Owner’s Representatives and Private Construction Consultants are generally used for larger dollar, higher volume projects where the economics point to incorporating high-end management to protect the owner’s interest.

General Contractor (GC) vs Construction Manager (CM): 

Differences appear to be more a product of administrative structure and employee relationships than about the actual techniques of the construction project itself. Besides the Construction Manager At Risk and the Guaranteed Maximum Price the difference is minimal.  In fact, within any given locale, it’s likely the same Mason, Electrician, HVAC or Concrete Contractor will be used regardless of whether the lead player is a GC or a CM.

Hence, owner preference may be the only factor in the decision on which direction to go.

However the trend for high dollar, large, complicated construction projects require a group of highly specialized individuals that can be found with a Construction Consulting agency or firm. Construction consultants usually contain a group of seasoned specialists that offer individual trade talents and as a group have the ability to make complicated large projects progress with relative ease.  The main function of the consultant is to guard and protect the owner’s investment and to manage the entire process.  The fee for a Owner’s Construction Consultant can range from 3 to 6% of the cost to build.  However, it’s the expertise of the consulting firm that will pay off in the end.  A high-end Consulting Team increases potential dividends related to scheduling procedures, cost overruns, delay claims, litigation, estimating deficiencies and Change orders, not to mention the construction procedure expertise and quick decision process ability.  The reality in any project is “time is money.” The longer it takes to build and complete a project, the costs exponentially increase, especially in the case of a large construction project.

Statistics show that only 65% of Construction Projects meet the original planned schedule.  Why?

1)  Owner’s inability to make critical decisions in a timely manner

2)  Design Team’s failure to respond to critical questions in a timely fashion

3)  Design team errors and omissions

4)  General Contractor mis-management

5) Project Management practices and performance

Main Reason:  Insufficient Owner Representation

That being said, what decision should the owner make and who should he choose for his project?

Factors in making the decision, Project Size and Value, project complexity and who has the best experience to handle the owner’s needs from start to finish.

Often overlooked in the decision making process is the proper owner’s representation.

The root cause for project failure is LACK OF, UNQUALIFIED OR INSUFFICIENT Owner’s Representation.

The post Owners Representatives, Private Construction Consultants, Construction Managers & General Contractors: How they differ? appeared first on GKMB Consulting .

Constructive Vision Delivers Results

Question: Do the majority of Owner/Investors know what they want out of their investment?

ANSWER: Yes a positive return.

Question: When deciding whether to proceed on a construction development project, what mistakes do the majority of Investors make?

ANSWER: The investors fail to plan properly to develop “real cost” to construct.
ANSWER: Failure to completely understand the owner’s role in the development process.
ANSWER: Failure to develop a realistic time evaluation or master development schedule.

Question: What should be the Owner/Investors first decision?

ANSWER: Seek out a professional Owner’s Representation qualified to prepare constructability, cost estimating analysis and master development scheduling.

Hence, The majority of Owner/Investors “get it,” however many continue to make the same critical mistakes, resulting in lost time and money, which can be avoided by seeking out a Qualified Owner’s Representation. The best results in any investment are produced by understanding what the investor is trying to achieve. This is a result found only through acquiring the proper experts to implement your investment plan and manage it properly.

Kenny Tsakanikas, Executive VP, GKMB Consulting

Kenny Tsakanikas
Executive Vice President
GKMB Consulting
www.GKMBLLC.com

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What is a Fractional Sale versus a Timeshare?

Because there are so many different types of timeshare purchases where the setup could include a set week each year, points program, etc.

Wikipedia defines a timeshare “as a form of ownership or right to the use of a property, or the term used to describe such properties. These properties are typically resort condominium units, in which multiple parties hold rights to use the property, and each sharer is allotted a period of time (typically one week, and almost always the same time every year) in which they may use the property. Units may be on a part-ownership or lease/”right to use” basis, in which the sharer holds no claim to ownership of the property.”

Many purchasers of timeshare properties have not always found their purchase beneficial, as they do not obtain true management rights over the property, which could lead to high yearly fees/assessments, or the ability for an increase in property value or appreciation. Timeshare purchasers basically pay for the useage of a condo and cannot foresee future costs or any return on the high investment over the years in these costs or fees.

A fractional residence is an actual purchase of real estate in which the buyer receives title and a deed to the property. The only difference in the fractional purchase versus an individual purchase is the buyer is only responsible for a percentage of the cost to buy the property. Many second home and vacation home buyers have found that they only use their property a number of weeks per year, but they are still responsible for 100% of the repairs, maintenance, taxes, insurance, etc. In a fractional purchase you are buying a vacation home at a fraction of its value. The only expenses are a share of the total costs and at the same time the ability to enjoy the benefits of a luxury home or condo. A fractional residence offers the same tax write-offs of single ownership. It may be deeded or willed to heirs. And the best part is a fractional owner sees their investment grow as many of these properties have been shown to appreciate at a higher rate on the percentage of the property as compared to a single owner’s increase in value.

For example, in a 4,3,2,1 fractional: This means that there may be 1 owner that buys all 4 shares of the property or 2 owners each buying 50% ownership or 4 owners each buying 25% of the property.

On a $2,000,000 luxury waterfront vacation home in Fort Lauderdale:

4 owners: each would pay $500,000;

2 owners: each would pay $1,000,000; or

1 owner: would pay $2,000,000.

1 owner purchases at $2,000,000 and pays 100% of maintenance, insurance, and taxes of $46,800 per year. They may use the home as much as they choose but practically speaking may do so only an average of 28 days per year.

4 owners purchase the home and each pay $500,000. They contribute to only 1/4 of the maintenance, insurance and taxes, each of $11,700 per year. They will enjoy the home a minimum of 13 weeks per year with no maximum useage.

If they choose to sell the home: The single buyer at $2,000,000 may find it much more challenging to sell during different phases of the real estate market. And if there was a large volume of luxury homes for sale at the time it is listed they may have to reduce the price in order to sell. Thereby, reducing their opportunity to see a return on their investment. The fractional buyers each with 25% ownership choose to sell they will find a much less challenging process to find a buyer looking to purchase their share at $500,000 during a time in the real estate cycle that properties are not selling as easily. And and even much more beneficial time when the market is strong and properties are selling they will see a better increase in their $500,000 investment as they are able to sell their fractional at a much higher price.

Purchasing a fractional luxury residence means access to your dream home for at least 13 weeks per year or more, an appreciation of your investment, the ability to rent (if approved in your individual fractional purchase) and receive income, an ability to sell at all phases in the real estate market, and control of the property management of your property.

Developers considering offering fractional sales of unsold units need to realize that they only have to commit a percentage of units to fractionalization. The sales staff is responsible for educating potential buyers on the benefits of both fractional and “whole” condo sales. And in many instances the buyer continues to choose the “whole” sale unit.

GKMB Consulting offers setup of fractional projects, sales centers, owner clubs and staffing to developments in the U.S. & Internationally.

The post Developers: Unsold Project = Consider Fractional Sales appeared first on GKMB Consulting .

That’s where a team of specialized facilities management specialists from the Real Estate & Construction field divisions come in as PM’s (Project Managers) and ORM’s (Owner’s Representatives). It is imperative that an advisor has had their own “boots on the ground” and understand FM (Facilities Management) from all perspectives. This knowledge includes the creation of a system of integrated reporting and process management to efficiently and cost-effectively manage real estate assets from one centralized location. The advisor that understands the management side of the day-to-day operations (including owner, corporate, site, vendor perspectives), as well as the process of implementing more efficient systems, is successfully able to act as a liaison to alleviate an organization’s unnecessary costs, time and labor.

Important to attain advisory assistance in:

• Owner’s Representation
• Project Management Asset/Property/Facilities Management
• Capital Asset Programs & Scheduling
• Vendor Contracts & Review
• Property Inspections Productivity & Performance Review/Measurements
• Training/Vetting Key Staff
• Budgets & Financial Analysis Software Implementation & Reporting Customization

Why would vetting, bidding and attaining national vendor contracts be beneficial to an organization? Simply stated, many of the same repairs across a region for a multitude of locations can be negotiated based on bidding from several vendors. This important process can offer reduced expenses for a larger volume of locations, with a standardized repair cost.

Why would software implementation make a difference in how we manage our organization’s work orders since we don’t own the assets? When realizing the number of steps and human intervention required when a repair is needed at a location, using a work order software program takes unnecessary human contact out and alleviates extra labor, time and delay in completing repairs. Not to mention costs incurred that may be the landord’s responsibility.

Why is it important for Quality Control procedures to be implemented for basic repairs to some of our locations? In many cases, the repair was not completed properly, which can lead to future repair costs that could have been alleviated by a knowledgeable inspection at completion of the initial work order. And for many of our clients a national service contract with negotiated, standarized rates cover a multitude of costs making budgeting and forecasting more accurate and easily applied.

When your organization is overwhelmed with the daily tasks for basic work order and maintenance of a high volume of assets it is challenging and almost impossible to find the time or the clear overview to create better processes and procedures to alleviate costs and labor and reducing the annual budget. That is where a consulting team is key.

The post In what ways can Facilities Management Consulting save money on the bottom line In what ways can Facilities Management Consulting save money on the bottom line appeared first on GKMB Consulting .

When I first entered the brokerage business, I was told that a good entry point is through property management.  It pays you a steady salary and you get the opportunity to learn the business.  This strategy that is still advocated by many today in the industry is flawed in two major ways;

1. The skill set to be a good property manager is very different than a brokerage leasing or salesperson.
2. A real estate investor/developer does not need a property manager who is not focused on a lasting career in property management.

I started with a small company who took on the management efforts of a few properties that we sold to investors and handled the leasing on their behalf.  I quickly learned that no tenants will ever call and say that the property manager is doing a great job, but they will call when the roof is leaking, HVAC is broken, the parking lot needs repair or a myriad of other defects.  A property manager gets very little positive feedback from the tenants they serve.  I knew I enjoyed the leasing part of the brokerage business, but I did not enjoy or feel suited for property management.  I guess spending one Christmas morning pushing water out the door of a retail bay sealed my career in leasing and sales brokerage, but also increased my respect for quality property managers who must respond 24 hours a day 7 days a week to emergencies.

A good property manager is key to any commercial real estate team, whether management of an asset is done in house or outsource to a third party property management firm.  I will add my disclaimer that not all property management firms or even property managers within a reputable firm are created equal.  I have known many property managers who I would not trust any real estate asset to and others who I feel are critical to the real success of many properties and in my success and ability to lease and/or sell a property.  As a real estate investor/developer you do not want to go with the lowest cost option when choosing your property manager.   I believe that you get what you pay for and that property management is professional position within an investment/development team that should be paid consummate to the value they may bring to the investment and team.  This is not where you want to cut costs!  Too many small developers or investors think they can do this function themselves and save some money.  This is rarely the case!

How does a good property manager add value to your team and real estate investment?

• They help reduce risks of owning a commercial real estate investment
• They help increase profits and reduce costs associated with operations
• They keep tenants happy and increase tenant retention
• They focus on increasing rents and decreasing vacancies
• They take care of all the routine maintenance on timely and schedule fashion.  This reduces long term problems that may incur with deferred maintenance.
• They are current on the laws dealing with Landlord-Tenant relationships.
• They understand the financials and tax regulations
• They help the Landlord choose better tenants to lease to.
• They are responsive to Tenant concerns
• They act as a facilitator between the Landlord and Tenant providing the necessary communication.
• They reduce the stress of owning commercial real estate
• They visit the property on a regular basis and stay on top of any maintenance issues including keeping the property clean.

The simple fact is that properties or portfolio of properties simply perform better under good and active property managers who are educated and trained to do their job in a professional manner.  By leveraging the property management function, you not only save TIME and MONEY, but it will allow YOU to concentrate on new deals that are the basis of your core business.

It is also important to choose the right property manager for you.  This includes; choosing the right company, and taking the opportunity to interview the actual property manager who will oversee your property.   If you cannot get a company to tell you who will be assign to your property than I would highly suggest looking at another company.  One of my favorite and best property managers in Memphis goes out every Saturday morning (his kids are now grown up) to drive all the properties in his area.  This allows him the opportunity to see how the properties look and jump upon any issues early in the next week or if critical immediately.  It is unfortunate the properties that are unclean or poorly managed are usually the hardest to lease.

I think that every leasing broker and other members of a development/investment team should walk in the shoes of the property manager for a little while as it would help them make better decisions when negotiating their deals that could make operating the property more expensive in the future.  Although, any good investor or developer with a good property manager on board will include them in any strategic decisions on the front end as they would any key member of their team and prevent some future problems that may arise.

Shawn Massey, CCIM, SCLS From http://retailrocksinthemidsouth.com/good-property-managers-worth-their-weight-in-gold/

The post Good Property Managers – worth their weight in gold appeared first on GKMB Consulting .

GKMB Consulting International, Inc., with main offices in Fort Lauderdale, Florida has opened a satellite office in a suburb between San Antonio and Austin, called New Braunfels. The new office location will service clients in the San Antonio, Austin, Houston areas. The team members of KT Consulting International have spent a large volume of their time in the Texas state area on projects that include data centers, large retail shopping centers, commercial and multi-family projects. The new office location will allow the company to service existing and new clients in the South and East Texas areas, including those in the Eagle Ford Shale.

GKMB Consulting International offers construction management, construction consulting, owner’s representation and project evaluation services for new and existing construction jobs. This includes commissioning on projects where there is a delay or dispute.

For more information contact Kenny Tsakanikas at 954-775-4595 or

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San Antonio Business Journal by Donna J. Tuttle, Projects Editor

Date: Monday, December 31, 2012, 11:47am CST – Last Modified: Monday, December 31, 2012, 4:42pm CST

A majority of the Texas counties with the most significant sales tax revenue increases in 2012 occurred in the Eagle Ford Shale oil-and-gas play region.

Kinney County leads the state — in a comparison of counties only — with a 185 percent increase in sales tax revenues between 2011 and 2012. Kinney County is part of the Maverick Basin, the northwestern part of the Eagle Ford shale area.

Closer to San Antonio, though, Karnes County came in at number four. That county’s sales tax rebate payments for 2012 are up by 134.8 percent, according to Texas Comptroller Susan Combs’ recent report.

Last year, Karnes County received $3.4 million. This year, during the same January to December time frame, it racked up nearly $8 million in sales tax revenue payments from the state.

Atascosa County, which geographically touches Bexar County, is number six on the top 10 counties with significant sales tax revenue with an increase of 104 percent. That county’s sales tax revenue rose from $3 million in 2011 to $6.1 million in 2012.

The counties with the largest percent increase in sales tax payments between 2011 and 2012, year to date, are as follows.

1. Kinney County — 185.1 percent increase
2. Terrell County — 180.4
3. Dickens County — 171
4. Karnes County — 134.8
5. Reagan County — 108.8
6. Atascosa County — 104.3
7. Gonzales County — 99.75
8. Dimmit County — 87.35
9. Bee County — 73.47
10. Oldham — 72.64

Local sales tax allocations from the Comptroller’s office are broken down by city, county, transit systems, and special purpose taxing districts.

From http://www.bizjournals.com/sanantonio/news/2012/12/31/eagle-ford-shale-continues-to-pump-new.html?ana=e_du_wknd&s=article_du&ed=2013-01-05

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We offer the developer a “boots on the ground” construction management oversight.  And an immediate knowledge and education into a specific geographic area they are seeking to build.

Our integrated approach for all phases of development includes:

∞  Pre-Planning

∞  Development & Productivity of Construction

∞  Project Completion & Close-out

Services include:

· Turnkey Investor and Developer Services

· Project and Market Feasibility Studies

· Architectural and Engineering Design

· Site Selection & Infrastructure Planning

· Full Project & Construction Management

· Building Assessment, Commissioning, QA/QC

· Funds Management

· Pro forma and Financial Advisory

Serving the State of Texas, the US & International Locations

For further information please visit us at:

(954) 775-4595 Direct

The post Eagle Ford Housing Development Assistance appeared first on GKMB Consulting .

Source: U.S. Energy Information Administration calculations, based on data from Drillinginfo
Note: Production through December 2013 is reported. Production from January 2014 through May 2014 is estimated. Glorieta and Yeso are separate formations combined for this article. Additional amounts of Permian production come from other formations not included in this graph.

The Permian Basin in Texas and New Mexico is the nation’s most prolific oil producing area. Six formations within the basin have provided the bulk of Permian’s 60% increase in oil output since 2007. Crude oil production in thePermian Basin has increased from a low point of 850,000 barrels per day (bbl/d) in 2007 to 1,350,000 bbl/d in 2013.

Largely as a result of this growth, crude oil production from Permian Basin counties has exceeded production from the federal offshore Gulf of Mexico region since March 2013, making the Permian the largest crude oil producing region in the United States. In 2013, the Permian Basin accounted for 18% of total U.S. crude oil production. The recent increase in Permian crude oil production is largely concentrated in six low-permeability formations that include the Spraberry, Wolfcamp, Bone Spring, Glorieta, Yeso, and Delaware formations. Production from these formations has helped drive the increase in Permian oil production—particularly since 2009—despite declining production from legacy wells.

Almost three-quarters of the increase in Permian crude oil production came from the Spraberry, Wolfcamp, and Bone Spring formations. Counties in these three formations have driven the increase in the Permian Basin’s horizontal, oil-directed rig activity in recent months. Production from these three formations collectively increased from about 140,000 bbl/d in 2007 to an estimated 600,000 bbl/d in 2013, increasing their share of total Permian oil production from 16% to 44%. Three other formations—the Delaware formation and the adjacent Glorieta and Yeso formations—also increased production from 2007 to 2013, but to a lesser extent. Production from these three formations rose from 61,000 bbl/d in 2007 to an estimated 112,000 bbl/d in 2013.

The Permian Basin region encompasses an area approximately 250 miles wide and 300 miles long, and it contains many potentially productive low-permeability oil formations. Although oil production has previously come from the more permeable portions of the Permian formations, the application of horizontal drilling and hydraulic fracturing has opened up large and less-permeable portions of these formations to commercial production. This is especially true for the Spraberry, Wolfcamp, and Bone Spring formations, which have initial well production rates comparable to those found in the Bakken and Eagle Ford shale formations.

Source: U.S. Energy Information Administration, U.S. Geological Survey, University of Texas Bureau of Economic Geology, and Drillinginfo
Note: Wolfcamp is found throughout the entire Permian Basin area.

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