Veteran developers, owners and investors in commercial real estate are all too familiar with Murphy’s Law — “Anything that can go wrong will go wrong.” By anticipating unforeseen situations, managing expectations and avoiding misunderstandings in advance of a project, the certainty that Murphy is always right can be minimized.
That’s definitely the case when real estate professionals embark on a major demolition project, either in advance of new construction or to prepare a property for re-sale. By conducting research, pre-qualifying demolition contractors and getting a full understanding of the complex demolition process, a successful and smoothly run project can be achieved.
Avoid Unforeseen Liabilities
The National Demolition Association (NDA), the global trade organization for the specialized demolition industry, understands the need for real estate professionals to be armed with a checklist of realistic expectations about the project, to lessen the likelihood of disputes and request for change orders down the line. The goal is to give stakeholders the tools they need to minimize the potential of negative impact involving changes in project schedules and costs, as well as the spectrum of unforeseen liabilities.
Before anything can begin, a decision must be made on managing the process. Options include managing the entire process independently, or through a general contractor, construction manager or architect. The owner may decide to work directly with a demolition contractor, especially if the redevelopment will proceed in stages. The NDA stresses that demolition contractors should be pre-qualified in advance – ask about the quality and types of work they have done, the recommendations of past clients, their ability to handle environmental issues and the financial backing, bonding and insurance they bring to the table.
Assuming a fully qualified contractor is now in place, contract discussions and the actual work begins. Here is a short checklist of some common sources of misunderstanding that should be addressed before starting a demolition project (the full Demolition Planning Document is posted on the NDA website:
Engineering survey. This required-by-law survey safeguards the health and safety of workers on the site. Preparations are made for bringing the structure down, securing the necessary equipment and taking measures for a safe work site.
Presence of asbestos. A federal regulation requires that written notification of demolition be filed 10 working days prior to commencement of work and is in place to determine if asbestos is present on the site. Confirm this will be done and determine by whom.
Proposed use of site. If this information is available, it’s important to provide to the contractor since decisions about excavation and backfill can be very important to the stages of the project.
Utility disconnects. Determine who will carry the cost and responsibility of utility disconnects. If the contractor is handling this, disconnect documentation must be provided in advance.
Reuse and salvaging of materials. If materials are to be reused or recycled, this information must be conveyed to the contractor as early as possible, since this will impact the project bid. If materials are to be salvaged or used as scrap, who will take ownership of this material? It’s usually in the owner’s best interest to let the contractor take ownership, as this can result in a lower bid and can eliminate their responsibility to remove the material away from the site.
Presence of underground structures. Clearly define options for the removal of all underground structures on site, including the depth of structures and whether they must be removed partially, fully or not at all.
Hazardous materials. Laws mandate that certain hazardous materials be removed and disposed of prior to razing a structure. Determine if hazardous materials are present on site and, if so, whether they will be removed by the demolition contractor or a separate entity. The best practice is for the owner to have testing done before asking for bids.
Permits and reporting. Although commercial real estate professionals are usually well informed about obtaining permits for various activities, permitting for a demolition project is a specialized task.
Permits may be required for:
- the demolition itself
- sidewalk and road closure
- specific structure heights
- dust mitigation plan
- airborne release plan
- truck route plan, etc.
It must be clear who will secure those permits. Extremely complex federal and state reporting requirements are usually best left to a demolition contractor well-versed in them.
Getting answers to these questions and many more is just the beginning when it comes to executing a safe and competent demolition project.
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