Why Is It So Important to Use Construction Consultants?

Imagine you are looking to start a building project. You will soon find that this type of endeavor is multi-disciplinary.

Construction work is the middle ground for engineers, architects, accountants, designers, bankers, and more. Do you have the experience of putting all the pieces together?

That’s where construction consultants come in.

A construction consultant is a professional who provides expert advice and guidance in various stages of the project lifecycle.

They work closely with bankers, contractors, architects, engineers, or other stakeholders to make sure the project is executed on time and within budget.

And they are able to do so because they possess extensive knowledge and experience in construction methods, project management, cost estimation, regulatory compliance, and industry best practices.

But the primary role of a construction consultant is to offer strategic advice and assistance throughout the project lifecycle.

Some common responsibilities of a construction consultant include: 

• Risk Mitigation
• Project Planning and Feasibility
• Cost Estimation and Budgeting
• Project Management
• Contractor Capability Evaluation
• Quality Assurance and Compliance
• Troubleshooting and Dispute Resolution

Overall, a construction consultant acts as the eyes and ears of the client in the construction field. They are trusted advisors, that offer their expertise to help clients navigate complex construction projects successfully.

What’s their ultimate goal? To optimize project performance, mitigate risks, and ensure timely and cost-effective project completion.

While “Construction Consultants” is a term widely used, there are a variety of client types involved in the construction industry. Not all construction consultants will provide the same type of service.

Here are some different types of stakeholders that construction consultants typically serve:

1. Property Owners: Some construction consultants work directly with property owners, including individual homeowners, real estate developers, commercial property owners, and public institutions. They assist property owners in various aspects of construction projects, such as project planning, design, cost estimation, contractor selection, project management, and quality control.

2. Contractors and Construction Firms: Construction consultants also provide services to contractors and construction firms. They may offer expertise in areas such as project management, cost estimation, scheduling, contract negotiation, risk assessment, and quality assurance. Consultants help contractors optimize their operations, enhance project efficiency, and mitigate risks.

3. Lenders and Financial Institutions: Construction consultants serve lenders and financial institutions by providing independent assessments and expert advice on construction projects. They conduct due diligence, feasibility studies, risk assessments, and ongoing project monitoring on behalf of lenders. These services help lenders make informed lending decisions, manage construction loan portfolios, and protect their interests.

4. Architects and Design Professionals: Construction consultants collaborate with architects and design professionals to ensure that construction projects meet desired specifications, comply with building codes and regulations, and achieve optimal design and functionality. They provide input and recommendations during the design phase, conduct design reviews, and assist in value engineering.

5. Government Agencies and Public Organizations: Construction consultants may serve government agencies, municipalities, and public organizations by offering expertise in infrastructure projects, public works, and facility management. They provide guidance on project feasibility, cost estimation, regulatory compliance, and project oversight.

6. Legal and Insurance Entities: Construction consultants may work with legal firms and insurance companies in matters related to construction disputes, claims, and litigation. They provide expert opinions, assessments, and analyses to support legal cases, insurance claims, and dispute resolution processes.

7. Construction Industry Professionals: Construction consultants also provide professional development and training services to construction industry professionals. They offer workshops, seminars, and educational programs on various topics such as project management, cost control, risk management, and industry best practices.

 

A construction consultant that helps lenders is a professional who specializes in providing services to financial institutions or lenders involved in construction projects.

Their role is to assess and mitigate the risks associated with construction loans and ensure that the lender’s interests are protected throughout the construction process.

Here are some specific services of a construction consultant that helps lenders:

1. Pre-Construction Services

Before a loan is approved, lenders rely on construction consultants to conduct thorough due diligence on the project. This includes reviewing the construction plans, estimating the project cost, evaluating the feasibility, and assessing the borrower’s qualifications and financial stability.

Construction Consultants can also perform Contractor Capability Reviews to help evaluate a General Contracting team and their ability to deliver a specific project on time and on budget.

They evaluate aspects like past experience, team member abilities, licensing adequacy, creditworthiness, and other factors that provide clues to understanding a Contractor’s ability to perform.

2. Construction Monitoring Services

During construction, lenders rely on construction consultants to conduct draw inspections to review and approve contractor requests for payment, permitting, construction schedule updates, budget revisions/change orders, and project conformance to plans.

Based on these items, construction consultants are able to report on their findings and offer recommendations to lenders.

3. Construction Risk Assessment

Consultants assess the risks specific to the construction phase, such as cost overruns, delays, change orders, and contractor performance.

They identify potential risks and evaluate the borrower’s ability to manage these risks effectively. This helps lenders understand the potential challenges and make informed lending decisions.

4. Funds Control

Construction consultants help lenders evaluate the accuracy of the project’s cost estimates and budgets. They review and analyze construction cost breakdowns, change orders, and payment requests to ensure that the costs are reasonable and aligned with industry standards.

By engaging a construction consultant, lenders can mitigate the risks associated with construction lending, speed up and inform their decision-making process, and protect their investments.

Consultants provide lenders with valuable insights, independent assessments, and expert guidance to ensure successful project completion while safeguarding the lender’s interests.

 

If You Are a Banker

Here is why construction consultants can help you:

1. Risk Mitigation

Not knowing what happens in the field sucks. Make informed lending decisions and minimize the potential for financial loss.

2. Expertise in Construction Industry

You are an expert in finance, not construction. Construction consultants understand construction processes, materials, cost factors, regulations, and best practices. Even more, they are doing this every day.

At USA Construction Consultants, we look at 300+ draws every month. Assessing a variety of projects gives us the confidence to report on issues before they escalate.

3. Unbiased Independent Assessment

Another perspective is always welcomed. An independent evaluation adds an extra layer of confidence for bankers in making lending decisions.

4. Accurate Evaluation and Feasibility

This evaluation helps bankers ensure that the loan is granted to a viable project that has a higher chance of repayment.

5. Peace of Mind

The Construction Consultants’ oversight helps bankers identify any issues or deviations from the plan early on and take appropriate actions to protect their interests.

Consultants also help bankers ensure that the project meets the required standards and minimize the potential for future liabilities arising from construction defects.

In case of disputes or conflicts during construction, they provide expert opinions and guidance to bankers. They help navigate through claim settlements, change orders, and other legal and contractual issues, protecting the lender’s interests and minimizing financial impact.

If You Are a Borrower

What if you are the borrower? Working with a Construction Consultant will still benefit you, not just your banker. Here is why construction consultants can help you:
1. Project Feasibility Assessment: Be sure your project is viable and financially sound before committing to significant investments.

2. Cost Estimation and Budgeting: Get a realistic understanding of the financial requirements and can plan financing accordingly.

3. Construction Planning and Design: Optimize the project layout, identify potential design improvements, and ensure that the plans align with building codes and regulations. This can result in more efficient and cost-effective construction outcomes.

4. Contractor Selection and Contract Negotiation: Select the right contractor.

Construction consultants can evaluate contractor qualifications, review bids, and provide recommendations based on the contractor’s expertise, track record, and alignment with the project requirements.

5. Project Management and Oversight: Maintain control over the construction process and ensures that the project stays on track.

6. Risk Management and Mitigation: Minimizing disruptions, avoiding unnecessary expenses, and protecting your investment.

7. Dispute Resolution and Claims Management: Easily navigate through the claims process, analyze the merits of claims, and negotiate fair resolutions. Save time, money, and potential legal complications.

If you find yourself in a challenging situation, it’s probably not the first time a Construction Consultant encounters it. Trust that they will provide you with the best recommendations.

Some Construction Consultants will serve a wide variety of clients, and some will focus on one specific client type. For instance, at USA Construction Consultants we’ve been exclusively serving the construction lending industry for over 35 years.

We know how to view construction risk from a lender’s perspective and will offer proactive recommendations to mitigate the unique risks of a construction lender.

Who do we serve?

• USA Bank’s Commercial Real Estate (CRE) Construction Lending Departments
• Building Purchaser/Owner & Real Estate Investors
• Private Equity Lenders

Every month our team completes hundreds of inspections specific to Commercial Construction, SBA, or Residential Projects.

Who we do not service?

• Construction Companies
• Project Owners and Developers
• Contractors & Subcontractors
• Insurance Companies
• Legal & Consulting Firms
• Government Agencies
• Regulatory Bodies
• Investors & Broader Financial Stakeholders

So now you have a better understanding of how Construction Consultants can help you. How can you make sure you select the right company for your project?

While specific qualifications can vary, here are some common qualifications and skills that construction consultants helping lenders should have:

1. Education and Certifications

2. Construction Industry Experience

3. Project Management Expertise

4. Financial and Analytical Skills

5. Knowledge of Construction Contracts and Regulations

6. Risk Assessment and Mitigation Skills

7. Communication and Negotiation Skills

• Reputation and reference are always a good indication of past performance.
• Proactivity can take you a long way in an industry where every day translates into higher costs.
• You want to work with problem solvers. Critical thinking skills and the capacity to analyze complex construction issues will help you not just identify issues, but deploy practical solutions.
• Looking for strong values, ethics, and integrity will allow you to work with consultants that are reliable, transparent, and dedicated to serving the best interests of their clients.
• Are you compatible with your Construction Consultants? Consider their ability to adapt to your specific needs and work collaboratively with your team.
• Does your project require a level of flexibility? Work with a consultant that’s willing to meet you where you are.

Before you pick a company, make sure you communicate your requirements and assess their qualifications, approach, and compatibility with your organization.

By carefully evaluating these aspects, you can choose a construction consultant who will provide valuable insights, mitigate risks, and support your lending decisions in the construction industry.

When hiring construction consultants, bankers may overlook or underestimate certain factors that can impact the effectiveness of their collaboration.
Here are some aspects that are often overlooked:

Communication and Reporting

Clear and timely communication is essential for effective collaboration. Make sure you can establish the frequency and format of progress reports, how issues and recommendations will be communicated, and how the consultant will provide updates on project status. If your consultant is willing to adapt, that’s a great sign.

Team Availability and Workload

Can the consultant handle your project? Make sure the consultant has the necessary manpower to provide timely and comprehensive support throughout the project’s duration.

At USA Construction Consultants we handle over 300 commercial projects every month, 300 residential projects every week, and up to $150M in construction projects. No matter your project location within the United States, you can count on the same reliable team that has been there for you for the past 35+ years.

Documentation

So you signed a proposal? What now? You should know that Construction Consultants require specific documentation before they can start working on your project. If you only submitted a part of the required documents, their hands are tied. Make sure you submit all the mandatory documents, to speed up turnaround time.

At USA Construction Consultants, we built a dedicated team that reviews client documentation and is available to answer any related questions. 

For bankers who prefer to focus on other aspects of their projects, our team manages the procurement process as well.

This means that once the banker provides a point of contact, USA CC will take care of the rest. All that’s left is for the banker to review the final report. Easy!

Technology and Tools

The world is changing, is your consultant adapting and leveraging technology? Construction consultants who leverage modern project management software, cost-estimating tools, and data analysis techniques can provide more accurate and efficient services.

Have a look at their technological capabilities to ensure they are equipped to deliver optimal results.

Long-Term Support

Is your consultant in it for the long game?

It’s beneficial to discuss with the consultant their willingness and capacity to provide long-term support, addressing any quality/workmanship issues or disputes, resolving post-construction issues, and answering questions that may arise down the line.

Sharing the same mindset will not only provide peace of mind but will help you foster strong connections.

Continuous Improvement and Feedback

Consultants who actively seek feedback, evaluate their own performance, and incorporate lessons learned into their future engagements can provide higher-quality services over time.
Observe their approach to learning and improving. Take these factors into account, make more informed decisions, and enhance the effectiveness of your collaboration.

Open communication, thorough evaluation, and careful consideration of these often overlooked aspects contribute to better outcomes in construction projects.

There you have it. Now you have a better understanding of the different types of Construction Consultants and their roles for different stakeholders.

What’s next? Use these takeaways to find the right fit for your project.

If you are a lender, we would be happy to help you navigate the fog and provide recommendations.

Feel free to get in touch with our team at any time. And don’t forget to subscribe for more educational content like this.

______________________________________________

Construction Risk Advisory for Lenders 

We help you mitigate construction-related risks and guide you throughout the construction project lifecycle with confidence.

Visit the USA Construction Risk Solutions Blog for more insights on construction management and risk mitigation.