The Construction Equation

Managing the costs of constructing an education facility begins well before groundbreaking — it starts with an effective project execution plan. Pre-construction planning addresses two key parts of the financial equation: developing and managing an accurate budget, and developing and executing a cost-effective procurement strategy.

Developing an accurate budget requires several pre-construction disciplines: professional estimating; value management; constructibility reviews; development of an effective construction strategy and realistic schedule; and risk analysis and contingency planning. Similarly, an effective procurement strategy depends on identifying and managing “long-lead” equipment and materials, and coordinating delivery at the optimal time in the construction process.

Building the budget

Establishing an accurate budget begins at the earliest possible stage of the project — ideally at the programming stage. An institution, design team and construction team need to work together to capture the scope and intent of the project, including the program, needs of the school or university, level of quality and sustainability goals.

A construction manager (CM) can bring the skills and experience of its professional estimators to the table. Professional estimators prepare detailed assessments at every stage of design documentation and track the design against the budget. Cost estimates are used as a tool to maintain the overall project budget and enhance the building as related to life-cycle costs, quality, building components, and the scope and cost of all building systems. Benchmarking is used to develop estimates and to verify that the estimated costs fall within the proper range for projects of that type and complexity — whether it is a classroom building, library or sophisticated research laboratory — in a particular geographic region.

Estimators typically will examine building systems first because these have a major impact on total project cost; then they will look at the concepts behind the building design, and finally, equipment and materials. Benchmarks are developed from comparisons of projects of similar type, size, scope and location, and the architects, engineers and construction professionals review and verify the benchmarks.

However, historical data is only part of the picture. Current and projected market trends also should be tracked and applied to the estimating process. This data is gathered through regular contacts with selected subcontractors and vendors to discuss the issues that affect construction costs, including labor shortages, availability of materials, and manufacturer delivery issues. All the information affects accurate cost modeling and the development of a realistic budget.

As the project design progresses, cost estimators provide increasing levels of detail, with important milestones at schematic design, design development and construction documentation. In parallel, other members of the pre-construction planning team will develop a construction strategy, known as a project execution plan, and a schedule designed to meet the owners' target completion date within the budget.

Developing a well-structured project cost estimate and schedule in the early planning phases of a project sets the stage for effective decisionmaking by the project team. The pre-construction planning team should perform constructibility reviews and offer value-management alternatives on every project, whether it is a K-12 classroom building or a complex academic research lab, to identify more cost-effective ways to meet the same performance goals without sacrificing scope, quality or aesthetics.