8409 Pflumm Cir.
Development Consulting Process
Beckner & Associates, Inc. has grown with its clients. After leasing for several years tenants often realize that they are paying off someone else’s mortgage and have nothing to show for their lease payments. They desire their own building, one that most fully meets the needs of their company. We work with our clients to find that property. But often the client has a unique need that can not be met by existing properties. They begin to consider building their own property. But the average business owner does not know how to begin. What does a building cost? How long does it take to build? How large of a building should I build? Can I get a loan and what are the terms I can expect? They simply do not have the information to make an informed business decision. They also do not have the time to spend trying to get this information on their own. When they ask architects, contractors, real estate brokers, bankers, etc. they get different answers. Much like the elephant analogy, each of these is looking at a different part of the question. Their answers do not add up. Beckner & Associates, Inc. has a unique perspective on the process. We have developed a “Development Consulting Process” to assist our clients in making an informed decision regarding custom building a new building.
We start the process with interviewing the client and learning about his unique needs. This allows us to determine the general size of building he needs which might include expansion space or additional space for investment. Based upon this we are able to determine the style of building that best meets his needs. This then allows us to define the size of land parcel he will need and the zoning required. Based upon this information we work with the client to put a specific parcel of land under contract with sufficient contingencies to give us time to design, zone, and cost the building. The contract will also include a contingency for obtaining the desired financing on the property.
At this time we begin to build our construction team. Beckner & Associates, Inc. brings an independent architect to the table as well as an independent design/build contractor. This team works together to design a building that meets the unique needs of our client and one which is the most cost effective. Due to their relationship with Beckner & Associates, Inc. both the architect and contractor are willing to provide preliminary design and cost estimates free of charge to the client. This information allows us to determine a budget for the building which enables us to approach a lender regarding financing. Further, due to their relationship with Beckner & Associates, Inc. their fees are greatly reduced and much lower than those usually obtained on the open market. The client on his own is a one-time project. Since these companies want to continue to work with us they offer reduced fees. This is also based on an understanding that if the client does decide to proceed with the actual construction they will use these companies. We only recommend companies that we know offer quality service. The architect working with the team provides a preliminary site plan based upon the specific parcel of land that is under contract. The unique characteristics of the parcel greatly impact the site plan. Usually, we try to build the largest building possible on that site to minimize the cost per square foot of building. The plan must take into account the requirements of the city, drainage, set-back requirements, etc. The architect also presents a preliminary building elevation for that site plan which incorporates the design preferences of the owner. Beckner & Associates, Inc. works with the architect to develop the most cost effective design possible while meeting the current and future needs of the client. The contractor also provides input to the design based upon his knowledge of material costs and construction alternative. This allows us to meet the needs and desires of our client in the most cost effective manner.
Once the site plan and building elevations are provided, the contractor builds a preliminary construction budget. He will get bids for many of the items but will also estimate some costs based upon similar bids from other recent projects. The contractor is required to base his budget upon a cost-not-to-exceed number. In this process the contractor is allowed a specific profit percentage and his actual profit will not be determined until the project is completed. He also guarantees that the final costs will not exceed a specific amount. Further, if the final costs are below the guaranteed maximum he will receive a percentage of the savings. This rewards him for saving the owner money, but he must still build to the agreed specifications. He has the owner, the architect and Beckner & Associates, Inc. watching the construction.
With the budget from the contractor, Beckner & Associates, Inc can build a total construction budget that includes the estimated construction interest, architect fees, soft costs, etc. This gives a final estimate for the project. It also allows the owner to initiate the loan process with banks. Prior to this process the owner had to talk to the bank in generalities and usually got a rather open response. Now the owner can talk about a specific building in a specific location with a maximum cost. Since the bank will want a to-be-built appraisal the appraiser can base his appraisal on this final budget. We will work with any bank our client wants and will assist him in approaching others if he desires. The client should be able to get a loan commitment based on this information.
At the completion of this process the client can make an informed business decision. He can decide if he wants to own a building that looks a certain way, on a specific lot, for a maximum cost and with specific monthly payments. He can make an informed business decision.
If the client decides to proceed we will now need to get city plan approval. This may even require rezoning the desired land parcel. To accomplish this we will need more specific plans to meet the requirements of the city. At this point a contract with the architect must be finalized which agrees to pay for this additional work. The contract usually also provides for the cost of constructions plans if the project gets approval and proceeds.
Like the architect and contractor, Beckner & Associates, Inc. provides this initial consulting free of charge. But, per our Development Consulting Agreement that is signed before providing these services, the client agrees to pay a consulting fee equal to 6% of the total construction costs if the client proceeds with construction. 50% of the fee is due at the first draw and the remaining 50% is due upon occupancy. Our clients have found that the savings they have received from the architect and contractor plus the time savings and assistance more than justifies the fee.
City plan approval usually takes 90-120 days. Once approval is obtained, the client proceeds with closing on the land. He also enters into a construction contract with the contractor based upon the final plans that were approved. This is usually the same as previously shown but could change due to additional city requirements.
During construction Beckner & Associates, Inc. stays actively involved in the construction. We bring our expertise to assist in the many decisions that must be made. In a design-build process the construction drawings are not as in-depth as in a design-bid process. This greatly saves on architectural fees but does move many decisions to the owner and contractor. It also allows more flexibility in final design. With our team approach this process is greatly facilitated. The contractor is the most knowledgeable about the current pricing of materials and cost effective alternatives. This allows for significant savings but also delays more decisions to the construction period. With its prior experience Beckner & Associates, Inc. can make many of these decisions directly and does not need to involve the owner in day-to-day decisions. Of course, decisions with significant cost ramifications or significant design change must involve the owner.
While the building is under construction, final floor plan and tenant finish decisions can be made. In a design-bid process these decisions are made by the architect prior to bid. In the design-build model the contractor includes an allowance for most items based upon the specifications determined by the team. He is able to get actual bids for alternative approaches and then the owner/team can make final decisions based upon actual costs and not estimates. Again, this saves time and money.
Beckner & Associates, Inc. continues to lead the team through to occupancy by the tenant. If desired and needed by the client Beckner & Associates, Inc. will assist with leasing any additional space and also can offer property management services. Both of these are provided for additional fees.
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