THE REAL ESTATE DEVELOPMENT PROCESS

Development of real estate projects spans a huge range of scale from adding a carport to creating thousands of homes or an industrial park. Vieques is a candidate for small developments, and most of those would be individual houses or multifamily complexes (condos or guest houses) of up to a dozen or two units. Numerous aspects (characters, philosophies, expectations, laws, etc.) come into play throughout the process. The following identifies some of the issues and considerations that one may well need to address.

The Design/Build Concept

Combining the processes of designing and building under the lead of a single entity offers both the client and the builder the most efficient effort and consistent result. Communications become immediate and direct. Responsibility for the entire execution of the project resides with just one company or person.

Historically, the design/build concept was embodied in the Master Builder. This person was hired to design and build everything from a house to a city. The larger projects were constructed by legions of workers managed by this Master Builder. Europe and Asia still operate in a similar form.

For the last hundred years or so, the professional architectural organizations in the U.S. have discouraged (or prohibited) the design/build practice by their members. The reasoning for this was one of advocacy. The architectural associations wanted their members to be the client representative in dealing with the contractor. Therefore, the contracts were set up so that the architect had a fiduciary responsibility to engage the contractor on behalf of the owner. This would give the design professional power and incentive to closely examine the work and standards of the contractors and the execution of the project. With this advocacy model, the interests of the client for quality are monitored by the architect to protect the owner from the contractor. While this sounds like a balanced approach, in many cases, it has become anything but efficient and cost effective.

With the high degree of litigiousness in our society (especially in the construction industry), an extreme amount of self protection and overkill in some quarters greatly increases the cost and complexity of building anything. Instead of working with everyone, each player must first build his or her legal protection. Instead of working as a team, in many cases, people are covering their posteriors. This costs time, money, and misguided efforts. Legal fees can be significant even when everything goes well. Fearing evermore litigation, a number of years ago, architects backed out of “inspecting” or managing construction projects and instead “observed” the construction periodically. This way, it is acknowledged that the architect doesn’t see everything that goes on and is therefore not responsible; however, major items may be noticed and records of progress are sometimes maintained for payments to the contractor.

In the last couple decades, more and more architects who wanted hands on control of their projects have elected to become design/build firms. This can be good for a client, but it is not for everybody. The advantages to the client include:

• Lower overall fees. The drawings are simpler. The architect isn’t required to put as much detail into the drawings to protect the client or the architect from the contractor because they are the same person.

• Improved efficiency. Inspection of the project and maintenance of intended quality is provided everyday by the on-site architect. There is no duplication of effort: the architect inspects the work while he or she performs it.

• Reduced paperwork and legal involvement. Responsibilities are simple and straightforward. In effect, the client has only one finger to point for design or construction issues. The architect/builder and the client must strive to maintain open communications and an ongoing team effort.

• Trusting the architect/builder. It is very important that the client check out the architect and the builder well, but in the case of the architect/builder it is even more important because all of the eggs are in one basket. One must always verify references thoroughly.

• Quality of construction. Those who are opposed to the architect/builder feel that the “fox is in charge of the henhouse”. This can be a valid criticism if the selected firm is so inclined to skimp on materials and shave corners. That is why it is very important to screen the professionals thoroughly. Given that the traditional architect will not normally be spending much time on the site anyway, it is unclear how much additional risk there actually is.

• Work load of the architect/builder. Nothing delays and imperils projects like the contractor who is overcommitted. Contractors with multiple projects in process at once can get into cash problems and, due to limited resources, may not be able to give each project its due. Architect/builders can have the same problem. One must research the history and practices of the professionals being hired.

• Maintenance of open communications. The biggest problems that occur in the entire process tend to be miscommunications or lack of communication between the architect, builder, and the owner. While much easier when the architect is the builder, it is no less critical that information and concerns travel both ways.