Consumer Guide to Construction Projects

Defining your Objectives

The next fundamental part of your project is to define your objectives. Start with establishing your budget. Create a contingency fund by taking 15% off your “Not to Exceed” limit. This fund will cover changes that occur in the work whether initiated by you or the architect. With the remaining 85%, deduct costs for financing, real estate commissions, design fees and feasibility costs that are not included in the construction cost. The final figure will be your construction budget.

We highly recommend keeping a binder or a documents folder which holds all your design inspiration, goals, and features for the project. Do this before meeting with an architect or contractor so that you have a referral for the design and cost estimating process when meeting with your team.

Contract Elements

When forming a contract with your partners, ensure you have everything in writing. Plans, specifications, schedule, cost, termination of contract, progress payments, change order procedure and final payment all need to be in writing. Anything that could be misinterpreted should be in writing; imagine that you must convince an arbitrator, judge, or jury of a situation, and how hard it would be without written documentation. Use standard contracts, such as the American Institute of Architects forms, and consider having an attorney review everything. Determine if you will want Architectural Inspections where the architect will help identify the contractor’s compliance with the drawings.

In your written contract, be sure to set up a process of dispute resolution. The contract should outline how conflicts will be handled, such as requiring negotiation between the parties first, followed by mediation, arbitration, or litigation if necessary. Defining these steps in advance can save time, reduce expenses, and minimize project delays while providing all parties with a clear understanding of their rights and responsibilities. A well-drafted dispute resolution provision encourages communication and helps preserve professional relationships throughout the project.

Administering the Contract

The following is a list of suggestions for administering your contract and keeping your project running smoothly:

•  Monitor your project’s schedule and cash flow closely, keeping and organizing all invoices and supporting documents. Hold your partners accountable.
•  Keep your own photographic record of the project (before, during, and after).
• Keep a written log of conversations, decisions, and a daily job diary. Keep all  correspondence, including texts but try to use email instead of texts.
•  Maintain open communication. Most disputes start with a lack of communication.
• If you are confused, ask for clarification. Do not wait until it is too late to reconsider.

Before you begin any construction project, remember that careful planning and selecting the right partners are more important than the construction itself. Taking the time to research your team, clearly define your objectives, document expectations, and maintain open communication throughout the process can help prevent costly misunderstandings and delays. Construction projects are significant investments of both time and money, but with the right preparation and trusted professionals, they can also be rewarding experiences that add lasting value to your property. An informed owner is a project’s greatest asset, stay engaged, ask questions, and work collaboratively with your team to achieve the best possible outcome.

This guide is intended to help you navigate the construction process with greater confidence and peace of mind, ensuring that your vision becomes a reality while protecting your investment every step of the way.