Building Assessment/Reserve Study

Should you set GMP at Schematic Design?

By |May 10th, 2017|

Should you set your Guaranteed Maximum Price (GMP) at schematic design?  No, you should not set it at schematic design.  Should you set your guaranteed maximum price (GMP) at construction documents?  Let’s discuss this further.

The GMP on a project is the point where you ask your contractor to lock in the costs for the project and, in theory, transfer the risk to them. And although we agree that locking in a price does shift some exposure to the contractor, a sophisticated contractor will manage that risk through allowances, contingencies and exclusions and clarifications/qualifications. Here are some pros and cons.

Construction Document GMP: At this point, the drawings are nearly complete and the contractor will have all the information to receive multiple bids and clearly understand the intent of the design. The costs will be detailed and based on actual take-offs and material pricing.

Pros

You are receiving pre-construction services, which includes estimates at key phases of the project (schematic design, design development).
You gain an early price and a comfort knowing that you are “close to target.”
You can begin fundraising to an established goal.
There are few allowances and contingencies that could prevent money being left on the table. But, note that the owner could control the use of the contingency.
Allowances and contingencies are reduced as contract documents are more detailed.
Changes during the construction phase are reduced due to the contractor being engaged on the project early in the design phase.
Exclusions and clarification items are significantly reduced. We recommend no more than a one-page document.
It decreases the contractor’s pressure on the team to make changes to the design. This may have occurred if the [...]

Building Assessment/Reserve Studies 101

By |February 24th, 2010|

In the current economy more properties will be changing hands, the properties that are being held will need to be properly managed with fewer financial surprises. There is a need for Owners to understand not only the economic and income producing characteristics of their properties, but the physical condition of the asset they own or will be buying. The focus of a facility assessment/reserve study is to resolve this need through the execution of a property condition survey so that a stakeholder in a property can position themselves to make better informed decisions regarding the acquisition, stabilization, or disposition of an asset. An assessment coupled with a reserve study can provide an owner with baseline information about various building components in need of replacement, out of compliance, or that require preventative maintenance.

Assessments are intended to openly discuss each major building component and determine a plan for maintenance or replacement for that component. Within each component are numerous parts and pieces that need to be maintained properly in a systematic approach. Nothing lasts forever, but with proper preventative maintenance, the remaining useful life of any building component can be extended.

An assessment report includes an evaluation of the overall condition of the property and provides many useful recommendations. The combined components become itemized in a spreadsheet allocating future capital expenditures over any give term; the reserve study. This assessment/reserve study will summarize the projected expenses to determine specific capital exposure of the property and allow the owner to determine a course of action; maintain, replace or rehabilitate. A replacement reserve report will also reconcile the reserve funding or capital costs with the projected operating income and expenses. Knowledge of these costs will help the owners or [...]