No See Ems

Jake Heller
December 01, 2023

In this week's edition, we're diving into a topic familiar yet often challenging for many in the construction and real estate development industry: "No See Ems." These are the unforeseen surprises in construction projects that can lead to unexpected costs and delays. A classic example is discovering that the water pressure isn't adequate for your fire sprinkler system, resulting in the costly requirement to upgrade a municipality's main line. That could be a $250K “no see em.”

Understanding "No See Ems"

"No See Ems" are hidden challenges that arise during construction projects. They can range from infrastructural issues, like the water pressure issue, to unexpected ground conditions, legal hurdles, or even changes in regulatory requirements. The key to managing these issues is twofold: anticipation and preparation.

Strategies to Anticipate and Avoid "No See Ems"

Comprehensive Preliminary Research: Before breaking ground, conduct in-depth research. This includes geological surveys, utility assessments, and a thorough review of local building codes and regulations. Hire experts - land use consultants, utility consultants, engineers… Talk with other developers in the nearby area and find out what sort of issues they ran into. The $10K-$30K upfront could save you hundreds of thousands, if not millions in the future.
Risk Assessment and Contingency Planning: Perform a detailed risk assessment. Identify potential pitfalls and develop contingency plans for each. You need to identify risks early and create a contingency budget for them. I’ve seen 3-5% contingency line items in budgets. Change that number to 10%. Something will always come up, and you need to be prepared.
Engage with Local Authorities Early: Early discussions with local government and utility providers can reveal potential issues with infrastructure, zoning, or compliance. Don’t wait. Pick up the phone and call the city and your utility companies early.
Hire Experienced Professionals: Engage with seasoned architects, engineers, and contractors who can draw on past experiences to foresee and mitigate potential issues. Get three proposals for each. Do not pick the cheapest. The cheapest always becomes the most expensive. Call references and make sure you properly vet everybody involved. If your architect, engineer, or contractor hasn’t completed at least 20 projects similar to the one you’re working on, look elsewhere. Experience is so critical.
Regular Site Reviews: Conduct ongoing site reviews throughout the project to catch and address issues early. Meet with your contractor onsite weekly. Meet with your architect onsite at least once a month, if not more. Make sure your engineers are looped into these conversations.

When the Unseen Strikes: Steps to Take

Despite all precautions, "No See Ems" can still occur. Here's how to handle them:

Immediate Assessment: As soon as an issue is identified, assess its impact on budget, timeline, and overall project scope.
Consult Your Team: Bring together your architects, engineers, and contractors to discuss viable solutions.
Communicate with Stakeholders: Maintain transparency with investors, clients, and partners about the issue and the proposed solutions.
Explore Alternative Solutions: Sometimes, a "No See Em" can lead to a more innovative and efficient approach. In this case, we call it “good no see em.”
Document and Learn: Record the issue and its resolution for future reference. This knowledge becomes invaluable for future projects.

Conclusion

While "No See Ems" can be challenging, they can be contained. With thorough planning, a knowledgeable team, and a proactive approach, these hidden surprises can be managed effectively, keeping your projects on track and within budget.

Until next time,

Jake