Nick is a director of MacMullen Associates, who specialise in providing project management and development consultancy services. He is a chartered surveyor with more than 18 years of commercial property construction experience, having worked extensively for consultants and developers in the Midlands, and is just completing the handover of a new £2.5m medical centre in Warwick
The prospect of coordinating the construction of a new medical centre can be quite a daunting one for most practice managers, who have a fulltime job running the current practice and may have limited knowledge of what lies ahead.
The development process is one that has, over many decades, found a way of making itself more complicated. As the world becomes more susceptible to litigation, the commercial property and construction industry has developed a tangled web of legal and technical dos and don'ts that can leave the uninitiated losing countless hours of sleep, with the prospect of either being well and truly stitched up or facing a bill for something they thought was someone else's responsibility.
The success of all development projects relies upon three factors: trust, a sound project team and cast-iron documentation.
Form good working relationships
Most new-build projects involve a private developer. The developer will obtain the planning permission, purchase the site, employ the design team, enter into a lease agreement with either the primary care trust (PCT) or the doctors, employ the contractor to build the property and then, having completed the lease, sell the investment.
All the while, this developer is running up a substantial loan as he/she must also finance the entire project until the proceeds from the investment sale materialise. The developer's motives are purely financial – it is a naïve practice manager who thinks they will offer any more than the bare minimum.
Practice managers should take a good look at the developer and, to some degree, disregard the glossy brochures and glamorous websites to establish whether they really feel this is someone they can trust.
When rents and returns on properties start to fall and construction prices continue to rise, the developer will be looking to either offset any costs he/she can or pass them on to others. Ultimately, the end user is often the one who finds him/herself in the firing line for this and relationships can rapidly deteriorate. Once those relationships break down, the element of trust is lost and the project becomes a tiresome prospect with little reward at the end.
The quality of the project team will largely determine whether the next 18–24 months of the practice manager's working life are likely to be pleasant or not. This team will comprise architects, engineers, project managers and the like, all of whom are in the pay of the developer and in hardened times know only too well with whom their allegiances lie.
So who protects the practice manager and the GPs? Depending on the size and complexity of the project, it's often very wise for the tenant to employ a professional representative, usually a project manager, who will have experience of ensuring the developer complies with their obligations, checks the quality of the work, supervises monthly payments (possibly in respect of tenant-funded fit-out works) and generally monitors the project in the best interests of the tenant.
This can be a very time-consuming process. For example, it can involve checking drawings and specifications, which the practice manager may not have the resources or technical knowledge to undertake. Furthermore, building contracts and lease agreements are complicated documents that contain a host of deadlines, protocols, rights and obligations. These can often lead the untrained into delay situations and arguments, which are best avoided.
Practice managers may think this is a job for the PCT, but from recent experience I have found the PCT simply does not have the time or qualified staff to handle this work. This can leave the practice manager floundering, and to have someone that can lead him though the various pitfalls and procedures that face every tenant can be of immeasurable benefit.
Once the paperwork is signed, often very little can be done to change things without incurring costs. It is critical that practice managers employ a lawyer well-versed with commercial property matters and get a technical representative involved at an early stage.
Appended to the lease agreement will be drawings and specifications, warranties, cost schedules and all manner of detailed documents that not only bind the developer into providing a specific end product but also set out exactly what the PCT and doctors are entitled to receive for their money.
This is the time to negotiate! Once planning is granted, the developer will be keen to agree a quick deal on the back of a brief specification and a handful of planning drawings. The developer will benefit if the tenant doesn't employ the right consultant to look after their interests, and, given the level of rent the developer is charging, there is likely to be plenty of room for negotiation before he/she starts to talk of walking away.
From my experience, a number of key design features usually become the main topics of conversation at meetings. The list below is not exhaustive but gives a flavour of what needs to be considered. After all, even the most detailed of building issues can lead to the most protracted of discussions.
All of this may paint a rather unattractive picture of the development process facing practice managers, but it's one that can be rewarding and successful if careful preparation is undertaken.
Most practice managers will have to go through the process at least once in their career and many may remark afterwards: "Never again!" For others it may be a challenge they relish, but what everyone will ultimately agree upon is that getting it right the first time leaves you with a delightful feeling of self-satisfaction. Then it's back to the day job.