Planning For Construction Cost Escalations

By Richard

Since late 2003 construction costs nationwide have been rising faster than the rate of general inflation, especially in the arid West. Various indexes have put national construction cost increases at 4 to 10 percent over the past year. Moreover, material costs nationwide have increased more than 2 percent just this September alone. And, with the impact of the recent hurricanes now being felt, construction costs are expected to rise 5 to 10 percent nationwide in the future.

Why is the West feeling the pinch? Increasing construction costs can be attributed to two major factors: an increase in new construction starts, and a shortage of materials. Current and planned construction starts alone are currently at $1.5 billion.

The effect is that architects, general contractors, engineers and sub-contractors have an abundance of work from which to chose, and therefore can now be more selective than in past years. Accordingly, competition is less price-sensitive. Since we have emerged from the "contractor surplus" seen in the early 2000's, there is now a relative "shortage" of qualified professionals to fulfill the demand of current and future projects.

Material shortages are another reason for construction cost escalations. Local material shortages are now being compounded by the nation-wide effect that the natural disasters in southeast United States have brought on. Material shortages not only add to the direct costs of materials, but can also add additional lead time to procurement. This can potentially extend the duration of project construction and additional costs in areas such as general conditions as well.

So what should owners do to put themselves in the best position for a smooth project? The following are the three most important concerns an owner should be aware of when beginning a new construction project:

1. Pick a sharp design firm. You want to ensure that the design firm you choose can give you the design aesthetics and functionality you desire, but is also looking for cost-effective solutions behind the scenes.

2. Pick a contractor with strong preconstruction services. Preconstruction is responsible for setting costs, scheduling, and determining alternative methods solutions. A reputable Construction Manager/General Contractor (CM/GC) will identify long-lead times associated with certain materials and plan for them accordingly so that there are no interruptions in construction. Also, if there are materials that are about to rise in cost, your CM/GC can order early to lock in a lower price. Additionally, it is in the preconstruction phase where your schedule is reviewed to identify if a possible shortening or shifting will enable you to realize additional savings. As you can see, having expert Development Support is critical.

3. Involve your general contractor early in the process. Many projects are started with an under-funded budget. You need to have accurate, real-time costs and data to properly prepare a budget for a project. Too often, budgets rely on dated or inaccurate information. This is why it helps to bring in a contractor early on.

While owners, architects and contractors all work together as a team, architects naturally have more control over design, while contractors have more control over costs. The earlier you bring all parties together, the less budget problems you will have later down the line.

Construction cost escalation is an issue that is not going away soon. There is no way to completely negate the issue, but with proper planning and the right construction and design teams, budgetary issues can be identified early on, and alternative method solutions can be pursued to keep your project moving forward on time and on budget.

Rich Allison oversees the Colorado office of Adolfson & Peterson Construction. He directs all estimating, scheduling, and construction project management activities, and is responsible for the strategic planning, risk management and operational decisions of the Colorado Region. For more information, see A&P's construction management resources. Rich has been involved in all aspects of A&P's business development and construction management for more than 25 years. He can be reached at 303-363-7101.

Rich Allison oversees the Colorado office of Adolfson & Peterson Construction. He directs all estimating, scheduling, and construction project management activities, and is responsible for the strategic planning, risk management and operational decisions of the Colorado Region. For more information, see A&P's construction management resources. Rich has been involved in all aspects of A&P's business development and construction management for more than 25 years. He can be reached at 303-363-7101.
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Safety Tips For Builders

By Nares Mahawar

Builders should always take the correct precautions to ensure their safety on building sites. This article includes a few guidelines which you should follow as a builder to ensure your safety on a construction site. Please note that this article provides some general guidelines only and are simply recommendations from the author. For more comprehensive safety guidelines you should consult your building company.

Ladders
Builders acquiring injuries from falling off ladders are not uncommon. As a builder don't be tempted to be macho. It is important that you anchor the top end of your ladder to something secure and avoid taking risks with old broken ladders.

Scaffolding

As a builder don't be afraid to request extra scaffolding or refuse to work on it if you think it is unsafe. Scaffolding is a relatively cheap process and a lack of it is not a risk worth taking. Also don't try to take shortcuts and rearrange the scaffolding if necessary.

Lifting

Back injuries are one of the most common types of injuries experienced by builders. Back injuries are easily avoidable by using the correct lifting techniques and by avoiding trying to lift heavy loads alone. Always ask somebody to help you if the load is too heavy as you don't have to be macho just because you are on a building site. It is better than ending up with a slipped disc.

Head Injury protection

It is a common criterion of building companies working on large sites to have all their builders wearing hard hats at all times. However on small sites it is rare to find even a single hard hat available, let alone a builder wearing one. The main reason for this is that most builders working on small sites feel that hard hats are for the 'big boys only' who work on larger developments on and hence shun them at all times. However smaller sites are no less dangerous than larger ones and therefore it is certainly worth making the effort. At very minimum they should be available on the site so that they can be utilized during works where there is a risk of obtaining a head injury.

Steel toe-cap boots

Broken or bruised toes can be easily avoided by wearing toes with steel caps. Most builder merchants offer a variety of steel cap shoes which should be an essential part of any builders working outfit.

First aid kit

All builders should have a first aid kit available on site. Most injuries received on a building site are thankfully minor and can usually be fixed with some TCP and a bandage.

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LEED - Impact on New Construction

By Jeff Schaefer

We've all seen the signs indicating a new construction project is underway. In this day and age more and more are becoming environmentally conscientious. What does that mean for those who are in the Construction field? It means they need to be on the cutting edge of green technology.

What is LEED? Leadership in Energy and Environmental Design (LEED) is basically a third-party certification program. It is a nationally accepted organization for design, operation and construction of high performance green buildings. This ensures the buildings are environmentally compatible, provide a healthy work environment and are profitable.

LEED certified buildings are commanding higher rental rates and great occupancy than the non-green buildings. This trend cannot help but impact the Investment community. The supply while gradually increasing is not keeping up with the demand for green buildings. LEED buildings are awarded points for sustainability for things like energy-efficient lighting, low-flow plumbing fixtures and collection of water to name a few.

Recycled construction materials and energy efficient appliances also impact the point rating system. In the political climate of today's world, as the earth's natural resources are being depleted at an alarming rate the construction industry is being compelled to look at alternatives to traditional construction materials and styles.

More and more legislation is being passed that impacts not only zoning but environmental impact for new construction. LEED certification and Energy Star ratings seem to be the future of construction projects. It's important to not only build beautiful buildings but buildings that are energy efficient, healthy for their occupants to exist within and that they not harm the environment.

Those of us who populate those buildings can feel good about the part we are doing to help the environment and preserve what is left of the environment after years and years of taking natural resources for granted. Green technology as it continues to catch on will generate additional jobs and challenge conventional wisdoms. Look what happened in the auto industry with the electric cars. It didn't really catch on despite the fact that many who had the opportunity to test drive them wanted to keep them. Instead they were basically scrapped because of big business. Now we have hybrids and more and more companies are looking for ways to create cars that are more environmentally friendly.

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Construction Company - Requirement For Everyone

By Omar S Mahmood

Home Construction is a cumbersome task because it needs lot of time and dedicated efforts to produce desired results. Every people does not have that much experience of building construction. Its really a tough science, its does not matter you are building a new home from scratch or renovating your existing home, You need experts help, or advice every time you think of it.

Well, there are several construction consultants or construction companies with several years of relevant expertise to assist people in building their homes, shopping malls, or offices. They are not only helpful in construction, in fact they provide one stop solution of all tasks related to building or any type of civil constructions including planning, elaboration, construction, furnishing as well as interior and exterior decoration.

There are several things which only an expert can suggest better, like materials needed in making different portions, their ratio and proportion depending on the geographical location and other factors. Another problem is with the need of civil equipments needed in construction, a normal person cannot arrange every equipment for quick, efficient and perfect work. This is what you can achieve by hiring services of a construction expert only.

Construction Companies helps you determine the time required in construction as well as the budget required. There are other requirements too which needs to be finalized before shifting to your new home of office, that includes several licensing and permissions like electricity license, phone connection, cable connection, fire alarms and emergency facilities (in case of offices). Another important issue is insurance of home as well as mortgage loans installments fixation. Construction companies helps you with everything, making you relax from all worries of construction.