“When project owners practice due diligence to its fullest extent, it equips them with the knowledge and expertise they need to either move forward on a fully vetted site with confidence or raise the red flag.”

In this month’s St. Louis Construction News & Review print magazine, Kwame Building Group CEO Tony Thompson shares insight on due diligence based on his decades representing owners in construction management. Here is an excerpt.

Interpreted most broadly, construction project due diligence includes risk management tied to cost, schedule and performance. How does a project owner navigate and evaluate these risks?

As comprehensively and realistically – and as early on in the proposed project’s life cycle – as possible, according to Tony Thompson, chairman and CEO of Kwame Building Group.

“Where and when does the owner begin?” said Thompson. “That’s a great question. Too many times, owners are aware of the facets of due diligence, but they approach them out of sequence.”

Thompson’s firm is the owner’s rep for St. Louis Major League Soccer Stadium project that broke ground in early 2020 and is anticipated to be completed in 2023.

“The first thing owners should be doing, if they don’t have this resource internally, is to identify an owner’s rep,” Thompson said. “Owners should hire someone who understands the entire design and construction process from beginning to end and is fluent in due diligence. They should bring this project partner (the owner’s rep) on before the budget is finalized and before they hire an architect, construction manager/general contractor and other project partners so the owner’s rep can assist the owner in vetting potential project partners. Too many owners establish a budget based upon a previous build they did, essentially pulling the number out of the air. If owners look at the potential (cost) growth between their original project estimate and the actual cost, it’s often a 25 percent increase. Bringing an owner’s rep on at the start brings the owner a set of eyes that understand what the entire project entails and helps keep project costs in line every step of the way.”

Without the due diligence expertise provided by an owner’s rep, the project’s cost often begins to soar as early as during the design phase, and even earlier if the project’s budget did not include adequate funds for site-related due diligence such as permitting and environmental testing/remediation. “If not managed properly, a project could typically go over budget before you ever put a shovel in the ground,” said Thompson.