Anyone who’s ever worked in commercial construction has heard the stories of major projects, such as the Big Dig in Boston, that significantly miscalculated budgets and broke the bank with a cost overrun of 190% [1]. It’s an extreme but prime example of just how important the preconstruction phase is to any construction project. Crucial steps completed during this planning phase transform initial ideas into reality. How preconstruction is handled can mean the difference between a successful project and mistakes that cause budgets and schedules to go off the rails.
According to McKinsey’s Construction Productivity Imperative report, 98% of commercial contractors experience project delays or cost overruns. Even more concerning, these projects are 80% over budget on average [2]. That’s why involving all project stakeholders early is key.
Here are four ways that Riley Construction ensures that preconstruction is a budget- accurate, efficient and painless process.
ADVOCATE ON DESIGN
Defining a detailed project scope early is crucial as it can help steer design to allow for a much more efficient preconstruction process. What happens when you don’t? Owners who reach the stage of completed drawings and projects going out to bid sometimes find out their plans are way over budget, even as they are getting ready to break ground. Then, they must scale back and make revisions, delaying the schedule. This means they may no longer get the initial project they fell in love with.
Riley can help prevent headaches and disappointment by engaging early with architects and engineers as plans and materials are evaluated. Our team understands that the cost implications for design changes are not always obvious and advocates for project owners to help determine what will work best within existing budgets. While some design changes may be needed, they will happen much earlier in the process and not impact schedules.
When possible, having Riley help select and oversee the architect provides a single point of contact that the owner can rely on to oversee the design, budget and schedule. For example, being more engaged early enables Riley to guide the design team to select products and finishes within the budget’s parameters. That keeps the project on pace and avoids last minute change orders that can cause delays.
APPROACH ESTIMATING DIFFERENTLY
It’s never too early to involve a preconstruction team in the estimating process. Sometimes, the process starts before land is purchased and estimating helps owners determine whether to move forward with a project. Sometimes it happens when a design is already finished. Either way, accurate budgeting is essential. If estimates are only based on historical rates from a year or so ago or similar projects, as is typical, budgets are going to run into problems.
Riley takes a unique approach to estimating called Smart Rates. These rates look beyond historical costs and consider a combination of client needs, project specs and local market conditions and pricing to create a highly accurate cost estimate. For example, a publicly bid project came with a 30-page detailed estimate from a consultant using only historical data and when it was put out to bid, it came back $3 million over budget. This caused delays because additional board approvals were needed for more funding. Having a more accurate budget earlier could have prevented this kind of situation.
Riley helps clients understand costs in every aspect of design, from conceptual and schematic to design development. We build trust by transparently explaining what things will cost so customers understand that we are looking out for their best interests.
BUILD CROSS-COLLABORATION
Riley offers a unique collaboration between its operations and estimating teams during the preconstruction process. Because they are all involved earlier, they better understand client goals and can help deliver the best value with the most qualified contractors.
This collaboration and a strong communications strategy leads to a more seamless transition from the design phase to construction. Riley holds regular meetings with the architect and owner to manage preconstruction deliverables, such as when drawings need to be completed and submitted for permits. It’s important to understand whether portions of the drawings should be released as early bid packages to expedite the procurement of long-lead-time items like precast wall panels, structural steel, HVAC equipment and electrical gear.
Because the operations team better understands the estimates and the scope, they can move faster, incorporate Riley’s InSTEP® planning process earlier and make smarter scheduling decisions. For example, one customer wanted to break ground in the fourth quarter of next year. While building in winter was not ideal due to extra heating costs, that needed to be weighed against the potential revenue lost if they delayed breaking ground until Spring. Riley’s operations and estimating team helped owners weigh the financial implications of that decision.
ANTICIPATE AND MANAGE RISKS
From weather to material shortages or environmental factors, there are potential risks in every project that must be considered during preconstruction. Riley identifies these risks and develops a preemptive strategy for managing them.
Budgets must also account for any unexpected surprises – with a built-in safety net. For example, if a soil test shows some contamination, we will calculate the cost ranges of the potential impact and narrow it down by performing additional field studies to reduce risk. That provides the project owner with a good understanding of the potential costs of that issue, so they are not surprised by an unexpected change order during construction.
We also can ensure the project is covered for compliance with the strictest insurance requirements, and we can add a premium time allowance and budget to have people work during off hours on an as-needed basis, to avoid patient and staff disruptions.
By engaging early on design, estimating appropriately, collaborating and managing risk during preconstruction, Riley can take the worry out of planning and make the process easier and more enjoyable.
Learn more about Riley’s preconstruction process and reach out to John Delavan, V.P. of Preconstruction, at johnd@rileycon.com or Amanda Toepel, Sr. Project Estimator, at amandat@rileycon.com.