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6 0 • r e s t a u r a n t d e v e l o p m e n t + d e s i g n • J U L Y / A U G U S T 2 0 1 5 How To David Fabian, Chief Development Offcer Falcon Holdings Management (Franchisee of more than 300 units, including Church's Chicken, Long John Silver's, A&W;, Hardee's, Taco Bell, Jack In The Box and other brands, with plans to build 9 Taco Bell stores, at least 1 Church's and 3 Hardee's this year) David Fabian looks at change orders through the eyes of a franchisee and says managing them is crucial because, with such tight budgets, there's no room for revenue loss. "While we budget for some changes due to unforeseen problems with weather and code issues, for example, there is no substitute for up-front diligence," Fabian says. "By beneftting from the learning curve, we have easily reduced the price of change orders by half over the years." In fact, the Fabian and his team have fgured out how to build a Taco Bell from the ground up in just 60 days, more than 20 days faster than in previ- ous years, just by knowing which factors lead to change orders. He shares some of his most effective strategies below. Establish long-term relationships. By working with a core group of general con- tractors and architects, all team members are committed to working together to solve prob- lems and mitigate future change orders. "We have worked with some people for more than 19 years," he says. "We don't want to have to retrain new people every time. We treat team members as partners, and as a result our work projects tend to be better. The price of switching from contractor to contractor is far higher than negotiating and partnering with folks who are reliable and do a good job." Fabian's team has even befriended sign inspectors during projects; knowing the inspectors' requirements ahead of time helps expedite the processes and reduce change orders. Be a tough negotiator from the beginning. "We are very strict when negotiating our price up front with our general contractor," says Fabian. "Once we decide on price we are very reluctant to change that." Having a clear scope of work for all parties — from operations to real estate, fnance and construction — helps clear up confusion. For example, when working on a project in San Antonio, Fabian says he relied on his contractor to research and select the proper bicycle rack accord- ing to city codes. When the wrong one was installed, "they knew that was their responsibility because of the scope of work, so they covered the cost of the change," he says. In another case, Fabian held frm when his company's operations depart- ment considered increasing the number of seats from 42 to 50. "Something like that has to have a strong business case because change orders don't just cost money, they cost time," he says. Agreeing about the specifcs of the project before work begins is important to saving both. Plan for bad weather. "Normally buildings take 30 to 40 days to be built. But we have fgured out how to quickly erect a building within two days and get the roof on in less than two weeks," Fabian says. This helps create a quick shelter for the project to prevent rain and other elements from damaging property or slowing down the construc- tion process. + so when we go to create construction documents they're very thorough and there should be no hidden surprises," says Andrews. Meet with inspectors and landlords ahead of time. An important part of pre-construction due dili- gence involves gathering as much information as possible from the landlord about the building. Also, it's important to meet with inspectors and city offcials to hear their opinions and recommendations in case they want things done differently. Many change orders are inspector-driven, especially if multiple inspectors are assigned to a project. "Take those com- ments and incorporate them into the second revision. Then send that version back to the city for a fnal look," says An- drews. "All this should be done before the paperwork gets to the general contractor." Make sure change-order logs are detailed. "Out of 136 restaurants, I maybe have had one with a nega- tive change-order log — they always happen," says Andrews. Budget for a baseline change-order amount deter- mined through previous experience and historical data. Allow for higher change- order budgets for remodel projects than for new builds. When change orders do occur, come to an agreement with the contractor and have project managers review changes thoroughly. "We review the plans, and if we feel there's a less expensive way to resolve the problem, we try to come to an agreement," says Andrews.