Following is a checklist that outlines some of the critical steps in the project development and construction processes, along with a few tips to consider in evaluating use of the HUD 242 program.
During Project Development:
1. The owner will need to coordinate with the program manager and hire professionals such as an FHA mortgage banker to manage the financing part of the process.
2. The entire project team will need to be involved in the HUD pre-application meeting and the HUD site meeting at the hospital. (For critical access hospitals, these meetings may be combined.)
3. The site selection will need to be carefully evaluated. As the guarantor of project financing, HUD needs to be assured that the site is free of liabilities. Environmental assessments (Phase 1 and any subsequent evaluations), historical surveys, geotechnical investigation, noise pollution studies, a title insurance policy, documentation of proper zoning, the availability of all utilities, and ALTA land surveys all may be required as part of HUD’s evaluation process.
4. Drawings and specifications will need to meet the AIA’s Guidelines for Design and Construction of Healthcare Facilities (2006 Edition), National Fire Protection Association Life Safety Code (2006 Edition) and ADA Guidelines (28 CFR 36 Revised July 1, 1994), under which HUD is currently reviewing projects, as well as all state/local agencies’ regulations. Even if your state does not use the same guidelines as HUD, your architect will need to review the design by both sets of standards and resolve any conflicts with both agencies.
5. The architect needs to closely review DAE’s 2.1 Guide for Project Applicants Design and Construction Related Activities and, if construction-managed, 2.4 Guide for Project Applicants Construction Management Services. These guidelines closely detail DAE’s expectations for each phase of design – Schematic Design (Stage I), Design Development (Stage II), and Construction Documents (Stage III). Each of these phases requires a submission to the assigned DAE project manager. The mortgage banker can often assist the construction team by coordinating the submissions of drawings/specifications to HUD, along with associated financing components, to ensure consistency and avoid confusion among the various federal agencies involved in the FHA review process.
6. HUD/DAE typically takes 4-6 weeks to review and return comments for the design team’s response. HUD will also have review comments on the financial portion of the submission.
7. If the job is construction-managed, which is highly recommended, close coordination will need to occur between the CM and Architect to develop Division I of the construction specifications.
8. HUD requires open bidding on all construction trades. Specifications must list three manufacturers and consultants and include an “or approved equal” clause. Generally, DAE will not allow proprietary specifications. However, if your architect and mortgage banker can present a strong case that a particular project will benefit from using a particular product, exceptions can be approved.
9. HUD projects require that all work for construction be included under the Owner-Architect Contract. Therefore, it is recommended that signage drawings, landscape drawings, food service drawings, etc. all be a part of the documents.
10. Alternates or allowances are not allowed on HUD projects so your architect must be able to help facilitate decision making by hospital leadership regarding the scope of the project early in the process.
During Construction:
1. The principal of record will be required to attend each of the monthly Owner-Architect Contractor (OAC) meetings or specifically designate an approved associate. A DAE project manager will also be in attendance and will prepare a progress for HUD, required as a part of the pay application process for approving disbursement of funds. Thorough minutes of the OAC meetings by the architect can assist DAE in preparing an accurate progress report.
2. Special attention must be paid to the pay application process for a HUD project, as monthly pay application forms must be reviewed and approval by several different parties in different parts of the county, before mortgage proceeds can be disbursed. Delays can be avoided when the construction manager or general contractor provides a complete and accurate pay application with complete back up, and the mortgage banker prepares an accurate mortgage loan draw request.
With HUD/DAE approval, the owner’s contingency can be released for funding options or unforeseen expenses in construction, typically in an amount directly proportional to the percentage of the project that has been billed. This process for receiving approval for the use of contingency for change orders can also be accomplished relatively expediently if planned in advance.y understanding each step of the process and ensuring all submittals are correct the first time, timelines can be accelerated. Recently we were able to shorten a typical loan approval by half the standard time. The HUD process is complex but finding experienced partners is the key to coordinating financing and design, and navigating federal, state, and local reviews. Done properly and efficiently, affordable financing that might not be available otherwise can be obtained.
While it is somewhat difficult to summarize “Lean” in a brief way, it is safe to say that the process is dependent on the ability to trust one another. Teams that work in collaboration to deliver on a “lean” project are committing to each other and the client to deliver value from the client’s perspective. Lean focuses on common-sense strategies for collaborating in an open and honest way that promotes the kind of continuous improvement that can occur when all team members consistently look for more efficient and effective ways to accomplish a well-defined objective.