Design and Construction
Initial Budget and Design Close Open
An initial plan and cost estimate do not have to be elaborate or costly—don’t reinvent the wheel. Even at this early stage, we recommend hiring an architect AND a code consultant because building code is a complicated legal document open to many interpretations. The code consultant’s job is to find the least costly code interpretation for your project, while still providing a safe building.
At this stage, the architect creates a two-dimensional plan; to scale, but quite simple; called a “pre-schematic” plan. The architect also should provide an “outline specification” which lists the types of materials, finishes, systems, and equipment required. Have rough building measurements taken, but do not spend money having the building fully measured.
A contractor or professional estimator can take the code report, pre-schematic plans, outline specification, and a set of building photos, and arrive at a rough budget price. Always test your estimates by comparing it to similar, recently completed projects. If everyone else has spent about $100,000 per unit on construction to renovate a loft building, your $50,000 estimate will look suspicious!
Checking feasibility with a “pro forma”
The next step is to prepare a “pro forma” for the project. A pro forma is a more detailed financial analysis of the project and will give you a better idea of whether the asking price is realistic, given how much construction will cost and the selling or rental price. This analysis will evolve as different costs and inputs arise during the development process. It is imperative that someone on your team understand the pro forma.
Always minimize upfront expenses until the property is “taken off the market” with a letter of intent to purchase. Sellers will typically require a deposit to “tie up the property,” but it should be refundable (for any reason) for at least a month or two. As the project progresses, the deposit will become “hard” or non-refundable. Although most Purchase and Sale agreements have “contingencies” that return your deposit for things beyond your control (inability to obtain zoning approval, environmental problems, hidden structural problems, etc.), it is highly unlikely that you would be refunded because you incorrectly priced the units or underestimated construction costs.
Thus, unless you want to gamble with your purchase deposit, you need to spend what it takes to get comfortable with your pro forma before your deposit becomes nonrefundable. While the contractor might not charge for his estimating time, the architect
will charge for his drawings and outline spec, as will your lawyer for negotiating the Purchase and Sale agreement, the code consultant for his analysis, and engineers for opining on the structure and the environmental issues. Including the purchase deposit, this contracted labor adds up to serious money, somewhere between 10 and 15% of the total project cost.
In most cases with artists’ projects, the developer or group of artists has to front the money for these predevelopment costs. If you are the one putting in upfront money, you should have a formal agreement with your fellow artists, developers, and/or investors stating how your funds will be used and credited toward your share of the project.
Building Codes Close Open
As building and life-safety codes have evolved, older buildings often no longer comply with current building codes. Since older buildings, particularly industrial buildings have qualities attractive to artists such as abundant windows, natural light, high ceilings, and muscular structures, artists often prefer to rehabilitate rather than undertake new construction. Fortunately, Chapter 34 of the Massachusetts Building Code allows latitude for renovations of existing buildings. Sticking to the preexisting use of a space (typically workspace) is treated more leniently than changing to a new use. Installing sprinkler systems can reduce some dimensional and fire protection requirements. Some requirements come into effect only above certain gross building areas or when rehab costs exceed a certain percentage of the property’s value.
Hiring a code consultant is the best way to understand how the code applies to your project. Knowing the code is an art form in itself, and your architect will not understand it fully. Having a code consultant on your team will simplify your development process and help immensely.
The entire building needs to be investigated as a package, not in a piecemeal fashion. Because the code is complex and building inspectors are not trained as lawyers, your code consultant can explain your code interpretation to plan reviewers, building and fire inspectors, engineers, et al.
When questions arise mid-construction about things like ducts passing through walls or sprinklers in closets or existing stairs that are slightly steeper than the current code allows or exposed steel components, etc., the consultant can interpret the regulations on your behalf.
Working with Architects Close Open
Tips on design: The design of the project stays with it as long as it lasts. It outlives lenders, occupants, buyers, sellers, and the rest of the crew. A well-designed project can save money and increase efficiency. Moreover, a well-designed project showcases your creativity and your intelligence to the world. Good design can increase your happiness, your productivity, and enhance your life. You are planning to spend the money. Why not spend it well?
Tips on engineers: A typical project requires structural, civil (site work), and Mechanical, Electrical, Plumbing/Fire Protection (MEP/FP) engineers. Good engineering is the core of an artist building and the reason we admire industrial structures. It is the key to systems that work well and efficiently. Some engineers involved are often sub-contractors of the architect (e.g. structural) whereas others work directly for the developer (e.g. civil.)
Design-build: In the simple world of art-space renovations, the MEP/FP engineering sometimes follows the “design-build” method in which the design and construction services are contracted by a single entity called the design-builder or design-build contractor. The architect, developer, and contractor map out a strategic “outline specification” for the building systems and the contractor bids the outline spec to competing sub-contractors who include the final engineering drawings as part of their construction work. The developer employs his own MEP/FP engineer to write the outline spec and review the submittals prepared by the subcontractors. When well-supervised, this method can save design fees, uncover efficiencies, and reduce change orders.
Stages of the Design Process
Pre-Schematics: Layout drawings done to assess the general “fit” of spaces in a site or building. Often several schemes are still in competitive play.
Schematics: Plans and elevations of all major and most minor spaces, showing the design concept to scale and including an outline spec. By this point, the team has made enough decisions to have settled on one scheme.
Design Development: A somewhat ill-defined stage; the point when the client (you) can be billed for introducing major design changes and when the contractor should commit to a price estimate. The schematics should indicate dimensions, materials, and unusual details.
Construction Documents: Drawings and specifications that legally bind the owner, the architect, and the developer to the job. The architect and/or engineers stamp and submit them to the building department, thereby formally binding them to the construction contract. Changes after these documents are issued are called “change-orders,” unpleasant missives the contractor sends.
Construction Period Services: The time when architect inspects the work in progress and signs off on a monthly requisition that releases (or denies) the contractor’s monthly payment request. The architect’s role becomes legally defined and key to the funding process.
An architect’s contract breaks down into the stages of service above. Fees vary widely. Low overhead keeps fees down, but short-staffing can cause costly delays and oversights.
Artists who work with architects they know; like friends, relatives, or friends of friends; have achieved good results. However, beware of unstaffed “moon-lighters,” no matter how well-intentioned they may be. Unless the project is exceptionally small, architecture should be the architect’s day job.
Certificates and Insurance: Make sure that the architect is prepared to sign the “Architect’s Certificate” issued by the construction lender. This certificate is a guarantee that the plans and specs meet all applicable codes. It also makes the architect culpable for any errors that might be uncovered. An architect without “professional liability insurance,” which a moonlighter probably wouldn’t be able to afford, should not sign it.
Remember that an architect is only as good as his client. Carefully consider your needs and respond to questions promptly. You play a key role in the effort to keep fees down and schedules intact.
Contractors and Construction Close Open
Finding suitable contractors and negotiating the construction contract are critical steps in the development process. Make sure you have an experienced real estate lawyer, project manager, and architect at your side to understand how to set up this negotiation. When choosing a contractor for your project, check their references comprehensively. Does the contractor stick to their price and timetable? Are there change orders? The lowest bidder might not be competent or reliable. Network to find recommended contractors before settling on one.
Types of Owner/Contractor Relationships
Contracts are either competitively bid or negotiated. Neither system is perfect. Many developers choose a general contractor early and have competitive bidding at the level of sub-contracts only. This approach gives a constant update on the estimated cost and makes the contractor a part of the team. It also provides a price before the drawings are finished and helps to ensure that the final plans will be within the budget.
Having an “Owner’s Rep”
Though your architect will monitor construction, someone on your team should serve as the owner’s representative during the construction phase. The owner’s rep is someone who can make on-the-spot decisions when problems arise. Like a project manager, the owner’s rep will coordinate between the architect, building inspectors, and the artists who will use the space. The development group should fully support the rep during the stressful construction process.
Work by Occupants
You need to clearly distinguish between the work of the contractor and any work done by unit occupants themselves. It is almost impossible to have amateurs working on the job before receiving a Certificate of Occupancy. Even once the project is turned over, amateur builders will need guidance so that their work meets the code and other building standards.
Working with Building Inspectors
After determining that the completed work is acceptable, the local building inspector will issue a Certificate Occupancy or CO. This permit can be issued for an entire building or on a unit-by-unit basis as spaces are completed and inspected. Obviously, the inspectors are not eager to come to the property endlessly, so they sometimes will refuse to issue COs for individual units.
Building inspectors might change (and multiply) during the course of construction. New ones might not understand the code interpretations that previous inspectors had approved. It is important to be well-prepared when meeting with inspectors and to appoint a single point person (often the code consultant) to answer questions and respond to requests from the building, electrical, elevator, and fire inspectors.