I read Barry Lepatner’s book, “Broken Buildings, Busted Budgets” a little over a year ago. I just finished skimming through it again in preparation for a meeting with a contractor on a possible development project. It really is excellent! The sub-title, “How to Fix America’s Trillion-Dollar Construction Industry” (now down some 35%) is a little ambitious, but he offers up some concrete measures that should be taken to heed.
We developers tend to fall in love with the image in our heads of what a building is going to look like and lose sight of the infinitesimal detail that is the difference between success or failure in a project. Problem is, the critical information that we need to have is under the control of the contractor…and the owner is at his mercy. The key to fixing this problem, according to Lepatner is to have truly fixed price contracts. Overruns? You don’t get to pass it on to the owner. The contractor is incented to get the project done on time with this method, and there are no cost sharing arrangements if he comes in under. The challenge, of course, for the developer is that he has to risk going to a full set of construction drawings before he REALLY knows if he has an economically viable development. Nevertheless, on a large project, this may well be worth the cost…the alternative is a tall stack of change-orders.
It’s worth the read – if you’ve developed or are a contractor, you will find yourself doing as I did, muttering – “dang wish I had thought of that before!”
It’s available over at Amazon, click here.