Construction Executive – Managing Your Business: Preconstruction Tips to Keep Construction Projects Under Budget
The person in charge of preconstruction essentially sets up the project for either success or failure. First, the preconstruction manager has the daunting task of developing an accurate, realistic budget to win the construction project, while also making a fair profit. Then, the preconstruction manager functions as one of the most important members of the construction team.
Construction companies may benefit from approaching every project with the mentality that all construction projects are over budget. Start by trying to get an understanding of the owner’s budget or expectation. Unrealistic or not, that should become the financial target. As a project manager, it is important to avoid viewing a budget as a bunch of numbers; instead, look at it in a way that helps the owner formalize his dream by providing a cost solution and budget boundaries.
Construction projects begin with the project budget, but as the project scope develops, so must the budget. The preconstruction manager bases the budget on a combination of subcontractor proposals, historical data and experience and knowledge, ensuring all items have been allocated and properly accounted for.
The preconstruction manager must also be able to understand how to make a project more efficient. This often means trimming the budget wherever possible. For example, it may help to minimize exterior concrete tilt-up panel height to save dollars or slope the roof steel to eliminate tapered roof insulation.
The preconstruction manager should also approach each project with an owner’s mentality in an effort to provide building solutions that will be beneficial to the owner in the long run.
There are several key elements involved in developing and maintaining a good construction budget:
Scope of Work and Project Clarifications
Even when the project does not have any drawings or defined scope, the preconstruction manager must still develop a realistic budget. A major part of the budget development and management is defining the project scope and accurately communicating it to the owner. The preconstruction manager must develop a scope of work and project clarifications to describe the project components and the proposed materials, which correlate with the project budget. This scope of work functions as the baseline of the budget generated, and as scope is added or deleted, the project budget is adjusted accordingly.
Subcontractors should be properly evaluated and prequalified prior to participating in the budgeting exercise. Subcontractor proposals should also be thoroughly reviewed and analyzed for accurate comparison to other proposals. This is a responsibility that falls on the preconstruction manager, who analyzes each proposal for full inclusion while paying close attention to the subcontractor exclusions.
In the design-build scenario, the project scope of work is continually evolving, and it becomes hard to communicate the design development to subcontractors as a result. The preconstruction manager must then make necessary adjustments to the budget to accommodate any item or scope the subcontractor has excluded. Using historical data, scope holes are priced and included in the project budget to assure completeness.
Further, while cost management is essential, it is even more important to select the right team members who can assist in the budget development and provide the adequate amount of manpower to execute the work within the projected project completion timeframe.
The best time to identify cost saving options is prior to construction and during the preconstruction phase. Value management begins in the design phase and then continues throughout the life of the project. The preconstruction manager works with the client and design team to review the constructability of the project and to provide feedback and recommendations regarding material selection and construction details that will reduce costs while maintaining the desired aesthetic and quality objectives. The preconstruction manager understands that savings from construction costs flow down to the client’s bottom line.
The preconstruction manager should identify the project risk and have a good understanding of how to manage that risk, or even mitigate it. For example, site work is often the largest risk on a project. The preconstruction manager should talk to consultants, subcontractors and the civil engineer to develop a plan to manage the risk and accommodate within the construction budget.
Once the budget has been established, the preconstruction manager must manage it through the entire design phase of the project. This includes orchestrating with the design team so they design and draw exactly what was contained in the budget. While the design team incorporates code related items, the preconstruction manager will adjust the budget as necessary so that it remains true to projected costs, while managing scope creep.
The preconstruction team leader is tasked with having a big-picture view with an eye for every detail, especially the budget. Follow these guidelines to help turn your projects into a win-win every time.