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Constructing your own commercial building can be an enormous investment of time and money, so the first step is to be sure that it's the right strategy for your business. Start by asking yourself, does this option really suit my company's needs? You'll need to consider your specific objectives, such as expanding space to accommodate more business, increasing productivity or increasing revenues by renting your space to other entrepreneurs. In the end, think about what's right for you.
Evaluate your options
The sheer scale of a construction project demands an enormous commitment from any entrepreneur. Keep in mind that time and energy invested in constructing a building could also be directed at the business itself. Although you might hire a project manager to oversee the construction, you'll still be involved in the daily decision-making, which means more time away from everyday operations.
Look at other possible scenarios such as renting office space, buying an existing building or renovating a space. When in doubt, get the help of a financial advisor or consultant to evaluate your specific situation. Once you've carefully looked at your objectives, you can also enlist engineers, architects and interior design specialists to help find the right building solution for you.
Whatever your decision, another important factor to consider is your long-term needs. Will the building be able to accommodate your growth down the road? You don't want to find yourself too quickly outgrowing your commercial space and making additional costly investments.
Get the right financing
A bank advisor can help you determine the affordability of your project, how much money you'll need from start to finish, as well as the right financing solutions best suited to your specific needs. It helps to start with a good business plan so that you can identify realistic revenue projections; this will help you gain the confidence of your potential lenders that you can handle this scope of project without endangering your company's financial health.
Get your building permit in order
Once you've made the decision to build, the next step is to be sure that you've met all criteria with the right permit. It's wise to do this as early as possible in the process since you obviously can't build without a permit. These criteria can vary greatly depending on whether or not you're building new premises, altering existing premises, changing the appearance of a building or altering the use of the building.
Under Canadian law, the regulation of buildings is a provincial responsibility and is carried out through various laws, acts, codes and regulations, often administered at the municipal level. Building codes generally apply to new construction and have traditionally been concerned with fire safety, structural sufficiency and the health of the building's occupants. More recent codes have dealt with accessibility for handicapped persons and with energy conservation.
Check with your municipality to see exactly what you're allowed to do with and without a permit.
Know the role of your building team members
A construction project involves many people, each with their own specific responsibilities. A major trend is to hire the person who designs your building to execute the construction. After all, the designer best understands your initial objectives and parameters.
- The owner assumes overall responsibility for the project. You decide what is to be built and ensure that work is carried out in compliance with existing laws and regulations. You are also responsible for choosing consultants and contractors
- The designer works with the engineer and architect to plan the building layout. Your designer could be your spokesperson when it comes to resolving conflicts with your contractor and suppliers
- The engineer and architect produce drawings and functional specifications that comply with laws and regulations as well as your requirements. As your representatives, they inspect the work to ensure that it is carried out according to the drawings and specifications
- The main contractor, or project manager, assumes full responsibility for the construction work, especially with regard to buying materials, determining the work schedule, and hiring personnel
- Subcontractors are hired by the main contractor to perform specific construction tasks i.e. installing electrical fixtures, a roof, a heating system, etc. Any one project can have subcontractors who specialize in ground up work (foundation, floors, walls, roof) or finish out work (interior walls, electrical, painting, plumbing)
- Suppliers must provide the main contractor with the materials needed for construction. Such materials must meet industry standards
- Finally, municipalities are responsible for examining drawings and inspecting projects, and must ensure that these comply with the laws and regulations in force.
Choose the right contractor(s)
The success of your project will largely depend on the expertise and track record of your contractor. When you're shopping around don't limit yourself to price. Here are some basic criteria that you can use:
- Ensure that the firm is licensed and can provide guarantees on the work done
- Ask if your contractor can provide maximum price guarantees to protect yourself. This also encourages contractors to better estimate the work and manage project costs
- Be sure that your firm doesn't have cash flow management problems and leave your project high and dry. Some firms may ask you for a deposit which should be used as the initial payment
- Determine whether or not your contractor has expertise in constructing sustainable buildings. This is particularly important to respect environmental laws and make your own contribution to protecting the environment
- Be sure you know who is doing what, small contracting firms are often limited to specific geographical areas and are subcontracted by larger companies
- Get information and references about the firm, including history of employees, past legal disputes and satisfied customers
- Ensure that your firm pays attention to key issues such as security in building design; you don't want to find yourself with lawsuits
- Ask if your contractor uses new and innovative construction methods or is up to date on new ways to achieve energy efficiency
Know how to resolve conflicts
It's almost inevitable that you will have to resolve some conflict during the construction of your building. These may involve discrepancies that crop up during a particular phase of the project and should be settled by the designer (who represents you) and the main contractor (who is responsible for all work, materials, and subcontractors).
What happens if you meet obstacles? First get a grasp of who is responsible for what. In general, all parties in a construction project with whom you have signed a contract must guarantee that their work complies with the terms of the contract. This means the main contractor is liable for any defects resulting from the work of subcontractors or others hired.
Where Common Law applies, except for Quebec, the contract determines the obligation concerning materials and workmanship. In addition to the particular guarantees mentioned in the construction contract, a contractor is obliged under law to construct a building that meets reasonable standards and is free of all dangerous defects.
According to the Civil Code of Quebec, designers, contractors, subcontractors, and promoters are jointly liable for all defects in workmanship for one year. For major defects, this liability is extended to a period of 5 years following completion of the project.
When in doubt, seek legal help.
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