Your business is growing rapidly, your sales are through the roof, you’re hiring new employees weekly and you’re outgrowing your current facility. It’s time to look into expansion – but where do you start?
Renting a larger space appears like a viable option at first, but the idea of monthly payments with no ownership in the end seems fiscally irresponsible and like a lost opportunity.
You then decide you’d like to own your next facility. Should you renovate an existing structure? Build from the ground-up on a vacant lot? Knock down an old building?
Every business owner is looking for their business to grow. As that growth approaches, it’s important to look at all of the available options for facility expansion.
The traditional, bid/build construction process
Traditionally, a business owner will seek out an architect and an engineer to begin conceptualizing a new building. An architect will talk to an owner about their facility needs, and what the building will look like aesthetically. Meanwhile, an engineer will discuss the building’s shape, how it will work on the designated property, and how to allocate adequate space for parking and trucking.
“Spending 4-6 months with consultants and spending anywhere from $20,000 to $100,000 is very common at this stage of the process for a project that will ultimately cost $1 to $10 million for construction,” explains Gregory J. Redington P.E., P.P., President of REDCOM Design & Construction LLC.
After the schematic design stage, it’s time to move forward to get the approvals to build the facility. For an approval, an owner will need to hire additional consultants costing thousands of dollars and spanning the course of several months.
At this point, the business owner could have spent hundreds of thousands of dollars without having permission from the town to build the facility, or a sense of the cost of construction.
If all goes according to plan, the proposed building will get approved by the township. Following this step, the architect will put together a bid package, costing anywhere from $50,000 to $200,000 (depending on the project’s scope), while taking another 2-3 months to develop the plans. The project then goes out to bid to different general contractors, at which point the owner may find that their project will cost more than anticipated.
“Unfortunately, that is the process that we find a lot of people going through,” said Redington. “Sometimes they do have success after that process, but unfortunately this process gives the contractors who are bidding the drawing an incentive to give a low price up front so they can get the job and then try to make a profit later with extras and changes.”
The design/build, lump-sum model provides business owners with an alternative to the traditional construction process. As opposed to commissioning several different consultants to put together schematic designs, site plans, bid packages, and budget forecasts, a design/build firm offers all of these components in one entity.
For example, REDCOM employs engineers, architects, estimators, interior designers, project managers and site superintendents, providing business owners with a one-stop shop for all of their construction needs.
“What you have with us is a fast-tracked organization that is designing and pricing things as we move forward with your decisions,” said Redington. “So not only are you making aesthetic decisions, and operational decisions, but you know what the cost ramifications are of those decisions as you make them.”
The incentives for design/build general contractors are significantly different from the incentives of independent consultants. An architect wants to design a building that looks great, while the cost, approval, and constructability standpoints are secondary. An engineer wants to design a site that receives approval, while expense and efficiency are secondary.
“The owner may not know that an approval can be granted with $50,000 less piping or lighting or catch basins or grading,” said Redington. “But since that engineer doesn’t have anyone checking his work, so to speak, the owner ends up paying for those engineering decisions, without any knowledge of them.”
With the design/build, lump-sum model, REDCOM provides its clients with a price and layout early in the process, allowing the owner to plan accordingly.
“We have an incentive to deliver the product at the end of the day at that price and get it approved for that price,” said Redington. “I have no one to point a finger at. I have no one to blame for designing something that costs too much.”
Another benefit of the design/build model is that a single firm can get the project started, and therefore completed, faster than the traditional bid-build method. At REDCOM, a complete building design isn’t necessary to start site work, nor is a complete permit package necessary to start foundation and shell construction.
“In a bid/build scenario, you would be crazy to start construction without complete designs because you won’t know what the total cost will be,” said John Cannata, Sr. Project Manager. “With design/build, lump-sum, you don’t need to worry about it – the cost is set. The design/build firm can start construction, and phase construction, while design documents are being completed and save months on a project schedule.”
Building to benefit the client
Building relationships in this business is just as important as building structures, which is something that REDCOM pays close attention to.
“Giving the owner the ability to manage one team and have a responsible party to make sure expectations are clear and achievable is extremely important to us,” said John Cannata, Sr. Project Manager. “Our clients enjoy having a single source that has to take responsibility for the final product and price.”
Giving business owners the comfort of knowing they can get in contact with any of their consultants with one phone call is also an important factor in the design/build model. This helps eliminate finger-pointing between parties and results in happy customers at the end of the process.
The fast-track approach to construction also greatly benefits business owners. An owner can review a project and change something in the design, and get revised drawings within a day or two. They can also submit these changes and receive updated pricing right away, allowing them to make more decisions on the fly.
“Our owners who come back to us time and time again are really spoiled, they take advantage of that to the fullest, and we tell them they can,” said Redington. “That’s one of the many benefits of working with us.”
Single-source responsibility, a fast-tracked construction process, and one phone number for all consultants helps to alleviate the stress on owners when expanding their businesses.
“When the owners find us, they love the fact that they can walk in the door and can get their project designed, approved, and build all under one roof. They can talk architecture and engineering, they can talk interior design, they can talk prices and schedule with our project management department, all within the same organization,” said Redington.