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January 12, 2009 
Monday Properties


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This year is about questioning the assumptions on which the construction industry manages its business affairs, says construction law guru Barry LePatner of LePatner & Associates, who's involved in some high-profile projects like WLIW's studio renovation and expansion, WNET's new studio in Lincoln Center, the Dream Hotel in Chelsea, and litigation on a project in the Theater District.


"For too many years we've accepted doctrines that dictate how we build, how we design, how we set budgets, and how all cost overruns must be paid for by the owner because 'this is the way we have always done it,'" he says. We've been sold on the benefits of fast-track projects, the illusion of guaranteed maximum price contracts, and an assured flow of funding, he adds. But lenders will no longer automatically permit a project to move forward with only 10% equity or provide mezz loans to bail out a construction contract on a GMP basis, and therefore owners, he warns, should not start bidding work without complete construction drawings and certainty about final cost.


Barry with firm partners Ron Feingold and Henry Korn. He says the construction industry is notoriously inefficient, costing the U.S. more than $120B annually. And more: The industry needs to shed outdated and inefficient means and methods, and retaining skilled ombudsmen and project managers who permit only those who reveal their true costs to work on their projects. In return, contractors should be entitled to make a fair profit for capable performance of their work.


For the architecture and design industry, the secret to getting through 2009 is diversification, says Perkins+Will managing director Paul Eagle, whose firm is behind the $1B NYPD Police Academy project in Whitestone, Queens and the United Nations HQ renovation planning. Spreading risk over sectors has allowed Perkins+Will to prosper in uncertain times, he says, noting that 2008 was one of his firm's most profitable years. Today, a successful firm will not just be a brick-and-mortar architect, but one which goes beyond traditional design with offerings like feasibility studies and research. "Clients are looking for information," he adds. "When you're on a short list, it can be a differentiator."


Paul with colleagues (clockwise) Chris Bormann, Debra Cole, Rob Goodwin, Daryl Bodewin, and Sonya Dufner. Leading firms will also look at sustainability, as more clients ask for green design and corporate mandates dictate a LEED approach. Firms that try to do more with less and cut fees will not survive, he warns. And be smart in what projects you go after. In the early '90s recession, 20% of architects left the industry, he points out. But out of crisis comes opportunity, so Paul is focused on identifying new markets and looking two to three years ahead. When not working, he enjoys walking his golden retriever, Bailey, whom he claims is the world's most ill-behaved dog (apparently, he hasn't seen Marley and Me).

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