The second phase where budget is exceeded is, of course, during construction. Be sure that this is not always because of a greedy contractor. The cause of overruns can be varied and the source of the problem can come from multiple directions. That is why an Owner’s Representative, or Project Manager can play such an important role on your team.
To be certain, all too often incompetent contractors are at fault. They perhaps didn’t take enough time or have the skills to properly price the project before starting. Or at times contractors do not have the ability to manage the project efficiently during construction. Because of this, it is so tempting to cast blanket blame and only talk about incompetence of contractors. However, many of them are nice guys who wish to do a good job, but are not capable of that for various reasons. In this case, we can say that the owner should have done a better job of screening the contractor. Recently I was asked to intervene as the Owner’s Representative to project manage a home in mid-framing stage. The contractor had bid the job at literally 50% of his competition and promised delivery in 7 months, which should have been 18 months. In this case, I think we can blame the homeowners for being greedy themselves.
This is an excellent example of how the Owner’s Representative can avoid a bad situation by doing a knowledgeable screening and selecting the contractor that best fits the project. There are some subtle qualities in a contractor that an owner would not know how to look for. An individual craftsman type of contractor might be the best fit for a small, highly detailed home. In contrast, a large project with complex structural requirements and many finishes requires a contractor who can provide a team of personnel and sophisticated office systems for managing budget and schedule. Oddly enough, the percentage fee charged by these two types of contractors can often be quite similar in the long run. Be careful not to assume the small contractor without an office will charge less. That is not always case.
The skilled and experienced Project Manager can help you not only select the correct contractor, but also monitor the project and give you reliable information as to whether the project is on track to a successful completion or if it’s going off the rails. If it is going off the rails, a professional Owner’s Representative can foresee this coming, alert the owner, and suggest changes before the problem escalates.