Dollars are hard to come by in Zoos, making it critical to stretch each one as far as possible. Doing so requires an understanding of the current market cost of goods and services, a partnership with your architect and general contractor, and navigating construction methodology. A clear project scope, estimating an accurate timeline, and avoiding changes when possible are the simplest ways to control costs and avoid spiraling.
4 Key Points
1. Today’s Material Market is Extremely Volatile
A series of weather events, including a significant hurricane in the Gulf of Mexico in 2019 that did damage to petroleum plants and a deep freeze in Texas that impacted resin manufacturing, have coincided with the COVID-19 pandemic to cause extreme supply chain constraints. No matter what the industry – furniture, cars, appliances, paint – almost every construction-related material has been affected and this has broad implications for material cost and availability. For example, many steel mills were shuttered in the early days of the COVID-19 pandemic and, in recovery, some producers decided to not reopen certain high-pollution mills. While open mills are now operating at capacity, the industry is running 10,000 tons short of typical demand. As a result, the cost of steel continues to climb and lead time is 10 – 14 months.
2. Flexible Design and Open Communication Saves Money
Open dialogue among architects, contractors, and owners can reveal savings by analyzing and modifying designs to reduce items with long lead time, high costs or scarce availability. In today’s climate, items and methods that were traditionally more expensive may be more cost effective or quickly accessible. Proactive and frequent communication between architects and contractors is particularly important so that each has the information necessary to make recommendations.
3. Delivery Method Can Make a Big Difference
In today’s market, intentional selection of a construction/delivery method for your next project can mean tremendous cost savings. The traditional methods include “Design-Bid-Build”, “Construction Manager at Risk”, and “Design-Build”.
- In “Design-Bid-Build”, the owner works with an architect to complete a full design before going to bid for a general contractor. This is high risk in the current market, as there is potential for a lot of wasted time and effort on the design if the bid comes back much higher than expected.
- “Construction Manager at Risk” offers more opportunity for communication and coordination between architects, owners, and general contractors than “Design-Bid-Build”. Instead of waiting for a design to be complete before going to bid, a general contractor is selected soon after a concept is developed and assists with budgeting as the design is finalized. Architects, owners, and general contractors work collaboratively to seek the most cost effective and efficient solutions. Owners can ensure “Construction Manager at Risk” is a fair & equal process by entering intentional and careful agreements and can still take advantage of the bid market when selecting subcontractors. “Construction Manager at Risk” is quickly becoming the method of choice for many architects and general contractors.
- With a schedule driven by the general contractor, “Design-Build” is a fast and highly efficient method often selected for projects where speed is a priority. The construction manager is the primary point of contact for the owner, and cost drives the design. Architectural priorities are secondary in design decisions. “Design-Build” carries some of the same benefits as “Construction Manager at Risk”.
- Contact the ECHO Team at echo@glmv.com for a full owner’s guide to project delivery methods.
4. Realize Cost & Time Savings with Master of Service Agreements
In Master of Service Agreements, a series of projects are bundled, requiring just one bid, review, and contract process. This provides an opportunity for cost and time savings with your architect and/or general contractor, including quicker response to new projects and efficiencies like shared equipment and familiarity with the site and staff. Often, Master of Service Agreement will apply to smaller projects and include a maximum project cost. If done for larger projects, separate budgets and a “Construction Manager at Risk” for each project is highly recommended.
