Why Risk It? 5 Mitigation Strategies for Tackling Federal Lease Consolidation Projects
April 13, 2020 |
Crafting a risk management strategy for a federal consolidation project often becomes more complicated when it is also a leasing project. The number of stakeholders is increased along with the number of differing missions, creating a complex web of needs that must each be given special consideration. Untangling that web becomes significantly easier when the team’s Construction Managers know how to address the most common roadblocks that keep that project-type from being completed on-time or on-budget.
From both experience and research, AFG’s Project Directors and Construction Managers have identified the top 5 reasons lease consolidation projects falter – and how a PM/CM can mitigate each risk.
1) Differing Interpretations of Lease Language
Lease documents outline cost allocation, responsibilities, and requirements in narrative form, often leaving room for interpretation and requiring many rounds of negotiation between the Lessor and the client. Risk Mitigation Strategy: Clarify up front the meaning behind the lease language and being prepared for negotiation can be crucial to moving forward. Provide support for these negotiations by providing multiple estimates, lease clause review and citations, and professional advice to a fair and reasonable settlement between the parties.
2) Lack of Communication to the Stakeholders
Stakeholders who are not familiar with the schedule or process may feel frustrated or rushed when their timetables are restricted by project deadlines. Risk Mitigation Strategy: Fully explain the process at each accompanying stage, as well as the effects if time restraints aren’t met. Proper reporting and meetings can help stakeholders understand and meet deadlines, reducing problems like change in costs of material and labor, loss of free rent periods, and holdover costs related to a pushed schedule.
3) Ever Changing Scope Requests from the End Users
That “one little change or improvement” often adds up quickly, which then creates a snowball effect of accumulating costs, schedule, and design adjustments. Risk PM/CM Mitigation Strategy: Help the client understand the impact of these potential scope changes from subcontractors and lessors, and then establish firm deadlines for “wish-list” changes. Build into the budget and schedule time and money for the most common changes which are FF&E, AV, IT, and Security needs.
4) Managing the Design Effort to the Lease Budget
The Lease will often state that this is the Lessor’s responsibility, but it requires good management by both the Lessor’s team and the client. Risk Mitigation Strategy: Develop accurate estimates appropriate to the level of completeness of design to control costs, anticipate change orders, earmark contingency, and refine the program of requirements (POR).
5) Managing the Schedule Across Multiple Prime Contractors
Multiple Primes and multiple schedules may be present across many leases, contracted by both the Lessor and the client. With different people maintaining separate conversations with the client and Lessor, it is possible to create delays in other contractor’s schedules without directly interacting with them at all, creating risk of many conflicts. Risk Mitigation Strategy: Combine all contractors into an Integrated Master Schedule and track this in line with more detailed contractor schedules, which will require a top-down understanding of the project and scheduling practices.
About the Authors
About AFG Group, Inc.
AFG Group, Inc. is a woman-owned firm focused on multi-‐disciplined program, construction, and relocation management, with a national portfolio of work in healthcare, laboratories, courthouses, educational facilities, and government buildings. With 30 years of business acumen, AFG has earned a reputation for providing strong expertise, responsiveness, and project execution that helps owners navigate through complex design, procurement, construction, and activation processes. For additional information, visit: www.afgcm.com