How Developers Can Curb Rising Construction Costs
As construction costs continue to increase, developers can benefits from better pre-construction planning and scheduling.
“In the rising cost environment, today’s developers can deeply benefit from utilizing pre-construction services, which involve planning and scheduling, identifying potential problems, scope of project, estimating costs, and analyzing project needs,” Richard Lara, president and CEO of RAAM Construction, tells GlobeSt.com. “This is a service our firm conducts regularly, especially in the affordable housing sector, and it can be a game changer for developers, who understand that it’s essential to keep costs down without sacrificing quality.”
The pre-construction stage is the ideal time to make decisions that can have a significant impact on costs without sacrificing quality. Specifically, this means consulting a full team as early as possible. “At this stage, we can value engineer the entire project before any permitting or approval processes begin. This is essential to avoiding ancillary costs that can come from design changes down the road,” says Lara. “By bringing in a contractor before presenting the project for approvals, developers can better understand what will and won’t work from the start, ultimately saving a tremendous amount of time and money.”
Lara has seen developers lose money and time by permitting a site and consulting only an architect in the pre-development stage. Planning out the full project is essential to cost savings. “We have repeatedly seen developers work with an architect to create a plan and rendering for a new multifamily development, spend time and money to get the project approved and permitted, only to find out later that the project is too expensive to build as designed,” he says.
Pre-construction planning isn’t the only way to mitigate rising costs. Lara says that implementing economies of scale and relying on professional relationships is another method for curbing costs. “Bundling purchases and buying materials in bulk and in advance to take advantage of discounts providers may offer,” he says. “Deep vendor relationships are also important, and developers should ask their GCs about longstanding connections that may result in cost savings.”