Lessons to learn from a hotel refurbishment gone wrong

MDCI support a wide range of businesses to successfully complete construction projects. Ideally, we are called in at the very outset of the project, to ensure nothing goes wrong. However, we do also come in a Project Rescue capacity, when things are going seriously awry and help is needed to get back on track.

This was the case with a recent project for a hotel refurbishment project who had embarked on a major revamp and extension of their existing site. Unfortunately, the works were substantially behind schedule and crisis action was required and so MDCI were called in to find out what was going wrong and to steer the ship.

We found a wholesale lack of process, and excess of unnecessary paperwork, but insufficient contracts in place. Even more concerning, was that we discovered works underway without licences in place, nor supervision nor approvals for them to be signed off when completed. Sadly, for the management team, their builders were unsuitable, there were ancillary suppliers based in several regions and countries and there were no interior decorators included in the final delivery of the project – thus indefinitely extending the delivery date.

Having identified the key obstacles to progress and proposing an integrated planning and strategy to complete, we then uncovered evidence that the Hotel company had not paid their suppliers in many months. They were wrongly thinking that by threatening the cashflows of the suppliers, it would force them to “work day and night” to complete the project. However, the reverse was happening, with an array of legal letters being issued and a justified slow-down of the works.

Unfortunately, the combination of undefined and unagreed works, poor management and conflicts due to payment delays, this was not a project we were able to take on and many months later, the venue remains closed and the work ongoing.

However, we think it’s important to shine a light on where they went wrong and how other companies can learn from their mistakes. Closing an existing business for renovations, means losing income every day that you’re closed, so doing things right is even more important!

What should be done differently?

PROJECT PLANNING

Take a holistic view of the detailed needs of the project and give yourself a realistic time period to complete

To correctly set the timescale for a project, you need to know how long each aspect of the build takes, how each trade and each phase dovetail to maximise efficiency and where the potential blocks are, which can derail a plan. By taking the time at the outset for a detailed planning of works, setting a viable budget, choosing your suppliers and contractors carefully, and drawing-up detailed contractual agreements with penalties and guarantees in place, you will be in the best position to finish on time and on budget. But too often, this stage is rushed, and the project isn’t looked at in its entirety, or funded correctly before starting out. This almost always causes issues and should be avoided. Only by skilled and diligent mapping out of the multitude of facets and actions required by a knowledgeable project manager can you be assured that the process can have inherent guarantees to delivery- and beyond!

CONTRACT MANAGEMENT

Clear Contracts and Controlled Timelines

Always ensure that you have all contractors, suppliers and trades locked in to contracts which specify their roles, responsibilities, deliverables and realistic timelines. This is important in all projects, but is particularly vital for projects where the delivery date is vital, such as when you need to open a hotel for guests, which have been booked in.

PAYMENT PLANNING

Pay your suppliers on time when work has been completed and signed off

Contracts and agreements should include phased payments when aspects of the project have been completed successfully. It’s important to pay the interim invoices on time and comply with your side of the agreement to avoid situations where the supplier takes his revenge by slowing progress down. Any court case where details of your own punitive failings are used against you will not favour your chances for damages.

MDCI PROJECT MANAGEMENT

Bring in an independent Project Manager at the outset

It is a false economy to wait to bring a Project Manager in until the construction process has begun. They have to spend a lot of time and energy fixing issues, where money and time has usually already been wasted, putting the project in trouble. The planning, tendering and contract period is vital and you should have an independent Project Manager at your side during this process. They can also help you to handle the licensing applications, and ensure that there are no nasty surprises with legislation or permits.

If you’re due to construct, or renovate a hotel in Spain, we can support you from start to finish, and ensure that guests are not let down and you can open your doors again as soon as possible. Contact MDCI today