These 10 remodeling oversights have consistently been found to bring
anguish and business problems to club owners who let them slip by.
By Donald DeMars
remodeling programs. Since the mid-1980s, capital lending by
banks and other traditional financing sources for new start-up
projects has been very restrictive. Club owners who had
anticipated building an additional club, and those who are
faced with an outdated facility and increased competition,
have now turned to remodeling efforts to create new and better
programs to serve their existing members and add market
incentives for new growth.
This "remodeling fervor" is happening in an industry that has
also changed in terms of consumer expectations. The
consumers of the ‘90s have learned from earlier
disappointments and are now crystal clear about what they
expect in terms of quality environment and service. And with
the aging population and widening age span being served by
the industry, consumer expectations are becoming more
family-oriented. An awareness of such considerations is of
vital importance in approaching a remodeling program.
Commercial Renovation magazine, a Unites States
publication, recently estimated that 90 percent of all
commercial remodeling and restorations programs in the U.S.
experience overruns in time and money. Remodeling
programs of "average complexity" normally experience
overruns of 25 to 35 percent. An "overrun" is simply another
word for mistake. The project is over budget; the remodel
schedule has taken longer than expected; and although the
size of the overrun is often directly related to the complexity of
the remodel program, all overruns ultimately rest on the overall
methodology and quality of management employed by the
owner to process the changes. And construction is a process
that produces such mistakes all over the world.
Mistakes in remodeling are like a snowball rolling downhill. A
mistake in one area seems to gather momentum and overlap
into other areas. The way to stop the potential damage of an
out-of-control remodel program is to contain it, or better,
control it from the beginning.
Over the past 20 years, Donald DeMars Internationals (DDI)
has been involved in literally hundreds of small and large
remodel programs - from the simple remodel of two
racquetball courts to achieve a larger portion of square
footage for fitness programs, to the complete renovation of a
110,000 square foot manufacturing building in Mexico into a
modern, multi-use fitness, sport and social center, to the
updating and remodel of a century-old 12-story club building.
We have also gone in "after the fact" as construction
management and "trouble shooting" specialists to salvage
remodel programs that were out of control. Without exception,
every one of these remodel programs had been instituted with
minimal initial investigation and management control. Such
methodology courts disaster, not only during the remodel
period, but long after the dust has settled, in terms of ongoing
operating burdens for maintenance and replacement
expenses that are directly tied to the remodel effort.
Following are the 10 biggest mistakes we’ve consistently
found to bring anguish and failure to owners and developers of
health, fitness and sport facilities.
1. Inadequate research and data collection
A lack of thoroughness in gathering adequate information is
normally the first mistake. Information is normally the first
mistake. Planning a realistic and appropriate remodel
program begins by having all the facts available that will
influence good decision making.
It is critical to have a thorough analysis of demographic
potentials in the facility’s direct trade area by a consultant who
is experienced and knowledgeable about how to read such
data. The consultant should also analyze the impact it will have
on the remodel program. In my experience, most existing
owners do not have a sophisticated understanding of the
nature of their market’s potential.
A thorough understanding of the facility’s market competition
is also critical, as competitors do influence your existing
business and will also affect the potential of your remodeled
club. Clearly understanding the best attributes of your
competitors, and where these advantages are negatively
influencing your business, will give you an advantage by
disarming those advantages through the redesign and
remodeling of your facility.
Adequately surveying the attitudes of your members is also an
important goal of this early research period. The likes, dislikes
and general attitudes of your existing captive members are
your closest avenue to the eventual acceptance or rejection of
the choices you will have made in completing the remodel.
The attitudes and input from your general manager, key
employees, marketing consultant, and non-member residents
and corporations in the trade area that you are serving, often
provide wonderful insight and further helpful data.
Doing an adequate investigation of the existing project
building is one of the most important elements in beginning a
successful remodel. Without a total awareness of what is
there, a virtual road map for the journey ahead of you, you will
blindly move forward unaware of the pitfalls ahead.
2. Gathering the wrong team
In any endeavor, the quality of the players contribute to the
success or failure of the outcome. In football, a winning team
requires a strong line, a quick backfield, good ends with sure
hand and an intelligent leader. A team of specialists is only as
strong as its weakest link.
The team should include input from a knowledgeable and
experienced fitness or club development consultant who has
been through the process before, and is knowledgeable about
the impact of market data, member surveying, architectural
knowledge and contractor experience on general club
operations. The more versatile, knowledgeable and
experienced the consultant, the less risk you will take in
moving forward.
The experience and knowledge of your architect of choice as
this relates to the fitness industry and especially his
background in remodeling, is one of the two most critical
decisions you will make in the remodel program. All architects
are not the same, and the architect’s overall reputation for
achieving excellence in his chosen specialty is very important.
Club facilities that are properly designed require systems,
products, specifications and detailed knowledge that is not
readily available to the general architect.
A horror story of a club remodel was brought to our firm just
last year. This was a club remodel program designed by an
architect whose primary experience has been with car
washes. He had plagiarized the drawings of another club and
the final drawings simply could not be used. They didn't meet
specialized codes; they were not accessible to the
handicapped; they were operationally naïve; and they were
way over budget. The architect’s original fee was small, but the
impact of this mess on the owner’s budget was awful.
3. Failure to document existing conditions
Most owners of existing facilities have not kept adequate track
of their club’s original architectural drawings. And, if the facility
is a number of years old, earlier remodel efforts over years
may not be reflected in the drawings found, as the work may
have been done without permits, and not taken through normal
processes. I have never been handed a clean and well-
documented set of drawings that clearly reflect the existing
conditions of a facility to be remodeled at the onset of a
remodeling program.
A thorough field investigation of the existing facility should be
preformed by mechanical, plumbing, electrical and structural
engineers, and competent contractors. This information will
then be used by the architect to supplement his own onsite
investigations and compile an up-to-date set of as-built or
"existing conditions" drawings. The contractors also determine
what is usable or in need of replacement or refurbishment.
Such initial investigations should include air conditioning,
plumbing, electrical, floor loading limits, codes, parking
requirements, zoning limitations, health department
requirements, etc.
This information is the very foundation upon which the new
design program will build upon. If it is not correct, or if false
assumptions are made, the project’s cost and schedule are
exposed to major risk. There is nothing more frustrating during
construction than having workers sit idle because the architect’
s or engineer’s drawings do not interface properly with the
conditions of the existing building. An enjoyable and
successful journey always begins with an accurate road map.
4. Undervaluing of design excellence
It has often been said that any architect can produce wonderful
things with an unlimited budget. The real challenge is to
produce a winner on an economical and defined budget, and
to have strong cost-control procedures in place not only during
the architectural drawing phase, but throughout the design
implementation or construction phase.
Quality design always "reads well, wears well and feels good."
The raw talent of the designer in blending space, color, light
and function is of paramount importance and is always
exhibited in the end product. An exciting design with flair can
produce significant marketing benefits as a by-product - when
people love the design, they talk about it.
Excellence in design assumes significant experience by the
architect in producing similar projects on budget. Having been
there before, an experienced architect, thoroughly
knowledgeable about operations and working with cost-control
procedures and a good set of as-built plans, is not confined by
the artificial limitations of one approach. The architect can
study numerous alternative design options and their cost
implications, and this will greatly contribute to the project’s
success. By involving the entire team in the preliminary design
phase, including the owner, manager and selected
contractors, all members contribute toward managing or short-
circuiting unexpected costs or events before they happen.
It is common in this business to have an architect finish the
complete plans, and to bid out the project, only to find that the
lowest bid far exceeds the financing budget. For example,
when the 24,000 sq. ft. Atlas Health Club in San Diego,
California, in the U.S. (now known as Mission Valley Athletic
Club) was initially built in 1979, the financing budget was $1.4
million. The plans were completed and bid out, and the
contractor’s bid price was $800,000 over budget.
This project was the first major health club I was invited to work
on. The project was redesigned with the help of a very talented
contractor, John Zanderson and Zanderson Construction in
San Diego, who provide costing options and ideas to
approach the design program in a completely different way.
The end result was a practical and successful project.
Zanderson’s cost was $750,000 less than the original bid
design, with no loss in building size. Design excellence is
clear, exciting, economical, operationally knowledgeable,
maintainable, functional, flexible, user-friendly and on budget.
5. Inadequate building specifications
Although the quality of the bidding instructions and
construction documents are often directly related to the
experience and ability of the chosen architect, the architect’s
drawings and overall management responsibilities during the
bidding and construction administration phase may be diluted
because he has taken the job for a fee that is not adequate to
do a thorough job.
When an architect’s competitive fee is priced artificially low,
which is often seen in recessionary times when building
activity is slow, basic economics dictate that he will dedicate
less time and less attention to the project. Nevertheless,
adequate and critical directives and guidelines for the general
contractor and subcontractors regarding codes, functional
intent, prior investigation requirement and each contractor’s
responsibility for fitting the design to existing conditions,
product substitutions, no profit for extra work, and tough
penalty clauses for exceeding time and budget requirements
are an absolute must for all remodel programs.
6. Selecting the wrong construction bidder
It is often implied in the bidding process that the lowest bid is
the bid of choice. But it is extremely important not to blindly
accept the lowest bidder, especially if he is too far out of the
norm compared with other general contractors bidding the
project. When bid deviations approach 20 percent or more,
they should be thoroughly investigated and accounted for; the
larger deviations may result from bidding errors, substitutions
or work scope changes.
It must be underlined that the owner, at worst, gets what he
pays for. It is often joked about in the construction industry, that
the lower the bid price on the project, the higher the level of
misery for the contractor and owner. In some cases, an
unusually low bid accepted by the owner can spell disaster
and give the owner nightmares regarding work performance,
cost disputes, quality control, project lines, schedule slides
and, most often, highly involved litigation. If proper directives
are given to the bidders on how to present their bids,
thoroughly broken down through a number of categories,
comparing the bids and making the right choice will be far
easier.
7. Selecting an inexperienced contractor
Probably the most important decision in any remodel program
is selecting an experienced contractor for the job. Not only is it
important to review and verify the work experience and
reputation of the general contractor and each of his
subcontractors, but of equal or more importance is the resume
and experience of the general superintendent and of each
subcontractor’s foreman. It is quite common to have a
reputable company perform poorly on a job because the field
personnel have marginal experience. It is also important to
make sure that the general contractor and the subcontractors
have good, practical and functional safety programs and
quality control programs in place at the onset of the job.
A contractor experienced in club remodeling has been through
the process before and is aware of the importance of keeping
the club open and keeping the members happy during the
noise, dust and upheaval inherent in the remodeling effort.
8. Inconsistent construction management and control
Implementing a strong and consistent management program
during construction is critical, as this establishes the rules and
procedures by which the work proceeds. Without disciplined
control, chaos prevails.
The construction management should control the bidding,
contract letting, on-site inspections and quality control,
scheduling, as-built designs, maintenance materials and
procedures, project guarantees, etc. A properly implemented
management system will not only improve the project’s
success, but will, in most cases, more than pay for itself by
reducing change order costs, maintaining project schedules
and generating quality control.
9. Failing to require optimal guarantees on the work of
the contractors
With a standard one-year guarantee or warranty on an
installation, it always seems to be a year and one day later that
the work begins to show problems.
For this very reason, and also the fact that there is a strong
psychological stimulus for a contractor to produce a better
product when he has obligated himself to an extended
warranty, the owner should require longer-term guarantees for
all work. High maintenance items should require at least two-
year guarantees. Longer-term guarantees for such services as
roofing, air conditioning, plumbing, etc., should be five years or
longer as part of the contract negotiations, without affecting the
project’s cost.
These guarantees are simply there to be asked for, and they
can save thousands of dollars in maintenance and
replacement costs over the life of the project.
10. Not controlling the method of payment
Controlling the payments to the contractor is the only major
protection the owner has in maximizing project control. It is
important never to pay so much to the contractor that the
unexpended budget is less than what the remaining work
would cost to complete on the open market. If the owner runs
into problems with the contractor, and has held back adequate
funds, his options are numerous.
It is important to make sure that the general contractor and the
subcontractors do not "front load" their invoicing for the work
they are doing, by pulling out a larger portion of their profit and
overhead in the first half of the contract work. Their ongoing
interest and attention to the project is directly proportional to
the amount of their profit not yet billed. If the bidding
instructions require that the contractor’s payment schedules
break down each budget portion into labor, materials,
overhead and profit, you will then have all the ammunition you
need to negotiate delaying the majority of their profit until the
project’s completion!
Is it really this problematic to take on a remodel program? It
certainly can be. Without an awareness of the risks and the
resolve needed to put in place an adequate budget, and
exceptional team and hands-on management control to handle
such risks, you had better decide to put off your remodeling
program until such a methodology can be implemented. To do
so without such a program in place, would be the biggest
mistake of all.
