The Pros and Cons of Hiring an Owner's Representative

The HDC, which had required a fifteen-year needs assessment before approving the loan, also requires a construction manager on jobs with contractors from multiple disciplines, such as Ryerson Towers's current job, with general, plumbing, and elevator contractors.

Griffith says the board, remembering the difficulties of the earlier construction project, was happy to comply with the requirement. The HDC gave the board a list of approved owners' representatives, and the board then sent out half a dozen bid requests and interviewed two finalists before hiring E G Consulting.

"What will contribute to the success of this job is scheduling — who's doing what when," says Griffith, who works as a counselor at one of the City University of New York colleges. "Coordinating the general contractor, the elevator, and the plumbing people and making sure they follow the schedule is crucial, and that's one of the things George [Sawicki, a licensed architect and senior partner in the 40-year-old, Greenwich Village-based E G Consulting] will do. On a job like this, schedules must be adhered to."

But are there drawbacks to using owners' representatives? It's a strategy that worked for Ryerson Towers, but there are others who feel that owners' representatives add an unnecessary layer of bureaucracy — and cost — to some jobs. How can your board decide whether or not you should hire an owner's representative for an upcoming project?

The Rep of the Rep

As with so many things in the lives of co-op and condo boards, there is no simple, clear-cut answer to the question of the representative. But there are conditions that can help your board arrive at the answer that's right for your building. John Tsampas is president of Skyline Restoration, which specializes in restoring building exteriors. The company does not have any construction managers on staff, and Tsampas takes a generally dim view of them.

"Construction managers have always existed on new construction projects, but now they're springing up on restoration jobs," Tsampas says. "It's another level of protection, but in my work, construction managers are not necessary. If your board hires a good architect, a good engineer, and a good construction company, those are the only players you need. A lot of the time, construction managers just get in the way. They're trying to prove that their evaluation is worth what the board is paying."

Tsampas notes that after drawing up plans and supervising the bidding process, many architects and engineers will, for a fee, supervise the job. They act, in effect, as owners' representatives. "In my opinion," Tsampas says, "that's enough supervision for a single-trade job."

The crucial phrase here is single-trade job. "It's up to the owner [board] whether to bring a construction manager in," says Stephen Varone, a licensed architect who is president of RAND Engineering & Architecture. "It runs the gamut from unnecessary to absolutely essential, and it depends on the complexity of the job."

A single-contractor job — say replacing windows, even if they number in the hundreds — can usually be handled without a construction manager, in Varone's opinion. "But," he adds, "if a co-op or condo is doing a large exterior-envelope project at the same time as a heating plant upgrade — where they're going to have multiple contractors — it increases the potential need for a construction manager. It also depends on the property manager's experience and expertise. If he's not hands-on, you need someone more technically oriented. The best construction managers know their role, and they usually have experience in architecture, engineering, or construction. The worst is when roles get confused and they're making decisions that are my responsibility, as the architect."

Vital or Unnecessary?

Perhaps it's not surprising that the companies that offer construction manager services tend to see them as vital. Some management companies don't offer the service at all, while some, such as FirstService Residential, have a division dedicated exclusively to project management. And then, just to keep things confusing, there are management companies that make misleading claims.

"There are management companies that do not have construction managers on staff and yet have staff oversee projects that should be supervised by a construction manager, engineer, or architect," says Alvin Wasserman, director of asset management at Fairfield Properties, a Long Island company that owns, manages, and builds properties. "Who's managing their construction projects? A property manager. Is he licensed? No. Does he have an engineering degree? No. If a property has a complex job and it fails, who's responsible?"

He answers his own question with a story. "One of our condo properties had a roof replacement job that cost several hundred thousand dollars," Wasserman says. "We recommended that they hire an engineer and a construction manager who was going to walk the roof with the contractor before he signed off on every invoice. Instead, they hired the least expensive roofer they could find. A year later all the roofs leaked, but the roofing contractor had gone out of business. Because no engineer had signed off, the board was on the hook. They had to levy a special assessment to fix the roofs." One thing is certain, according to Wasserman: "Project managers are very much in demand right now because construction is booming in New York City."

New Bedford Management, which manages Ryerson Towers in Brooklyn, has three owners' representatives on staff. The company offers them to clients at a discounted rate — about four to five percent of the construction budget, as opposed to the five to seven percent most companies charge, according to Paul Gans, a partner in New Bedford who holds a degree in architecture.

Dan Wurtzel, president of FirstService Residential, says the property management company established its FS Project Management subsidiary ten years ago to fill a void in providing professional oversight of capital improvement projects.

He describes a project manager as "an extra set of eyes," as well as a resource for second opinions that can be invaluable on "difficult, complicated, and costly" projects — expertise that a property manager typically does not have.

"If an engineer specs out a job that has been agreed to by the board, then that job is bid out," says Wurtzel. "However, that may not always be the best course of action. The project manager explores other ways of achieving the project goals then presents the board with viable options. Once the board decides how to proceed, the project manager works side-by-side with the engineer and board from scope of work through specifications, the bidding process, and contract negotiations, and also oversees coordination of the actual work."

Photo by Lorenzo Ciniglio

Adapted from "The Project Conductor" by Bill Morris (Habitat, May 2015).  

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