Project Management Considerations for Building Equipment Upgrades
September 6, 2016 12:36pm
By Kevin A. Goldstein and Matthew Severson, Sep 6, 2016
If you own or operate a hotel for any significant length of time, you will likely have to replace some of your building's core MEP and HVAC equipment. This article outlines project management strategies for successful building equipment projects.
A well-executed building equipment project can save energy, reduce maintenance costs, and significantly improve the guest experience. However, a poorly managed project can be disastrous for a hotel in terms of the resultant cost overruns, guest complaints, and long-term dissatisfaction with the installed equipment.
We discuss five areas where strong project management can promote a successful building equipment upgrade, including: 1) Project Team Structure; 2) Operator Involvement; 3) Scheduling; 4) Risk Management and Contingency Planning, and 5) Project Closeout.
Project Team Structure
The majority of building equipment projects follow a fairly routine implementation process including due diligence, engineering design, permitting, mobilization, construction, and close-out / commissioning. These various project phases can be handled all by a single entity (a design/build contractor or a direct installation by an equipment manufacturer), or by multiple parties (including an engineering firm, a construction management firm, a mechanical contractor, and a commissioning authority). On occasion, an owner or operator may have the in-house capability to provide some of these services, which can add additional players to the mix.
The project manager should recommend an appropriate project team structure based on the level of financial exposure, complexity, and risk of the proposed construction activities. For projects that require significant levels of capital, we like using a design-bid-build approach, where the hotel retains control over the project design and contracting phases – this enables market forces to dictate the most competitive installed cost, and ensures that the equipment specification is both appropriate and efficient in nature. However, there are other project delivery methods that can work well in certain circumstances including design-build and design-build with engineer assist.
When selecting project team members, it is important to understand both their technical qualifications and their experience working in a hospitality context. The best engineer or contractor in the world may still fail to meet expectations if they are not familiar with challenges of construction in a functioning hotel – including the needs to have flexible scheduling, be respectful of guests and employees, and understand that mistakes will happen but must be resolved expeditiously.
For a front of the house renovation, there is generally a fair amount of “buzz” around the project and the resultant improvement to the property. However, this same level of communication is oftentimes lacking in building equipment upgrades. This can result in the operations team feeling left out of the process and therefore unable (or unwilling) to accommodate the difficulties of building equipment upgrades. That’s why the operator’s involvement during early project planning is an important first step.
The involvement of the hotel operations team – starting with the engineering team but going beyond to touch the other hotel departments – improves the probability that the due diligence phase will correctly identify all existing issues. It further encourages buy-in on the part of personnel who will have to live with a construction headache for a short to moderate timeframe.
Before work begins, the project manager should liaise with the hotel operations team to confirm that the following aspects of the project are understood:
At the conclusion of the planning phase, the operator should have a detailed understanding of the project and be able to anticipate and accommodate project impacts which may be noticeable to associates and guests.
The scheduling process should begin with the project manager developing an understanding of the hotel's operating patterns and constraints. This should ideally occur when the project is first contemplated so that the project schedule can permeate into the design documents, bidding process, contract award, and construction phases. Topics for discussion should include the following:
A very detailed project schedule should be prepared prior to construction. In fact, some projects may require a conceptual schedule as part of the contractor’s bid proposal. A good schedule will create synergy amongst the project team, minimize disruptions to hotel operations, and enable the contractor to perform the job in accordance with the agreed upon contract value.
The project schedule should include following elements:
Risk Management and Contingency Planning
Most of us in the hospitality sector know that things can go wrong quickly once construction is underway. That’s the reason that good project managers will talk with their teams about risk management and create a contingency plan.
The project manager should focus on asking targeted questions of the hotel operations team, design engineers, and installing contractors to pinpoint the areas where there is the highest level of risk. The following questions are a starting point:
Quite regularly, engineers and contractors are tasked with selecting replacement equipment at a hotel without a full understanding of the existing conditions. And more often than not, that uncertainty results in additional design and construction costs. These issues can be largely avoided for future maintenance events with better project closeout. A good closeout package should provide the hotel engineering team (and future engineering staff) with installation dates, basic system information, recommended maintenance intervals and where to begin when troubleshooting a problem.
The project manager should request that the closeout package includes items such as:
Providing a thorough closeout package can also be beneficial to the contractor, as it provides a resource for engineering staff and increases the likelihood that the installing contractor gets the first call for future service work.
Putting it All Together
Strong project management is a fundamental component of any renovation, and back of the house equipment projects should be viewed no differently. We recommend that the project management considerations outlined in this article should be reviewed early in the planning process – to identify the correct project team and provide for seamless project delivery during all phases of due diligence, design, and construction.
Project managers who oversee HVAC and MEP system upgrades should not only have a strong technical background, but also should be well versed in the financial decision making process for both capital and ROI upgrades – to support project execution that is aligned with the owner’s investment goals for the asset.
With the correct information in your hands and the right personnel at the helm, building equipment improvement projects can be highly beneficial to both the guest experience and the bottom line.
Kevin A. Goldstein is the President of HVS Energy & Sustainability, a division of HVS that helps hotel owners and operators reduce utility costs through diligent facility management and informed, strategic investment into building equipment. HVS’ pioneering approach in this area is financially-driven, owner/investor-facing, and hospitality-specific. HVS also hosts the Hospitality Energy Benchmarking Platform which provides a comprehensive analytical resource to manage a property’s utility spend. Prior to joining HVS, Kevin was a development executive for a design/build firm where he led multidisciplinary teams responsible for feasibility, investment structuring, master planning, A&E design, entitlements and construction.
+1 305 343-9004
Matthew Severson is a licensed engineer and general contractor based in California. His experience includes facilities recognized nationally for their innovative MEP systems and energy efficiency, including several LEED Platinum certified projects. He has designed and managed numerous capital and ROI projects for hospitality clients, and he specializes in providing turn-key project administration and oversight. Matthew is affiliated with Alvine Engineering, a family-owned MEP firm with two generations of expertise in fire protection engineering, architectural lighting design, building commissioning services, technology systems design, and life support systems engineering.
+1 619 952-6963
HVS, the world’s leading consulting and services organization focused on the hotel, mixed-use, shared ownership, gaming, and leisure industries, celebrated its 35th anniversary last year. Established in 1980, the company performs 4,500+ assignments each year for hotel and real estate owners, operators, and developers worldwide. HVS principals are regarded as the leading experts in their respective regions of the globe. Through a network of more than 40 offices and more than 350 professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. HVS.com
Superior Results Through Unrivalled Hospitality Intelligence. Everywhere.
Red-Hot Growth in an Ice-Cold Land: An Overview of Iceland's Hotel Market
HVS Market Pulse: Salt Lake City, Utah
HVS Market Pulse: San Francisco, CA
Miami: A Global City
Knowing Makes No Difference to Sleeping Giants
Africa Opens Arms to Global Hotel Brands… and Tourism
HVS Key Takeaways: CHICOS 2016
India - The HVS 2016 Hotel Development Cost Survey
Hostel Market In America: Potential For Growth
Hotel Investors in the UK Play the Waiting Game Prompting a Nearly 50% Fall in Hotel Transactions in Q3 2016, says Hotel Bulletin
Resort With A Real Estate Ownership Component: A Turnaround Case Study
The 2016 Dallas Hotel Conference: HVS Takeaways
2016 Canadian Hotel Valuation Index
2016 African Hotel Valuation Index
Advanced Industry: The Driving Force Creating New Hotel Markets in China's High-Tech Zones
2016 HVS Lodging Tax Report - USA
HVS Key Takeaways: The Southern Lodging Summit 2016
HVS Market Pulse: Island of Oahu, Hawaii
Cost Segregation Studies for Hospitality Assets
Brexit and Travel: The Risks of a Tourism Downturn in Asia
Please login or register to post a comment.