Risky business Featured

8:00pm EDT April 25, 2007
The complexities associated with building or relocating to a new facility can leave a company vulnerable to myriad financial risks, but planning and foresight can make all the difference between a successful and unsuccessful transition. Understanding your business’s needs and creating a clear project strategy can help your company mitigate risk, control costs and manage schedules.

“Avoiding risk early in the process means defining the factors that lead to cost increases and schedule delays,” says Amanda Stratton, director of project management at CB Richard Ellis in Atlanta.

“There are three aspects of a project that drive its risk level. The budget should be developed early in a project, the scope of work should be clearly defined for use in the request for proposal (RFP) in order to obtain the most competent project team, and the project schedule needs to be aligned with the owner’s critical business drivers.”

Smart Business spoke with Stratton about the steps that business owners can take to make the relocation process as smooth as possible.

How are project budgets developed?

Budgets have traditionally been created according to historical data, but that’s not sufficient due to the escalating costs of construction. The project manager needs to use historical data as well as current market data and trends to create a comprehensive project plan. The budget must address the full scope of the project, while also anticipating cost increases in the future of the project.

Expand on what you mean by the project’s ‘scope of work.’

The more defined a scope of work, the fewer unanticipated cost. By clearly defining the scope of the project, the team will have a firm understanding of each member’s responsibilities and whether each can effectively execute his or her commitments under the time constraints.

Risk to the owner increases when gaps exist in the documentation or interests conflict on how to manage or execute a project. For example, an architect needs to have a clear understanding of the client’s intentions for the facility in order to design a workplace that is functional and cost-effective. Once the scope of the project has been defined, it should be documented in the RFP.

What is the RFP process?

The RFP outlines each team member’s responsibilities along with the risks assigned to each task. RFPs are generally used to procure architectural, engineering, general contracting, IT, furniture, relocation and other consulting services. The RFP should include a detailed scope of work for the project, the schedule, as well as any occupancy requirements, contract and insurance requirements, payment procedures and project budget. Once the proposals are received, the client should evaluate:

  • Qualifications of the proposing teams based on their team structure and each member’s experience

  • Proposed project strategy and schedule

  • Client’s decision-making milestones as part of the process (in other words, can the client make decisions as fast as are needed to meet the schedule?)

  • References

What else should be considered during the planning process?

Managing the schedule is critical to mitigating risk on a project. The schedule should track team deliverables and project milestones, such as design presentations and completion of construction documents, ordering of long lead items, design/installation of IT infrastructure, furniture and equipment deliveries and relocation. The schedule should then be referenced to maximize the efficiency of the project delivery and balance the quality and cost factors. The role of the project manager is to drive the schedule to meet project due dates, understanding that pushing back the scheduled delivery can affect costs and quality.

AMANDA STRATTON is the director of project management at CB Richard Ellis in Atlanta. Reach her at (404) 504-7869 or amanda.stratton@cbre.com.