Page 8AA —
COLORADO REAL ESTATE JOURNAL
— November 19-December 2, 2014
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Spotlight
W
ith the ongoing
rebound in the
local economy,
many projects that were
shelved during the recent
recession are coming back to
life. The challenge with some
of these projects is that their
budgets remain based on a
past-life construction market
that featured a large labor
pool, low material costs and
subcontractors eager for work.
Today, these market conditions
have drastically changed.
To keep up with the current
status quo, engaging a general
contractor with an experienced
preconstruction team early
in the project development
propels the project forward
and greatly benefits all parties
with a realistic budget.
Having a knowledgeable
general contractor onboard
during preconstruction to
produce real-time pricing,
feasibility studies and
constructability reviews
routinely reduces the amount
of design rework associated
with pricing challenges.
Redesign inevitably causes
delays for value engineering
efforts and alters possibilities
for building systems and
materials, schedule and
financing.
Contractor participation
during planning enables
owners and developers to
receive more items on their
project wish list also. With the
client, architect and contractor
working together from an
early starting point, time,
energy and money dedicated
to the preconstruction phase is
significantly reduced.
n
Early Changes toMajor
Systems.
A building’s exterior
skin composition and its
HVAC system make up
approximately 40 percent of
a construction budget. These
two systems heavily influence
budget evaluations and shape
a building’s appearance and
occupant comfort so they
are best analyzed during
preliminary design stages.
When making these decisions,
it is important for both the
design team and ownership to
understand how these choices
affect the project financially.
A credible budget generated
by an experienced contractor
allows ownership to convey
to the design team their
top priorities and helps the
architect maintain the overall
design intent.
n
Life-Cycle Costs.
When
it comes to items that affect
building aesthetics and
performance, critical decisions
should not be made in a
vacuum. Life-cycle costs are a
key factor in analyzing major
systems of a building. A team
effort led by an engaged and
experienced preconstruction
group will provide the crucial
information necessary to make
these important decisions.
Along with knowing the
long-term costs, the details
of upfront costs and life
expectancy of all options allow
owners to decide which system
is best for their intentions.
n
Owner Financing.
Another
critical milestone in the
construction timeline is owner
financing. If a project must
undergo design delays for
value engineering, this rework
can delay a loan closing date,
which can impact leasing
activities or build-to-suit move-
in timetables.
Price escalation in materials
and the skilled workforce
labor shortage are issues that
impact a project’s budget. As
the marketplace continues to
grow, these issues are not going
away and have the potential
to drive up financing costs. To
overcome this distraction, it is
important to understand the
project budget early.
The good news about
financing is that there are
more lending sources today
than in the recent economic
downturn. Interest rates are
low, terms are flexible and
today’s lending environment
is more reasonable than in
recent years.
n
Schedule Considerations.
With many projects taking
a fast-track approach, a
preconstruction schedule is
critical to keep all parties on
track. Knowing the best time
to buy certain trades as they
progress through design is an
essential component to the
preconstruction process. An
experienced preconstruction
team understands these
purchasing cycles and works
with the design team to get the
most efficient and preferred
systems selected and under
contract for the financial and
timing benefit of the project.
n
Early Involvement is
Key.
The best advice is to
engage professionals with
preconstruction experience
early in the project
development process, and the
earlier the better. Things to
look for in a preconstruction
team include:
• recent experience in the
product type being constructed
• knowledge of the systems
being considered
• current presence in the
local market
• experience with the local
subcontractor community
The recent project
experience will provide
the information needed
to price complex systems.
Knowledge of the systems will
reduce the learning curve in
understanding the system.
Current presence and local
subcontractor relations is the
final and most important piece
in selecting a preconstruction
team, particularly in
today’s busy subcontractor
marketplace. A local team,
with established subcontractor
relationships, will limit the risk
associated with current labor
shortages and current market
conditions.
Grant Brownback
Estimator, Swinerton Builders
Having a
knowledgeable
general contractor
onboard during
preconstruction
to produce real-
time pricing,
feasibility studies
and constructability
reviews routinely
reduces the amount
of design rework
associated with
pricing challenges.
