The Site Plan Agreement on this 21 unit, 51,000 sq ft. development was delayed 13 months due to the leadership groups inexperience.
The owner hired the individual consulting team members and thought that individual team members, thru their own initiative, would coordinate each others efforts to produce the project, provide managerial oversight of the planning, design, financing and construction processes, and define the individual tasks that must be completed in the proper time and sequence.
Without experienced leadership, the ties that bind become frayed and broken, the coordination of information from one consultant to another is; often missed, not given or received, the level of importance is misinterpreted, tasks are performed out of sequence, and the owner is at a loss to understand why, after hiring the best of the best; progress is slow, duplication of effort becomes the status quo, and submission dates and approvals are stuck in a loop of continuous delay.
The Project Pro Forma anticipated a total profit of $3.7 million on $25 million in Revenue
During the planning stage this project incurred an additional $35,000 per month in interest expense to service the Land Loan for a total cost of $420,000. Once construction started the project was delayed an extra 4 months at a cost of $75,000 per month for a total cost of $300,000. In total the project incurred a total of $720,000 in additional interest cost that would have been averted if an experienced development manager had been hired early in the process. Profits fell to $2,980,000. The project management fee on this project would have been $262,000 .
In summary, the hiring of a development manager would have averted unnecessary delays and the associated costs. On a project of this size it only takes: •a 7 ½ month delay in obtaining the Site Plan Approval, or •a 3 ½ month delay in construction, or •or a combination of the above (e.g. a 2 month delay in obtaining the Site Plan approval combined with a 2 ½ months in construction delays)
to start incurring cost overruns in excess of the development management fee.
As your conductor OllieSwitch ensures your project makes music; by being profitable, by growing your brand and best of all by training you so you can manage future developments on your own!