Rebuilding the Construction Industry—Intelligently

Transcript

My name is Tami Boeck. I am a partner at Stoel Rives in both the Boise and the Sacramento office. I practice in construction development and real estate and construction litigation in both states and Nevada as well. Remember, construction is one of the very last handmade items. You look at your phone, you look at the equipment, everything that we have around, and it is essentially disposable now where things were not before and is probably made by a machine. Almost all of the construction these days is still handmade by 20 to 50 different trades all having to coordinate together to make something that stands up. So to me, that is fascinating. The process, how does it work? How do you know what works? How do you know what materials work together? The material science part of it is really interesting. I joke, I get to be a quote “expert” in the super broad range, but I really, I always remind clients, I am not a contractor. I am not an engineer; I just know how to ask a lot of questions. And some questions are born out of the paranoia of will that work? Are you sure that will be okay? Which, unfortunately, as my husband jokes, is part of my personality anyway. So, I take it out, I joke on the work to make that paranoia and just ask the questions and then let the client and the people that are truly involved, the engineers, the architects and the contractors make all the pieces fit together. It is like a big puzzle, so I thoroughly enjoy that. And then when we have litigation or we have a claim, and we will, it is a puzzle on that side because you have to figure out what happened? How did we get here from, we all have the same goal when we started. We are the same team, we are working collaboratively, but everybody has a different perspective and Stoel is so great. All of my colleagues in the construction development realm litigate and do transactional. That gives us great insight to the paranoia of the litigation, what goes wrong, and how do we try to manage that risk in the contract by talking to the other team players and the partners that are in the development or construction deal so that we can manage that risk.

How can clients set their project up for success? 

Just explain here is the reality of how a project works. They can work really well. We have several, including around this town, that we have worked on and we have, knock on wood, no issues. Everybody, we had early team meetings to explain the process, why we look at things this way. Why in the process we may ask more questions now? Because it is cheaper. It is a lot cheaper right now to do things upfront instead of unfortunately paying a lawyer to fight and litigate. It takes years off your life, is what I tell clients I do not care who they are, and that they will be my BFF for years sometimes if we cannot figure this out. So, spend a little more time, some money maybe you did not think you needed to spend to have somebody vet as much as you want them to, to try to help and plan. We have found and we have done some studies informally with our clients about does this really work? Will the cost benefit of doing these things upfront pay off? We have found they do. That is the exciting part as well, because you do not always know what ifs. What if I turn left? Would it have made a difference? What if I turn right? Would it make a difference? And seeing a client who embraced the process, albeit a bit reluctantly, but still embraced the process, and then collect the data and look at their projects and development and their designs over the years and how it reduced their costs, reduced their insurance premiums, because we could put together a package and show why we were trying to avoid liability in a rational way, was just gratifying to know that it can be done, it can work, but it is the old adage about like exercise. You just have to be consistent and persistent, and you have to do the hard work upfront, but once you go through what I call the early brain damage of thinking of all aspects of your project and your process, and then training your people so they know they are supported to complete the process. The success after when a project comes through, usually early, with less warranty claims, more efficient. We even finished a project so that we got to go from temporary construction financing to permanent financing earlier, so we were able to turn it around and open it up earlier, and the owner was thrilled. But it takes that focus, the entire team on that from the designer to the developer to the contractor. We even trained our subcontractors on why we were doing what they were doing. Oftentimes, we would bring them into our conference room to say you do not want to sit with us here when I am deposing you. We are on the same team right now, and this is what we want to see.

How do you balance risk with just getting the job done?

A lot of my great builders care so much. They are stressed by all the chaos that is going on, but they really do care to produce a good product, whether they are the developer and they want the good product or they are the builder and they want the good product. They see what it takes to coordinate this kind of whirling dervish of activity and do it in the right time and then get your governmental agencies in to inspect at the right time, and everybody wants it done now because they want to, I mean if it is an investment property, if it is a, we did a food facility and they needed it to ramp up for some dynamic that was required in the nation to be able to produce this. Everybody was like, let's get done, let's get it done. And there are only so many things that you can do without risking the part of getting it done. I always go to remember, it goes down to the guy in the field that is doing his job. And that is both great, because it does take more than people think to do the work, and both the physical side of it and the mental side of it, when they are good, they are really good. But, if he had a bad day—if he did not get a lot of sleep, if he had a fight with his wife or his girlfriend, he can have a bad day. One bad day and one error, it is really insane, the Murphy's Law that we see come out, like how did this happen?

How can bargain-hunting backfire in construction? 

What used to be, people worked together for decades. My dad was in construction, loved the people, as I said, knew a lot of those guys growing up and they always worked together. They knew what the other guys were capable of. They worked with similar subcontractors, similar architects. They just knew, good or bad. Then you can say to someone, hey, I know we had this issue on the past one, let's figure out how to do this better. Everybody is so mobile these days, it is less common to continue to work with the same people, which means every time you are relearning. A lot of the really great, I say guys, I mean the companies are great, but the individuals will make or break your project. Like I said, I was mentioning that one guy can have a bad day, and that can translate into problems. You just do not get that same continuity these days because our market is so dynamic and people move from state to state all over the place and they do not always work together, and rightly, people are always looking in the financial side of can I get a lower bid because I need my ROI to be better, totally understandable, but I try to remind them, if you are building a similar product, try to work with the same subs, a couple of dollars relatively speaking to the knowledge, your knowledge will pay off. Partnering with someone early, even if they are not the low-cost leader. I cannot tell you how many times I went well, that bit you in the fanny, because you saved a couple bucks, but here I am.

What makes for the best construction team? 

Architects are artists, unless they have actually built something, they need to work with a contractor who understands how it is put together. The best team is the guy with the vision, unfortunately, who is not practical, working with a guy that is practical, that can see the vision and put it together pragmatically.

How has the labor force changed in recent years? 

It is a continual theme, talking to clients, talking to my great experts. Our labor is not as well trained. We gave them information from high school on up that this was beneath people, which is crazy. It is so competent and capable work that a lot of times we had to shift. You have to have labor, as I mentioned, it is handmade.