Article
How to Get Better Results With Your Architect, Designer, General Contractor and Regulators
"Suddenly, a heated exchange took place between the king and the moat contractor" is the caption on a Gary Larsen cartoon that almost anyone who has been involved in a construction project can appreciate. In the cartoon, a king discovers that the contractor is building the moat inside the castle walls, clearly not as planned.
Any building project, particularly a restaurant, creates many possibilities for misunderstanding. Establishing clear communication with all members of your construction "team" is critical in getting the doors open.
Your team -- architects, contractors, designers and even regulators -- can be an interesting and unique group of people with whom to work. The best of this lot bring design, labor and materials together to create structures that are completed on time and offer owners a building that not only suits their immediate and future needs but also builds wealth because the property appreciates in value over time.
When the team is weak or does not "play well" together, it can create a living hell of "callbacks" -- repairs and maintenance that never seem to end, years after the doors are opened. That's why you need to ensure you have the right restaurant building or remodeling team in place from the start. Initial diligence can save you thousands of dollars (and probably much more, depending on the size of the project) and allow you to concentrate on opening and growing your restaurant, not constantly fighting a stream of facility problems.
The purpose of this article is to offer basic advice on picking your team as you enter into planning, designing and constructing your restaurant building project. Based on my experience with restaurant construction projects, I have found that every project has the potential for confusion, cost overruns and time delays, whether you're building from the ground up or remodeling an existing facility. Finding the potential "soft spots" early on will save you a great deal of unnecessary expense and aggravation as you start the actual construction processes.
Buyer Beware and the Golden Rule
Simply understanding that any restaurant construction project is fraught with the danger of cost overruns and is not for the faint-hearted is an important first step. You need to go into this journey expecting the worst and hoping for the best. Building or remodeling a restaurant has a number of complexities that can quickly overwhelm the project.
Many novice restaurateurs begin the journey with the "just get it done" mentality so they can get to the sexy part of the trip involving menus and positive cash flow. Veterans want to get to the same place, but realize that the facility is the foundation for success. If the facility has problems, they will reverberate throughout the business. They know that being proactive and engaged during the design and build stages will pay big dividends down the road.
A better mind-set with which to enter the restaurant building process is to focus on two age-old concepts: "caveat emptor" -- let the buyer beware, and "Do unto others as you would have them do unto you," i.e., the "golden rule."
The most important member of the team is you -- the buyer. It's your money, probably hard-earned or even harder borrowed, and when everything is said and done you're the one left holding the building and the mortgage. Honest designers and contractors understand this but they're also in business to make a profit, and the golden rule applies. That is, if you try to cheat them out of their profits you can be assured they'll find a way to cheat you on materials, callbacks or some other aspect of the building you'll never know about until the warranty has long disappeared.
One of the first rules of construction teamwork is to have a complete understanding of what's expected from each of the building team members and what the charges are for each element of the process. Sounds simple, but as you start down the design and construction path, the fast-paced activity, rapid decision making and the project's complexity can create all kinds of confusion and memory lapses. Even the best planned and executed construction projects require "field" changes because paper plans can't always be translated into reality. Having an early understanding of how "change orders" will be handled and what they'll cost is critical to staying within budget targets.
Know Thy Players
Before turning to the importance of a well-drafted and comprehensive construction agreement, I want to emphasize the value of understanding the different roles each construction team member plays in building or remodeling your restaurant.
One of the worst scenarios on any construction project is the "blame game," i.e., the contractor says it's a design problem, while the architect points the finger at a subcontractor and the engineer says neither one of them knew what they were doing. Don't laugh; it happens a lot and it will cost you money. Each member has his or her responsibilities. You need to know who does what. Construction "team member" players and their roles include:
The owner/client. Again, that's you. The more you know and understand what you want, the easier and more productive your relationship will be with other construction team members. This is one of the reasons restaurant chains are able to complete restaurant buildings in record time, sometimes as little as 30-60 days. They know from experience exactly what they want and that's easily conveyed to the other members of their construction teams.
It's your job as the building owner (or primary tenant, if you're leasing and doing a build-out) to define as clearly as possible what you want your restaurant to be and what you're willing to pay to get it. That's often easier said than done but these are defining decisions that must come first and they must come from you. The buck starts and stops with you.
If you are ambiguous regarding your needs and goals, it will take more time to sort out what you really want, cost you more money and set other team members off on the wrong footing. It is your job as owner to communicate to the designers your concept, your time and budget requirements and to set the working relationships. If you don't have a clear idea of what you want you can't possibly expect the people designing and building your place to have a clear idea either. A simple piece of advice: Until you have a clear vision of your needs, continue to do your own homework. Billable design hours add up fast. Your research time is free and you'll be better prepared to let the designers help you develop your ideas when you're really ready.
Once you have that clear vision it's time to move to the next step of selecting the people who can bring your ideas to reality. In most cases your first contact is the design team. They can help you focus, develop your concept and add the specific dimensions to take it from idea to construction documents.
The designers. Designing a restaurant is a specialty. And a complex one at that. Traffic flows, entrance and exits, furniture layouts, graphics, electrical and mechanical systems, kitchen production, food storage, signage requirements and the other myriad things that go into restaurant designs are unique and require specialized knowledge. Repeat after me slowly: Selecting a consultant or architect with restaurant design experience is simply a must. A key question to ask any potential designer is about their recent restaurant design experience. How many restaurant projects have they worked on? Which ones were they? Does their design license cover the scope of this project (a very important question for many local regulators)? Are those restaurants still in business? What exactly was their role in designing those restaurants? What mistakes have they seen in designing a restaurant? What other designers or architects did they work with on those projects?
Seldom does a single individual have all the necessary knowledge and skills to be a one-person restaurant design-and-build expert. In most cases the lead architect or designer will hire or work with other professional consultants who specialize in the specific disciplines such as heating, ventilation and air conditioning (HVAC) or electrical systems or interior design. As the owner you also have every right to hire your own consultants for specific design areas. A kitchen designer is a good example of specific expertise you might want on the job. Based on your menu the kitchen design is given to the architect to incorporate into the total design plans. Generally these consultant fees become part of the designer's overall fee, and are approved by the lead architect who then makes sure the payments are made to the consultants. That helps the architect keep control of both costs and timing. As the owner it is important to make sure that these additional professions are paid on time to avoid any design or construction "liens" being placed against the building (see sidebar "Don't Lien on Me" below).
Again, experience is one of the most important selection criteria for a restaurant architect. In turn, those colleagues the architect chooses to work with should also have equal or greater restaurant design experience. It's the best way to avoid most design troubles. Another avoidance tip is to remember that paper is much less expensive than construction labor and materials. The more you can lay out and change your ideas and designs on paper, the fewer "construction change orders" you'll need later on. Paper changes are easy; removing nails or metal screws is not. (See "Restaurant Design: How to Incorporate Form & Function")
Fees for restaurant design services vary widely and can be offered on an hourly, percentage or lump-sum basis. Opinions vary on the best way to pay your designer. One popular suggestion is to request a proposal for a lump-sum bid and then work from there on the exact services that fee covers. You can then divide the estimated total project costs into the fee amount to come up with the percentage numbers and ask how many hours the architect plans to spend to figure an hourly design cost. Like everything else in the construction trades, don't be afraid to seek competitive bids and to negotiate. On a recent $4.5 million restaurant project written about in this magazine the competitive bid process produced a lump-sum fee difference of more than $50,000 from two different and highly qualified design firms.
There are several ways to search for your design partner. One of the best is to visit restaurants looking for elements of design and function that appeal to you and ask the operators the names of firms involved. Question distributors, local restaurant associations and consultants about design and construction firms they recommend. Look for names in restaurant design books and trade magazines. Always keep in mind, however, that restaurant design experience is a key qualifier. The traditional method of building is to have all communications on the project go through the lead designer or architect who is then responsible for coordinating and managing the project and approving construction invoices for payment. During and after the design stages the most important decision you'll make with your designer is the selection of the construction general contractor.
The general contractor. Bringing together knowledge, materials, labor, equipment and accepted building methods in a timely fashion is both art and skill. Taking paper drawings to finished restaurant is a step-by-step process that requires an experienced hand. It might seem that all builders or contractors offer the same services but, again, in building a restaurant, experience is a key component in making sure things go as smoothly as they can. We can't say it enough: experience, experience and experience.
The earlier you can involve your restaurant contractor in the design process the better and easier the construction process will progress. Sometimes that can be hard because without at least preliminary drawings you can't get specific with the construction bidding process. However, conducting contractor interviews early helps narrow the final selection to a shortlist, which saves time when the actual bidding begins. Interviewing principals, learning about the firm's organization and procedures, and visiting some of their completed restaurant projects can give you a comfort level that this or that firm should be allowed to submit a bid for building your restaurant.
Every contractor knows the competitive bidding process and the good ones can help save money by being encouraged to review the plans for areas where time and money can be saved during construction. There's no one way to build something. Sometimes, in fact, it seems every contractor will read the plans differently and use their own construction methods. As you go through the bidding process, be on the lookout for the contractors who offer time- and cost-saving suggestions. Because of their field experience they can often suggest ideas that translate into major savings while keeping the integrity of the design. Good architects welcome these construction suggestions because it helps them keep costs reasonable.
Once the initial design plans have been converted to construction drawings, a process that can take from four to eight weeks, the bidding and permit issuing process begins. Nearly every construction job is completed in a fragmented fashion in which subcontractors perform the bulk of the work for a particular specialty. These days, the general contractors do about a quarter to a third of the work themselves and farm out the balance to subcontractors or "subs." On most projects the general contractor will appoint one of their employees to be the project's construction manager. He or she will have specific responsibility for your project and is the person that you and the designer will communicate with most often. With smaller firms the project manager is often the owner or one of the partners of the construction company.
Coordinating day-to-day construction activities of diverse specialties can get complicated and at times heated. General contractors and their subcontractors have multiple jobs going on at any one time and delivering the appropriate workers and materials at the right time and place can get complicated. Each activity has to be scheduled so that it doesn't interfere with another trade's progress or that one trade doesn't jump ahead or fall behind schedule. For example, getting the fire suppression system installed before beginning wall structures is accepted practice but if the fire contractor gets delayed it sets back everyone else. Multiply that off-timing sequence with all the major trades, such as HVAC, plumbing, electrical or sheetrock and you've got a behind-schedule restaurant opening.
During the bidding process the general contractor solicits bids from a variety of subcontractors. In most cases these are "subs" who the general has known and worked with before. The quality and timing of your job depends on how good the general contractor picks these subcontractors and that's why you should also be interested in who they are and their experience levels. This is particularly true with the major subs. The incorrect installation of ventilation, or not having enough electrical power or leaking plumbing is simply something you can't and shouldn't live with, and double-checking these important components is part of an owner's responsibility.
Expect construction problems, however. Even well-planned jobs using qualified contractors will experience challenges. It's the nature of the building process that things always don't fit together as they might. Problem solving is where the general contractor's experience level pays dividends. The earlier problems can be exposed and dealt with, the better chances you'll have of opening on time and on budget.
Reviewing the Bids
The bidding process has a number of components including how busy the contractor is at the particular time the project is to be constructed, how much they need or want the work and if they feel they can make a profit on the project. Next to restaurant experience, the most important aspect of selecting your general contractor is reviewing the bids. Numbers speak loudly, but they shouldn't have the final say. The "Example Building Bid Breakdown" below, provides a real-life view of four competing bids for the interior buildout of a metropolitan 6,500-square-foot upscale Midwest steakhouse. Contractor "C" was selected even without having the lowest bid numbers. The owner felt the builder's restaurant experience and reputation offered additional value added.
The design-and-build process takes place under the watchful eyes of the regulators. Understanding early on that they are also a critical ingredient in the mix and need to be communicated with will help speed up your restaurant construction.
The regulators. Local, state and even federal government agencies (particularly in the case of Americans with Disabilities Architectural Guidelines issues) exercise a wide range of control over any building. There is, however, an added layer of control over where foodservice activities are going to take place. Not only do they grant approvals but they also interpret what the regulations mean and how they will be enforced. From reviewing plans, conducting safety audits and setting fire safety standards to making sure proper sewer connections are made, the regulators are very involved in making sure owners, designers and contractors do not violate the rules.
Like other members of the team, getting them on board early is a key to successfully navigating potential design and construction minefields. This is where the experience of your designer and general contractor can be indispensable. Because their livelihood depends on working with regulators, experienced designers and contractors bear the load of making sure the project is going by the rules. The owner shouldn't have too much involvement unless something is going wrong in the process. In fact, many experts recommend that the owner not be around when periodic inspections are conducted because it adds another unneeded dimension to the dialog between builder and regulator.
Bringing the Team Together
Each team member will have a different perspective on any given restaurant construction job. That's just the nature of the various disciplines each team member brings to the project, however, the one common denominator is time. Everyone will work on a schedule and anything that upsets (or potentially upsets) the preset and specified time frame needs to be addressed immediately.
In the design stage the time pressure is on the architect and as the focus moves to the construction phase those pressures move to the contractor and in turn to his subcontractors. This is again where the conflicts and the aforementioned "blame game" can come into play. This was the case in a recent restaurant construction project in which a circular grand entrance staircase was designed but simply wasn't going to work. After several redesigns and field modifications the staircase got built but it took a number of delays in which designers and contractors couldn't agree on appropriate fixes. The owner opened three weeks late and paid extra time and change order charges.
As the design phase ends and the construction documents open the way for actual construction activity, weekly and often daily meetings are a key to making sure the project is on schedule. It is in these meetings that progress can be noted and recorded, problems can be anticipated and solutions worked out before they become costly change orders.
One excellent way to watch the progress of any construction activity is to use a digital camera to record daily or, at least, weekly pictures. This gives you a record of just how things were put together and can be used as a reference for maintenance issues, like knowing where the electrician "ran" the wiring. These pictures can also be used to prove any discrepancies that might have been overlooked. In a recent project the owner had noticed that after the roof tiles were in place an area below the center of the roof had collected wet spots after a rainstorm. The roofing contractor was called and repaired the leak or at least thought he had. After the interior was completed, the leak reappeared in the same place only this time onto interior finishing. Because the owner had taken progressive pictures of the project, including the original wet spots on the concrete subflooring, there were no arguments over the second set of repairs.
Any restaurant construction project is an exciting but demanding part of the startup process. It can offer personal satisfaction and a pride of ownership that comes from knowing that you've put together a winning concept housed in a location that opened on time and on budget. There's an old construction saying: "Quality, speed, cost: Pick any two." In my experience, with the right team members, good planning and an active participation you can have all three.
Don't Lien on Me
Every state has construction or "mechanics" lien statutes to protect contractors, subcontractors and others who furnish labor, materials or rental equipment to a building project from not being paid for their work. These give the contractor a security interest in the property on which they have supplied labor or materials until they are compensated. The policy for these laws is pretty straightforward: A building is not like a car or television, which can be repossessed if the buyer does not pay the supplier or otherwise breaches the sales contract. The electrician or plumber cannot easily return to the project and remove all the wire, pipes and equipment he installed, nor can the concrete contractor dig up the foundation and resell it to another buyer. These statutes also establish rules regarding how the liens are "perfected" and the order in which everyone gets paid in the case of a default, recognizing the often many suppliers and trades-people who contribute to a typical construction project.
The mechanics lien extends to the building and the land on which it sits. As long as the lien remains, the lien holders have an interest in your property, which may make it difficult if not impossible to transfer to another owner or refinance.
The laws are technical and must be strictly followed to be enforced. Having a good construction law attorney on your team from the beginning to draft and review construction agreements, including lien waivers, and defend lien claims can give the owner considerable leverage in avoiding or deflecting claims.
That said, as the owner, you need to ensure that the owner, subcontractors and suppliers get paid according to agreements. Under state mechanics lien statutes, subs and suppliers can file liens against the primary property. Problems are more likely to arise with liens filed by suppliers and trades-people hired by the contractor, rather than hired by you. You can wind up paying twice for labor and materials if the general contractor does not pay the subcontractors and suppliers.
If primary- or second- or third-tier subs claim they are not being paid in a timely manner, you need to address this immediately. If you rely on your general contactor to pay subs and suppliers, check with him regularly to find out if he is satisfying obligations according to the agreement.
No Handshake Deals!
In the 1996 movie "Jerry McGuire," sports agent McGuire enters an agreement to represent a top NFL draft pick based solely on a handshake with the player's father, Matt Cushman, who tells him, "What you do have is my whole word, and it's stronger than oak." If you've seen the movie, you remember that Cushman's word didn't count for much. Technically, many handshake deals are enforceable, although it can be a royal pain to do, since it can be difficult to prove the terms. Written agreements are an absolute must for even the smallest new or remodel restaurant project.
Good agreements do more than give you leverage in court if there is a breach. They keep all members on track. Without them none of the team members can be sure of their responsibilities or liabilities. In fact, if an architect or contractor doesn't want a written agreement, send them packing. Period.
Although it is a good idea to have your attorney review all agreements, you should know that standardized design and construction contracts are available at nominal charges from the American Institute of Architects. Prepared by the AIA with the consensus of owners, contractors, attorneys, architects, engineers and others, the documents have been fine-tuned during their 115-year history. As a result, these comprehensive contracts and forms are now widely recognized as the industry standard. You can also purchase AIA Contract Documents software by calling (800) 365-2724.
Evaluating Contractor Bids Beyond Price
When managing building costs, it's important to keep them as low as possible, but price alone shouldn't be the sole factor in choosing a contractor. Other aspects, such as the contractor’s experience and reputation, can add significant value beyond the initial bid, making it worthwhile to consider more than just the numbers when making your decision.
Watch Out for Clouds
The construction process by necessity is a flexible program with give-and-take as it moves from planning to building. Often all the design elements are not in place when the hammering begins. Don't be surprised on the construction drawings if you see an occasional wavy line circling a particular area. It's called a "cloud" by contractor people and it means that the design for that area has not been finalized. Watch out for too many clouds on any construction drawings. It could indicate potential delays.
