Building with Certainty: The 10 Key Questions to Ask Your General Contractor before Building a Townhouse Project.

Every week developers looking to build a townhouse or multifamily project call and ask me questions.

This week, a thoughtful developer took the time to send me a list of questions in advance of our meeting. ?When I see something that could help other developers, I like to share. Thanks Marc

Nothing is proprietary or confidential.?I’ve added in and changed a few of the questions to give more context.?

For clarity- these are my answers based on my experiences as a developer and now a partner in a construction company. ?This is a new developer, so I have catered the answers with this in mind.

Ok, so these are 10 good questions you could ask your GC prior to engaging:

1.??????Of the consultants you indicated will be required (mech, electrical, civil, energy, survey, Geotech, structural), are you able to provide recommendations?

Yes, that is one of the things we are adamant on – the team you use to build your townhouse is key.?

I gave him the example of hiring a consultant (structural) based on the fact they were buddies with the architect and came ‘highly recommended”.?I was warned by the GC, but went ahead anyways.?Well, that structural engineer, likely delayed the project more than a month and cost $50k- $70k due to the complex design.?

2.??????How do you communicate with me??Frequency??Onsite meetings?

We will send you a bi-weekly report on the progress of your project, along with a 2 week look ahead.?You’ll also have full visibility on your project through our online software (Procore).?Pictures, drawings, changes etc are all tracked here.?It’s

Side Note: as a developer, the first time I used Procore it was a huge improvement.?I could see pictures in real time.?All drawings are there, with dates.?If you’ve ever tried to track changes and updates, wondering which set of drawings to look at, procure makes it simple.

3.??????Who will be on my project??How many staff?

Typically, we will have a full time Forman on an infill location, a Project Manager and Project Coordinator dedicated to your site (but they are not billed full time).?We have a site super that oversees several infill locations.?

4.??????How is the interior design handled??Is this something the architect does, or do you have a designer that can help??

Yes, we have an interior designer that we work with (my wife!), but you can engage another designer.

I think it’s important to have a designer come in for finishes (lightening, flooring, fixtures, paints, etc).?It’s typically a small investment that can make a big difference.?I’d add in $7500- $10k for your budget.

5.??????How long will it take to build?

We generally tell our clients, once we can start (the house is demoed) it takes about 10-12 months for infill sites.?If we are building in greenfield, that time could come down a few months.?

Side Note: Next door to an infill I developed last year, the neighboring property was also being developed into a 4 plex.?As of this writing, they are still in framing.?It’s been more than a year and, I’d estimate it will be another 6 months before it’s ready.?I estimated it cost me $35,000/month (in general conditions and lost revenue).?

6.??????What level of contingency do you (as a developer) typically use in anticipation of change orders?

If this is your first project, I’d carry a minimum of 5% on your hard costs and $50K+ on soft costs in contingency.?We had a good conversation on this.?The reality is, development, things come up.?

In Calgary, it’s not uncommon for changes in design, building code, onsite conditions to require updates.?The City can hit you with offsite levies that you didn’t expect.?Moving a power pole.?A variance taking longer than you expected.?Interest rates rising (your debt will float with prime) and could double your Interest Reserve.?There are so many variables… the last thing you want to do is go into a project with just enough money.?

In a perfect world – I’d carry 10% on hard (if your build cost is $2M – carry $200k in contingency).?With our clients, they rarely need it.?But, developments run into issues.?And, your first project, far better to be overprepared than to cross your fingers and hope for the best.

7.??????Can you advise if you’ve had any/many warranty claims on similar completed projects??If so, what type of claims?

Typical warranty claims are water related.?A dishwasher, washer not connected right.?A tenant unplugging a sump and then having an issue.? As the builder, you get warranties with us (we can discuss in more detail).

8.??????Can you confirm you would have capacity to take this project on in 8-10 months??And, at what point would you like to get started so I can gain more certainty on costs/schedule?

We ( Kalamoir ) start all our project in Preconstruction.?This gives us a 4 month lead time to get your project dialed in (on the drawings, consultants and value engineered).?

In that time, we have the time to get the team together to hit the ground hard when your project starts.?Too often, developers think GC’s have a team that’s ready to go at the drop of a dime.?Construction is a low margin business.?We can not afford to have people sitting around collecting a check and not working.?So, far better to give your GC a long lead time and commit to them (with a precon) so they know the project is real.

9.??????Are you bondable, or is that something lenders typically require??If so, what does that add to the cost?

We are bondable.?That said, most (if not all) our developers/lenders have not required bonding.?It’s an extra cost.?Not to say it’s not important – but something we can discuss if you require.?

Bonding is based on a % of the total cost. If it's something you require, we will get our insurance to quote.

10.??Are you able to provide a few references of clients that have done similar projects to mine?

Absolutely - we have a deep list of clients that we can send you.?We pride ourselves on a 100% reference letters on all our projects – so, if we mutually agree to work together, we would expect the same with you (provided we exceed your expectations).

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?BONUS Question:

11.??Can you send me the link to your video/article you referred to (related to the process we use to help clients build).

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In the comments, there is a video and link to “How much does it cost to build a townhouse”.?

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This is a good sampling of questions I get from developers.?Next week, I’ll tackle the question, they start with – how much money will I make on this project??

It’s a loaded question. ?And, requires a full post on it’s own.?

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?If there are other questions you’d ask – drop them below and I’ll do my best to answer.??