Over the past several years, it has become more common for owners to engage owner’s representatives on construction projects — and with good reason.
Owner’s reps provide any number of invaluable services, from assisting the owner on selection of an architect and contractor to advising on the scope of work to reviewing and testing cost estimates to approval of draw requests. It’s no wonder we are seeing an increase in the use of owner’s reps as construction projects and their delivery methods become more complex, opening owners and investors to increased economic risk.
Engaging an owner’s representative is particularly important if the owner does not have the internal expertise or bandwidth to manage the project and perform the necessary review and oversight. Investing the money on an owner’s representative often has a positive overall effect on the project schedule, cost and quality.
Following are 10 reasons why owners would be smart to consider engaging an owner’s rep on construction projects:
- It places a skilled third-party professional in a central role on the owner’s side of the table. It is critical for an owner to engage legal counsel to advocate for the owner on legal matters. By also engaging an owner’s rep, an owner will obtain a critical eye on many aspects of the project that are not specifically legal in nature, such as design and engineering matters, cost, scheduling, etc.
- In cases where the owner does not have the expertise, depth or time to perform the required oversight and management of the project and where the design professional is not fulfilling these roles, an owner’s rep brings its knowledge, judgment and skill to fill the gap. For example, an owner’s representative could confirm required insurance has been obtained, review draw requests to confirm they are appropriate and address construction lien issues.
- An owner’s rep could assist the owner and legal counsel with critical high-level decision-making associated with the project, such as the choice of delivery method, budgeting, review of constructability and the bid process.
- An owner’s rep could be a valuable advocate in addressing issues that arise during construction by assisting with required value engineering, managing disputes with the general contractor or the design professional, and troubleshooting on issues associated with required permits.
- An owner’s rep could provide practical advice and perspective in managing the project in the context of our current global pandemic. Such advice would be supported by having firsthand experience of the impact of the pandemic on project staffing, supply chain and risk allocation.
- An owner’s representative could provide another voice dedicated to keeping the contractor on time and on budget. Owners do not always recognize material issues until they actually impact project cost or timing. A good owner’s rep may be able to anticipate issues and head them off before they become a detriment.
- An owner’s rep may help improve communication between and among the owner, contractor and design professional. Since they are part of the construction “club,” an owner’s rep can often quickly cut through formalities and get to the substance of critical issues.
- In situations where an impasse has been reached between the owner and the contractor or design professional, the owner’s rep may be able to offer a practical and reasonable compromise that may help the project back on track.
- An owner’s rep may assist with review of the plans and specifications for the project. Some of the detail in such documents is often difficult for an owner to understand. In addition, an owner’s rep may review the contractor’s general conditions expenses to confirm that they are appropriate. By having a knowledgeable construction professional as an advocate, owners can obtain greater comfort knowing the scope of work is complete and consistent with the design intent.
- An owner’s rep could assist an owner in making certain all requirements for completion have been satisfied, placing the owner in the best position to operate the project after completion. This could involve assisting in the development of the punch list and ensuring the contractor has assembled all of the final deliverables required by the agreement, such as the sworn statement, lien waivers, manuals and warranties.
Every construction project is different, and every client has different needs. Given the complexity and risks associated with modern construction projects, it often is prudent for an owner to engage an owner’s representative on construction projects.
Jim Rabaut is a partner at the law firm Warner Norcross + Judd LLP who concentrates his practice in construction and real estate law. He can be reached at email@example.com.