Wolgast Blog

Popularity Increasing for Design/Build

Posted by Cory Sursely on Wed, Sep 03, 2014 @ 10:58 AM

PlansAccording to the May 2013, “Design-Build Project Delivery Market Share and Market Size Report” by Reed Construction Data and RS Means Intelligence, Design/Build construction delivery method has taken an additional 9% of the construction market since 2005 and General Construction has lost 10% of the market share in that same time.

We recognize that the movement isn’t happening at rapid speed, but almost 10% brings it up to 40% of the overall market share.  Another study, “The State of Design-Build”, December 2010, by Design Build Institute of America uncovered that Design/Build professionals believe the biggest reason building owners haven’t rapidly adopted Design/Build is because it’s unknown to them and therefore seems risky.  Is that true? 

Wolgast was the first to bring Design/Build to mid Michigan in the 1970’s.  We saw early on the benefit of having the architect and the contractor on the same team.  It meant more continuity and collaboration, which would create a smoother construction project and therefore protect our clients from discrepancies in plans and change orders to remedy the parts that don’t translate during construction. Also, the cost for construction is determined earlier, so business owners can make an educated decision for their business without getting too far into the design process.

In actuality, Design/Build works so well because the construction experts are reviewing the plans while they are being drawn to ensure their constructability.  Therefore, once a shovel hits the dirt, there are very few setbacks, which in turn creates a quicker construction schedule, a reliable budget, and a happy building owner.

No setbacks mixed with the ability to get permits, pricing and materials earlier, makes Design/Build the fast track to construction delivery.  In some instances, the project can be completed months earlier than if it were delivered via General Construction Delivery Method.

As we are able to educate more people about what Design/Build is and the level of efficiency involved in constructing the building, we believe that it will continue to grow its market share.  To gain the insight that you will need to help you make a business decision, download our white paper, “Why Some Business Owners Don’t Do Design/Build, but Should”, or “Fast Track”.  We can also answer any of your questions, so please leave a comment or call us, 800-WOLGAST.

Tags: Medical Office Construction, Design/Build, the Wolgast Way, Dental Office Construction, Good for Business, Risk Management, Manufacturing Construction

What is the Design/Build Method of Construction?

Posted by Cory Sursely on Mon, Aug 25, 2014 @ 11:17 AM

Design/BuildWe've been providing Design/Build services for almost 40 years and we're curious if it's a well known term among those who haven’t previously been involved with the construction of a commercial building.  Have you heard the term before?  In a nutshell, it’s a method of construction delivery in which the building owner executes a single contract with one entity to provide architectural/engineering and construction services.

In other words, a building owner hires one company to interpret and define the project scope, provide architectural design, bid the project, obtain permits, and then construct it.  The Design/Builder handles the entire project on the owner’s behalf per open communication and agreed upon contractual parameters.

This method uses the same qualified and licensed architects that a building owner would use in other construction delivery methods and provides the same caliber of design.  However, with the architect and contractor as one entity, there is frequent collaboration on the constructability and the budget during the design phase, which helps the project run smoothly or with very few surprises during the construction phase.  Fewer surprises equals a budget and schedule that you can rely on throughout the project.

This team collaboration during design allows for permitting, material ordering, and when needed demolition or site work to start earlier than with the traditional General Construction method (a.k.a. Design-Bid-Build).  That’s why it’s considered the fast track to construction, which means the project can be completed, months faster than with General Construction.

Design/Build is best suited for busy business owners including doctors, dentists, manufacturing, banks, and other businesses who don’t have their own construction department on staff, or who may not be familiar with commercial construction.  The Design/Builder becomes the construction department for these busy firms and the advocate for all things construction.

Hopefully this blog has clarified how the Design/Build method can help business owners efficiently build or renovate their office or plant, if not, here is the perfect opportunity to ask your questions.  Or for more information on the benefits and how Design/Build saves time and money, download our white paper “Why Some Business Owners Don’t Do Design/Build, but Should”.

 

Why Some Business Owners Don't Do Design/Build, but Should

Tags: Medical Office Construction, Design/Build, the Wolgast Way, Scheduling, Dental Office Construction, Good for Business, Risk Management, Manufacturing Construction

Leaseback: Get a New Building While Keeping Capital in Your Business

Posted by Cory Anderson on Thu, Aug 01, 2013 @ 02:37 PM

Build to Suit

Build to SuitWhen the time comes to move your business to its own brick and mortar (or any other building material) building, or expand to a bigger building, you have an option to keep your capital in your business rather than spend it on a loan to cover construction costs.  This new building can be built to suit your operational needs rather than trying to fit your operation into an existing floor plan, and with limited risk to your business. 

Leaseback is a construction delivery method that provides the best of both worlds to qualified business owners and even though it may sound too good to be true, it’s legitimately a great, low risk option for presidents or CEOs to remain focused on their business while a building is created for their use.  I’ll explain more about how it works below.

By definition, leaseback is a construction delivery method whereby a developer builds, finances, and leases a facility back to a business owner, allowing him or her to keep capital in the businessThis method is perfect for newer, up-and-coming businesses or those that are established and experiencing rapid growth because there is little risk to the business and there is a lot of flexibility in defining the provisions with the developer.

How it Works

The developer reviews the business owner/lessee’s business financials and determines that he or she is a qualified candidate to take on the risk of building a building.  The building owner then enters into a contract for the lease, which is flexible in the terms of the duration of the lease, who will handle maintenance, and who will cover taxes and insurance payments among other things.  The developer will then work with the business owner to find the most optimal location for the business.  Then they both work with the architect to design a building suited to the business’ use (i.e. square footage, floor plan, finishes).  Once the floorplan is determined, the developer works with the general contractor to ensure that construction goes as planned, leaving the business owner time to focus on business without the interruption of making decisions because, let's face it, they likely have enough of their own work to do without adding on construction management. 

Early in the design process, the developer will be able to determine the lease payment amount, so the business owner will know quickly what the leaseback will cost per month.  Also, the terms are negotiated in the contract and the lessee has flexibility to negotiate many of the terms with the developer.  Typically, the finishes chosen by the lessee have the most direct effect on the monthly rent of a leaseback.  By working with the architect, developer and general contractor, a lessee can choose the interior look and feel that's in their budget.

Key Benefits to Business Owners

You’ll notice that there are numerous benefits and most of them have the underlying theme of risk aversion to business owners.  Here are the key benefits:

  • Lease payments are fully deductible as a business expense by the lessee
  • Terms of the lease can be flexible to allow the lessee the option to renew the lease or purchase the building at any time during the lease
  • No large cash investment is necessary, so leaseback saves capital and keeps debt off the balance sheet of the lessee
  • The cost of land can be amortized in the lease payment thereby preserving cash by the lessee
  • You can choose a prime location that you may otherwise not be able to afford
  • There are no financial covenants on a lease, which gives the lessee greater control over its own business and operations
  • Owners would be able to keep financing options open for future opportunities
  • Rather than worrying about all the moving pieces of construction, you can focus on your business

This is a simplified explanation of the leaseback method.  For more detailed information, call Michael Shepard at 800-965-4278 or 989-790-9120.  Or click the link below to find if Wolgast's leaseback services are right for you.

 

Wolgast's Leaseback Services

 

 

Tags: Medical Office Construction, the Wolgast Way, Financing Construction, Leaseback, Dental Office Construction, Good for Business, Manufacturing Construction

To Use or Not to Use a Pre-Engineered Metal Building

Posted by Cory Sursely on Mon, Jun 17, 2013 @ 08:15 AM

Pre-engineered metal buildingWe have had all kinds of business owners from varying professions ask us about using a pre-engineered metal building when they’re fact finding about new construction for their business.  We tell them a general rule of thumb to consider is that metal buildings are best for businesses that want an industrial look, or have a big enough budget to dress up a pre-engineered building with brick or EIFS (for example) to mask the industrial façade.

It’s certainly a viable and economical option when a business owner is looking for new construction.  However, the expense of masking the industrial look can be cost prohibitive and could actually make it more economical to choose building a stick-built building instead.  To see examples of how a pre-engineered metal building can be “dressed up” visit Kirby Building Systems website. Additionally, the larger the building, the better the economies of scale become for metal buildings.  The price per square foot gets more attractive the bigger the building vs. stick-built construction.  On the same note, the smaller the building, the bigger the square foot price will be, which can make stick-built construction the more economical option.PreEngQuote

The time you have to complete construction can also play a factor on your choice between metal and stick-built construction.  Both methods start with an architect designing the building and getting through approvals.  Once the contractor has a signed contract with the owner, stick-building construction can start, however, when using a pre-engineered metal building this is the point where it gets ordered from the manufacturer.  From there, it takes time for the manufacturer to complete their engineering and planning for the support of the structure per your design.  Then they put it into production.  Your contractor can begin site work and foundations prior to the arrival of the metal panels, but that could take 8-12 weeks for most jobs (simple jobs can take less time).

A final consideration is future expansion.  If your site allows it and you have plans for expanding your building in a few years when you’ve doubled your business or another reason, then starting with a smaller metal building can provide cost savings during an expansion.  If you design it with the intention of adding space later, it should be easier and more economical to do so with a metal building compared to a stick-built building.

In summary, if you’re looking to build a large building and don’t mind that it looks like an industrial building (such as operations for warehousing, manufacturing and some retail), a pre-engineered metal building will be your most economical choice.  For those who need a smaller building, less than 10,000 s.f. or so (doctors, dentists, restaurant owners, service providers), who'd rather not have an industrial look, or don’t have the budget to mask an industrial look, then a pre-engineered metal building most likely isn’t your best economical choice.

Either way, Wolgast is skilled in designing and erecting pre-engineered metal buildings as much as we are in designing and constructing stick-built buildings, so please contact us with your questions about what type of construction will work best for you.  800-965-4278.

Tags: Medical Office Construction, Professional General Contractor, the Wolgast Way, Auto Dealers, Design, Dental Office Construction, Good for Business, Manufacturing Construction

Warning: Adding on to Your Building May Not Be Possible

Posted by Cory Anderson on Thu, May 30, 2013 @ 11:15 AM

What you should know before expanding your business

Expansion

Many of our clients begin their business expansion quest by attempting to add on to their existing building rather than moving their operation, and most of the time they’re able to move ahead without any problems.  Expanding their existing space to make more room for additional manpower or machinery could be more affordable than building new or renovating another building.  However, there are times when it’s just not possible to expand where they want or at all.  Below we discuss the possible caveats to consider when expanding.

Setbacks & Zoning

Like I said, adding on to a building could be the most economical option for a business owner to expand his or her business as long as the property site will allow it.  However, there are limitations to consider when expanding on an existing site.  Each municipality is different in their requirements and the type of business, whether it’s a commercial office, retail or a manufacturing company can make a difference to setback and zoning provisions.  Each municipality sets how close you can be to curbs or property lines, which will determine where a building expansion can be on a business’ property, if allowed at all.  An architect or design/builder can help you identify zoning and setback requirements.

Utilities

The location of existing utility lines on a property can also restrict where construction can occur on a site.  In most every case, a building can’t be built over a utility line, so it may be cost prohibitive to relocate utility lines that can’t be built over.  It depends on the desire and budget of the client.

Parking

Also, depending on the type of business, many times, the municipality will require additional parking spaces if the business is adding staff (or at least not lose any space), which can limit the size or location of an addition should a business owner intend to build on his or her parking lot.  An architect or design/builder can help determine the parking lot requirements of the municipality and the location and layout of the addition.

Materials

The final consideration isn’t prohibitive in a regulatory sense, but depending on the age of the existing building or the materials that were used, it may be difficult or impossible to match the aesthetic of the new construction to the existing building.  This is simply because the exact material or color may no longer be in existence.  To some, a complimentary look will satisfy them, however, others want it to match exactly.  This is fine if the budget includes the cost of a full exterior remodel.

Wolgast as your design professional and contractor will work with your municipality to ensure that all codes and regulations are met and negotiate with your municipality to the fullest extent possible to help you accomplish what you’d like to do with your business.  Please share with us any questions you may have about expanding your building.

Tags: Medical Office Construction, Design/Build, Professional General Contractor, the Wolgast Way, Dental Office Construction, Good for Business, Manufacturing Construction

You Have Construction Service Options

Posted by Cory Anderson on Wed, Feb 27, 2013 @ 10:24 AM

constructionWhich construction delivery system is best for your project?

There are several unique and distinctive methods for providing construction solutions. As a business owner you have the luxury of selecting the most beneficial and appropriate delivery system for your type of project.

Design/Build

The Owner hires one firm to provide architectural design and construction services in a phased approach.  Oftentimes, the architect is a staff member of the construction company.  The design/builder becomes the single-source that is responsible for designing the building, hiring the subcontractors and coordinating the schedule and invoicing to ensure the project is completed on time and within budget.

It’s the design/builder’s sole responsibility to complete the project to the client’s satisfaction.  The architect and contractor are the same entity, which eliminates misunderstandings as they collaborate throughout the design process.  The design/builder becomes the owner’s advocate, leading them through site planning, permitting, design, value engineering and construction.  The phased approach provides economical/budget information early for the owner to decide if the project is a go or no-go.

Design/build is suitable for busy owners or those who know only a little about construction.  It’s also a fast-track method or a fast construction process for projects with a tight schedule.

Construction Management

A construction manager’s (CM) role as part of the project team is to provide estimating and constructability review during design, and cost, time and quality control during construction.  The client establishes their team of architect, CM and owner’s representative at the onset of the building concept.  The architect is responsible for defining the building through drawings and specifications while the CM regulates and monitors the schedule, budget, materials and performance of the subcontractors.  The owner thoroughly informed by these professionals, can then make educated decisions about his or her project.

The owner must be willing to be involved in the process because by using the CM method each trade contract is signed with the owner.  The CM method is most suitable for those who construction is a recurring activity and/or their project is very large, like schools and retail chains.

General Construction

Considered the design/bid/build method, the owner typically already has plans which were prepared by an outside architect/engineer when they seek a general contractor.  They choose their general contractor by one of three methods, 1) negotiating with one or more contractors of their choice, 2) selecting a group of contractors to bid and then accepting the lowest bid, 3) advertising for a broad variety of bids and accepting the lowest.

For clients who have a simple construction project, general construction is likely the appropriate construction solution.  It’s also the right choice when it’s necessary to bid and then build a project based upon completed plans and specifications.  However, this method leaves little room for correction of design or programmatic errors, if any exist.

Leaseback

The contractor finances, builds and leases a new facility back to a qualified owner, allowing him or her to focus on his or her business.  This is the best option for businesses that are faced with the need to expand their floor-space while at the same time minimize the risk involved with tying up capital in construction costs.

Business owners who qualify and currently have all their working capital in their business without a budget for building their new space are candidates for leaseback.  By choosing leaseback, they can move their business to a prime location and get the space tailored to their design needs.  The owner has the option to purchase at a future date when the business warrants the investment.

Still not sure which one works best for you? Call us to discuss your options.  At Wolgast Corporation, all systems are in place to provide the most appropriate delivery method. 

Click on the Prezi Presentation below for more information about your construction service options.

 

Construction Options on Prezi

Tags: Medical Office Construction, Design/Build, Professional General Contractor, Schools, Construction Management, the Wolgast Way, Restaurant Construction, Leaseback, Dental Office Construction, Manufacturing Construction

What Every Business Owner Should Know about Design/Build Construction

Posted by Cory Sursely on Tue, Jan 10, 2012 @ 12:19 PM

Design buildGeneral Construction for a long time was the primary method of delivering construction.  Even Wolgast in the early years was a one-trick pony with General Construction being our only option.  That is, until the 1970’s when we were the first to bring Design/Build to what’s now known as the Great Lakes Bay Region. 

The needs of busy business people who didn’t have much knowledge about construction drove the creation of the Design/Build delivery method.  They were educated people who knew a lot about their line of business, but never had an opportunity to learn about construction practices.  They needed guidance and, really, someone to be their advocate as they went through the process.

What is Design/Build

In a nutshell, The Design/Build method is classified by the architect and contractor being on the same team.  The company that’s responsible for designing the building is also responsible for making sure it’s constructed on time and within budget.  It’s a true collaboration throughout the project between the client, architect and contractor from concept to completion.  Through three phases, the contractor reviews the progress drawings with the architect to ensure that the project is still within budget and can be completed by the deadline.  Potential challenges can be flagged early and discussed to be mitigated.

Two Important Benefits of Design/Build

1 - You get an accurate estimate earlier – when using the General Construction delivery method, you have to wait for plans to be completed by the architect to hand over to the contractor for bidding.  You won’t have a cost estimate until you already have plans for your dream building set.  With the Design/Build method, you get a preliminary budget, roughly, a month or so after meeting with the architect.  You’ll then have enough information to know if financing is needed and, if so, documentation to take to the bank to get your loan approval.  Additionally, you’ll have easily and cost effectively made design adjustments to create a dream building within your budget.

2 – You’re able to find the best price from local bidders – when a general construction project is put out to bid, there’s normally limited time for general contractors to solicit subcontractors for their trade bids by the deadline, which means that you only get a couple of easily solicited bids for each trade.  When a construction project is delivered through the Design/Build method, the Design/Builder has the opportunity to set their own deadline and get bids from all local subcontractors (or any that you may request), which means that there’s no hit or miss with getting all the low numbers.  You’ll have all of the lowest numbers in one bid package.

Contact Michael Shepard to get an early preliminary budget, the best price and exceptional quality for your next building project.  800-965-4278, mshepard@wolgast.com.

To read more about additional benefits to the Design/Build delivery method, you can download our whitepapers on Fast Track The Wolgast Way or Why Some Business Owners Don't Do Design/Build, but Should

Tags: Medical Office Construction, Design/Build, Dental Office Construction, Good for Business, Manufacturing Construction