Student Housing Business

MAR-APR 2015

Student Housing Business is the voice of the student housing industry.

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QUESTION OF THE MONTH MARCH/APRIL 2015 STUDENT HOUSING BUSINESS .COM 38 Will Construction Delays Be a Big Story in August? Why or Why Not? It is diffcult to say, but I imagine late deliver- ies won't be as big of a story this year as they were in 2014 — largely due to Campus Crest being on the sidelines, construction volume being down, and developers learning from their mistakes last year. There were a seemingly record number of late deliveries for fall 2014, which appeared to be driven by a shortage of wood framing labor and the misalignment of third-party general contractors with property owners. At Landmark, we serve as our own general contractor so we can better control the construction process. Even though we have yet to deliver a project late, we've taken additional measures to mitigate this risk by purchasing a wood framing business, shifting to more light gauge metal construction, and trying to start construction even earlier. — J. Wesley Rogers, President & CEO, Landmark Properties Given the workload of subcontractors over the past year, there will likely be an uptick in scheduling challenges this year, especially on projects where the general contractor did not plan for delays along the way. However, 2016 will be the real battle because there is so much work to do, more than in 2014-2015. That means the challenge to keep labor on the job will be even greater. It is important to wipe from our memory the past fve years when contractors had the ability to pull rabbits out of the hat and deliver projects quickly, affordably and with a high level of quality. We could all make things happen quickly after the Great Recession, mostly due to the amount of labor without work. If owners want to fast-track projects, they should allow for a good deal of time on pre-construction to give the design and construction teams plenty of time to strategize, plan and attract the right talent for the job. —Curt Mulder, Vice President, Wolverine Building Group Reports indicate that between 15 percent to 20 percent of all beds delivered off-campus last year were delivered late. This will not be a big story in 2015 because people will not talk about it, just like last year. As I write this, I am in a city with a project that just started construction that is scheduled for delivery in 2016; it has absolutely no chance of making it. Developers, lenders, capital partners, construction, management, and residents all need to recognize the risks and deal with them positively and proactively. By the way, my favorite way of developers dealing with late delivery are those who, when a project is going to turn over late, divide the project into two projects on the fy and declares both phases delivered on time, a year apart! — Brent Little, President, Fountain Residential Partners 2 y s i t w s n o c h a n c e o f m a I am very hopeful that delays this year will be minimal. Lessons learned over the past two years have taught us all that we must be smarter going into our deals with adequate time in the schedule up front and, from a contractor's standpoint, with back-up subs in your pocket. The challenge of keep- ing adequate manpower on the job is real, and I'm afraid it will continue for at least another year or two. Smart contracting is key because this business is defnitely not for the faint of heart! — Giny Knudsen, Executive Vice President, Construction Enterprises Inc. Maybe not as great as last season, but certainly there will be many projects that will open late. We still see signifcant labor shortages in key trades and regions, and that coupled with a late start is a formula that does not work. Projects that used to take 14 months now take 16 to 18 months to com- plete and all project team members must adjust to this market condition in order to guarantee certainty of outcome. Please note, however, that FaverGray will make every opening date on time in 2015! — Jim Gray, President, FaverGray Core Campus never fnishes a project "on time;" we only fnish them ahead of schedule. In fact, all projects completed over the last two years, and the ones scheduled for this year, have allowed for early move-ins. In some cases, students were able to move in several weeks before their scheduled lease-start date. We like to over-plan for everything, especially construction delays, so typically our construction schedules end a month earlier than our competitors. Often, we also start a project earlier than others would to additionally pad the time we have to build and open the doors. Does this cost us more? Sure. But I can tell you that its very reassuring to our team and to residents to know their building will be ready unquestionably. — Ben Modleski, Chief Operating Offcer, Core Campus w p o m i n d c

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