Navigating Commercial Real Estate Projects: A Comprehensive Guide to Key Project Management Terms and Processes

At Keyser, our Project Management (PM) department is dedicated to guiding clients through the complexities of commercial real estate projects with expertise and transparency. From initial lease agreements to post-occupancy support, our team is there every step of the way to ensure a seamless experience.

As in other industries, in real estate, technical jargon and industry-specific acronyms can be confusing for clients. This guide breaks down essential terms and frequently asked questions (FAQs) by project phase. Whether you’re embarking on a new build, relocating, or navigating tenant improvements (TI), this guide will educate and empower you to make highly informed decisions.

Key Terms to Know

Common Acronyms by Project Phase

Each phase of a commercial real estate project involves specific types of documentation and acronyms. Here’s a guide to these terms, organized by project phase:

1. Initial Planning & Proposal Stage

The initial phase involves determining feasibility, gathering information, and setting the stage for future steps.

• RFP (Request for Proposal): A formal document inviting potential contractors to submit a proposal for a project.
• RFQ (Request for Qualifications): A pre-screening document to assess contractors’ qualifications before formal proposals.
• BOV (Broker Opinion of Value): An estimate of a property’s value, typically prepared by a broker.

2. Design & Development Stage

This phase establishes the physical layout and functionality of the project.

• SD (Schematic Design): Initial layouts and design concepts, often including floor plans, elevations, and preliminary 3D models.
• DD (Design Development): A more detailed design phase where specific materials, finishes, and dimensions are determined, bridging conceptual designs and construction documentation.

3. Pre-Construction Documentation

This phase involves documentation needed for bidding, permitting, and pre-construction.

• CD (Construction Documents): Comprehensive blueprints and specifications that guide contractors through each aspect of the build.
• LOI (Letter of Intent): A non-binding document outlining preliminary terms agreed upon before the formal contract.

4. Occupancy & Compliance

As construction nears completion, documents certify the building’s safety and readiness for occupancy.

• CO / C of O (Certificate of Occupancy): Certifies that a building complies with local codes and is safe for occupancy.
• TCO (Temporary Certificate of Occupancy): Allows for partial occupancy while minor items are completed, provided safety requirements are met.

Financial & Contract Terms

The financial terms below are crucial for effective project budgeting and cost management:

• GMP (Guaranteed Maximum Price): A contract cap that prevents project costs from exceeding a set price, providing cost certainty.
• TI (Tenant Improvements): Customized modifications that the landlord or tenant makes to a rental space to fit the tenant’s operational needs. TIs can include walls, flooring, lighting, and other features needed to make the space functional.
• Tenant Improvement Allowance (TIA): A set amount per square foot provided by the landlord to help cover tenant build-out costs, including general contractor fees, architecture, and project management. At Keyser, we anticipate these costs to provide clients with transparent projections early on.
• Tenant Reimbursement: During construction, tenants may need to seek reimbursement for TI costs. This process involves submitting documentation to the property manager, general contractor, and architect, and is handled by Keyser PM to ensure accurate and efficient reimbursement.
• SF / RSF / USF (Square Feet, Rentable Square Feet, Usable Square Feet):
  • SF: Total area measurement.
  • RSF: Includes the tenant space plus shared areas.
  • USF: Only the actual space a tenant occupies.
• PSF (Per Square Foot): A common metric in pricing leases and construction.
• NOI (Net Operating Income): The income generated by a property after operating expenses, essential for property valuations.
• CAM (Common Area Maintenance): Shared maintenance costs for spaces like lobbies and hallways.
• OPEX (Operating Expenses): Ongoing property costs, including utilities, maintenance, and management fees, crucial for long-term operational budget planning.
• FFE (Furniture, Fixtures & Equipment): Non-permanent assets that are essential to make a space functional.
• ROI (Return on Investment): A measure of financial return on a project relative to its cost.

Construction-Related Phrases and Terms

Understanding these terms will help clarify project changes, timelines, and structures:

• ROM (Rough Order of Magnitude): An early cost estimate used at the project’s start to provide a preliminary cost range. At Keyser, we revisit the ROM three times—during the hypothetical phase, preliminary design, and final bidding—ensuring transparency throughout.
• BTS (Build to Suit): A construction project designed and built specifically for a tenant’s requirements, ensuring the space meets both functional and aesthetic needs.
• Full Build-Out: Refers to complete construction and customization of a tenant’s space, including design coordination, audio-visual systems, furniture, data cabling, and interior construction.
• Vanilla Shell vs. Grey Shell: Terms that describe the initial state of a leased space:
  • Vanilla Shell: A nearly finished space with essential infrastructure (HVAC, plumbing, electrical) ready for tenant customization.
  • Grey Shell: An unfinished space requiring a full build-out, including walls, floors, and utilities, typically requiring longer timelines for completion.
• Value Engineering: A process to identify cost-saving strategies without compromising on quality.
• Punch List: A final checklist of items to complete or correct before project handover.
• Change Order: Modifications to the original project scope that can impact cost or schedule.
• As-Built Drawings: Drawings that reflect all changes made during construction, providing a record of the completed project.
• Critical Path: The sequence of key tasks that determine the project’s overall timeline. Delays in the critical path affect the entire schedule.
• Fast Track: An accelerated schedule where construction begins before final design completion.
• Design-Build: A single entity manages both design and construction, providing streamlined communication and often a faster timeline.
• Shell and Core: The basic structure provided to tenants, allowing them to handle interior customizations.
• Site Work: Preparatory construction on the building site, including grading, utilities, and landscaping.

Roles in the Project Team

An effective project team brings together professionals with specialized expertise, each contributing to project success:

• GC (General Contractor): Manages on-site construction and coordinates subcontractors.
• CM (Construction Manager): Often the client’s representative, overseeing construction aspects, schedules, and budgets.
• PM (Project Manager): Leads planning, organizing, and execution, ensuring the project meets quality, budget, and timeline objectives.
• MEP (Mechanical, Electrical, Plumbing): Engineers responsible for critical building systems.
• AOR (Architect of Record): The main architect responsible for creating and certifying design documents in accordance with regulatory standards.
• EOR (Engineer of Record): Ensures engineering aspects meet safety and code standards.

Project Management Concepts

The following concepts are essential to efficient project management:

• Milestone Schedule: Key dates marking critical points in the project.
• Submittal: The process of gaining approval on materials or equipment before use in construction.
• Long Lead Items: Materials or equipment that require extended procurement time, ordered early to prevent delays.
• Mock-Up: A sample section of the project for design review and approval.
• Constructability Review: An assessment ensuring project plans are feasible for construction.
• Quality Control: Systematic inspections verifying that work meets required standards.
• Substantial Completion: The phase when the project is ready for intended use, even if minor work remains.
• Post-Occupancy Support: Keyser’s commitment to handling issues that arise after move-in, such as IT or networking challenges, blinds, or wayfinding. We manage these follow-ups to ensure complete tenant satisfaction.

Project Meetings

Regular meetings are critical to a project’s success:

• OAC Meetings (Owner, Architect, Contractor): Routine meetings involving the owner, architect, and contractor to streamline decision-making, review budgets, schedules, and address potential changes. At Keyser, OAC meetings are held weekly on-site to maintain project momentum.

Common Construction Clauses

Understanding key contract language helps avoid potential conflicts:

• Time is of the Essence: A clause requiring strict adherence to deadlines.
• Force Majeure: Protects against delays due to unforeseen events, like natural disasters.
• Liquidated Damages: Predetermined compensation for project delays.
• Hold Harmless: Protects one party from liability arising from certain actions.
• Substantial Completion: Defines when the project is ready for occupancy, even if minor items remain.

Building Systems Terminology

Understanding building systems terminology ensures clarity around structural requirements:

• VAV (Variable Air Volume): A type of HVAC system that controls airflow based on temperature.
• HVAC (Heating, Ventilation, Air Conditioning): Essential for maintaining indoor climate control.
• BMS (Building Management System): Technology that monitors and controls building systems, like HVAC and lighting.
• UPS (Uninterruptible Power Supply): Provides backup power to prevent interruptions.
• AHU (Air Handling Unit): Circulates and conditions air as part of the HVAC system.

Safety & Code Compliance

Ensuring code compliance guarantees safety and functionality:

• ADA (Americans with Disabilities Act): Regulations ensuring accessibility.
• OSHA (Occupational Safety and Health Administration): Workplace safety standards.
• IBC (International Building Code): Standards for building design and construction.
• NFPA (National Fire Protection Association): Fire safety codes.
• UL (Underwriters Laboratories): Certification for product safety.

In Conclusion

At Keyser, we believe that knowledge empowers our clients. By understanding these essential project management terms and phases, you can navigate your commercial real estate project with greater confidence. Whether you’re planning a full build-out, customizing tenant space, or managing ongoing maintenance, Keyser’s Project Management team is here to guide you from start to finish—and beyond.

For more information or to discuss your project management needs, contact us today!

Frequently Asked Questions (FAQs):

1. What is a tenant improvement (TI) allowance, and how is it applied to my project?
   The tenant improvement allowance (TIA) is a fixed amount per square foot that landlords allocate to help tenants customize their space. This allowance can cover general construction, architecture fees, project management, and even furniture and audio-visual systems. However, build-out costs can exceed the TIA, so, at Keyser, we proactively project these costs to help you budget accurately before the lease signing.
2. How does a “build-to-suit” (BTS) project differ from a standard lease?
   In a build-to-suit (BTS) project, the property is designed and built specifically to meet a tenant’s unique requirements. This approach provides complete customization of space, from layout and design to infrastructure. Keyser’s project management team helps ensure that every detail aligns with your operational needs and aesthetic goals.
3. What’s the difference between a vanilla shell and a grey shell, and how does it affect build-out timelines?

• Vanilla Shell: This is a nearly finished space with basic infrastructure (like HVAC, plumbing, and electrical) ready for interior customization.
• Grey Shell: An unfinished space that requires full interior build-out, often including utilities and walls, resulting in a longer construction timeline. Keyser works closely with you to determine which shell type best fits your project’s timeline and budget.

4. How often do we revisit cost estimates during a project, and why is this necessary?
   At Keyser, we prioritize transparency, revisiting the Rough Order of Magnitude (ROM) cost at three stages: the hypothetical phase, preliminary design, and final bidding. This regular review allows us to keep clients informed of potential cost changes, ensuring your project aligns with your budget expectations.
5. What post-occupancy support can I expect once we move into the space?
   Our commitment doesn’t end at move-in. Post-occupancy support from Keyser means we handle any follow-up issues, such as IT or networking challenges, window treatments, or wayfinding needs, so you don’t have to coordinate with multiple vendors. We also verify that all vendors honor their warranties, ensuring long-term satisfaction with your new space.
6. How does tenant reimbursement work, and what’s Keyser’s role in this process?
   Tenant reimbursement requires submitting documentation of project expenses, often involving detailed payment records and proof of work completion. Keyser handles the entire process, from preparing and submitting documentation to coordinating with the property manager and general contractor, ensuring that you receive qualified reimbursements efficiently.
7. What should I expect from weekly OAC meetings?
   OAC (Owner, Architect, Contractor) meetings are essential for keeping the project on track. Held weekly, these meetings ensure that all parties are aligned on the latest budget, schedule, design progress, and any necessary changes. Keyser PM coordinates these meetings to streamline communication, allowing decision-makers to make timely adjustments and avoid project delays.
8. What is value engineering, and how can it benefit my project?
   Value engineering is a process of analyzing and revising project plans to find cost-effective alternatives without compromising quality or functionality. At Keyser, we use value engineering to identify savings opportunities, balancing the desired outcome with budget considerations—often providing substantial cost savings without affecting the project’s vision.
9. What is the critical path in project management, and why is it important?
   The critical path is the sequence of tasks that directly impact the project’s timeline. Any delays on the critical path extend the overall schedule, so Keyser closely monitors these tasks to ensure on-time delivery. Understanding the critical path helps clients grasp the importance of certain deadlines and project milestones.
10. How do construction documents (CDs) differ from initial design documents?
    Construction documents (CDs) are detailed blueprints and specifications that guide the actual construction work, outlining every aspect of the project down to specific materials and measurements. Unlike initial design documents, CDs provide contractors with precise instructions, ensuring that every element aligns with approved designs and regulatory standards.