10 ways you can hold down project costs

August 11, 2010

Your clients are clobbering you on “escalating construction costs,” and no wonder. In the last four years, the cost of asphalt has gone up 190%, copper and brass 146%, iron and steel 114%, aluminum 72%, concrete 36%. Yikes! What to do?

Well, you might want to take a page from Leopardo Construction, a 500-person commercial builder in suburban Chicago. They’ve issued a 10-point document called “Smart Construction” to help their clients understand what they’re doing to save them money in the face of soaring material prices. Here, in greatly condensed form, are 10 ways they’re helping clients hold down costs:

1. Avoid scope creep and build lighter. Build for today’s growth, not the space you think you’ll need tomorrow. Cut out wasted space in projects. Build lighter: Can you use six-inch slabs rather than eight-inch ones?

2. Purchase materials smarter and in bulk. Use your purchasing channels for centralized buying and discounted bulk purchasing of building materials to save your clients money.

3. Know where the dollars are spent to gain the biggest savings. Leopardo found that up to 48% of interior construction project costs were hidden behind the wall: electrical, HVAC, plumbing/fire protection, and communications/security. Savings could be made here, without diminishing the aesthetics of the project.

4. Change the palette of materials. Can you use pre-assembled or pre-fabricated walls, floors, or cladding in parts of projects? They save on upfront costs and labor.

5. Build green and reap the benefits. Would a ground-source heat pump system with a four-year payback work for your client’s next project? It would start “making money” in the fifth year.

6. Integrate more revenue-generating space and features. Optimize rentable space for your client with a revenue-producing rooftop terrace or by making rentable signage space available at pedestrian level in a busy CBD.

7. Leverage the contractor as development partner. Educate your clients about local economic development incentives—enterprise zones, TIF districts, fast green permitting, etc.

8. Bring the builder on board early or explore design-build. Bring the contractor on board in the early planning, before expensive decisions are set in marble. As for design-build, it’s not for everyone, nor for every project. But where it’s appropriate, it can, as the Leopardo paper puts it, turn “seemingly unworkable projects into legitimate opportunities.”

9. Fast-track the project. You’re probably doing this already, but it never hurts to remind clients how hard—and fast—you’re working on their behalf.

10. Build smart, energy-producing or self-powered projects. If you aren’t already doing so, start looking into microturbines, PVs, and other alternative energy sources. They’re becoming more cost-effective, especially when coupled with financial incentives from local utilities.

So, start taking action, and let your clients know what a great job you’re doing helping them hold down costs.

To download “Smart Construction” go to:www.BDCnetwork.com/contents/pdfs/smartconstruction.pdf

         
 

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