Saturday, December 15, 2012

Owner's Representative not to be confused with Construction Manager or Project Manager

I believe many owners simply are not aware of how beneficial Owner Representation is and what it does.  And in some instances confuse Owner Representation with Construction and/or Project Management:
Project Management is the coordination of Time, Equipment, Money, Tasks and People;

Construction Management is the process of organizing and directing men, materials and equipment to accomplish the purpose of the designer; and

Owner Representation is the effective third party hired by the owner in the absence of any or little experience and/or knowledge of the building construction process by the owner. 

Usually Owner Representatives have experience and/or knowledge in planning, design, construction, construction management, project management, real estate and the overall development process with the ability to anticipate and solve problems in a timely manner.

The following is a partial list of common tasks and activities appointed to Owner Representative by the Owner:


Liaison between the project participants and the owner (sometimes the owner’s management staff or team); 

Advises and assists the owner in the need for a project team, who should be on the team, team selection, qualifying the team, and hiring the team;

Advises and assists the owner in the need for a project schedule and budget including the respective tasks and activities;  

Attends and participates in municipal  planning, design and review meetings on behalf of the owner;  

Monitors the design and development process pursuant to the owner’s best interests, desires, and expectations; 

Oversees the overall design process to insure that the contract documents are prepared and completed on a timely basis and the final design complies with the owner’s expectations; and 

 When given the authority executes documents and contracts on behalf of the owner

 During Construction
Insures compliance with the contract/construction documents by recognizing, resolving and responding to issues and problems for the purpose of avoiding conflicts and delays; 

Manages and responds to costs and payment requests from project resources such as the Construction Manager, Architect, Engineer, Contractor(s), and owner’s vendors; and

Insures that the contract documents are being executed correctly.

Post Construction

Assists the owner in occupying the property/project;  

Monitors the project for defects and/or deficiencies as reported by the occupants of the project and prepares and transmits such information to the contractor and/or responsible parties; 

and Organizes and attends the one year inspection if mandated by the contract documents and/or statutory requirements. 

Perhaps others can comment on and/or offer addition benefits of Owner Representation or even services needed by owners when undertaking building construction projects.


Saturday, December 1, 2012

Holding Contractor Money (Retainage)

The purpose of Retainage is to hold back money from a contractor for incomplete or deficient work.  Ten percent (10%) appears to be the norm across the United States including Hawaii.

Retainage is held by prime contractors against subcontractors and/or by owners against prime contractors.

There is little or no reason to hold the Retainage once the work has been completed and accepted in accordance with the contract documents.

One technique I have successfully used is to include wording in the contract documents that “The contractor shall notify the owner in writing that all punch list inspection items are complete”.

Here is a definition of a Punch List found in my Glossary  "A list prepared by the owner or his/her authorized representative of items of work requiring immediate corrective or completion action by the contractor."

As the prime contractor or owner’s representative I would not hold or attend a punch list re-inspection for the project until the aforementioned notification has been received.

This practice tends to minimize, if not eliminates, incomplete punch list re-inspections and expedites the Retainage payment to the contractor because when all punch list items have been completed and accepted in accordance with the contract documents the contractor is entitled to submit a payment request for the Retainage amount.  And said payment should not be unreasonably withheld.   Usually contract documents include payment processing requirements such as “payments are due within 30 days of receipt, etc.”

This practice also tends to be fair to both owner and contractor.