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What Influences Construction Cost the Most

What Influences Construction Costs the Most?

There are many factors that influence the cost of construction. Some are obvious: land acquisition, permits, material and labor costs. Then there are the future costs or lifecycle costs to consider: maintenance, repair, replacement—the cost of keeping the facility and its systems up and running over the life of the building.

But time is money, and a poorly run project, or one that does not meet the owner’s specifications or budget from the start, will result in delays. This means the owner can't occupy the building on schedule and the cost of the overall project increases.

One of the most effective ways to control construction costs is to establish early involvement on behalf of the owner, the designer and the contractor. This may seem obvious, but under the traditional method of construction delivery, the owner commissions an architect or engineer to prepare drawings and specifications, then separately selects a contractor by negotiation or competitive bidding at a later stage in the project’s development.

This can present a number of problems for the owner.

Can the design be built for the proposed budget and within the desired timeframe? If the project needs to go back to the drawing board, how many months will be lost? What if the architect and contractor disagree? How many contracts need to be managed by the owner?

design build vs. traditional construction delivery methodIn contrast, the most effective way to achieve early contractor involvement is by employing the design-build project delivery method, pictured here. Design-build streamlines project delivery through a single contract between the owner and the design-build team, creating an environment of collaboration and teamwork between the designers and construction team.

[Learn more about design-build with this free eBook]

In addition, pre-construction services provided by the contractor, such as feasibility studies, financing options, site selection and logistics, conceptual planning, value engineering and scheduling provide an opportunity for collaboration and help determine the viability, and ultimate success, of a project—well before the shovels hit the ground.

As illustrated in the Cost Influence Curve pictured at the top, decisions made early in the conceptual planning and design phases have a dominant influence on the cost and completion time of the project. It quickly becomes evident that the owner holds the key to controlling project construction costs because all decisions made at the onset of a project have far greater influence on costs than those made at later stages. In addition, design and construction decisions made early-on will influence on-going lifecycle costs.

When the owner works with a single team under one contract, it is far easier to balance his or her facility needs and budget with the design, materials, systems and construction processes required to maximize the owner’s revenues. 

When you add Lacy Construction to your team from the start, you benefit from our integrated design-build approach that works to successfully complete a project faster, safer, more cost-effectively and with fewer change orders. Plus, the owner, design team and construction team are all on the same page working toward one goal—complete owner satisfaction.

Have a project in mind? Let's talk about how we can help you get started >>

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By: Jerry Huismann On 06/19/2018