Contruction's Risky Business
Construction Risk Management (CRM) is a proactive approach to monitoring construction projects. A bond is a reactive instrument that cannot be called into play unless, and until, a default occurs, which is the absolute last place anyone (lender, borrower, contractor, or subcontractor) wants to be.
While problems occur on all construction projects, the vast majority of the time there is no default, and, therefore, the bond is not called. So, in most cases, something (the bond) is paid for, but never used. CRM is generally one-third to one-half the cost of the bond.
CRM is appropriate for all types of projects – hospitality, multifamily, office, warehouse, retail and restaurants. It's also good for ground-up development, tenant improvements, renovations, build-outs, or sub-division A&D. Horizontal or vertical, it really doesn't matter. It works for SBA, USDA, HUD, or commercial real estate, it can work in all instances.
For MORE engineering insights on GlobeSt.com, check out Partner Engineering and Science, Inc.'s "Science of Real Estate" blog, which provides Thought Leadership positions on a variety of commercial real estate-related issues.
About Partner Engineering and Science, Inc.
Partner Engineering and Science, Inc. (Partner) is a full-service environmental and engineering consulting firm completing projects nationwide. We specialize in evaluating properties in connection with real estate transactions, development or management.