10 Great Commercial Construction Tips

Commercial construction can be a big undertaking, both literally and figuratively. You might think you have it all under control, but do you really? Here are ten tips that will help make your next commercial construction project a success.

1. The lowest bid is not always your best choice. It’s a counter-intuitive thought compared to everything we have been taught. But even in these times of wanting to be sure to keep the bottom line in check, it’s important to find the best price for the project. Sometimes the low bid is that way because the contractor has no idea what the job entails, and other times they will come in low, get a payment or two, and then abandon the job.

2. Go online and do your research. Check references, run the contractor’s board numbers, and study the backgrounds of your contractors so you can know before you sign on the dotted line just what you are getting. The internet can also be a source of information about current trends in commercial construction.

3. Find a contractor who specializes in what you want done. Sometimes the biggest isn’t always the best. A smaller contractor who is more adept at smaller jobs might be just the right thing your job needs. If you are revamping a store, consider finding contractors who specialize in retail space renovations.

4. Start with the general contractor and build from there. By bringing the general contractor into the job first, you are able to use their knowledge on the job from the beginning and have them help guide the project.

5. Go ahead and add on that maintenance agreement. Once the job is done, you want to ensure that your project will last for years to come. A good maintenance contract that checks over the equipment is a great idea to clean and maintain things like your furnace or drain pipes. A quick cleaning now is much cheaper than an expensive repair later.

6. Does the goal of the project further your company’s image and brand? If it doesn’t, it might not be the right project for you. This is a big capital expense, and you want it to pay off with a solid return on investment for you.

7. Your project should make sense. Do you have custodial closet doors that open inwardly? Did the customer service booth end up with only a small front-facing window? Double check the design proposal before you go out to bid to ensure that the concept diagrams and blueprints make sense and lead to positive workflow.

8. Along with number 7 goes ensuring that the areas like the office supplies and the copier are easy to get to and are going to keep things efficient in the office or administrative area.

9. Decorate in such a way that the colors and furniture enhance your brand and your company’s image. Your customers should feel like they are welcome in your new place, so be sure your contractor includes an interior decorator in the plans.

10. Be sure your contractors are all on board with the project and are capable of meeting the deadlines. This point is probably the most important one of all. Any delays are costly both financially and in terms of getting your business going again in the new location.

Hopefully these tips will help get you going in the right direction for your next project. Happy building!

Tips for Outgoings Management and Budgets in Commercial Property

When you manage commercial real estate, the outgoings within the property will require focus and financial control. When the property market slows or gets tougher, managing the outgoings is really important; the outgoings form part of the financial strategy for the landlord and will impact the net income for the property. If the outgoings get too high, the property will be hard to lease and hard to sell.

Set Some Rules

You can split the outgoings into a number of categories and this is normally done to identify and track the cash flow by expense streams. Most importantly there are two sides to the outgoings equation. Some of the items will be controllable and others will be uncontrollable. This means that the landlord can exercise control on only some of the outgoings.

The uncontrollable outgoings are those which are imposed on the property and have to be paid without any opportunity for cost savings, adjustments, or budgeting. Those uncontrollable items are normally council rates, land tax, and water rates. To a degree, insurance and energy costs will also fall into that category although some cost controls are possible with these items.

To manage the property outgoings effectively it pays to adopt a process similar to the following:

  • Create a budget for the property prior to the commencement of financial year
  • Track your expenditure to budget monthly. Adjust expenditure when you see a need and reason; early adjustment prevents bigger blowouts.
  • Look at the history of the property expenditure over the last few years to identify any excessive spending or items that are beyond the averages in the local area. The history of the property will allow you to adjust your budgets and cash flow expectations.
  • Make sure that you have removed the capital expense items from the normal repairs and maintenance for the property.
  • Talk to the owners of comparable properties in the same area. The outgoings between your property and their property should be similar. If not, you need to know why and take steps to fix that. Share information of outgoings costs with other similar property owners for this very reason.
  • Monitor the annual valuations for rating purposes. When these valuations are done, you will soon see the statutory charges and council rates rise soon after. It is not unusual for landlords and property managers to dispute the valuation in an effort to keep the statutory charges at a lower rate.

In preparing an expenditure budget for the property, you should time the expenditure so that the larger costs are expected; hence ensuring that the cash flow is suitably adjusted in preparation.

The controllable outgoings are those that the landlord can exercise decision and timing. Normal items of repairs and maintenance together with the contractor maintenance will fall within this category. If the landlord chooses to delay the expenditure with the controllable outgoings, then they can spread the impact of those items on the net monthly income from the property.

In summary, the property manager working on behalf of the landlord should exercise due care and diligence in the budgetary process for property expenditure. A well-managed landlord cash flow in an investment property is a correct balance of income against expenditure given the tenancy mix pressures on the building and the existing vacancy factors.