16C — May 20 - June 16, 2022 — Owners, Developers & Managers — M id A tlantic Real Estate Journal


O wners , D evelopers & M anagers

How to manage a construction project

Capano Residential expands into . . .

such unanticipated invoices are null and void pursuant to the terms of a well written contract. On the other hand, if the owner or project manager does not adhere to the terms of the change order provision the contractor may be able to argue that such enforcement has been waived. It is for these reasons that any change order provision must be strictly fol- lowed and construed. Key Issues During the Management of the Construction Phase During the construction phase of the project, there are key issues which the owner and the owner’s representa- tive should keep in mind as the project progresses. As discussed above, one of the key things the owner or project manager must do is ensure strict adherence to the change order provision of the contract regarding ex- tra work and/or base contract work. Aside from that issue which arises in virtually every project, another main issue that must be continuously ad- dressed is keeping the contrac- tor under control. Unless the project is small, contractors typically submit applications for payment on a monthly payment for review by the owner or the owner’s representative requesting a certain amount of payment based upon percentages of completion of the work under the contract. The contractor requests payment based upon the payment application and their evaluation of the work that they completed. It is criti- cal that the owner or owner’s representative carefully review each payment application, as well as the work completed on site to determine the accu- racy of a payment application prior to issuing a payment to the contractor. Often times, contractors may attempt to claim a higher percentage of completion to ensure a higher payment rather than what was actually completed. As the owner or property manager you must ensure that the contractor never gets in front of you as far as payments it is entitled to. If the contractor starts to receive substantially more than it is entitled to the project could be- come in jeopardy should there be issues with the contractor completing its work. If there are issues with the work that was completed by a contractor, it is very important continued from page 14C

that those issues be addressed as they come to light instead of waiting until the completion of the project. Attempting to resolve any such issues at the completion of a project could prove fatal to the construction project, and further, will only make the issues more difficult to resolve. If an issue is discov- ered it should be immediately raised with the contractor, it should be documented in the form of written notification to the contractor, and appropriate photographs or videos should be taken of the issue. Typically, the contractor will be given an opportunity to correct or cure a purported issue. Should the contractor not correct or cure the issue, however, a back charge may be issued against the contractor equal to the amount it will take to resolve the item. Further, the owner or project manager should with- hold money to the contractor until such issues are addressed. It is extremely important that documentation and notifica- tion be provided and that any issue be addressed immediately rather than at the conclusion of the project. Staying on top of the contractors and subcontrac- tors will ensure that the issues are addressed, and the project is successfully completed. Should there be issues with the completion of the project due to delays not the fault of the owner or project manager, it is essential that pressure be con- tinuously applied upon the con- tractor to complete those items. Should there become an impasse where the contractor or subcon- tractor fails to perform, then in that event, it may become neces- sary to assess a back charge, to carefully document same, and to have that work completed by an alternate contractor. The cost that the owner may incur to correct the improperly performed or incomplete work would be a deduction from the contract to which the contractor may be entitled to. Once again, docu- mentation and notification are essential. Closing Out the Project Once the project is nearing completion, there are several issues that should be kept in mind as the project draws to a close. Never take your eye off the prize, as it is critical that a project is properly closed out for both the owner and property manager. In closing out a project, there are two concerns which are directly related.

First, any construction agreement should have a retainage provision whereby a certain percentage of the total contract amount is held back from the contractor pending the issuance of a certificate of occupancy, and further, satisfaction by the owner that all work has been completed in accordance with the terms of the contract and any approved change orders. Oftentimes, punch lists are created by the owner or the owner’s representative which detail items which must be completed prior to retainage being released to the con- tractor. It is crucial that this process be strictly adhered to and carefully reviewed by the project manager and the owner. Otherwise, it is very difficult to get a contractor on site to complete these items if they have already been paid in full. The best time to ensure their completion is by withholding the retainage until the items are completed in their entirety. The final thing that an owner or project manager must do is obtain lien releases from the contractor. In other words, the owner wants the general contractor to obtain releases from both itself, as well as any of its subcontrac- tors, suppliers, or vendors whereby they certify that they have been paid in full for the work they provided for the project and that they waive any claims against the project. This provides the ultimate protection to en- sure that the property owner is not sued by any of these potentially unknown parties even though it may have paid the contractor in full for the materials and services it provided. It is strongly sug- gested that retainage not be released until such releases are obtained. Upon receipt, the retainage can be released, and the project can be con- cluded with the contractor essentially turning over the keys to the owner. This is only a brief oversight as to how to successfully man- age a construction project. The commencement of a construc- tion project is a formidable process, however, can be suc- cessfully completed provided appropriate precautions and preparation are undertaken. Paul Norris is a Share- holder at Stark & Stark, PC. MAREJ

A rendering of Capano Residential's The Reserve at Steelpointe

turing unparalleled amenities, finishes and views. “The Reserve at Steelpointe will be Phoenixville’s first true luxury offering, capturing the best of what the area has to of- fer, from its central, but quiet location, to its thoughtful and exceptional design and ameni- ties,” added Capano. Located on Smithworks Blvd just west of the Gay Street Bridge, the 240-unit commu - nity is located just blocks from downtown Phoenixville but is secluded from the hustle and bustle. This luxury apartment building will feature a 10,000 s/f of interior amenity space, multimedia club room, library, collaborative workspaces, and conservatory with sweeping views of the French Creek. The community will also feature a mezzanine lounge, pool with sundeck, and a state-of-the- art fitness club with a private fitness studio. Every finish will be carefully curated for the ultimate living experience. All homes feature high-end fix - tures, lighting and hardware leaving no detail behind. Capano Residential’s ver - tically integrated operating model offers a high touch ap- proach, ensuring the highest quality materials and design. The management teams for The Reserve on Forge and The Reserve at Steelpointe will look to foster a true sense of community by prioritizing personal and one-on-one rela- tionships with each and every Capano resident. Enhancing communities for over 75 years, Capano Man - agement will look to further expand in the Pennsylvania market and add to their di- verse portfolio which includes 6,000+ multifamily residenc- es spanning Delaware, Mary - land, Pennsylvania and Flor- ida, 3M+ s/f of commercial assets and an iconic collection of hospitality brands. MAREJ

continued from page 8C Phoenixville has also benefited from changing corporate struc- tures, which favor smaller sat- ellite locations outside Phila- delphia to accommodate hybrid work arrangements. Not far from the shops and art galleries is the multi- use Schuylkill River Trail, a popular spot for those who enjoy walking, running, and bicycling. The two new residential com- munities will meet different market demands in the area. “The recent spike in rents has created a shortage of high- quality housing communities in well located areas,” said Capano. “The Reserve on Forge is one of the few new construc- tion communities that offers a high-end living experience at a competitive price.” The Reserve on Forge is located at 200 Finery Forge Way, the site of the former Village of Eland Downe retail complex off Route 113, just 1.4 miles away from downtown Phoenixville and minutes from King of Prussia, PA. The 108- unit, three-story garden-style community will feature open floor plans, upgraded finishes and fixtures, entertainment kitchens with an island, stain- less steel appliances, quartz countertops and wood plank flooring throughout. The com - munity will have a host of amenities, including a pool and clubhouse, multimedia lounge, entertainment kitchen, fireside lounge, collaborative workspaces, state-of-the-art fitness club, and coffee bar. Capano Residential’s sec - ond offering is The Reserve at Steelpointe, an ultra-high end residential community cater- ing to Phoenixville’s most dis- cerning renters. The Reserve at Steelpointe builds on the success of The Falls, Capano’s new construction luxury com- munity in Wilmington, DE fea-

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