In order to save money on construction projects, you must in fact have construction projects running. This is a very fundamental necessity of the construction business. No project, no paycheck, no savings for the owner. It’s really a very simple situation – we need to get banks to loan money to developers who will then go out and pay architects to draw buildings who will then wipe their hands clean of the design upon hand-off to the contractor who will turn around and blame every cost and schedule overrun on the architect until everybody lands in court fighting over money. It’s really a lovely system we have worked out, but without the initial financing from the bank, our diabolical plans cannot even begin.
Hey bankers! Yeah I’m talkin’ to you! Start loaning money damn-it!
Once our friends in the cushy banking offices up in Manhattan put down their Cuban cigars and close out of solitaire, we’ll have plenty of money with which we can build houses, retail and office space, condos, etc. So when that day comes, the following five items will help everyone save time, money, and lots of Advil.
5. Be nice.
Maybe it’s just me but if someone is a jerk (and most are), I really don’t feel like doing them any favors. When I worked for a sub, I would give breaks on change orders if someone wanted to work together and come to a sensible solution. If I was hollered at, belittled, or had a finger pointed in my face, the change order amount started to rise. Plus it made me never want to work with them again. And if I did bid a job for them, I would skyrocket the price.
Contractors are more sensitive than you think, if you piss them off, it’s just going to cost you money.
But again maybe that’s just me.
4. Be careful with changes
There are three truths in life: death, taxes, and changes to construction projects. And man, they are friggin’ expensive. However, we must realize that putting a design out to bid that is not complete or requires changes may allow a project to commence sooner and thus complete sooner. So if you do make changes make sure they are made in enough time to solicit bids from the contractors, collect pricing and negotiate the cost all without affecting the schedule. If the subs have to perform the work prior to receiving the change order you’ll never come to an agreement on the cost and if the number is high enough, you’ll land in court.
There is nothing wrong with establishing a unit cost for all changes prior to entering into contract. But just like the best way to avoid an STD is to not have sex, the best way to avoid costly change orders is to not make changes.
3. Can anyone say 3-D?
The capabilities of three dimensional CAD programs, otherwise known as building information modeling, are just beginning to become known and explored. There are of course the obvious benefits of conflict resolution with everything from a door swing to MEP and steel coordination, but the benefits reach much further.
I’ve seen millions of dollars thrown in the street due to lack of drawing coordination and conflict resolution in the field is extremely expensive. Often times the conflict will be partially fixed or not fixed at all which detracts from the quality of the project.
Beyond conflict resolution, the entire job can be estimated and viewed in three dimensions prior to lifting a shovel. The construction process can even be modeled in 3-D to look for conflict of equipment. I recently worked on a casino where concrete cranes and steel cranes were working in very close proximity. We didn’t use BIM but it would have helped significantly to avoid delays caused by cranes being too close. The steel contractor submitted a $200,000 change order for delays caused by the concrete cranes.
2. Be clear about expectations
Hey bankers! Yeah I’m talkin’ to you! Start loaning money damn-it!
Once our friends in the cushy banking offices up in Manhattan put down their Cuban cigars and close out of solitaire, we’ll have plenty of money with which we can build houses, retail and office space, condos, etc. So when that day comes, the following five items will help everyone save time, money, and lots of Advil.
5. Be nice.
Maybe it’s just me but if someone is a jerk (and most are), I really don’t feel like doing them any favors. When I worked for a sub, I would give breaks on change orders if someone wanted to work together and come to a sensible solution. If I was hollered at, belittled, or had a finger pointed in my face, the change order amount started to rise. Plus it made me never want to work with them again. And if I did bid a job for them, I would skyrocket the price.
Contractors are more sensitive than you think, if you piss them off, it’s just going to cost you money.
But again maybe that’s just me.
4. Be careful with changes
There are three truths in life: death, taxes, and changes to construction projects. And man, they are friggin’ expensive. However, we must realize that putting a design out to bid that is not complete or requires changes may allow a project to commence sooner and thus complete sooner. So if you do make changes make sure they are made in enough time to solicit bids from the contractors, collect pricing and negotiate the cost all without affecting the schedule. If the subs have to perform the work prior to receiving the change order you’ll never come to an agreement on the cost and if the number is high enough, you’ll land in court.
There is nothing wrong with establishing a unit cost for all changes prior to entering into contract. But just like the best way to avoid an STD is to not have sex, the best way to avoid costly change orders is to not make changes.
3. Can anyone say 3-D?
The capabilities of three dimensional CAD programs, otherwise known as building information modeling, are just beginning to become known and explored. There are of course the obvious benefits of conflict resolution with everything from a door swing to MEP and steel coordination, but the benefits reach much further.
I’ve seen millions of dollars thrown in the street due to lack of drawing coordination and conflict resolution in the field is extremely expensive. Often times the conflict will be partially fixed or not fixed at all which detracts from the quality of the project.
Beyond conflict resolution, the entire job can be estimated and viewed in three dimensions prior to lifting a shovel. The construction process can even be modeled in 3-D to look for conflict of equipment. I recently worked on a casino where concrete cranes and steel cranes were working in very close proximity. We didn’t use BIM but it would have helped significantly to avoid delays caused by cranes being too close. The steel contractor submitted a $200,000 change order for delays caused by the concrete cranes.
2. Be clear about expectations
I don’t know what it is with lawyers these days, all they do is stir up trouble. They’re like the kids in the back of the classroom that shoot spit-balls at the nerdy kid with glasses just waiting for him to snap and go postal. I guess they need to pay for law school somehow.
But regardless of the reason for the tendency of lawyers to cause conflict, even the most benign attorneys will look at the construction industry and see the bright lights of Vegas. How do we stop hungry lawyers from feasting on the profits of owners, designers, and contractors? We need to clearly define our expectations.
The construction disputes that I have seen mainly involve situations that could be easily discussed and agreed upon prior to entering into a construction contract. I don’t know if people are too afraid or just too lazy to bring this stuff up, but it needs to be discussed. How hard is it to ask what will happen in the event of a schedule over-run or how overtime rates will be handled? Will change order pricing be at an agreed upon unit rate or left up to the contractor? How will coordination issues in the plans be handled?
These are the same issues that come up time and time again, but we still refuse to bring them up in the contract. Perhaps we’re afraid of getting the project off to a bad start or souring relationships before the job begins, but a slightly uncomfortable conversation early on can prevent a torturous battle through mediation, arbitration, and court.
1. Pre-con, pre-con, pre-con!
Above anything else, the more time spent in planning, the less cost and schedule overruns you will have during construction. However, we must be careful about over-analysing the project and bringing it to a halt. You have to remember that every day the building is not open is lost money for the owner, so we could talk forever about what kind of foundation to use, but the more we him and haw about it, the more we’ll have to accelerate the project during construction.
Pre-con is not as easy as picking the lowest cost for every material and contractor, it is very much a balancing act in an effort to get the project on line in the shortest amount of time with the lowest cost and highest quality. It’s difficult if not impossible to get all three, but the purpose of pre-con is to maximize the overall value of the project.
For example, if an evaluation is being made as to if you will be using steel or concrete for the structure of the building, one may point out that concrete is less expensive and should be used. However, steel will erect faster and may be less likely to encounter material shortage problems throughout the project. In light of this additional information steel could become the more prudent choice.
Pre-con will often be skimped on in an effort to break ground and save money in the short term, but a little more effort early could make construction less painful and the courtroom less likely.
Feel free to add some of your own tips on saving money on construction projects.
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We shall in the first instance KNOW WHAT WE WANT before starting the activity. This will minimize the changes (variations) wich are the root cause for disputes and cost thereof. Take timeand freeze the specs and scope. Appointing 'friendly PMC' at a small cost could be a good idea more so if the owner is new to construction and contracts. The PMC acts as a guide for the coordination and also will be able to minimize the cost/time overruns.
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