With never-before-seen labor and material shortages, construction price volatility is unprecedented. A recent article in Construction Executive Magazine offers several strategies for mitigating construction pricing spikes, citing that, since July of 2020, the price of natural gas is up 146.7%, steel mill products are up 108.6%, and softwood lumber is up 45%.
Time is money and finding the right team to help you manage the design, bid, permit, and construction process is a critical piece of the overall project cost that can be controlled. Below are six things to keep in mind before you embark on your next project.
1| Due diligence during site selection
There are often hidden surprises found in the plat notes and deed restrictions included when land is purchased: some may restrict the building type allowed on the property, some limit building height, width, or siting.
Hiring an experienced architect/civil engineer team to perform due diligence during the feasibility (pre-close) phase will protect you down the road from making costly mistakes.
2| Selecting Experienced Consultants
An owner has many options, and associated fees, for design team selection. It is a major misstep to select your team based solely on lowest price. Often, this will result in more time and dollars added to your project budget, as the quality of drawings and permit schedule aren’t promised.
Look for the best value of fee, experience, and consulting teams that have a proven track record together.
3| Program Validation
This is an important step that often gets overlooked by an inexperienced planning team. A knowledgeable consulting team will review an owner’s program and overlay it with the site and available space.
Identifying up-front too much, or worse, not enough space to execute the program properly will save time, money, and many headaches later.
4| Defined Permitting Strategies
Due to unprecedented growth in Central Texas and throughout the entire state, finding the most streamlined permit strategy can feel overwhelming. It is important to make sure your consulting team includes an experienced permit expediting partner. This decision can reduce project approvals by months!
Have you leveraged pre-review opportunities to help with reviewer buy-in?
Is the ROI for an expedited permit application worth it based on schedule?
Does your permit expediter have a strong reputation in the project’s jurisdiction?
5| Early Contractor Engagement
Your contractor should provide a budget validation and constructability review. This process is more difficult than ever in today’s climate, given the frequent price escalation and growing material lead times.
Adding a construction partner to your team in the Design Development phase brings the needed cost control and supply chain experience to the table early-enough to make any design changes to accommodate challenges (caused by materials or labor shortages).
6| Examine Contractor Contingency and Soft Costs
Even with the best construction partner, the bid market remains unpredictable. Including a small construction contingency will help you accommodate unforeseen conditions while keeping lenders and stakeholders happy. Also, adding in a price escalation clause is a good idea. Lastly, don’t forget to include soft cost items in your preliminary project budget as well furnishings, signage, and AV/communications.
Whether you are buying land, designing the project, or selecting the right build partner, each phase contains criteria that, when addressed early and in partnership with an experienced design team, can help keep your project cost under control.
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