The Client and Its Challenge
This client is a boutique real estate consulting and real estate development management firm currently building a $200 million mixed-use project in New York. A 25-acre 1.0 million square foot industrial park is being redeveloped anchored by high-quality, “lifestyle” shopping center. The client, acting as the developer for this project, is responsible for managing the development, including master planning and design, development, programming, and leasing. The client hired an architect to handle all design and engineering details as a representative for the owner.

The client outsourced the drafting of the engineering plans for eight buildings. Payments for the drawings were based on completion rate scale—payment was made at 50 percent complete, 75 percent complete, with a final payment due when the plans were 90 percent completed. Prior to making the final payment, the client wanted a third-party review to identify any inconsistencies in the plans that might possibly lead to contract change orders.

The Risk Consulting Solution
Because the plans were developed under a “draw-and-do” engineering process, there was some concern that they may have been developed too quickly and that the internal quality control may have been lacking. When plans are released for bid, any inconsistencies that are identified later can result in costly change orders, which affect both the project timeline and cost.

Marsh consultants conducted a standard of care review of the plans for the eight buildings to determine whether or not the plans were free from defects. Based on their review, over $2 million worth of potential inconsistencies that would have been charged to the client were identified.

Results
By identifying the inconsistencies in the plans prior to their release for bid, the client was able to save itself millions of dollars in change orders and construction delays. It was also able to justify withholding the final payment to the design architect and engineers until the plans had been completed to its satisfaction.