A recent report I came across revealed some stunning data about construction delays. According to the 2020 National Construction Payment Report (https://www.levelset.com/blog/2020-reportconstruction- wasted-time-slow-payment), “80% of construction businesses expect delays on some or all of their projects.” That is four out of five construction projects across the board that will have a delay and lose time! While it is no secret that delays are an unfortunate and often frequent problem in construction, numbers this high tells me that some conversations should be occurring on nearly all construction projects across the board that may not be happening.
Developers - Are you receiving notice letters and having open conversations about delays with your construction team? No one likes sending or receiving letters, but contracts often require them, and they don’t need to be contentious. The Douglas Company, one of our 68 documented process systems, requires that we send letters for all delay events,... Read More >
The Covid-19 pandemic has impacted nearly everyone and somehow touched every aspect of the world in which we live. It will change many aspects of the senior housing industry, including not only the prospects for new development but the design and functionality of new senior living communities. While the ramifications both short and long term are still unclear, the pandemic will not change the vast wave of baby boomers who will provide steady demand growth for senior housing for several years beginning in 2022.
Most experts within the senior living industry continue to express optimism about the long term prospects for senior housing, and particularly the assisted living, memory care, independent living and active adult segments, all of which have experienced significantly fewer cases of Covid-19 than have been realized in skilled nursing communities.
As we begin to look to the future, it seems inevitable that Covid-19 will have a lasting impact... Read More >
As our country begins to transition back to a new level of normalcy, it brings to light how fortunate we were to be able to continue to work relatively unscathed throughout the COVID-19 pandemic, allowing us to fulfill our core purpose to contribute to the success of our clients and associates. While there is a lot of uncertainty about what all of the long term impacts this crisis will bring, I believe that it is fair to assume there will be some changes to our industry moving forward as a result of the past few months.
The virus has brought to focus on the importance of worker health and safety on our job sites, while some of the policies are tedious, it is better to be safe than sorry. It will be important to continue practicing these policies moving forward into the future to help mitigate any future waves of... Read More >
The current slowdown is unfortunate in its cause, with all of the people suffering from the virus. It is hugely disruptive to all of us both professionally and personally, but it is the reality. Though this arose fairly quickly, our clients are intelligent, optimistic, and focused and are already asking how much prices are going to come down and when.
The best predictor of the future is usually the past, so I did some research. RS Means, a widely respected resource for pricing in our industry, reports that the 2008-2010 recession had stable pricing, not decreasing. I think we all know this isn’t right, so I checked the Turner Construction Company historical index. It seems more realistic, reporting an 8.4% decrease in construction costs in 2009 and a 4.0% decrease in 2010 for a total of 12.4% This seems more accurate. All recessions are different. There was a milder recession in... Read More >
Who is ready to turn the corner on everything that has been in front of us in the last couple of months? I know I am. While The Douglas Company has been fortunate and grateful to continue operations as an essential business during this pandemic, it has, of course, prevented me from getting out and seeing clients, prospects, and my networking partners, unfortunately. As I’m sure many can relate, Zoom is just not the same!
That being said, and while it could have spawned from better circumstances, there will be some interesting and exciting times ahead for the design and construction of multi-family spaces in particular senior living communities.
We have been busy in our estimating and pre-construction departments assisting clients with conceptual budget estimates and value engineering as usual and look forward to seeing more and more creative ideas on how to address health crisis type issues that can... Read More >
What is BIM? BIM stands for Building Information Modeling; essentially, it is a software that allows the entire project team to integrate their respective components into a 3-D model. When appropriately used it can help streamline not only the design stage of a project but also the build of a project. Some of the advantages of BIM include better visualization of spaces before they are constructed reducing the amount of changes during construction, increased coordination and clash detection which can save time and avoid costly rework, increased productivity through the utilization of prefabrication, safer projects, and ultimately a higher level of quality throughout the building. Some of the disadvantages to BIM are it can be costly and lead to additional time in the design stage of the project, as well as, finding subcontractor’s/firms that are experienced in the software can also be challenging. As our world continues to evolve through... Read More >
One of the biggest challenges the construction industry has faced over the past few years is the ever-increasing difficulty to have project plans reviewed in a timely manner, with a fair and reasonable critique of the documents for code compliance, and at a reasonable cost. Further frustrations have been experienced in dealing with building departments having a shortage of qualified building inspectors to conduct timely onsite building inspections when the contractor schedules them. This all led Florida to pass legislation allowing for developers to use private, third-party plan review and building inspection services. Florida Statute 553.791 passed in 2019, allowing developers to hire a qualified independent provider to review their plans in place of the traditional route of submitting them into the local building department. It also permits the developers to hire independent providers for building inspections instead of relying on the often overburdened local building department officials.
In addition to... Read More >
The COVID-19 pandemic has the spotlight of construction industry news across the county right now. Rightfully so, as it has been extremely disruptive to developers, contractors, and suppliers alike. While there is great debate on how to address the spread of the disease, all of us in the AEC industry are trying to determine what we should be paying attention to. For those involved in a large construction project presently, no matter what role, it is suggested to think about a few things:
Safety Measures - By now, most of us are familiar with the term "Social Distancing" and the importance of handwashing, but there is more than that. OSHA has devoted a separate webpage for the standards from 29 CFR that apply to this outbreak and reminded us that this is a recordable event. Do not count on anyone to provide these measurements for you or your associates;... Read More >
As I talk with both senior living and multi-family developers, there is a big focus and many questions relating to “active adult” or “age-restricted’ apartments. It makes sense for many reasons, but the average age of entry stands out the most. Today the average age at which a person moves into traditional senior housing is 85, with an average length of stay just over six years.
The move-in age for active adult communities is in the low to mid-70's. The oldest members of the baby boomer generation, those born in 1946, are just now turning 74. This creates a true opportunity to capture a younger senior demographic ten years earlier than traditional senior living facilities.
Boomers considering active adult communities prefer renting over owning to provide them with economic and logistical flexibility. They are attracted by a sense of community and are healthy enough to not need traditional care-based senior housing. At... Read More >
Last week I was sitting in a presentation with an experienced developer for a project we will be starting soon. This same developer is currently building a facility in Columbus, Ohio, with an institutional contractor, which is not going well.
Over and over, he said, "how much of a pleasure it is to be working with a developer's contractor." We are one, but sometimes I forget what it means. In this case, the client's architects and engineers completed the drawings and added all kinds of things that were nice, but didn't add value to the project or its future residents. With our experience in senior living, we are able to control cost by weeding out what was not required, and we have the technical expertise to communicate effectively with the design professionals with minimal involvement from the client. But there are other things we do, such as keeping up a... Read More >
After years of attending the NIC and ASHA conferences, I feel a need to shout out about the construction costs that one of our competitors supply to them for senior living. Frankly, I don’t know how anyone could make the numbers work for a project with the costs that they promote. First of all, construction costs per square foot are probably the wrong numbers to be considering when developing proformas. Cost per unit or cost per bed is what matters because revenue is based on cost per unit and cost per bed. Cost per square foot can be an extreme variable depending on space usage. As you can imagine, as an individual room increases in size, the cost per added square foot isn’t much. So larger units cost less than smaller units on a cost per square foot basis, but the incremental cost per unit is not that much different. ... Read More >
There was a recent article in Senior Housing News that discussed the rising development costs in senior housing being to the tune of a 6.4% increase last year according to a report created by CBRE. During the same period, which was 2019, the average number of units per project decreased to 106 from 128.
As you can imagine, two primary drivers of this were a robust construction market and the increasing labor expenses. This isn’t necessarily new as the article also confirmed that overall U.S. construction activity has mostly increased over the last ten years, which thanks to the laws of supply and demand drive up material costs regularly.
It was interesting to note that site acquisition expenses represented 10.1% of development costs and that the average site area decreased 15% as demand for good sites increased significantly in metropolitan areas.
So this trend is not just about senior housing exclusively as the... Read More >
I learned early in my career how little I know. Though we have built more senior living than anyone I know and have been exposed to very successful senior living developers and operators, they all operate differently. Someone recently said to me, “An expert is someone who knows more and more about less and less until eventually, he knows everything about nothing.” But I don’t think that is the case in my situation. It’s just that there are a lot of ways to be successful if you know what your Hedgehog Concept is, as Jim Collins would say.
Mid-market became a newer thing a couple of years ago. They often say what is old is new, and this might be one of those situations. We, in conjunction with a number of clients, are working on several mid-market concepts. They hearken back to the eighties when this industry was starting, and people’s... Read More >
The “Silver Tsunami” of Baby Boomers is not knocking on the door of assisted living communities just yet and still has several years to go before they are. So how are senior living developers going to entice these folks to leave their homes?
A recent article in Senior Housing News noted that in a survey of 120 senior housing professionals, 87% of them responded that they are currently pursuing active adult apartment projects. They see the need for a stepping stone so to speak; getting seniors to leave their homes that are nowhere near ready to move into an Independent Living community much less an Assisted Living community. Seniors in this segment are still looking for active, vibrant lives and are not ready to see what the future looks like by living in communities where they would see just that.
If seniors can stay in place longer in these communities with the... Read More >
When you hear the word exoskeleton you probably start thinking of something out of a sci-fi movie like Alien or Avatar, but they are starting to make a presence in construction. Exoskeletons or exosuits are a wearable technology typically made from metal and other fabrics that attach to the body. They are aimed to help lessen the strain on workers' body allowing them to work quickly and safely while reducing injuries. With the potential to reduce required muscle force by as much as 60%, it’s easy to see what kind of an impact this technology could have on workers by easing the physical demands that come with the job. Currently, there are two (2) main types powered and mechanical (passive), and over five (5) main categories for these power suits: power gloves, arm/shoulder support, back support, standing/crouching support. As this technology continues to evolve it will be interesting to see... Read More >
One thing was clear at the National Investment Center for Senior Housing (NIC) fall conference that was held recently in Chicago. The interest in senior housing continues to grow. With more than 3,300 attendees at NIC, it was a whirlwind of activity meeting with developers, operators, equity providers and lenders, all who are optimistic about the future for new development in senior housing.
There seems to be no limit to the private equity that is available to experienced developers who along with their operating partners have a solid track record. Private equity funds that target the senior housing sector raised more money in 2018 than at any time before, with more than $15 Billion raised. This is up from the previous record of $10.8 Billion raised in 2015.
This high level of interest in senior housing can be supported by the fact that the number of Americans age 65 and above is... Read More >
The Douglas Company has done a lot of work on developing Mid-market senior living prototypes that are cost-effective, functional and durable. Though we have expertise in senior living construction, we are not experts in the operations of these communities. So while we can attack the cost of the physical plan, which is really is only 10% of revenue, it's a small part of the solution.
At the NIC Conference, people talking about how to serve the mid-market, but only one had a prototype. It was intriguing and thoughtful and we are studying it further, but there was limited other focus on this market from what I saw. NIC had a session specifically devoted to this, and there were a number of statistics I wouldn’t normally consider impacting current and future demand for this product, such as the changing demographics related to marital status, location relative to children, changing health-related factors, and... Read More >
A lot of solid data has come out in recent months from NIC regarding the senior middle-income population that will not be able to afford private-pay senior housing and care options, nor will they qualify for Medicaid. It is concerning because that is such a large percentage of the country’s population. Per the NIC report, the number of middle-income seniors will nearly double to 14.4 million by 2029. It is predicted that over half of them will not have the financial resources for senior housing and healthcare as it is priced today.
There was a great session at the NIC conference in Chicago recently discussing this topic. It is a private sector issue to tackle in regards to developing more affordable housing communities. It is a public sector issue to tackle by developing tax incentives targeted to the middle market and possibly expanding Medicare coverage as well as subsidy programs to... Read More >
The key that is often overlooked as to why certain construction company’s projects succeed more frequently and sustain long term success, is the proper alignment of each project team on a daily basis.
To help with team alignment, at The Douglas Company internal daily huddles are conducted throughout all levels of the organization to help foster shared goals, a common purpose, facilitate clear communication, resolve conflicts, and align behaviors.
These daily huddles ultimately enhance performance, get everyone working together, and playing from the same playbook of contributing to each team’s success. It’s what keeps the business running and employees productive and empowered. Holding a daily huddle is perhaps the most important tactic a business can employ to help their company leaders and associates stay focused.
Each morning at The Douglas Company our huddles confirm and give updates on daily projects and priorities. This meeting rhythm makes us accountable to each other, to... Read More >
With a continued labor shortage across the country and no signs of change in the near future, some firms are looking to/have implemented robots into their workforce to help combat this issue. Robots in their present capacity are being used to perform repetitive tasks like laying brick, tying rebar, hanging drywall, etc. They are also performing demolition, 3-D printing, and assisting with lifting activities. In 2018 the construction robotics industry was roughly a $23 million market, however, this market is being forecasted to grow to nearly $226 million by 2025 according to the article by Tractica. Some of the benefits being reported by those utilizing robots are increased speed and efficiency, higher levels of safety, and the ability to integrate with design software such as BIM. As one who has never had robotics performing labor on a construction project, I am looking forward to experiencing it and to what impact... Read More >