Buying a house is a shock to the finances, particularly in the current market, but brace yourself. The startling numbers won’t stop at closing. The price of renovations, which new homeowners seemingly are compelled to make, will probably be even more shocking because, whatever your house cost, you at least knew the price when you agreed to purchase it. Renovations are typically a wilder ride for the uninitiated. Michael Wood, a veteran interior designer in New York City, knows all about the wiles of contractors, how to spot the shady ones and how to determine who are the good ones.
Michael Wood has completed nearly 500 projects in the notoriously expensive New York construction market, almost invariably right on time and with a budget variance of just 2%. None of it was by luck. Michael Wood and his team take client advocacy as seriously as the hands-on work itself. After all, if the client is unhappy with the process they are a lot less likely to appreciate the result.
We asked Michael Wood about his design career, the secret to dealing successfully with contractors (it really is who you know!), and how to oversee your own renovations if you can’t afford a high-end designer to do it for you.
Your firm puts a real emphasis on getting projects done on time and within budget. How can you pull that off so consistently working in New York, where construction of every sort is legendarily expensive and takes, seemingly, forever?
Michael Wood: As with any successful endeavor, leadership, a proven methodology and an experienced team are essential. We have an extensive range of professional trades and consultants with whom we’ve developed positive working relationships over the years that honor their commitments and deliver enduring quality. Equally important are the comprehensive drawings that we issue to clearly define the scope, accelerate the filing and bid processes, and significantly reduce the opportunities for change orders (COs) during construction. On the back end, we have a dedicated operations team to coordinate the myriad of procurement and logistical requirements, along with an on-site team that visits a project several times per week to manage the trades and swiftly resolve construction issues.
I understand that you got the idea for your company, which sounds as much like a project management company as an interior design firm, from a single client you once had who wanted his loft apartment renovated. Can you tell us that story, and the insights you gleaned from it?
Michael Wood: It was my first renovation project in NYC. Initially positioned as an interior designer, I observed a wide range of distinct parties – trades, architects, consultants, sub-contactors, vendors – many with short-term agendas. Then there’s Owner with the least amount of leverage and the most to lose. By positioning myself as the Owner’s single point of contact, we immediately changed the dynamic and a new business model was born. A project manager, yes, but I see it more as a client advocate. A one-stop shop if you will, that is equal parts creativity and professionalism to safeguard client’s interests.
My experience with contractors when I was living in Brooklyn was that you begged for them to come to your apartment, you knew better than to expect them on time, and paid whatever they demanded while hoping for the best. Is that the experience you are promising to spare your clients?
Regrettably, the construction business is awash with shady characters that prey on consumers who have no idea how the process works or what things cost. And your property, a significant investment for most, is at stake. Quality, responsible tradespeople do exist, but even the best require clear direction and regular oversight. Negotiations are also far from over once you go into contract. Issues arise throughout that affect design, costs and schedule, so it helps that we speak the language of construction and know how to play the game.
Everyday when I was commuting to my job in Manhattan I walked past a 12-story office building that was being gutted. Laborers with hand trucks wheeled in empty trash cans and wheeled them out filled with debris to empty into Dumpsters. That was obviously a slow and expensive process but also probably the only way to do the job. How do you keep a project moving and on budget with the inherent challenges of building or renovating in a big city?
Michael Wood: NYC has some unique dynamics that can affect the budget and schedule at any point in the project. For the planning phase it is critical that the design be coordinated with seasoned consultants such as expeditors, engineers, lighting, and A/V. During the implementation phase, regular site visits are essential. We regularly check-in with the Super to ensure procedure and protection standards are being maintained. Also, small thank-yous go a long way such as an occasional lunch for the crew or recognition of a craftsperson’s work. Working as a cohesive unit will save a few days along the way, which often means a great deal during the final few weeks of a project.
What tips do you have for individuals who have to hire tradespeople themselves? Do they have any leverage over scheduling and surprise costs?
Michael Wood: Yes, if they play their cards right. Depending on the extent of the service and the potential effect on one’s property value, I do recommend engaging some sort of consultant with local experience who can give you a sense of what lies ahead. But for those on a tight budget or who prefer a more hands-on approach, a few tips to consider:
· For starters, no matter how easy it looks on HGTV, reality is an entirely different matter. Before making any calls, it is important that you have a strong understanding of what you want. The big picture, including a clearly defined scope and assembling the right team, is significantly more important at this stage than pillow fabrics or drawers pulls;
· Do the trades you are considering have a license, full-time admin support and regular, licensed sub-contractors that they can name on the spot? With no admin support, expect extensive paperwork and accounting issues. And if they can’t name any sub-contractors, you’ll likely be subject to a ragtag crew that’s been cobbled together for the first time;
· Ignore the sales pitch and listen to your gut. How do you feel about inviting this person into your home? A professional will respect your questions, educate you on the process, and show a genuine interest in your requirements;
· Nobody hands out a bad reference, so ask instead about other buildings in which they’ve worked (the Super knows all) or when and why a project hasn’t worked out for them. If they reflect on the latter as a learning experience, they are more worth considering than if they respond defensively or blame the client or other parties;
· Beware of the lowest bidder, particularly if they keep dropping their price, have a sloppy proposal or push for a deposit. These are telltale signs of a trade with money problems. A background check of your shortlist of candidates is money well spent.
· Do not sign a one-page contract. A proper bid will be descriptively itemized by trade and deliverables (e.g., every millwork piece), and have clearly defined payment terms and a schedule with milestones. Bid breakdowns help you compare, and if they can’t focus on something as important to you at this juncture, then expect the rest of the project to be handled similarly;
· If you can only afford one consultant, make it one that is familiar with bids, construction negotiations and contracts. The AIA (American Institute of Architects) has an array of agreement templates that balance the interests of all parties and allow for terms specific to your project (e.g., regular site meetings to review progress and set goals for the week ahead);
· ALWAYS hold on to at least 10% of the contract value until the job is entirely complete. Meaning the work has reached the substantial completion (move-in ready) stage and every item on the punch list has been addressed. At the same time, if project milestones are being met then pay as agreed. They have kept their end of the deal and money keeps the project moving.
Lastly, by nature residential projects are emotionally charged. It’s an investment in your home and you want to do it right. If partnered, do your best to be on the same page as a couple or family. Conflict that is dragged into the negotiations or onto the jobsite creates a negative aura and often results in the team taking direction from multiple sources, which is recipe for disaster.
Research extensively, plan carefully, vet diligently, demand accountability, and don’t be afraid to ask questions. After all, you’re the one writing the checks.