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Owner's Responsibility for Viability of Construction Project
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Ultimately, responsibility for a construction project's viability falls to the owner. Chief among the viability of the project is the protection of human capital. This involves not only the maintenance of a safe working environment but also managing the project to avoid or minimize disputes with those involved in the project. Events and circumstances affecting the individuals who work on the project could seriously undermine a project's viability. For example, consider the situation where an explosion occurs on a construction site and gravely injures many of the workers. From both a human and economic standpoint, such an event could irreparably damage the progress of construction.
The financial soundness of the project must be addressed by the owner from the outset and throughout the life of the project. This includes ensuring the initial funding for the project as well as monitoring the construction progress for compliance with the construction schedule to avoid delays or other situations that would impact the cost of the project. Additionally, because market factors can play an enormous role in the success of a project, owners must examine the current and projected economic conditions to avoid delays in construction resulting from a recession or other economic force. For example, if the housing market was taking a downhill slide and projected to remain in a recessionary state for several years, a single-family home development may be compromised from the very beginning. Or, consider the situation where lumber prices are expected to skyrocket. The owner might plan for this eventuality by purchasing the bulk of the necessary lumber for a project prior to the price inflation thereby maintaining costs from the start.
The owner's payment of his financial obligations is of paramount consideration. The failure to meet such obligations can cause work on the project to be delayed or even abandoned. Further, the owner could be subject to breach of contract actions that could further deplete any available resources. Given the magnitude of the owner's financial obligations, many contractors require evidence of the owner's financial ability to maintain the project prior to the start of work.
To further ensure the viability of the construction project, owners must monitor not only the creation of the construction schedule but its maintenance throughout the project. Additionally, at the literal foundation of the project, the owner must have the rights to the land upon which the construction project sits. Access to the site and the acquisition of permits are also necessary for the viability of the project. Copyright 2009 LexisNexis, a division of Reed Elsevier Inc.
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