2017 PHFA Housing Forum

Jeff Davis – Senior VP/CFO, Presbyterian Senior Living

2017 PHFA Housing Forum

Case Study: Lessons Learned from Building Affordable

Multifamily Housing

Jeff Sturla –Vice President, Wohlsen Construction

Goals for Today

• Overview of what Presbyterian Senior Living and

Wolhsen have learned together and independently on how to develop efficient and affordable housing

• Specific ways we have reduced development costs

• How in coordinating design and construction with operations we have improved value to residents through replication, coordination and innovation

• Questions and answers

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Presbyterian Senior Living Growth

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Personal Care

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Presbyterian Senior Living Affordable Housing Living Units

2006-2016

Prior to 2006 PSL had 97 units

79 units under construction in 2017

PSL Map - Geography

Typical Project Development

Developer Architect

Contractor

Civil Eng

Muni Rqmts

PHFA Rqmts

Investor Rqmts

Typical Project Development

Developer Architect

Contractor

Civil Eng

Muni Rqmts

PHFA Rqmts

Investor Rqmts

Sorry Charlie. Maybe next

year……

1. I get no pleasure from the development process

2. I get pleasure from seeing just a few of the hundreds of people in need of affordable safe housing move into our finished living units

3. I get no pleasure in spending money

4. The longer it takes to please me, the more grumpy I become

There Has Got to Be a Better Way!?

There is a story here

1. Do not reinvent anything you don’t have to • Units • Finishes • Entire buildings • Appliances • Development team members

PSL is about to begin construction of its 4th version of the same

LIHTC building Another LIHTC we have built twice

6 of our LIHTC buildings and one market rate rental have identical

interior designs and finishes Saves significant cost and time

Some Big Paradigm Shifts

2. Use team members who: • You can trust • Make life easier • Understand LIHTC and PHFA requirements • Work together well

3. Reverse engineer the project – begin with the end cost and other goals in mind 4. Discipline the process with regular meetings and communications 5. With replication – Constant product improvement


6. Make One Team Member Responsible for As Much of the Project as Possible

Instead of this

Developer Architect

Contractor

Civil Eng

Muni Rqmts

PHFA Rqmts

Investor Rqmts

This

Developer

Architect

Contractor

Civil Eng Muni Rqmts

PHFA Rqmts

Investor Rqmts

“Never trust an architects cost estimates for new construction, and especially never trust an architects costs estimates for renovations and adaptive reuse.”

A Quote from my Favorite Architect

Location, location, location – site costs

• Instead of – I want to build here • Look at the best place to build – Cost and PHFA

requirements

PSL Specific Learnings

Location, location, location – site costs – Engage township and Fire Marshall early – Agree to gravel vs pavement for access – Do geo-tech early on – Cad civil programs can save many times the civil costs – Amenities which are important to residents and

appropriately PHFA – No retaining walls – No underground storage – Consider a land condo – can save $$ on subdivision


• Replication savings – $120,000 in architect fees vs $600,000

• Bidding: – Most of our recent bidding of pre-designed buildings

to general contractors has shown virtually no price differential between them

– We have found bidding of civil and architect can save $$, however in all cases the ability to work collaboratively towards an overall goal is paramount

• Self purchasing of specific items such as appliances, cabinets, furnishings can save $$


• Building “jogs” cost money


• Keep plumbing and HVAC limited to one side of the living units

• Flooring – Some great products out there at low costs which residents actually prefer vs more expensive versions

• Self purchasing of specific items such as appliances, cabinets, furnishings can save $$

• All one paint color – ceilings and floors


Offices in: Lancaster Harrisburg Greater Philadelphia Delaware Baltimore Northern New Jersey Connecticut

Construction Management General Contracting Design/Build

• Founded in 1890

• $330 million in annual volume

• Employee owned - 330 Teammates

• Focused on: Senior Living Healthcare Multi-Family Residential Higher Education

VICE PRESIDENT WOHLSEN CONSTRUCTION

40 years in Construction Industry 20 yrs. / Operations Superintendent Project Manager 20 yrs. / Preconstruction Estimating Precon Management

Senior Living/Multi-Family

Affordable Housing Experience HUD & LIHTC – 9% / 4%

What PHFA requires

What Zoning allows

What Code requires

The Investor’s perspective

Marketing’s Vision

Architect’s Vision

Engineer’s Vision

Contractor’s Budget

WHAT THE RESIDENTS

REALLY WANT

MANAGING EXPECTATIONS

2. Use team members who: • You can trust • Make life easier • Understand LIHTC and PHFA requirements • Work together well

3. Reverse engineer the project – begin with the end

cost and other goals in mind 4. Discipline the process with regular meetings and

communications 5. With replication – Constant product improvement


• From Ancient times, well into the 19th Century the MASTER BUILDER worked with the project Owner to provide design and construction as one seamless service

What’s “OLD” is “NEW” again

Master Build Project: the Duomo, Florence completed 1436 by Flippo Brunelleschi

• SEPARATION of Architect and Builder began during the Industrial Revolution and was made absolute in 1935 with federal legislation prohibiting the practice of joint service on governmental projects

• It wasn’t until 1997 that statutes finally provided for the use of Design/Build on federal projects

• The current industry trend is the use of LEAN/Integrated Project Delivery

What’s “OLD” is “NEW” again

RIGHT PERSON IN THE RIGHT SEAT ON THE BUS

Typical Project Arrangement

Reinforced by provisions of AIA and AGC “standard“ contracts

Owner

Designer

Parties act against each

others' interests

This relationship has become increasingly

ambiguous

Contractor

LEAN/Integrated Project Delivery • Integrates people, systems, business structures and practices

into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of design and construction

Lean/Integrated Principles • Collaborate – really collaborate • Early engagement of team members • Target Value Design • Pull Planning– all parties involved in the schedule • Elimination of waste and duplicate activities • Continuous feedback and learning

TARGET VALUE DESIGN • Integrated team validates facility can be built within allowable cost

• Target Value set at or slightly below allowable cost

• Owner, Architect and Contractor work within market constraints to

achieve TARGET VALUE DESIGN

What’s

Wanted

Allowable

Cost

Expected

Cost

FEEDBACK LOOP

English to Contractor Translator’s Dictionary

• Politically correct English: Cost estimating challenged

• Contractor speak: Lousy

Site Work • Civil Engineers are challenged (lousy) cost

estimators

• Storm water runs downhill and burying storage tanks is not the only answer

• Understand impact of utility infrastructure

• Balance your site

• Work with your Municipality to reduce costs

Building

• Architects are challenged (lousy) cost estimators

– DO NOT use $/sf from last project – Many cost elements are “per unit” driven not “SF” driven

– “Ripple effect” changing one element may effect numerous others

– Analyze Gross to Net SF – Building Efficiency

Building • Involve Structural early

– Standardized Details – Stair tower example – Sheer wall – sound implications – Floor structure – open web floor truss vs TJI

• Involve Code review early

– Exterior Envelope – Roof structure – defining areas to meet codes

• Panelize as much as possible

– Unless your framer is Amish

MEP – Mechanical/Electrical/Plumbing

• Engineers are challenged (lousy) cost estimators

– DO NOT use $/sf from last project – Many cost elements are “per unit” driven not “SF” driven – Bathrooms and Kitchens drive $/SF

• 30% to 40% of the cost of the project – Even higher for Reno

MEP – Mechanical/Electrical/Plumbing

• Involve MEP engineer early – Systems can drive design and cost

• Involve MEP engineer early – Location of units drives cost – Ductwork and Doors

• Open Specs – no commercial/institutional boilerplate • Fresh Air – is like bottled water - it costs money • “With all the vents do I even need siding?”

2017 PHFA Housing Forum

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