ADMINISTRATIVE DUTIES OF A GOOD PROJECT MANAGER

In the last writing we focused on the on-site duties of a good construction project manager.  In this issue we will delve into the administrative duties that are also necessary.

Construction project managers have come from one or two basic paths:

  • Those that rose up doing physical work on site, typically carpentry.
  • Those that graduated from a college with a degree in construction project management.
Photo by cetteup on Unsplash

They both have advantages and disadvantages that are rather apparent:

  • Those that rose up doing the physical work how to put a building together but are naive about the systems required to properly manage the administrative duties such as budget accuracy.
  • Those that graduated with a degree in project management are knowledgeable about software and systems but lack the knowledge of how trades and materials interact in real life.  

Of course the best are those that have gained knowledge of both.

A good home construction project manager is competent at:

  1. Creating a realistic and complete budget.
    1. The best starting point for a project is a budget that a has included in it all the line items that will require funds in order to complete the project.  
      1. A one page outline is not enough, too many items can be missed.
      2. A laborious budget that is too specific can also be tedious to work with.
    2. The ideal is a budget that has enough line items that it forces the project manager to remember and deal with all the pertinent items that will need funding.
  2. Creating a schedule that is digitized and can be updated easily.  Typical schedules are called gant charts or bar charts.  
    1. Schedules should be digitized because it should have the following qualities:
      1. Dependencies:  That is where the start on a task is dependent on the completion of other prior tasks.  For example unless it a a project with many concurrent phases, foundations must be completed prior to framing.
      2. Have an identifiable critical path.  These items must be completed in the sequence shown for the project to be completed.
      3. Be easily updated.  A hand written schedule on notebook paper becomes misleading and good for the dust bin within one month of starting.
    2. A good construction project manager in the San Francisco Bay Area must be good at managing the schedule because there is so much demand for workers that they must be scheduled way in advance.
  3. Manage change orders.  Yes there will be change orders, no matter how good the plans and the builder are.  Custom home construction is unique and new issues become apparent during construction.
    1. A good project manager is knowledgeable about construction so can quickly discern if a cost requested  for a change is appropriate.
    2. It is the project manager’s job to know what line item in the budget spreadsheet to charge this to.
  4. Processing pay requests and logging them into the budget.  This is where a software system designed for the purpose of tracking pay requests is critical.  No, Quickbooks is not the answer.  Quickbooks does not have the capability to tell you how much has been paid, what is left to pay, and what percentage of the total line item budget is consumed.  This information is critical for a project manager of a construction project to keep on top of the budget as it is being spent.
  5. Collecting warranties and lien releases.  A good construction project manager will make sure these collected and collated before the end of the project.

For the administrative purposes alone an experienced construction project manager is crucial, especially when building a custom home, and especially when building a home in the condensed areas of Oakland, Berkeley, San Francisco and other parts of the Bay Area. Without someone with the knowhow and ability to stay on top of these tasks subcontractors, supplies and even simple things like permits can slip into the cracks or through your fingers. 

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THE PERILS OF THE HOME MORTGAGE PROCESS

The following applies to mortgages called “jumbo” or over the standard Fannie Mae size that you hear adds for such as “rocket mortgages”.

If you are in a position of considering a refinance to help you purchase a home you most likely know someone who has gone through this process already. If you have then you probably know that refinancing (especially with a “jumbo” mortgage’) is going to be painful. In this blog I am going to give you some details that many don’t learn about until they are knee deep in the process.  I am hoping that I can pass on this information to forewarn you of the difficulties you may encounter so that you may be able to prevent them.

This process, unfortunately, can be costly and you may start to feel like you have no control.

Five realities that become apparent once you enter into the process:

  1. The system is structured to favor the wealthy.  The more money you have, the easier it will be to get a mortgage and the lower your interest rate will be.
  2. As with any commission based field, the lending agents will make big promises to entice you but may not be able to follow through on the offers they have made. Once you are embedded in the process the pitfalls that raise your costs will become apparent, but only one at a time.
  3. The process is somewhat unpredictable and there is no roadmap as to the next steps required.
  4. You will be paying for expenses along the way, such as appraisals.  So have some cash available.
  5. Most likely there will be a need to put in cash at closing.  You will not be able to anticipate how high these costs are so be prepared to pay more than what you were originally told.

This is an arduous and frustrating process thus it is important to know as much as you can so you will be prepared for a long process that can be quite difficult to navigate. There are a few things you will probably not have a lot of control over that will affect you directly. 

For example:

  • Your credit scores, (which determine the interest rate): Typically the fewer credit cards and loans you have the better your score will be. However, if you don’t have at least 3 credit lines, and you don’t use them, your score will be lower than if you actively use credit.
    • Be on guard that your loan sales agent or broker does not seek too many sources of funding which will individually run a credit check on you.  Apparently two or three close together is not too harmful, but beyond that any further checks will cause your credit score to  drop like the ball at Times Square at New Years.
  • Appraisals of your property: These can vary widely and rise and fall with the mood of the housing market.  In addition you will not be able to choose the appraiser, the loan officer will assign you one of their choice.  This could result in an appraiser from out of the region where you live which can result in them being significantly off in their perception of value.
  • Let’s say that you are assigned an appraiser that puts your house at “market Value” or gives an assessment that seems reasonable to you; unfortunately you are not out of the woods yet. There will be a second appraisal done called a “desk appraisal”. This in an appraisal done by someone who has not seen your home but they set guidelines for the secondary market. The lenders do this because they intend on selling your loan about twice down the line and they are the ones that give a value of your property.
  • Cash needed at closing:  Not all expenses may fit into the loan, so you will have to come up with cash for taxes and a long list of costs at closing.  You will not know this amount until a few days prior to needing it.

Percentage rate for interest on your loan directly affects your monthly payment amount.  Every strike against you such as your credit score, or the amount of reserves you have affect this rate.

What I found disturbing is that I could not get a roadmap as to the steps involved in this process, and the amount of time each will take.  It seems there is always a rush because there is a constant set of surprising discoveries along the way.

It is important to remember (albeit frustrating) that when you are applying for these loans you are at the mercy of the lender. They are able to handle these loans however they like. The housing crash in 2007 made banks rethink how they give home loans. The end result was creating this process that leaves the lender in power and the lendee in a position where they have no control. 

It is my hope that you will not experience all of these roadblocks during your mortgage process and that you use a broker that will make you feel like they are invested in you. Hopefully some of these thoughts above result in an outcome where you end up with a decent mortgage on your great property. 

Once you have completed the mortgage loan process and have the amount of money you need to make improvements on your home you will have the power back in your hands and can start the process of hiring a team to help you with renovations. Please refer to my older blogs for tips and advice on how to make the rest of your renovation or home improvement process organized, easy and puts you in charge. 

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Undeveloped 110-acre Tiburon Ridge property for sale for $110 million- The ARK

The ARK published an update of the controversial Martha Property litigation. Will having a single buyer wanting to build a single home fair better for Tiburon Open Space? Or will it leave the door open for the new owner to sell some of the property to developers? The fight continues as non-profit groups such as TRUST, LCOTNA and TOSC try to find a way to purchase the land, preserving it for good.

Read the full article from The Ark here

 

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Richard Wodehouse Quoted in the Wall Street Journal

In this article from the Wall Street Journal yesterday, October 24th, Richard is quoted below the second picture as the president of TRUST (Tiburon/Belvedere Residents United to Support the Trails). He is discussing the lawsuit to preserve the trails in Tiburon that are currently at risk of being developed. The proposal is for 43 homes to be built which would not only make the trails unusable to the public, it would destroy the trails and a large portion of the surrounding wildlife.

See the article here

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INTRODUCTION TO SERIES ON BUILDING SCIENCE

Over the next few weeks I will be publishing a series of articles on practical applications of what has come to be known as “Building Science”.  Yes, there is such a term.  “They don’t build them like they used to” is quite true, but in a good way, we build much better now.

We have learned so much since the days of the log cabin in the real old days, and Sears kit houses which symbolized the emergence of fast and efficient building techniques after WW2.  Every year there are new products offered by an industry that has a world wide market.

In North America we build primarily with wood because that is a resource we have available.  In more Southern countries cement and masonry are the  dominant building materials.  High-rise buildings are made primarily of steel.

The concepts of preventing moisture infiltration, of creating healthy and comfortable buildings is similar in all.  What is important is a thorough understanding of how to combine materials so as to prevent holes.  Holes that allow water to enter or air to both enter or exit uncontrolled.

In the evolution of building techniques we have both improved our buildings in terms of energy efficiency, and at the same time created some flaws such as trapping moisture.  We have made our buildings more comfortable but at the same time sealed in some very harmful chemicals.

That is where building science comes in, it is the well studied concept of best practices.  It is how to have an energy efficient comfortable and healthy building. Topics this series will cover:

  • We will address what constitutes a high performance building or home.  
  • We will learn how to avoid the pitfalls of moisture build-up and mold creation.
  • We will learn why we now split insulation into both inside and outside the wall to create what is called CI or Continuous Insulation. 
  • We will learn why we want to think of a building enclosure, and not building envelope.

Due to the horrific fires suffered by so many residents of California in the last year, we will also cover ways of lessening vulnerability to fire. For example, we are finding fire often entered attics through vents and started burning the roof structure from the inside.

In the next issues you will find information on:

  • Thermal movement control in homes (heat and cold)
  • Water barriers and rain screens that allow the building’s skin to breathe but repel water
  • Various new products that are worth considering in new construction
  • Fire prevention measures
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