TRUMP STRATEGIES FOR REAL ESTATE CHAPTER 8

CHAPTER 8 WHY TRUMP BUILDING P R O J E C T S A R E A LW A Y S TIME AND ON UNDER BUDGET. KEY POINTS: Manage contractors and control costs. Be your own general contractor when possible. Create incentives for being early rather than having penalties for being late.
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TRUMP STRATEGIES FOR REAL ESTATE CHAPTER 8 8 WHY TRUMP BUILDING P R O J E C T S A R E A LW A Y S ON TIME AND UNDER BUDGETKEY POINTS • Manage contractors and control costs. • Be your own general contractor when possible. • Create incentives for being early rather than having penalties for being late. • Be fanatical about details. • Motivate people. 165D ONALD TRUMP LEARNED most of what he knows about the construction business from his father, who was also a renownedreal estate developer and builder. One of the earliest photos of Don-ald shows him at the age of 12 inspecting the foundation of one of hisfather’s buildings. Fred Trump was meticulous in overseeing what hebuilt. He was very involved and insisted on knowing every detail ofhow his buildings were being constructed, from laying bricks and in-stalling steel beams to digging foundations, until the building wascompleted. Donald inherited his father’s work ethic. A classic exam-ple of Donald Trump’s hands-on monitoring of construction prog-ress occurred when he was transforming the old Briar Hall golfcourse into what is now Trump National Golf and Country Club inBriarcliff Manor, New York. W hile inspecting the site, he learnedthat a huge amount of granite existed at a critical spot and would re-quire a major amount of blasting to remove. Trump was curious andwent to the spot and said, “W hy can’t we incorporate the stone toserve as a backdrop for a major waterfall on a golf hole?” The site en-gineer replied, “You’re talking about a waterfall that will be over 100feet high and will require a large source of water to make it eyecatching. It’s going to cost millions to build.” Trump said, “I know,but it will be my signature hole and everyone who plays the coursewill talk about it. It’s worth the price.” Trump was right. The 13thhole at Trump National is the “wow” hole on the entire course. MANAGE CONTRACTORS AND CONTROL COSTSSmall investors who closely monitor the progress and problems thatarise in their own building and renovation projects will find many 167 T R U M P S T R AT E G I E S F O R R E A L E S TAT Esimilar opportunities to make unexpected improvements or cost sav-ings. Like Trump, you need to learn as much as you can about everyaspect of the real estate business and construction. The more knowl-edge you have about prices, costs, options, materials, real estate ser-vices, and other factors, the more opportunities you have to reducecosts and increase profits. You can learn a great deal by staying in close communicationwith the specialists you hire to work on your project, and encouragethem to speak their minds. Since you should only hire people with aproven capabilities, listen to their advice but remember the final de-cision should be yours. For example, I recommend you employ a goodarchitect to design plans and specifications. Every good architect is asource of valuable real estate information but also has access to reli-able general contractors (GCs) and the various trades used by otherclients. This is a great source of valuable contacts for you to investi-gate. Find out who has built a building similar to the one you arecontemplating and learn who was used as the GC. Call that GC andtell him of your desire to build a building and you’re considering himor his firm for the job. You’ll undoubtedly get a list of the jobs forwhich he acted as GC and the names of the owners. Get as much in-formation as you can as to the anticipated costs, time for construc-tion, and fees to be paid. Tell the GC that you’ll get back to him andthen check him out. Check the workmanship of the buildings forwhich he or his firm was the GC. Speak to the owners of those build-ings in a face-to-face meeting to find out the plusses and minuses ofthe GC. Was he accurate in forecasting the budget? Was the job fin-ished on time, if not, why not? W hat were the names of the subcon-tractors who were employed for the various trades? How good werethey? Would you use them again? If you assemble the same informa-tion from multiple sources, you’re on your way to creating your owndata base for future reference. 168 TRUMP BUILDING PROJECTS BE YOUR OWN GENERAL CONTRACTOR WHEN POSSIBLEIn a typical situation, a GC is hired to oversee all of the work. He willbuild the structure and he will contract with all the necessary tradesto complete the construction at a total price. If you are inexperiencedin the many facets of construction, hiring a GC is the way to go eventhough it may cost more. Donald Trump, on occasion, hires a GC, butusually hires a construction manager (CM). The basic difference be-tween a GC and a CM is i ...