1. Stage VI & VII: Construction and Completion & Formal Opening
Reading: RE Development, Principles and Process. (Chapter 20)

2. Stage VI & VII: Construction & Completion and Formal Opening
Stages VI & VII
Time at this level is very crucial
Risks are real now as this is where most of them actually may occur >>> higher degree of uncertainty
Developer now commits maximum resources
Stopping is more difficult and change is very expensive
Developers reputation is greatly at stake
Focus now shifts to project management to control established constraints
Stage VI & VII: Construction & Completion and Formal Opening

3. Stage VI & VII: Construction & Completion and Formal Opening
Procurements Route & Financial Contract Types
Major players
Building the structure
Drawing down the Construction Loan
Leasing Space and “Building Out”
Construction
Stage VI & VII: Construction & Completion and Formal Opening

4. Decide on Procurements Route
Be certain which procurement route to use
Traditional
Design and build
Construction Management
Project Management
Be certain on the type of financial contract:
Fixed price
Cost reimbursable (Cost plus)
Stage VI & VII: Construction & Completion and Formal Opening

5. Stage VI & VII: Construction & Completion and Formal Opening
Major players
A good team is key to project success
Players will include:
Developer --- Leader and final Arbiter
Project manager(s)
Design professionals
Contractor and Sub-contractors
Suppliers
Marketing managers
Financial officer
Property manager
Etc…
Stage VI & VII: Construction & Completion and Formal Opening

6. Building the structure
MAJOR PLAYERS
General & Sub Contractors, Vendors/Suppliers
BUILDING STRUCT.
Substructure, superstructure, skin, interior, fixtures
DRAWING FUNDS
Equity first, Bank loan next
LEASING SPACE
Before and during construction, Tenant Space - built to suit
EXTERIOR WORKS
Paving, landscaping, exterior lighting, sewer, roads, etc
PHASED DEVELOP.
10-20yrs project, construct buildings in phases
RISK CONTROL
Retainage, Bonds, Arch Supervision, Project Mgmt, warranty etc.
COMPLETION & OPENING
Financing to Permanent loan, Connecting Utilities, Move In etc
Stage VI & VII: Construction & Completion and Formal Opening

7. Building the structure
Total project management: Initiating, planning, executing, monitoring and controlling and then closing
General/ Main Contractor
Mobilization & Site Preparation
Managing
Sub-contractors
Managing Vendors (Installers)
Managing Suppliers
(materials)
Installation of Cranes, Source controls,
Access mgmt, Work sequence, Waste mgmt
Stage VI & VII: Construction & Completion and Formal Opening

8. Stage VI & VII: Construction & Completion and Formal Opening
Claims Processing
A claim involving a demand for payment or work related to a construction project.
The claim may be either from a contractor claiming additional compensation due to changes in a contract or
The client asking for compensation or additional work to be completed by a contractor not fulfilling the terms of a contract
Managing Claims:
Set up procedures for processing claims
Claims should be in accordance with conditions of contract.
Claim as they occur and within time limit specified by the contract conditions rather than at the end of the project.
Assist consultants in the verification of claims.
Stage VI & VII: Construction & Completion and Formal Opening

9. Drawing down the Construction Loan
Normally lender will not release all the funds at once: will be done according to a schedule
Construction will be commenced using equity and once lenders are comfortable, funds are released
Need therefore to determine clearly what the projected cash flow of the project is
Certificates for payment are prepared and payment issued as agreed upon
The general contractor is responsible for paying the sub-contractor except the contract estates otherwise
Stage VI & VII: Construction & Completion and Formal Opening

10. Leasing Space and “Building Out”
If some space remains un-leased even though some might have been leased (anchors) during Stage IV
This helps to improve absorption
Also, once the physical construction has begun and the anchors have been secured, the development team has an advantage in negotiating rents with new tenants
In some cases, money from leases will contribute to cash in-flows which puts pressure on the marketing team
Stage VI & VII: Construction & Completion and Formal Opening

11. Completion and Formal Opening
Stage VI & VII: Construction & Completion and Formal Opening

12. Completion and Formal Opening
Activities include:
Training operating staff
Connecting utilities
Beginning on-site operations
Final marketing of development
Grand opening
Tenants moving in
Transition of financing from construction loan to permanent loan
Other financial arrangements sealed
All contracted closed/ dissolved except for marketing and property management
Stage VI & VII: Construction & Completion and Formal Opening