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Writer's pictureEric Vechan, PhD

Permits


Permits shouldn't break the piggy bank. Identify, control & quantify permit driven risk to help everyone's finances.

We all have to get at least a permit or two to build each project. Some are pretty common and fairly easy to track down. These are usually construction specific permits. Some permits are a little more random and obscure - tracking theses down is a bit of a wild goose chase.


Obscure is manageable when the permits are still construction specific or one hundred percent construction focused. When permits have less to do with construction but the contract still requires contractor managed procurement, things get tricky. When a designer or client is responsible for and/or submits the initial paperwork it is very difficult to for contractors to pick up the process where it is left off and do it within schedule and cost constraints. Contractors are usually a little high on the time and cost numbers but in worst case scenarios, the time can cost to perform final procurement on a designer or client driven permit can add weeks and several percent to the project cost. To mitigate schedule concerns and, especially cost concerns, clients should consider utilizing allowance items to cover the project needs. Allowance items enable contractors to control risk on known unknown scope items. Risk is more or less translated to price via fee. If clients can reduce or help control risk, pricing will not only be less but also more accurate. Risk creates higher prices and price variability between contractors. Knowing this, clients should consider utilizing allowance items vague scope items and contractors should request allowance items when vague scope items are present. Most contractors are happy to bill for allowance scopes based on cost or cost plus type methods. With proper backup, the contractor remains whole and the client doesn't have to break into their piggy bank to cover all required scope items.

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