There’s a reason that commercial construction projects are notorious for going over schedule and budget — in fact, it’s reported that nearly 98% of commercial construction projects end up costing more than their original budget. As a facility manager or project manager, how do you explain that overage to those who invested in the financing of the construction?
While some extrinsic budgetary factors are unavoidable, there are some steps you can take to avoid costly surprises that can tank the ROI of your construction.
Plan your project to the hilt
“Measure twice, cut once” is applicable here more than ever. If you think that you’re overplanning the design or layout, you aren’t. Change orders during the construction process can slow everyone down. On-the-fly tweaks can end up costing much more than if the same factors were originally integrated into the blueprint.
But keep an open mind
Even with the right planning, you could be faced with having to choose an alternative to the ideas you cemented in place before work started. These decisions may be made under duress, but stay flexible in the face of change and take time before locking in a final answer. Unwillingness to waver from your original vision may result in extra costs if you’re demanding perfection from your plan.
Get the timing right
File this under Planning 101, too: When you start your project matters. Like every industry, commercial construction has its seasons, too. The costs associated with building during peak activity will automatically rise due to supply and demand. On the other end of that spectrum, winter weather could delay timelines and cause costly shutdowns where no one is working but you’re still paying the bills.
Find the source
Sourcing is perhaps the most important budgetary consideration next to planning and makes up a good portion of overall construction costs. Whether you’re in charge or you leave the sourcing up to your contractors, make sure to choose a domestic supplier to avoid the extra cost associated with delays when shipping goods from another country.
Grab some extra credit
Even if you watch your budget like a hawk, you’ll still need to account for some wiggle room — but it shouldn’t include your business cash on hand. It’s a smart idea to keep a line of credit open to defray unexpected costs without dipping into your liquidity. Lack of cash flow means you don’t have the tools you need to keep your bottom line growing.
Don’t overlook operating costs
Your building still needs power and other utilities during construction even if the doors may not officially be open for customers. You need to consider where the capital for these bills will be coming from while work is being completed and include that in your overall budget. It’s especially important to maintain liability insurance during a renovation to keep everyone protected and avoid an expensive lawsuit later on.
Reuse what’s already in the building
If you plan to renovate instead of build new, think about existing systems. If they’re in good working order and can be reused during a renovation, do it! Installing new HVAC, plumbing, electrical and other major building systems can be a huge expense, so use what you already have and build to suit these recycled elements. However, if your systems are outdated and not energy-efficient, replacement can offer a lifetime value that can offset upfront costs. Work with your contractor to learn about options for reusing materials.
Connect with the right contractor
One surefire way to check all the cost-cutting boxes above? Partner with the right commercial construction contractor in the first place. Take your time finding the right contractor, ask questions about licensing and certifications, make sure their work aligns with your vision, and demand they communicate with you every step of the way. Putting a seasoned pro on the job helps ensure that you’ll avoid costly delays and obstacles that could run your project into the red.
Whether your project is a new HQ or a tenant upfit, it needs to begin with contractors who are ready for the job. G. S. & S. is an expert in all construction areas, and experienced with architecture that takes the New Madrid fault into consideration. We are a 4th-generation St. Louis-based family-owned firm. Get in touch to learn how we can help your next commercial construction project go off without a hitch!