Cost Control Strategies I: New Construction
July 01, 2003

By Staff
Appeared in R&D: Lab Design Handbook

Controlling the costs of laboratory design and construction involves the same disciplines that drive scientific success for the end-user: creativity, collaboration, and communication. Completing any project under budget is the result of common-sense cost-control methods. With the strategic guidance of an experienced design/construction team, an owner can realize far greater holistic efficiencies over the course of a facility program. Here are 10 practical strategies to use:

1. Start early and define your program completely.
Sometimes, project design commences without clear internal consensus or external communication defining the scope of work. What then follows are costly change orders, lost efficiencies, and expensive delays as a comprehensive vision slowly emerges. Instead, start with a collaborative effort to define your parameters and expectations. Ask your consultants to lead preliminary meetings with internal users–including the often-overlooked maintenance and operations personnel–to articulate the needs, desires, and vision. Your designers will then clarify this input into a document called the "Basis of Design" or "Project Definition Statement" outlining the program in terms of architectural, engineering and construction objectives.

2. Value engineer before you engineer.
Begin talking about value engineering at this early stage in the project because the later you do, the lower the returns it can yield. Evaluate major cost considerations such as the programming, architectural features, HVAC (including a possible heat recovery system), basic structural and wall components, and construction phasing to minimize cash flow and operational impacts.

3. Choose and use your builder early.
Bring your builder on board early to cast a knowledgeable eye on the proposed site and the hidden costs presented there. He can investigate and advise you regarding logistical constraints, tree relocation and preservation, wetland protection, and a range of site-specific factors that will significantly impact cost and schedule if not addressed early enough.

4. Fit it to the master plan.
In the case of a multi-building campus, make sure that your project design fits into your master plan. If this is your first building on the site, but you think there might be more, hash out a master plan before proceeding with decisions that will later become irreversible. Lack of forethought can cascade into future costs.

5. Schedule precisely and fast-track your progress.
A skilled design/build team can use fast-track methods to save time and money. It may be possible to produce a highly detailed project schedule that identifies the priority sequence of drawings to be safely released for construction even as the balance of the design remains underway. A properly executed fast-track plan can save both time and money, but going fast without an adequate plan is liable to end up costing more of both.

6. Factor in local pricing fluctuations.
Since costs vary by location, take the time necessary to become familiar with the regional economy, its workforce, and any special fees levied by the city or state. Seasonality, supply shortages, and construction demand can affect the cost of materials and labor. Expect your design/build team to have a finger on the pulse on local conditions to help you predict and plan for such scenarios.

7. Flex your buying power.
Whenever possible, purchase equipment for multiple projects at one time to achieve significant savings. Choose equipment with local maintenance support to save money over the lifecycle of use.

8. Expect changes, but mitigate them.
Changes are inevitable over the course of project design and construction, but by building adaptability into the process at the onset, change orders can cost less. Changes made during construction will cost approximately 30% more than the same change made during the design phase. Studies suggest that if more than 10% of your total project costs represent change orders, you had errors in planning and programming.

9. Cost-load the construction schedule to plan capital outlays.
An overlooked source of savings comes with better cash-flow management during construction. A construction schedule can be devised to indicate the precise timing of capital outlays to support the project, minimizing periods when cash is idle.

10. Plan ahead, then follow the plan.
A successful project is designed and built on a foundation of accurate and dependable estimates. When fine-tuning your estimate, make sure the project estimator considers special needs--such as a requirement to work overtime--to avoid or minimize any impact on the budget. Remember to look for weather-related pitfalls, such as being forced to work in the wintertime. That may require round-the-clock heat and building protection. Other items to consider may be high water tables that require special dewatering procedures. And when space is at a premium, consideration should be given to off-site storage of your building materials and equipment.

Once a realistic cost and schedule has been determined, your project’s team must control it over the course of the project. A good schedule will show the true value of each project component, and expenditures can be tracked along a construction timeline. This approach allows a continual progress evaluation, leaving plenty of time to notice red flags and bring your project back on target before corrective measures become too costly.

Finally, don’t lose control in the excitement that builds as the project nears completion. Make sure you have accurate record-drawings (as built) and equipment descriptions, along with maintenance records and training documentation, before disbanding your project team. Identify the closeout costs, schedule, and procedures (such as commissioning and validation needs) early on so you can finalize and complete the project on time and within budget.

Cost control is a team effort where all share in the success. No one makes money on a delayed project or faculty estimate. Above all, be realistic, not optimistic, in your budgeting.

By Mark Yakren, PE, is senior VP of Syska Hennessy Group ( Robert Geremia is VP of Syska Hennessy Group Construction Inc. With its main offices in New York City and Los Angeles, Syska Hennessy Group is a consulting, engineering, technology, and construction firm focused on the creation of technically sophisticated buildings for an international roster of clients.