How to avoid costly issues when involved in a commercial building project


An extract for an Article I wrote for the NSWBC

How to avoid costly issues when involved in a commercial building project

Why is this important?

Taking on the challenge of building or renovating can be an emotional rollercoaster of risk and heartache for business owners and investors. It requires a multitude of decisions focused on minimising risks and maximising long term business rewards. Whether constructing an asset, building for business or renovating a property for commercial use, the process can be overwhelming. That is, if it’s not done right.

Every project has its issues, whether they’re timing issues, cost overruns, contractor problems or regulatory problems. This makes your contingency planning quite important. It also helps if you know upfront the costly risks you can face when involved in a business building project.


What to do

Don’t try to cut costs mid-project

You need to understand the contractual arrangements that are made through the builder.

If the contract is a hard dollar fixed price agreement, all parties then have a right to recover costs against changes made. Unless a suitable arrangement is made with the contractor, then changes will generally cost more money than whatever originally blew the budget. Some clients will try to place these changes in the project hoping that the contractor will then take on the problem within the project. Making changes mid-way through a project has big ramifications for all, and should be avoided.


Have trust in the project team

Construction, development and building is a team exercise; it requires many speciality trades and experts all doing their best, and goodwill is often the grease that makes the build as easy as possible. If each one is competing against one another, then the team attitude can fall away and the building starts to fragment. One of the trades is left to pick up the pieces of the other team members and the outcome is often an inferior product.


From the onset of each project it’s important that a collaborative approach is pursued.

  • Consider running weekly meetings or informal discussions where information flows and team members don’t feel pressured by over-powering personalities or difficult team members.

Clients can sometimes lose confidence in the project team. Maybe the project has taken a direction that the client wasn’t happy with, or someone in the team has made an error. At the end of the day, we are all human and we make mistakes.

  • Give the responsible parties the opportunity to rectify the wrongs and give the team the ability to move forward. Letting team players fix their problems ensures responsibility is taken for the error and generally results in the best outcome.


Make the time to get to know the team

As the start of the project the client and many of the team members won’t have had the opportunity to create rapport with the team. The problem with this is that people then have an issue understanding how one another operate in a personal sense and from a work ethic.

  • Building a rapport with the team is essential for communication and trust. People like to work with others who they like or know.


Don’t make decisions based on emotion

Pride can be both a positive and a negative. On the positive side, pride in achievement, the feeling you get when you have stayed the course and achieved an excellent result is a good thing. Negativity can send the project off course but perhaps ego doesn’t let us lay blame on ourselves. Trying to save face and maintain pride can sometime be detrimental because it clouds our judgement and decision-making.


Don’t make assumptions

Making assumptions is a classic error in management. There seems to be a school of thought where the asking of questions is seen as a negative, as if not knowing something signals a problem. The industry is complex, yet full of information. There’s no negative in understanding that you don’t know everything, that concepts can change and that asking questions and sourcing information is a positive. Asking questions needs to be promoted and encouraged.


Keep the project team informed

Not keeping the project team informed about different aspects of the project can cause problems later in the building process. If this is occurring, it suggests that the team foundation is weak.

  • Make sure trust is a core part of the team.  If new elements are brought into the build or unknowns start to creep into the scope then, chances are appropriate changes can be made and agreed to with minimal disturbance. Communication will ensure that all issues are dealt with promptly and professionally.


shutterstock_163117349Don’t play the blame game

The ‘blame game’ is what groups of people play when something goes wrong- everyone attempts to pass the blame on, absolving themselves of responsibility for the issue. The blame game can get quite complex and convoluted, frustrating and time-wasting.

It can also be very counterproductive. By shifting the focus to who made the mistake that led to the problem, the blame game distracts people from why the problem occurred in the first place. As a result, trust starts to wilt and valuable lessons are not learnt.


Source: Justin Palasty, Director, Formacon


Editor: Charisse Gray

Published: February 2014


Where to go for help

Formacon Building Services is a specialist construction, design and fitout company providing cost-effective solutions underpinned by meticulous, personalised service. We pride ourselves on our ability to convert our clients’ objectives into realities. We specialise in commercial office fitouts, retail shopfitting, hospitality and light-industrial. or ph: 02 8231 6449