Prescription for Building Success

It is time. The financial package is in place, the building permits are displayed, and the contractor is on site ready to break ground. Most importantly, you are confident of your facility’s long term success. Even the market analysis indicates that this project will prosper from startup through the next 50 years. So you have […]

It is time. The financial package is in place, the building permits are displayed, and the contractor is on site ready to break ground. Most importantly, you are confident of your facility’s long term success. Even the market analysis indicates that this project will prosper from startup through the next 50 years. So you have nothing to worry about unless your building’s construction does not endure to serve the approaching senior population boom.

The National Investment Conference Review Vol. VI predicts that between the years 2002 and 2006 well over one million people will be between the ages of 55 and 64. For the most part, these people have planned extensively for their retirement. Is your facility planning to serve their retirement housing needs or will a lack of planning lead to your facility’s early retirement instead

A Fresh Start. In previous years, the title “construction consultant” was synonymous with bank inspector throughout the retirement industry at a time when no one but the lender found comfort in the presence of an inspector. Today, however, there are significant differences that set the construction consultant apart from the bank inspector. Appreciating these differences has resulted in increased use of the construction consultant by the owner and more value derived from every dollar spent.

One important difference is that the consultant is not simply babysitting the project and reporting to the bank. Although he can certainly fulfill your due diligence requirements when necessary, the construction consultant is not limited to due diligence. Instead, he is actively involved in design, planning, construction and management regardless of the involvement of a financial entity.

Since the construction consultant does not represent another party, his objectivity is never compromised. The only residual gain that the consultant can expect from a project is measured not in dollars but by the clients he keeps. Therefore, while the bank inspector has a contractual obligation to the bank, the construction consultant is obligated to the ultimate success of the project and satisfaction of the client.

The greatest asset of your retirement facility is not just the building itself but accurate information about it as well. Results from the National Investment Center’s 1998 Lender and Investor Survey show that “investors view a typical assisted living facility as 40 percent real estate and 60 percent business.” This is quite interesting considering that without the real estate there would be no business — without the building there would be no income. So, while the majority of investors and directors are consumed with the business aspect of the facility, who is knee-deep in the design and construction details? It is the construction consultant.

The consultant’s main purpose is to provide the investor, manager and director with up-todate and accurate project information. As an outsource member of the team with no direct investment in the project, his second goal is to bring his objectivity to the project to facilitate communication, resolve disputes and create an open forum for discussion. Construction can be compromised unintentionally by a lack of clear and accurate information and communication. The presence of a construction consultant can not only resolve problems when they arise but also prevent them from materializing. This is essential throughout the development as well as the management phases of your facility.

Remedies for Building Success

Beyond information and open communication, the successful construction consultant provides specific services for the startup, renovation or expansion of a facility. To facilitate development, the consultant’s services usually begin with a design and review analysis. During the planning stage, the consultant can pinpoint design flaws and make value engineering recommendations that often shave dollars off the total project cost. The key word is value because value engineering often becomes devalued quality simply because the person doing the value engineering is looking at dollars, not necessarily consequences. The experienced consultant will recognize the difference between cutting cost and cutting quality, and his attention to this detail will serve you from the planning through a smooth construction phase.

During the construction phase there is a delicate balance between the construction schedule, cost and quality. If any one of these is compromised, the others will suffer. Since lenders often base your loan on the anticipated value of the completed construction, how can you be sure that your project’s quality meets or exceeds this value? This is where the construction consultant steps in to provide monthly inspection services. His inspections will not only meet the lender’s due diligence requirements but also keep you informed of the construction progress, quality and budget savings or shortfalls. If these factors are not living up to their expected value, the consultant can make recommendations for corrective measures before the entire project is affected. A good construction consultant can help all parties understand the variations in the construction progress by providing visual representations of the project status such as a customized critical path schedule or a construction progress curve. These visuals, in addition to the monthly report, will keep all parties completely informed and, therefore, confident throughout the construction phase.

When zumBrunnen, Inc. inspects an assisted living facility, whether existing or under construction, the inspection is from top to bottom.

The need to stay within a budget does not end after construction is complete. It is not uncommon to have a facility operating on a limited budget, making effective asset management an ongoing challenge. Fortunately, the consultant’s services, like your budget, do not end with construction. A full-service construction consultant can perform a property condition survey to evaluate the current condition of a facility. He can then provide a capital reserve budget which projects the life span of the facility’s capital items, the expected replacement cost and the most strategic time for replacement. Using this information, he can assess the amount of reserve money needed each year to properly maintain the facility. The uncertainty that can lead to overreserving or under-reserving can be avoided. Like the critical path schedule, the capital reserve budget can be customized to fit a specific facility’s needs whether it is a 120-unit assisted living facility or a 120-acre CCRC. Throughout the planning, construction and asset management of your project, the expertise of a construction consultant can help ensure that your facility does not retire prematurely.

  • The Right Construction Consultant Owners, managers and developers can benefit from the services of a good construction consultant. Finding the right one for your next project need not be difficult, and following are tips to help you do this.
  • Look for a professional with lots of experience and a formal degree in building construction management, architecture, civil or mechanical engineering.
  • Choose a consultant who is trained in new products and systems such as EIFS, roofing and mechanical systems.
  • Find someone who is a team player and who gains leadership not through taking control but through earning the respect of fellow project team members.
  • Ask for references!

Today’s seniors want to be spoiled. They want to write a check and have their expectations met. This is exactly what facility professionals want from the members of their project team, and a construction consultant can help ensure that all parties’ expectations are met and the facility is a success.

Reprinted from Retirement Community Business Magazine — Spring 1999