What we read
The qualifications page, the buyout log, the allowance schedule and the change order clause, set against the sponsor budget rather than against a benchmark.
Home Who we work for Family offices
Family offices underwriting construction risk
You are underwriting a construction risk that is not your core business, using instruments built for a different kind of risk.
The position you are in
The model cannot show you what the contract left open
Your model has a construction cost line, a contingency line and a sensitivity that flexes both. What it cannot tell you is the probability attached to that sensitivity, and the probability does not live in a spreadsheet.
It lives in a set of documents describing what the price covers, how much of the work is bought, and who pays when something moves. Every one of those documents existed before you funded.
Real overruns are also lumpy rather than smooth. One uncapped exclusion or one underpriced allowance produces most of the variance on a typical job, so a model that only tests a smooth percentage is testing the least likely shape.
What you usually ask us
The four questions we hear most
Every one of them is answerable from documents you already hold, which is why the reading runs without asking the contractor for anything.
- What is the realistic range, rather than the point estimate?
- How much of this price can still move?
- Which three exposures account for most of the width?
- Who has read these documents who is not the sponsor or the contractor?
How it works for you
What we read, and what you get
What you get
The open exposure as a range built from named items, each with a low and a high, so your sensitivity runs on the actual shape of the risk rather than on a percentage.
Who we act for
Owners and capital only, never contractors. We do not price work and we do not bid, so there is nothing on the job we are protecting except your position.
Written for you
Three pieces from the same desk
Short notes on the mechanisms behind the questions above, written from the owner side of the contract.
Reading a construction budget as an investor
Underwriting risk the model cannot show
The range, not the point estimate
Underwriting risk the model cannot show
The range, not the point estimate
The other three
One position, four different rooms
The register is written the same way every time. What changes is who the memo has to survive being read by. The overview page sets out all four side by side.