Case Study 1.1 — Suite 400: A $2.1 Million Fit-Out, Start to Finish
A composite of small commercial projects. The firm, the building, the people, and the numbers are illustrative — but the arc is exactly the arc of every project you will ever run, compressed into four months so you can see all of it at once.
Setup
The project. Alderman & Voss is a 62-person law firm in Rivermont. Their lease is up, and they have signed for 14,200 square feet on the fourth floor of a 1998 office building owned by Fairhaven Property Group. The space is a gutted former insurance office: existing base building, existing core, existing rooftop mechanical units, and nothing else.
The people.
| Role | Who |
|---|---|
| Owner (tenant) | Alderman & Voss; managing partner Corinne Alderman signs |
| Landlord | Fairhaven Property Group; provides the tenant improvement allowance and approves drawings |
| Interior architect | Studio Bellweather |
| Contractor | Kestrel Construction Group, small-projects group |
| Project manager | Renata Oyelaran |
| Assistant project manager | Cody Vance |
| Superintendent | Pete Krisanski (part-time; he runs two fit-outs at once) |
The constraint that actually matters. The firm's current lease expires and no extension is available. If the space is not ready, 62 lawyers and their files have nowhere to go. This is the small-project version of Meridian's interim clinic space expiring on October 1, Year 2 — a hard date the contract does not mention and everybody is really working toward.
The contract. Lump sum, $2,148,000, 118 calendar days from notice to proceed. Design-bid-build: Studio Bellweather finished the drawings, three contractors bid them, Kestrel was selected.
What Happens
Before day 1 — the part most people skip
Studio Bellweather issued bid documents to three contractors on day −30 relative to notice to proceed. Bids came back:
| Bidder | Base bid |
|---|---|
| Contractor A | $2,061,000 |
| Kestrel | $2,148,000 |
| Contractor C | $2,239,000 |
Kestrel was not low. Renata spent a day and a half leveling the three proposals against the drawings and specifications — reading each bidder's inclusions and exclusions line by line — and found that Contractor A had excluded the demising wall at the corridor and the fire-alarm device modifications required by the new partition layout. Both are unambiguously in the documents. Priced, they are worth about $74,000.
$2,061,000 + $74,000 = $2,135,000 — still slightly below Kestrel, but only slightly, and Contractor A's number now depended on a conversation about who pays for something they had already said they were not carrying. Studio Bellweather recommended Kestrel. Corinne Alderman agreed.
The first money on this project was made or lost before a single wall came down. That is theme 3: the project is built twice, and the first build is on paper.
The long-lead back-schedule
The day after award, Cody built the procurement log — not a list of things to buy, a list of dates to buy them by, computed backward from when each item has to be on site.
| Item | Lead time | Needed on site | Must be released by |
|---|---|---|---|
| Supplemental rooftop unit | 14 weeks | Day 60 | Day −38 (released under a letter of intent before NTP) |
| Reception desk and millwork | 12 weeks | Day 92 | Day 8 |
| Glass office fronts | 10 weeks | Day 88 | Day 18 |
| Light fixtures | 8 weeks | Day 70 | Day 14 |
| Access-control hardware | 6 weeks | Day 100 | Day 58 |
Note the rooftop unit. Its release date was before the contract existed. Renata identified that during the bid period, told Studio Bellweather, and Fairhaven authorized the deposit under a letter of intent. Had nobody done that arithmetic, the unit would have landed on day 88 instead of day 60, and there is no amount of overtime that installs a rooftop unit you do not have.
The budget
| CSI Division | Scope | Bid carry |
|---|---|---|
| 01 | General requirements, supervision, temp facilities, cleanup | $186,000 |
| 02 | Selective demolition | $58,000 |
| 06 | Millwork and casework | $214,000 |
| 08 | Doors, frames, hardware, glass office fronts | $196,000 |
| 09 | Drywall, acoustical ceilings, flooring, paint | $412,000 |
| 10 | Specialties | $34,000 |
| 12 | Window treatments | $28,000 |
| 21 | Fire protection modifications | $46,000 |
| 22 | Plumbing | $61,000 |
| 23 | HVAC | $298,000 |
| 26 | Electrical and lighting | $317,000 |
| 27 | Communications rough-in | $52,000 |
| 28 | Access control | $31,000 |
| Cost subtotal | $1,933,000 | |
| Overhead and profit, 11.1% of cost | $215,000 | |
| Contract sum | $2,148,000 |
That $215,000 of overhead and profit is 10.0% of the contract price. Hold that number.
Day 22 — the discovery
Demolition on the north corridor exposed two things the as-built drawings did not show. First, a structural beam sitting roughly three inches lower than documented, directly over the conference-room entry where Studio Bellweather had drawn a 9'-6" ceiling. Second, a 4-inch waste line running where the drawings showed clear space.
Here is the sequence, in hours and days:
| Time | Action |
|---|---|
| Day 22, 8:15 a.m. | Pete photographs and measures the condition. Emails Renata from the field with dimensions and three photos. |
| Day 22, 11:40 a.m. | Renata issues RFI #14 to Studio Bellweather describing the condition and offering three options with rough order-of-magnitude prices: drop the corridor ceiling to 9'-0" for 14 linear feet; build a soffit around the beam; or relocate the duct main above the beam. |
| Day 22, 11:41 a.m. | Renata tells Pete: do not build anything in that corridor. Move the crew to the west side. |
| Day 24 | Studio Bellweather responds selecting the soffit, with a revised reflected ceiling plan. |
| Day 26 | Kestrel prices it: $11,840 — framing, board, finish, revised light layout, two sprinkler head relocations. |
| Day 28 | Corinne Alderman approves. Change Order #3 is executed before the work begins. |
| Day 31 | Soffit framed. |
Schedule impact: zero. The corridor ceiling had nine days of float. Renata knew that because Cody had built a schedule, not a wish.
Compare that with change order #14 on Northgate, where a verbal go-ahead on a Thursday became concrete on Monday: $186,400 of cost incurred, $121,000 of provable cost, and $43,650 Kestrel never got back. The difference is not diligence or virtue. The difference is six days of process applied before the crew started, instead of eight weeks of negotiation applied after.
The rest of the arc
| Days | What happened |
|---|---|
| 1–12 | Demolition; permit in hand day 1 (submitted day −25) |
| 8–40 | MEP rough-in; four inspections, all passed first time |
| 22–31 | The beam discovery, resolved |
| 35–60 | Drywall, tape, ceiling grid |
| 55–85 | Flooring, paint, ceiling tile |
| 80–100 | Millwork, glass fronts, casework, doors and hardware |
| 95–110 | Access control, furniture coordination, client IT |
| 60 onward | Closeout package assembly begins — warranties, operations and maintenance data, and as-builts collected as each trade finishes, not at the end |
| 110 | Pre-punch walk by Kestrel alone, before showing the client anything |
| 112 | Punch walk with Studio Bellweather: 82 items |
| 114 | Substantial completion — four days early |
| 123 | Punch complete |
| 131 | Final completion, final payment, warranties turned over |
The final numbers
| Line | Amount |
|---|---|
| Original contract | $2,148,000 |
| Four executed change orders | $31,600 |
| Final contract sum | $2,179,600 |
| Actual cost | $1,955,400 |
| Gross margin | $224,200 — 10.3% of revenue |
Bid margin was 10.0%. Kestrel finished at 10.3%. That is not a triumph; it is a job that behaved. Buyout came in $9,400 under carry on electrical and $6,100 under on drywall, partly offset by two extra weeks of Pete's time in general conditions when the client added a scope item late.
Analysis
Nothing dramatic happened on this project, and that is the finding. Read the arc again and count the moments where the outcome could have swung.
1. The bid leveling. Awarding to the apparent low bidder would have started the job with a $74,000 argument. Cost of leveling: a day and a half of a project manager's time. This is Chapter 16 territory, and it is where small projects are usually lost.
2. The back-scheduled procurement log. The rooftop unit had to be released 38 days before the contract was signed. Nobody discovers that by intending to be organized. You discover it by subtracting lead time from need date, in writing, for every long-lead item on the job.
3. The eleven-minute stop-work instruction. At 11:41 a.m. on day 22, Renata told Pete not to build in that corridor. Everything good that followed depends on that sentence. The expensive version of this story is the one where a foreman, trying to be helpful, frames the corridor anyway and it comes back out.
4. The RFI that offered options. Renata did not write "please advise." She wrote: here are three ways to solve this, here is roughly what each costs, which do you want? An architect handed a decision responds in two days. An architect handed a problem responds in two weeks.
5. Closeout starting at 60%. Warranties, operations and maintenance data, and as-built markups were collected as each trade demobilized. The alternative — chasing a plumber for a warranty letter six weeks after his last day on site — is why final payment on so many projects arrives four months late.
The honest summary: the project made its margin because none of the ordinary failures happened, and none of the ordinary failures happened because somebody did unglamorous work on time. There is no clever move in this case study. That is the case study.
Discussion Questions
-
Kestrel was not the low bidder and still won. Explain to a skeptical owner, in plain language and in under 90 seconds, why the apparent low bid was not the low bid. What specifically would you show them?
-
The rooftop unit had to be released 38 days before notice to proceed. Who took the risk on that deposit, and what would have happened to that risk if the tenant had walked away from the lease? Identify two ways to structure the release so the risk sits with somebody who is being paid to hold it.
-
Renata's RFI offered three priced options rather than asking "please advise." Name one situation in which offering options is the wrong move for a contractor — where it exposes you rather than helping you.
-
The corridor ceiling had nine days of float, so the beam discovery cost no schedule time. Who owned that float — Kestrel, the architect, or Alderman & Voss? What would the contract have to say for the answer to be clear? You will not have a full answer until Chapter 14; write down your instinct now and check it then.
-
Gross margin came in at 10.3% against a 10.0% bid. If the beam had been discovered on day 90 rather than day 22, estimate what would have happened to both the schedule and the margin — and say specifically why the date matters more than the condition.
Your Turn
Take the long-lead table above and rebuild it for a project you can actually see: the building you are sitting in, a renovation on your street, or the Willow Street Community Center in Appendix K.
Pick five items that cannot be bought at a supply house on the day you need them. For each one write down the lead time you believe applies, the date it must be on site, and therefore the date it must be released. Then circle every release date that has already passed relative to a hypothetical notice to proceed next Monday.
Every circled item is a project you have not started and are already late on. That is the entire value of doing this exercise before the job instead of during it.