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Construction Costs Unknown

FRIDAY, MARCH 31, 2017

By Letsfixconstruction.com


More items for Good Technical Practice

In my first post—the one titled, “Is Construction Broken?”—I listed a few ways that the profession of architecture is contributing to how construction is broken and needs to be fixed. I’m providing the link so readers can go back and refresh their memories on the whole discussion, but for the rest of this post I will be addressing one observation, which reads in part:

“(Most but not all) Architects have very poor knowledge of how much construction costs, and use loose rules of thumb to try to determine whether or not their designs are within their clients’ budgets. They rarely know how the details they create affect the project cost, and the resulting necessary Value Engineering (VE) costs them time, money and prestige.”

Construction
Unsplash via pexels.com

Architects have some tools at their disposal to help them keep their designs within budget.

As I’ve thought more about this, it occurs to me that this is one of the biggest problems facing the profession. The owner’s money is not an unlimited fountain and most projects have some sort of budget, either a hard limit or a “this is where we’d like to be” type of budget. Owners rely on architects to curate expenditures and to develop designs that meet their facility needs.
 
When architects begin with the design concept as the primary driver, or if they have a personal “favorite move,” the client’s budget is already at risk. Swoopy curves and other grand gestures may be considered the fun part for the architect—and even for the building occupant—but complexity often carries a heavy premium.

Design at a Price

I learned recently of an office that designed an S-shaped, low-slung residence with structural insulated panels (SIP) instead of normal framing and sheathing for the roof structure. Each SIP would have needed to be custom made in a trapezoidal shape. Is there any wonder this project was significantly over budget? The resulting VE exercise cost the architects most of their interesting design as well as their (uncompensated) time, while it cost the client its seasonal construction window. It also generally cost goodwill all around.

Similarly, when architects begin with an advocacy statement, urging clients to buy into “green” or other design fads, the resulting project could incur added costs that are difficult to evaluate up front. Whether the project delivers a return on the additional investment is not something that the architect normally has a stake in, or an understanding of.
 
There are other common stumbling blocks. For instance, sometimes owners are not willing to divulge their budgets, or only share part of the picture. Architects should make sure their clients understand that without something realistic to aim toward, they’re unlikely to meet the budget. 

Earlier in my career I was involved with a 12,000-square-foot tenant improvement project for a public entity that, after it was fully designed, was priced by a contractor $400,000 over the owner’s budget. Given that there were only a few design bells and whistles in the job, I didn’t see how $30 per square foot could be cut out. I later learned that the architect had an incomplete picture of what the budget included (an amount that the architect assumed included just hard cost also took in a range of soft costs and fees). Had there been an understanding to begin with, the architect could have advised the client that the construction cost wasn’t reasonable and they’d either have to add dollars or shrink the project.
 
Construction costs vary and two nearly identical projects can have wildly different prices based on numerous factors, most of which are out of the architect’s control. These factors include the general state of the economy; location of the job; availability of skilled labor; level of competition between subcontractors or suppliers; labor union strength; material shortages or surpluses; quality of the documents; method of procurement; and allowed duration for construction.

Given the myriad possible permutations, it’s unfair to blame architects for not being able to accurately predict a project’s cost. Contractors’ estimators, who price work every day and have a far deeper understanding of the work climate, are sometimes surprised when a trade’s pricing is different than predicted. Given this, it’s not particularly surprising that architects routinely fail to design within budget.

Architects’ Toolbox
 
Still, architects have some tools at their disposal to help them keep their designs within budget.

  • Historical data: If a 50,000-square-foot hospital addition they designed cost $15 million two years ago, it stands to reason that a similar project will cost roughly the same, plus some escalation, plus or minus the previously mentioned market influences that the architect can understand and evaluate in discussion with contractors.
     
  • Comparable materials: We understand that building materials have a spectrum of costs. For example, cast-in-place terrazzo costs more than porcelain tile, which costs more than vinyl tile; curtainwall costs more than storefront. Having an idea of the per-installed-unit-cost for construction materials can help keep the project on budget.
     
  • Consultants: A large portion of the cost of a project is in the unseen but necessary components. Architects should have value vs. performance discussions with their HVAC, electrical, plumbing and fire suppression consultants. There are many ways to heat, cool and light a building, and budget can drive those decisions.

These are good starting points, but the best resources architects have are their industry partners.

  • Contractors can be hired to perform preconstruction services (or they’ll perform them without a fee as part of a greater project involvement throughout construction) and can evaluate the project’s cost during the design phases.
     
  • Manufacturers’ reps can tell architects whether materials are being used in an economical way and advise on value improvements.
     
  • Specialty consultants (for elevators, building envelope, etc.) have in-depth knowledge of how to maximize and balance value and performance on the areas of their specialty.
     
  • Specifiers, whether in-house or consulting, generally don’t have specific knowledge of current construction costs but can help the project land in the right place on the value performance spectrum.

Given their distance from the actual construction business, it’s nearly impossible for most architects to determine a project’s cost as they design. However, given the numerous opportunities to ask for expert aid, it’s inexcusable for a project to come in more than a few percentage points away from a reasonable budget.

About the Author

Elias Saltz

Elias Saltz, CSI, CCS, LEED AP, is an architect and construction specifier with Eckenhoff Saunders Architects in Chicago. He has been working in the industry for over 20 years and is primarily responsible for preparation of construction specifications for all of his firm's projects, spanning the range of project size from tenant improvements to new hospital facilities. His responsibilities include understanding project requirements, code requirements, building envelope performance, and construction document quality control. Additionally, he has a blog called “The Skeptical Specifier” and participates in LetsFixConstruction.com.  He is the past president of the Chicago Chapter of CSI.

You can follow him on Twitter @EliasSaltzCSI.

ABOUT THE BLOGGER

Letsfixconstruction.com

Let's Fix Construction is written by a collective group of construction professionals involved in letsfixconstruction.com, an online impartial platform to provide forward-thinking solutions to many longstanding issues that have plagued construction. Organizers and contributors seek to better the industry by sharing knowledge, while creating open and positive communication and collaboration. Many of the posts have appeared first on letsfixconstruction.com and are republished on Durability + Design with permission. Author information is available at the bottom of each blog entry.

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Tagged categories: Architects; Budget; Building owners; Commercial Construction; Construction; Construction Specifications Institute; Consultants; Contractors; Designers; Residential Construction; Specifiers

Comment from Jesse Melton, (4/3/2017, 8:18 AM)

The imbalance between design and engineering is the driving force behind innovation. Attempting to harmonize design and engineering can only go two ways; square or round. It doesn't matter if you're talking about a building or a shampoo bottle, design and engineering must be at odds with each other or we long ago eliminated the need for either.

East Germany was a great example of the statistical building philosophies which must arise when design and engineering get along. You can make it bigger, but it's still going to be square or round. That just sucks.

Harmonious design and engineering is a sterile state of existence, which is why it's never sustainable. You have to prevent anything new from becoming part of the social fabric or it throws the numbers off. In a world of cubes and circles, the ellipse is a coup d'etat which cannot be allowed to survive.

I'm not sure construction is broken, and even if it is, I'm not sure fascist architecture is a solution.


Comment from M. Halliwell, (4/3/2017, 5:05 PM)

Certainly, engineering is more function over form and architecture is more form over function. Sure, Eastern Block design was far more functional and scalable, but it didn't preclude some wonderful forms (just look at the churches in Moscow). That said, there's a lot of designs coming out of architectural houses these days that are an engineer's (and construction company's) worst nightmare in trying to make the design into a real building. Jesse, I agree that something more than basic engineering is needed to liven things up... but I also agree with Elias that some early and appropriate input in the architecture stage can lead to better budget outcomes for buildings that aren't "cookie cutter" designs. Just needs a bit more communication, I think.


Comment from Steve Black, (4/5/2017, 7:57 AM)

From the contractors perspective it is ill advised to advocate for "free" Preconstruction services from a contractor. You will always get what you pay for. Let's partner up early and deliver a project that the whole team can be proud of without the wasted effort of design, then price, then look for ways to save money, with hurt feelings all along the way.


Comment from Jesse Melton, (4/6/2017, 8:32 AM)

Architects and contractors have incompatible goals. If you try mash them into a manufactured collaboration you're giving total project control to the most effective bully.

Do you know why you never let software developers design software? Because their priorities are completely out of line with the priorities of the client. You get big chunks of prefab copy & paste code that ultimately force change in business rules. Which is exactly the opposite of what software developers are supposed to do. What they're supposed to do is build what they're told to build. If they want to make design decisions they have chosen the wrong career.

Architects and contractors aren't different fields just for the sake of being different fields. They're different because their goals aren't compatible.


Comment from Neil O'Connor, (4/6/2017, 11:58 AM)

Bringing together the "construction team" including design team, general contractor / construction manager, and most of the larger subs including framing and finishing subs together in the preconstruction phase to work out the issues prior to finding the issues deep in the construction phase may not be “free” but can save a lot of money, time, and frustration. The keys to success in this type of model are to build a trusted team and being open to alternate ideas. Control freaks need not apply. Use of BIM modeling as part of the preconstruction process including virtual reality and augmented reality viewing systems adds the ability to allow the entire team to look at the same issue at the same time and develop the best overall solution. This type of team work does require some paradigm shifting that a few enlightened management individuals and larger proportion of the younger generations can embrace.


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