October 22, 2018

Keeping Construction Costs in Check: Four Strategies for Reducing Expenses on Your Next Project

Construction costs have been rising steadily over the past four years, and there is no sign that the pace will slow anytime soon.

A tight labor market and increased material costs are largely to blame for the uptick. In fact, the Associated General Contractors of America reports that the cost for all goods and services used in construction climbed 6.2 percent in the past year.

There’s little to be done about the labor market or the high price of materials. But owners do have options for keeping their expenses in check. The number one way to contain costs: enlist the expertise of a design/build team. From there, a number of strategies can be employed to lower your outlay.

Engage a design/build team

When you choose the design-bid-build method, in which the project is designed and then a contractor is retained, you are operating with only half of the information you need. Material costs, scheduling decisions and construction methods are seldom incorporated into the design process. There is no way of knowing if your vision and budget will line up until after the project goes to bid. If labor and material pricing comes in too high, you could be looking at redesign work, change orders, or both—all of which will inflate your costs.

But with a design/build approach, all disciplines are at the table from the start. Your team can plan and design a project that fits your goals, needs, aesthetics, and financial resources from day one. As a result, construction costs can be guaranteed earlier in the project process.

Moreover, the design/build approach enhances collaboration and problem-solving in your favor. There is no finger pointing to contend with if an issue or question arises in the field. Instead, you have one team at your side working to deliver your vision for quality and performance within your required budget.

Be open to trade-offs in scope and materials

Defining needs versus wants is never an easy conversation, especially when you have multiple stakeholders in the room. But it is integral to keeping the project within budget.

This begins early on with planning and feasibility studies to validate that the project scope aligns with your actual needs. You may find that you need to cut square footage or rethink how you plan to use interior spaces. But it is far less expensive to do this during the design process.

With a design/build approach, you will also gain the advantage of real-time pricing estimates. If costs begin to creep up, your team can offer informed options on more budget-friendly materials or systems. This will allow you to weigh decisions against the bottom line before you go to bid, reducing the likelihood of high-priced change orders in the field.

Make decisions early

Time is of the essence. The longer a project takes, the more it will cost. And given the volatility of materials pricing, the earlier you can commit to design decisions, the better for your budget.

When you work with a design/build team, you have a single point of contact throughout the design and construction process. This reduces communication gaps, which can slow progress, and it enhances collaboration and decision making. You will have access to accurate cost and schedule estimates far earlier in the process, which enables your stakeholders to come to consensus faster. After all, there is no sense in holding multiple meetings about conference room finishes if only one can satisfy your budget goals.

When firm decisions about budget and materials are made up front, the team may be able to get a head start on purchasing some of the bigger-ticket items to lock in favorable pricing. In addition, the team can get started on preconstruction activities sooner, such as permitting. That, in turn, reduces the schedule, shaving costs from the project.

Seek out creative solutions

Every project has unique requirements, which means there is no single tried-and-true method for reducing expenses. However, a design-build team is uniquely positioned to pool cross-discipline talent and knowledge to assemble the right cost-control strategies for your situation.

To gain the full benefit of this approach, you need to work with a team that listens, embraces collaboration, and is vested in solving your challenges. Your team should also be familiar with and forward thinking about different types of materials and construction. For example, exploring prefabricated materials and just-in-time delivery could reduce expenses without sacrificing quality. A contractor that is locked into specific vendors or construction methods limits your options.

Construction costs are sure to continue their headlong pace for the immediate future. But that doesn’t mean you can’t influence the results. By working with a design/build team, you will be better positioned to curb your costs—and benefit from an overall better experience.

Is a new project on your horizon? Get started now on cost reduction strategies. Contact Brian Lacon, Vice President Preconstruction at 513-583-4742.



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