For the past several months, builders and developers across the country have been feeling the sting of rising construction costs. And now, in the wake of hurricane Katrina, that sting just got a little more painful. The costs of building materials have not only climbed in anticipation of the huge spending that will take place to rebuild the area, but also because of the interruption in oil production. Petroleum and natural gas are key ingredients in many building products, especially asphalt, roofing materials, plastic piping and insulation. Even before Katrina, the costs of major building materials such as cement and steel were rising steadily.
As a result, architects and general contractors are being asked to keep an extra-close eye on controlling construction pricing by recommending cost-effective materials, and in some cases, alternative materials and methods, to keep the project within budget. The question is: Is the use of alternative or economical materials necessarily a smart idea? The answer depends largely on the size and type of project, as well as the goals and values of the client.
The owners and developers of larger projects, such as 100- to 225-unit condominium projects, apartment complexes or large commercial buildings where the costs can really add up, can potentially see meaningful savings by substituting alternative materials. The major factor in considering these savings comes down to this: the cost and time to redesign and reprice vs. the impact of the savings on the overall construction budget.
The same does not necessarily hold true for smaller, typically suburban or urban infill projects. Bryer Architects, a Cambridge-based architecture and interior design firm, which specializes in 10- to 35-unit multifamily residential and commercial projects in New England, has not felt pressure to substitute for lower quality materials as the only option for cost control and construction savings. The reason is simple: experienced owners and developers do not want to cut costs at the expense of compromising or cheapening their project in a competitive urban market like Greater Boston. This holds particularly true for the “buy & hold” clients that we work with. Unlike developers who build to sell, many of our clients are in it for the long-term. Life-cycle costs are an important consideration for them. As a result, they want quality materials because they know there will be less maintenance and replacement issues down the road.
Instead of seeking cheaper materials, our clients are asking for construction cost estimates, along with several alternate design scenarios, as early in the process as possible. This early cost modeling helps them stay ahead of unexpected cost changes and allows them to make decisions about alternate design options very quickly. We have also seen some of our clients return to the traditional bidding process, where instead of working with a construction manager, they contemplate bidding projects to selected general contractors in an attempt to drive down the construction price.
Another important and often overlooked consideration for projects both large and small is redesign costs, and the subsequent time delays. When a substitute material is proposed during or after construction pricing, the construction documents frequently must be revised to some degree. So, the question is simple: are the cost savings from using an alternative or substitute material – stucco instead of brick or stone for instance – going to significantly outweigh the redesign costs and the impact on the construction schedule? If so, then the change is worth considering. Remember, redesigning a smaller project during construction is going to be comparatively less cost effective than on a larger project. The economies of scale realized on redesign of large projects are just not as likely on a small to midsize project.
We share our client’s concern over rising building costs. We stress careful planning at the very beginning of a project by letting our clients know the building material options and relative costs that are available. We also emphasize that value engineering is much more effective when done in the preliminary design stages of a project, not when a project is out to bid and over budget. The key is early planning and flexibility. We advise our clients not to lock into the final design until we have explored the alternatives and fully examined the potential costs implications. The more they know up front, the less surprises down the road.
