Controlling Cost on Your Construction Project

Posted by Craig Jones on Mar 20, 2018 8:00:00 AM

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I’ve worked as a general contractor for over 30 years and the number one question I get asked is, “How can we reduce project costs?” Over time, I have learned that although there are things that we (your contractor) have no control over, there are still several creative ways we can help, and better yet, there are factors that you (the client) can control yourselves to reduce your final bill. So what are they? 

We've partnered with The Bridge Group to offer 2 perspectives on how to save money on your next construction project. The Bridge Group offers tips to Construction Managers, Facility Managers and Operation Teams to lower construction costs in their blog post, Three Simple Ways to Control the Cost of your Next Construction Project.

Alternatively, I've outlined these 3 key cost contributors below, and how you (the client / end user) can take matters into your own hands to reduce costs.

Cost driving factors that your contractor has NO control over

  • Commodity prices are rising making the cost to produce and ship materials for your project higher.
    • Copper is up 47%
    • Crude oil is up 34%
    • Metal studs are up 20% and projected to increase 20% - 30% more
    • Drywall is projected to increase another 5%

  • Assembly Bill 1701 went into effect on January 1, 2018, which now makes general contractors (GCs) financially responsible for any subcontractor who fails to pay their employees, even if the GC has paid the subcontractor for the work completed. This requires GCs to assume liability for unpaid wages, fringe and other benefit payments or contributions, including interest owed by subcontractors to their employees. Ultimately, this new law will likely lead to higher construction costs.

  • The new OSHA Silica rules have caused subcontractors to implement new procedures and safety measures on their projects to comply with such rules, which has the potential to increase project costs.

  • Several natural disasters have also impacted costs: Hurricane’s Harvey and Irma resulted in $200 billion in damage and the Northern and Southern California wildfires increased our already taxed housing situation which all cause further stress on construction materials and labor.


Areas your general contractor can help reduce costs

  • Understand city plan check and inspection lead times to factor into the schedule and avoid overtime labor costs

  • Prepare effective schedules during pre-construction to sequence the workflow and maximize efficient manpower usage

  • Involve AV, IT, cabling, and security subcontractors (and the Owner stakeholder for these trades) early in pre-construction so that design is final and priced into the project to eliminate change orders during construction

  • Set realistic construction schedules - if the schedule is too short, subcontractors will price labor higher to meet schedule demands

  • Order materials early on projects so that no overtime is necessary for installation

  • Work closely with the design team to select readily available materials and products

  • Hire key subcontractors early to coordinate with the design team and existing building conditions to eliminate pricing contingencies

  • Use new technology to streamline the design and construction process. Some examples of new technology are mobile applications and cloud storage for quick access to important documents; laser scanning to help capture accurate space conditions and drones to help survey the space from a different vantage point.

  • Use modularization and prefabrication when possible to reduce field labor costs


How YOU can control your own costs

There are ways that you can take costs into your own hands while selecting and conceptualizing your space. We’ve created a tool called the Bay Area Cost Comparison to help guide you towards a less expensive project. This white paper will give you an idea of what an average project might cost in your area, what factors drive cost escalation, and what cost saving measures to look for.

Here are the most important factors that you can control to reduce your own construction project:

  • Pay attention to the existing conditions while selecting your space. The current condition of things like restrooms, drywall, floors, window shades, etc. can either save, or cost you a lot of money.
  • Mind the 3 F’s: fixtures, finishes and features. Work closely with your contractor to determine material cost and availability when selecting finishes like millwork, flooring, ceiling and special features like stairs, Audio Visual or kitchen appliances. Light fixture type, lighting distributors, control systems and existing wiring will also drive your costs.

  • Examine your HVAC system’s existing condition to check the condition of the  medium pressure loop, VAV boxes, ductwork and controls. Replacing any of these elements can be costly.

Tips for Construction Managers & Facility Management professionals

The Bridge Group outlines their tips for construction professionals to strategize cost saving measures for their clients in their blog post, Three Simple Ways to Control the Cost of your Next Construction Project.

 

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 START CONTROLLING YOUR CONSTRUCTION COSTS HERE

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Topics: costs, Construction costs, construction regulation, AB 1701, Silica, schedule, budget, controlling costs, OSHA, plan check, general contractor, reduce cost

Why is the US not fighting equally hard for families?

Posted by David Hayes on Mar 13, 2018 1:15:22 PM
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International Women’s Day inspired me write about women in construction, but that sent me on a different path that encompasses not only women, but families as a whole, and the support system that our country provides to keep highly skilled and intelligent individuals in the workplace.

The US government hasn’t decided to prioritize and invest in its own citizens who want an equally prosperous life – families. Families with children have to choose between not returning to work or paying exorbitant childcare costs. Why?  The US government offers a measly $5k child credit in the new tax law. Big deal, $5k buys you childcare for one or two months only.  Why not offer $24k-$30k per child in credit or make childcare costs 100% deductible?  Let’s invest in our most educated resource – our workforce.  A tax credit means you have to earn money to get it, and both women and men want to work, thus will earn more, pay taxes and can use the credit.

Did you know 57% of students in college and graduates are women?  Yet after having a child, many families must make the difficult choice for one of the parents (in most cases, women) to stay home over returning to work due to the cost of childcare. This means we have a country where around 50% of our highest educated people are leaving the workforce.  If the key to a balanced and successful country is getting its citizens educated and contributing to the economic engine, why are we forcing families to remove one educated job participate from the economic machine? Why are we forcing them out of work when we need all the talent we can get?

Laws have improved giving both mothers and fathers more time off to bond with their babies but more can still be done. We need tax laws that support women, men and families and make the financial burden of childcare costs go away.  If we do not push our legislatures for it, we will continue to lose our highest educated resources.

 

Women in Construction

When I became a partner at Skyline in 1996, it was a newly-founded company. There were no women in our project management department. ZERO.  22 years later, 25% of our project management group and 40% of our leadership team is comprised of women.  We are about to appoint our first woman to our board of directors, Jessica Carps, and we are a better organization because of this depth and brain power.

 

What are we doing at Skyline to foster women in construction?

Twice per year we evaluate the salaries of employees to ensure that women at Skyline are consistently compensated with their male counterparts and make necessary adjustments to level the field when discrepancies appear. Last year, the Skyline Women’s Network was created to promote and support inclusion within our organization.  We are also trying to take matters into our own hands in terms of supporting our talent pool by developing a “menu” of benefits that allows every employee to select the options that are pertinent to them based on their stage of life–this includes providing financial aid to offset childcare costs.

Topics: women in construction, workforce, childcare, costs, cost of living