Case Study: Capital Projects Cost-Plus Wins!
Case Study Overview
A national REIT with thousands of properties anchored mostly by well-known grocery chains was looking to consolidate their capital expenditures with one company. Some of the outcomes they hoped to achieve included improved pricing, faster turnaround times from “scoped job” to completion, better communication channels with the partner doing the work and a completely upgraded validation process for when work is completed.
They needed a better way of handling their capital work.
After multiple meetings with different stakeholders to learn more about the needs of the program, Ferrandino & Son launched the program with a two day workshop, bringing in members of our own Capital Projects Team along with IT, Finance and Senior Leadership.
The client was represented with stakeholders from their Facility Department, Operations, Procurement, Accounting and Risk Management teams.
The goals of the workshop included the following:
- Identify the goals of each department and then to define the outcome that would be achieved if we delivered on those goals.
- Develop a project workflow that would be the guide for every capital initiative, regardless of scale or spend.
- Develop a plan to provide transparency and better budget certainly around the projects.
The client was burdened with what they felt was an outdated model. Each project was being managed by a local stakeholder, using unique vendor pools with different scopes, missed deadlines and a complete lack of transparency on the final product delivered. The client needed guidance on how to manage the workflow.
Through the initial planning stages, we identified 3 critical steps:
Step #1: Planning: Identify each area for repair, how each bid should be broken down (areas of the site), and what the time frame is for the project. This would allow all vendors to quote the same scope of work.
Step #2: Communication: Work directly with the Property Managers to ensure each site had before and after pictures and the work was done to the full extent requested by the Property Manager.
Step #3: Budget: Using our Subject Matter Experts, we were able to negotiate the best price per project and ensure that all work would be completed to brand standards.
Ferrandino & Son’s Solutions
With multiple locations in different territories, it was important for Ferrandino & Son to create a plan that was easy for the client to understand and stay within their budget.
Ferrandino & Son first executed site walks at each property. Conversations with each Property Manager, validating areas to be covered, detailed breakdowns of the bids, defining strong time frames and reviewing photos were crucial to ensuring a detailed SOW would be supplied to each vendor to follow. This was all validated by the Property Managers.
After vendor submissions estimates were received, negotiations began with quotes being resubmitted and proposal drawn up for each Property Manager. Once approved by the Property Managers, Ferrandino & Son was able to offer complete oversight during the project. Project updates and pictures were sent throughout the process to keep the Property Manager up-to-date. In addition, once each project was completed, pictures and completed punch lists were issued to the Property Mangers for final approval.
These new processes significantly improved the time each project took to complete with one point of contact to manage each project from beginning to end.
Communication was the key to completing this project and driving costs within the budget. The initial stages of reviewing each property with the Property Manager was crucial to ensuring each vendor was able to submit a proposal based on the same requirements.
In addition, this helped with further negotiations and receiving better prices for the work to be completed. The consolidation this REIT took with Ferrandino & Son helped reduce project completion by 30% and additional Cap Ex projects were able to be funneled into this program for Insurance Claims, Emergency Services, and Violations from Inspections resulting in a higher ROI for everybody.
The program ultimately landed on a cost-plus model that allowed both sides to remove the uncertainty around cost and allowed the relationship to move into more of a collaborative effort.
A win-win for everybody.
Interested in Learning More?
To learn more about Capital Projects and a Cost-Plus program for your multi-site portfolio,
give Ferrandino & Son a call at: 866-571-4609
and ask to speak to someone in our Business Development Team.
You can also reach us at: firstname.lastname@example.org