CONSTRUCTION COST MANAGEMENT

*Cost Consulting* *Project Management* *Scheduling* BACK TO HOME PAGE	Can we help you? *Construction Cost Management* can save you money, reduce your risk, and give you more control over your costs. BUILDING OWNERS AND DEVELOPERS FACILITIES DEPARTMENTS This is your page...
	An impartial expert on your side will help you obtain the value you are looking for, and be there for you in negotiations
	Choosing the right architect for the project is crucial. The right one can add a plus to your building project. They may not be experts at everything - especially cost control.
	The companies who will construct the project - they want to make a profit too. We can explain more about the costing process, and some ways to make sure you get value.
	We'd like to tell you more about both cost control in general, and our approach in particular.
	An estimate is a forecast of the cost of doing construction. Estimates prepared by contractors and subcontractors become the bid, a firm price proposal.. Competition is what keeps the price down.
	These hands-on seminars are a great team-building feature, and can help facilities managers as well as architects understand how construction is competitively priced.
	Dean Sherwin, the principal of CCM, is a professional estimator who has wide experience in architecture, estimating and construction consulting - on three continents
Links to Other Informative Sites

Let's look at part of the wish list of Building owners, Developers and Facilities Managers, as it relates to cost control

Be sure that resources - time, money, human - are being used to best extent
Have a building that will satisfy needs now and in the future
Have a building that will be simple to maintain and will hold its value
Satisfy regulatory bodies, lenders, local politics without enormous expenditure of effort
Move ahead rapidly once the decision to proceed is taken. Time is money and neither design nor procurement phase should take longer than necessary.
Have architects and professional consultants who are efficient, give clear advice and competent service, and follow the agenda of the building owners and users.
Have a construction manager that will do a competent job, be easy to deal with and not ask for extra costs during the project
Be able to move into the facility at a pre-arranged time and not be faced with unpleasant surprises.

**HOW TO BUY CONSTRUCTION -**
The order indicates, generally, the degree of control over cost and value, from least to most
Turnkey	Everything is provided by the developer - even the site. The commercial equivalent of buying a house on a developer's subdivision. Example: warehouses.
Design Build	A construction and design team, often with a developer or financing organization as part of it, constructs and delivers a building to agreed scope and quality, on a site belonging to the owner. The cost of the proposed building along with a detailed description, and optionally a floor plan and draft elevations, are agreed to contractually. It is up to the Design/Builder to deliver the product without any extra costs.
Construction Manager with GMP - Guaranteed Maximum Price	The owners hire the design team and pay their fees to design the building they want. Early in the design process the CM proposes a maximum cost. Any changes in concept or quality after this point will usually change the agreed GMP.
Construction Manager as appointed General Contractor	The CM as "favorite son", where an owner perhaps because of past experience has confidence in a particular contractor and has him submit a price for a building - designed by the owner's team - without any competition. The CM may or may not have input and influence over the design process.
Construction Manager as agent.	In this case the CM is acting more as a Project Manager for the owners and is paid by percentage, hourly or fixed fee to oversee the bidding and construction process. The actual contracts, whether there is also a General Contractor or many subcontractors whom the CM coordinates, are held by the owners.
Select competitive bidding	The completed construction documents are bid to a pre-selected list of CMs (most General Contractors now refer to themselves as Construction Managers), usually from three to six in number. For most projects this is the best option for competitive pricing with some control over who is responsible for the construction and their management style.
Public open bidding	Publicly advertised competitive bidding, where any CM or GC who meets the pre-established criteria may submit a bid. Often a bond is required so that the owner has a recourse if the chosen contractor - normally the low bidder - fails to complete the project satisfactorily. This is the traditional type of bidding used by public agencies to show that the best use is being made of public funds. Still the best way to get the lowest cost for a project; however many owners become frustrated by change orders and what they see as unscrupulous practices. Needs complete documentation by architects.
Owner as Manager	The owner acts as their own CM and bids out work directly to subcontractors. Lowest contracting cost but requires high overhead and expertise by the owner. Appropriate to institutions and plants with permanent facilities management with work of a known type.
Direct Labor	The workforce is on the Owner's payroll and the whole process is under their control. Traditionally used by process plants, utilities etc. where work is specialized and owner has ongoing experience.

Tips:

Decide your priorities, but be flexible in ways to achieve them. If you are going to pay consultants, and inevitably are going to be involved with many people with an interest in the project, it makes sense to get the most benefit out of them.
Be aware of the absolute upset budget that you can achieve or justify for a project; keep a portion of that, 5% or so depending on the complexity of the project (more for renovation, less for a straightforward construction on a clear site)in your back pocket, outside of any contingencies that may be shown on proposals or estimates.
Find out if there are any hidden "costs of money" - for example is a lending institution that is offering good terms going to have its own inspectors or specifications which could cost you more in construction costs; will they release payments in a timely manner ?
Insist on an agreed-upon logical schedule for all but the simplest construction projects. If there should be delays or changes later during construction, you will be in a much better position to decide them fairly
In general use contracts for construction matters that are standard ones, that have been worked out over time to take account of the special conditions in construction. When you use lawyers ensure they are familiar with construction matters. Like any specialized field, construction has its own terminology and accepted practices, and not all lawyers are familiar with these
Alternates : The use of alternates in a design makes a lot of sense since it allows the owner to choose options based on cost, and to fine tune the final cost of the contract. It is preferable to have the designer consider these as part fo design than have them presented as a cost-cutting sfterthought. However they should be clear and easy to cost. In the heat of competitive bidding - and if its not competitive you are not getting the value you could - alternates especially where they involve many trades, do not get the careful consideration they need. We know - we've been there.
Addenda: The proper use of addenda that are issued once the documents are in the hands of the bidding subcontractors, is to clarify questions arising, especially from a pre-bid meeting. When they are needed to clarify or complete inadequate documentation, they are hard for the estimators to deal with and undermine confidence in the design and documentation. It is far better to take the time to get the documents ready before issuing them.



There may be a lot of potential value in an old run-down building needing restoration	Well restored or maintained older buildings have a character and make a contribution that is unlikely to be out of date	New construction is more predictable, often faster - but it is seldom a bargain

We are located in Philadelphia PA - but we are just a click away, and can help make building projects less risky
wherever they, or you, are located.

Contact us for more information dsherwin@constructioncostman.com
CCM - Construction Cost Management
308 South Avenue
PO Box 11
Media, PA 19063
USA
(610)892-8860
Fax(610)892 - 7862