we don’t fit, or if we cannot provide immense value to your project and business, we will tell you so.

That being said, we will always point you in the right direction if we are not a fit, and cannot add value.

Pivotal Project Management can readily demonstrate how we have paid for ourselves, and then some, with every client engagement we have taken on. Commercial real estate projects are large investments for a business and including Pivotal Project Management in your overall plan and team is simply adding a return on investment partner.

The ‘successful formula’ in commercial real estate projects is quite simple. It boils down to experience, time, and money. Set the numbers aside for a moment and realistically ask yourself—

  • Do you have the experience? This is not a simple bathroom remodel, the learning curve is very steep, the commitment is heavy, and the consequences are harsh…
  • Do you have the time? No seriously, do you have the time to afford, and is that the best use of your time? Do your Clients feel the same?
  • Do you have the money? We’re not talking about you or your business’ financial stability, we’re talking about the money needed to recover from lack of time or experience

Hiring a professional Owners Rep and Project Management firm like Pivotal is a savings tactic—not a budget sacrifice or a nice convenience if there’s a slush fund. Is your development, facility, or tenant improvement plan blowing the budget? An experienced Owners Rep can identify critical course and options to succeed. Are your General Contractor fees coming in out of line? Getting 3 bids will not correct that—an experienced Project Management firm will. Think your relocation savings comes down to the lowest-cost mover? Check out our 99:1 ratio blog and let me know if you are willing to bet cheap on your future.

In short (yeah, this is long)—it’s time to understand that the value of an Owners Rep, Project Management, and Relocation Management firm like Pivotal is not just a nice convenience, it’s simply the best tool in the business to build a successful business.

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Why Use a Project Management Company for Tenant Improvements?

Tenant Improvements (TI), also known as Leasehold Improvements, are the custom interior build outs a landlord or tenant makes to their commercial space. This complicated construction project is integral to your business, so having a project management company like Pivotal Project Management on your side is important. We have the experience, resources, and most importantly, the time, to focus on your project and ensure its success. From the initial Tenant Improvement negotiations to construction management, a project manager will protect you from cost overruns and missed deadlines that can be costly to your business. We have listed the three most important reasons for hiring a project management company for Tenant Improvements below.

 

1.    Add an Experienced Negotiator to Your Team

Negotiating the allowance for Tenant Improvements is a key factor in any commercial lease. Having a key understanding of the commercial leasing market, construction costs, and construction management gives you the edge in negotiations. Adding Pivotal Project Management to your team brings years of commercial project management and construction cost control experience to your side of the table. We know how to create realistic budgets and schedules for construction projects and know how to leverage your position to get you the best lease terms.

2.    Team Composition and Strategy

Using a project manager like Pivotal Project Management will save you a considerable sum of money. It all starts by choosing the right team. When we manage a commercial buildout, evaluating and hiring the right tenant improvement contractor and architect can make a huge difference controlling costs. We will pre-qualify general contractors and architects, gather proposals, and create an evaluation criteria matrix to provide a clear answer to find the right partners. When your team is organized and all on the same page, the results are more favorable. Deadlines will be achieved, budgets will be met, and the move in process will be smoother.

3.    Control Costs with Construction Management

Another way a project manager like Pivotal Project Management will save your company money, and headaches, is through construction management. We are directly involved throughout your entire Tenant Improvement project providing the diligence and time needed (which most clients do not have) to ensure a successful build out. We hold the GC and subs accountable for quality construction and budgets, review and address all change orders, and conduct weekly site inspections and project meetings. The steps we take to control costs and manage construction will keep your Tenant Improvement project on time and on budget.

There are three project pillars that Pivotal Project Management follows throughout every phase of the Tenant Improvement project lifecycle. Review, assess, and improve. Having a project management company looking out for your best interests while managing your Tenant Improvements is incredibly valuable. Costly delays and change orders can quickly derail your timeline, creating lots of stress within the business, even impacting your customers. Pivotal Project Management is your key to a successful Tenant Improvement project.

If you or your client is making a move to new commercial space in the future, please contact a Pivotal Project Manager and get the conversation started.

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The 99:1 Dilemma – How Difficult Could It Be?

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Disciplined | Reliable | Honest

Nearly 99% of a business’s overall real estate project budget (in both time and money resource) is spent upon identifying a preferred location, negotiating a lease or purchase transaction, construction costs, and furniture expenses.

99:1 Dilemma and relocation managementBusiness leaders know that time, money, and the time value of money matter, and accordingly they tend to put their best and brightest resources upon negotiating financially critical leases, or, buy/sell transactions. Heck, why not? These are big dollars with big consequences and if you don’t have your best team of Attorneys, Bankers, Brokers, and advisors ready at the helm, you can cripple your business or business units for years to come. Aside from payroll and benefits, rents and mortgage expenses continue to present a growing dominance in overhead expense ratios – the numbers certainly matter.

But what about that other 1%? Where does that piece of the budget and attention go?  This area of 1% falls into the 99:1 vs 1:99 dilemma and where to reduce your risk and expenses.

If it’s not consumed by unexpected cost overages along the way, then unfortunately what’s left to handle, perhaps the greatest point of risk upon the business after all, is the occupancy phase: relocation management of people, IT, equipment, records, and resources.

During lease negotiations and construction buildout, 99% of the project budget is at risk, while only about 1% of the overall business itself is exposed to risk. On the flip side, during the final phases of a project (the relocation and occupancy phase), 99% of the business is truly at risk, while only 1% of the projected overall budget rides the line. How do we mean? Simple – lease negotiations and construction activities have large dollars attached, but they can take several months if not year(s) to arrange and complete. The business remains in motion, serving its customers, managing orders and delivery of products, goods, and services, and protecting its brand and position in the market along the way.

relocation managementWhen it comes time to ready the team and the company to relocate, do not dismiss the level of risk in this phase. You are fully exposing the business, your employees, your customers, and your brand to risk. If your internet circuit is not up in time, you can lose all inbound/outbound communications. If your construction schedule blows up and the certificate of occupancy is delayed, this can domino into your relocation vendors; they may not have the availability or capacity to make such adjustments at the last minute. Most commercial relocations involve 8-10 different external vendors to coordinate, and anywhere from 15-50 internal vendors to communicate and coordinate with regarding the change of service location. The occupancy phase and relocation management is critically dependent upon a multitude of things lining up just right, in the right order, at just the right time.

So what happens – you spend more money? Actually, No. There are ways to keep this from happening. First and foremost, do not underestimate the gravity of the tasks ahead of you. If you’re thinking or asking yourself “How Difficult Could It Be?” A commercial relocation is poised to show you that answer.

Regardless of whether you employ professional relocation management services, or attempt to take this on internally, you must dedicate capable people; and most importantly, those persons must have the time capacity to remain committed to the deliverables and outcomes. This specific phase becomes a challenge to most businesses, since its tough to predict one’s capacity, availability, or priorities as the relocation approaches. Some further points that will help reduce your risk exposure include:

  • Start planning much earlier than you think necessary – Do not put off the relocation planning until you know when you’ll achieve a certificate of occupancy
  • Contact your internet service provider at least 6 months out from projected relocation dates. Confirm the ISP provides (not can/ or may be able to provide) service for you at your new location. If new service installation is required, this can take an additional 3-6 months to establish along with their current 6 month wait period. Then, watch your updates like a hawk (sorry to say, but this one requires acute attention). Maintain continual update on status with your ISP provider on ‘turn up’, and have the service turned on at your new location at least a week ahead of your relocation. The time will still be crunched.
  • Evaluate your existing vendor relationships. Some existing vendors (IT, MSP, or ‘handyman’ services, by example) may not have the skillset or team capacity to properly address your needs during this critical event. During the relocation is not the time to ‘figure this out’.
  • Internal communications about the upcoming relocation and plan is critical (it prevents fear, damaging rumors, speculation, and ‘rogue’ plans), and limit the communication to only the critical points, dates, and responsibilities.
  • Relocation management is not a democracy. This sounds a bit rough, but trying to bring a democratic or ‘manage by consensus’ process to a commercial relocation is a recipe for disaster.

We think it goes without saying that every Business and Client would like a seamless and painless commercial transaction. Whether that be a lease renewal, an expansion, a brand new lease, a buy/sell transaction, or some combination thereof. Finish that experience on a high note, don’t let a commercial relocation sour a great new start!

If you would like to review your plan with us, or, you would like more info specific to your relocation, feel free to contact us. Our team is happy to discuss with no obligation.

Have a Client headed for a relocation? Give us 15 minutes of your time and we’ll make sure you’ve got them pointed in the right direction and paying attention to the critical risks. We want your Client to finish your deal on a high note. www.pivotalstrength.com

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Pivotal Expands Services

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Pivotal Project Management Inc. is pleased to announce a suite of new services that fully tie out all aspects of a client’s project (new build construction, mergers/consolidations, tenant improvements, or relocation to an existing structure).

Our turn-key solutions at Pivotal allow for smooth transitions as the client project moves through each phase or a set of phases- inception to completion.

Our New Services Include:

Due Diligence/Pre-Purchase Study [in conjunction with Pivotal Developers LLC]

Land and environmental studies are vital components before purchasing land in which an Investor or Developer can make proper decisions about the future use of the property. Understanding the prior history of the land, use of the land during prior ownerships, and searching for environmental or other impacts/mitigation issues will allow the purchaser to consider any liabilities that may hold up the plans or incur more costs for development.

Pivotal is your ideal Program Manager in land development cases, with our background knowledge and experience in working with the local/regional Municipalities, Authorities Having Jurisdiction (AHJ’s), General Contractors, Architects, and Engineering parties to ensure the investor’s/owner’s projects fall within the guidelines and budgets to turn this investment into a living and breathing structure that has respect for the land and surrounding environment.

Relocation Planning and Management

Occupancy and/or transition services to a new space or building for your company requires a relocation project management scope, and a detailed leader to carry this constantly evolving task. At Pivotal, we understand the tight timeframes involved and the protocols that must be in place before the business can take/occupy the space, operate the business, or service the public. The relocation takes time to plan, a key communications strategy, and proper execution; great plans can greatly fail without an experienced team to execute them. The availability, coordination, and scheduling of the vendor parties, and the timeframe in which the business must be ‘live’ without disrupting productivity, employee morale, and customer service, are all factors to consider. Rely on Pivotal Project Management to expertly shepherd your business through its greatest exposure point – relocation with our expert relocation management services.

Tenant Improvement (TI) and Work Letter

Customized tenant improvements (i.e. building out your new space to the working environment, workflow, and experience you desire) are often required when a company is relocating or building out new commercial space. This allows the client to run its business in a space that fits the culture, environment, and level of productivity for daily operations and goals of the business. Tenant improvement costs (concessions) are negotiated with the landlord prior to signing a lease and involve general updates such as paint, walls, flooring, electrical, lighting, HVAC, ceiling drops/exposures, etc. Some lease arrangements call for a ‘work letter’ or detailed statement from the incoming tenant, to the landlord, identifying the build out needs of the space and/or particular requirements of the landlord to suit the tenant’s operational needs (i.e. extended power/dedicated backup power, total lumens required, paint and carpet detail, and more). Don’t pay for other’s mistakes in this process- Pivotal Project Management is your key resource for this role in ensuring your tenant improvement vision is met, while protecting the budget and delivery schedule.

Decommissioning Services (if required)

Decommissioning a space is the most overlooked detail within a company relocation and can cause monetary setbacks to the project, issues with the landlord, and potentially impact total project schedule. Most every commercial lease has an exit clause or provision identifying how the landlord will require you to leave the space upon exit. For example, this usually means clients need to address removal of old low-voltage cabling, patch and paint of any drywall that has been damaged or otherwise perforated for hangings (pictures, signs, etc.), removal of building signage, clean or repair of damaged areas/materials, removal of anchoring’s, power units, old IT equipment, re-demising the leased space(s), leaving in ‘broom-swept’ conditions, etc. Decommissioning requirements are an afterthought, but can cost you 1.5 times your rent, and then some, if not properly addressed in time. The Pivotal Project Management team has the resources, approach, and most importantly the time to address decommissioning needs before they become a money pit.

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What three project pillars align the driving force behind every phase of your project?

Review     Assess     Improve

Review

The review process is a snapshot of current status, progress, issues, challenges, and contractors/vendors commitments, in comparison to the project timeline, budget, and specific outcomes.

Example: The initial assembly of project schedule shows a parallel path for remediation efforts and utility infrastructure installations. Upon continual review, a schedule collision can be forecast if further remediation needs are discovered. The assessment pillar will present options ahead of the ‘problem’ becoming a problem.

What to review? (among many others)

  • Submittals against Criteria
  • Current Spend and Burn Rate
  • Burn Rate vs. Project Schedule
  • Key Benchmarks
  • A/E/C Pay Applications

This pillar must be active throughout every project phase, and beyond delivery of space.

Assess 

The assessment analyzes short and long term impacts, options, and potential outcomes based on the review – Maintain the current direction? Identifying corrective actions? Set a new direction?

Example: A change order is proposed by the GC to address a missing electrical circuit. A review serves to determine the source and responsibility of the missing circuit; an assessment serves to identify options, and, any other schedule or budget impacts this may create. Understanding the relationships, responsibilities, and contract structure between Owner, Architect, and Contractor is key to alignment.

What to assess is determined by what you review, but how to assess the information (and thus options) should always be anchored to the defined goals of the project outcome –

  • Due Diligence →Options
  • Contract Structure →Options
  • Change Orders/Logs →Options
  • Value Engineering →Options
  • OAC Meetings →Options
  • Work Product →Options

The assessment pillar keeps the driving force behind the idea aimed at the outcome.

Improve

Improvement is the active implementation of the ‘go forward’ decision- this can include efforts to maintain the current course.

Example: The assessment process has revealed significant local market rate and product differences for HVAC trades. The improvement step may be to contract a singular preferred vendor with a national reach and fixed volume pricing.  This improvement can enable greater accuracy in concept budgeting for future projects

The improvement process can help make future projects of a similar caliber more efficient and within budget.

What to improve?

  • Budget &Time/Schedule Allocation
  • Contingency Use
  • Communication Tools
  • Project Team Members
  • Field Coordination
  • Concept Budgets/Schedules

The improvement pillar is the re-start to the evolution life-cycle; review of the improvements come next.

The three project pillars (Review, Assess, Improve) hold the project phases together. The common area in which most Clients tend to fall short: Time! Many ideas and projects focus on the gross monetary requirements, but fall off the tracks due to a miscalculation, or mismanagement, of time requirements.  Every project has a proposed schedule, but failing to implement these three pillars can result in severe financial impacts or failure.

Pivotal Project Management Inc. manages the driving force of your idea to outcome by offering CRE Owner’s Representation, Program Management, and Construction Project Management Services. www.pivotalstrength.com

Pivotal Blog 3 Pillars

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