Once you have found the right commercial general contractor for your commercial construction, you will be able to make significant cost savings due to their innovative ways of managing the project.
Small and medium-sized business owners usually hire commercial general contractors based on this particular skill. Hence, the builders will try to demonstrate their ability to bring down the construction costs as a way of getting more projects. The question is, how do they do it?
Discover how your commercial general contractor can apply effective personnel and project management strategies to economize your construction project while maintaining its quality standards.
Reasons For Cost Overruns in Commercial Construction Projects
A recent survey from international research firm IDC revealed that 75% of corporate and public real estate projects were over budget and 77% were delivered late. Looking at these statistics, it is apparent that cost overruns are becoming an industry-wide phenomenon. Some of the major reasons behind this inefficiency are:
- Inflation
- Poor planning
- Inaccurate cost estimates
- Project design deficiencies
- Unaddressed change order provisions
- Poor personnel and site management
- Misunderstandings due to irregular communication
- Lack of proper coordination with suppliers, vendors, and subcontractors
- Disproportionate resource allocation
- Unfavorable environmental conditions
- Accidents or equipment damage
Qualified and experienced commercial general contractors with great foresight can overcome these challenging barriers, avoid costly mistakes, and deliver projects under planned budgets.
Why You Need To Hire A Commercial General Contractor
With their strong experience and long industry standing commercial general contractors are able to complete the project at lower costs.
Though the cost of a construction project mainly depends on the time and the resources needed to complete the project, by prudently planning ahead and systematically approaching the project, your commercial general contractor will help you achieve a higher level of cost savings in a construction project.
Your commercial general contractor will find many different ways to reduce the costs of construction. Most importantly, they will be using advanced construction management software to optimize the use of the resources, materials, and equipment in such a way that they complete the project at a much reduced cost.
10 Ways A Commercial General Contractor Reduces Construction Costs
The most effective ways of reducing the cost of a commercial construction project include the following:
1. Put the Right Employees for the Right Jobs
It’s a skill that a Commercial General Contractor specializes in:
In a large construction project, you will involve many types of workers. By engaging skilled employees for more complex and demanding work, your contractor will be able to complete them with minimum stress and minimum resources within a short time. This will avoid the necessity to redo faulty items incurring heavy time, material, and cost overruns.
To avoid expensive delays, commercial general contractors will select a qualified workforce and keep it ready for particular types of tasks. They engage in regular upskilling of their personnel’s skill sets and keep them abreast of all emerging techniques in the industry. This boosts employees’ confidence and productivity, and hence, they contribute to your cost savings. Commercial contractors always allow more experienced workers to lead the team and others to assist them.
2. Avoid Long Downtimes of Critical Equipment
Downtimes of equipment is an unnecessary cost:
During a commercial construction project, your contractor uses different types of equipment for easy and swift completion of the project work. Hence, they see to it that there is an uninterrupted availability of these during the execution of the project. Some construction equipment is more critical for the project while others are mere accessories. Commercial general contractors carry out a periodic assessment of the equipment and take proactive actions to keep them in working condition.
This will help your construction work proceed smoothly without any critical equipment failing at the wrong time. An equipment’s downtime and the time taken to bring it back to normal operation will add more labor costs and material costs. So, maintaining the construction equipment is one of the practical ways of reducing costs and proceeding with the work without any hitch.
3. Planning The Project Work As Per The Weather Conditions
Cause weather can’t be ignored during commercial construction:
Any experienced commercial general contractor who knows the effect of weather conditions on the project execution will be planning the project work as per the prevailing weather conditions on the construction site. This helps them in the optimal use of the equipment, materials, and workers, reducing wastage as much as possible.
A general contractor and their team will be leveraging professional weather forecast applications to get an overview of present and future weather conditions in real-time as well as receive severe warnings by meteorologists. Weather forecast software allows contractors to set parameters, rules, and limitations for ideal working conditions. Their data can be easily integrated into company-specific software which helps in documentation of weather.
By avoiding unfavorable weather conditions like rain, thunderstorm hail, and snowfall, your commercial general contractor will be able to put construction workers and materials to the best use and prevent cost overruns.
4. Good Communication
Because miscommunication is expensive:
As a commercial construction project involves hundreds of employees working towards the mutual goal of delivering the project, communication is the common strand that connects them all. Many teams working on the different parts of the project at the same time need the highest possible coordination, and for this, an effective line of communication is vital.
Your commercial general contractor will have an open line of communication. They will use cloud software services for project documentation and instant messaging apps to allot work, monitor the progress and give timely instructions. Timely communication makes sure that each team has their equipment and materials with them at all times so that the project can progress without any impediments.
This will help your general contractor complete the project on time and bring down the project’s overall costs.
5. Provides Accurate Cost Estimation
Developing price estimates reduces cost overruns and change orders due to budgetary limitations.
Always hire a contractor who will provide accurate cost estimates based on your project scope and specifications. Most commercial general contractors will either use construction estimating software or assign this job to their in-house cost estimators.
They will count factors such as labor, materials, equipment, building permits, legal fees, administrative expenses, and several others to give final cost projections to the owner. Early budget planning helps to identify future budgetary issues and plan strategies to handle unexpected expenses.
6. Set the Right Timing for The Project
Because timing is everything:
The timing of starting and proceeding with the project has a huge impact on the cost of the project as everything has its season, and construction is not an exception. When you are starting a large commercial construction, your contractor, with his experience and long-standing in the construction industry, knows the impact of the project cost’s timing and will start the project at the right part of the year when the labor and the material cost less.
Usually, there will be very few projects during fall and winter, and hence these periods of the year are considered to be the off-season for the construction industry. To cut costs and bring in more savings, your commercial general contractor will know when to start the project based on the local conditions prevailing in the local construction industry. By doing this, he will be able to complete the project at a lesser cost helping you to save more money.
7. Good planning
Because prevention is better than cure:
Most of the time, more money is wasted due to redoing the project work and making alterations in the middle of the project. To avoid these costly mistakes in commercial construction, it is necessary to do strong planning before starting the project. Your experienced commercial general contractor will be well aware of the importance of thorough planning. They will take steps to educate the project requirements to the team heads and explain all specifications clearly.
Commercial contractors will make sure that each team member knows the complete details of the project regarding their part and will be able to work with clarity. If all deviations are noted during the project work, they can take corrective actions immediately without wasting labor and materials. This type of prior planning will help you earn more cost savings in the construction of your commercial property.
8. Ability to Control Everything
Cause control on time & materials means control of money:
As the contractor is in charge of the entire project and knows its every aspect, they will have a clear understanding of the project’s methods of execution. With full authority, they can alter the work routines or reshuffle the work schedules for optimum results. This way, it will be possible to obtain the best results without wasting time or materials. Due to their strict monitoring and ability to take corrective steps immediately, significant cost savings can be achieved.
9. Offers Value Engineering Solutions
Extracting quality results from value-based resources is the key to cost reduction.
A reputable construction contracting firm will be providing you with value engineering services for a large-scale real estate development project. Value engineering in commercial construction is weighing the cost of each function against its benefits or ‘value’ and suggesting alternative designs, materials, or methods. Here, value implies quality, longevity, and lower costs.
The building contractor along with the design team will analyze architectural drawings and specifications. By doing functional analysis, they will prioritize essential components that can be obtained at lower costs. If there are budgetary restrictions, the contractor will offer less costly alternative solutions to deliver your project within budget.
Value engineering is not just about cheaper construction, it also involves cost analysis where the overall costs of a project are assessed keeping in view the long-term life cycle of your building.
10. Adopts New Technology
Construction technology increases the efficiency of construction projects.
One notable benefit of partnering with today’s commercial general contractors is their adoption of progressive technologies for speeding up operations and reducing expenses.
- By harnessing construction management software, they streamline various processes, digitize workflows and blueprints, and save resources by going paperless.
- Based on historical cost performance data from past projects, commercial contractors develop accurate cost estimates and manage accounting through budget dashboards.
- Building Information Modeling (BIM) is a powerful 3D visualization software that shows developers real-time data on material prices, appliance errors, and worker availability. With such information, it’s possible to redraw plans and make adjustments in seconds.
- Wearable monitoring devices in the form of hard hats, vests, boots, and construction gears run on Artificial Intelligence which tracks the activity levels of workers.
With such construction technologies reforming supervisory tasks, project managers can dedicate more time to other important tasks like logistics and permitting.
11. Effective and Good Sourcing
Because the Contractor is good at cracking good deals:
Sourcing is an important function of your commercial general contractor and will have excellent experience in dealing with many projects. They will be sourcing material, labor, and equipment from their reliable suppliers or vendors. When your contractor enters into best deals using their well-established vendor relationships, you save much of your construction costs by purchasing materials and labor at lower prices.
12. Reduces the Likelihood of Change Orders
A considerable amount of expenses are incurred due to change orders.
Every construction project experiences the damaging effects of change orders arising because of design alterations, human errors, or material/equipment shortages. Though they are not preventable, a commercial general contractor definitely can reduce their likelihood.
Firstly, it’s important to add specific change order provisions in your contractual agreement with the commercial general contractor so that there are no disputes over budget allocation. Commercial contractors will clearly understand client requirements, provide accurate cost estimates, and include them in the initial budget. They will plan solutions for any potential budget overruns.
Also, they will establish transparent lines of communication between project teams and this way, no team member will misinterpret the task guidelines.
13. Efficient Reusing
Because efficient reusing leads to efficient resource utilization.
If your project involves a lot of renovation work and you already have existing materials & appliances employed in your space, the general contractor would reuse most of the possible materials, which will continue to meet your requirements and productivity. While preparing the budget, the commercial general contractor would consider the state of the existing materials & appliances. Reusing used resources leads to potential reductions in the project costs creating the same quality level of output at the end of the project.
Thus, if you have chosen your commercial general contractor carefully, you can be confident that they will be able to bring down the overall cost of the project in different ways. You can take advantage of their experience and expertise in managing large commercial contracts.
Conclusion
It is a fact that commercial construction projects are more complex and expensive than residential projects, however, a commercial general contractor has the ability to overcome all barriers and optimize costs. Through their expertise in project management, cost estimation, vendor coordination, and value engineering, commercial contractors play an instrumental role in cutting construction costs and executing a project efficiently. Remember to hire a reliable professional who is dedicated to offering premium standards of commercial contracting services.
If you want to know about our commercial general contractor services, feel free to contact our team at Constructive Solutions, Inc. today.
FAQs
What is the impact of cost overruns and delays in a commercial construction project?
Construction cost overruns may lead to project delays, lesser returns on investment for the owner, disputes and claims among the builder and the stakeholders, supplementary agreements, and even bankruptcy.
What are the various costs involved in a commercial construction project?
These are typical expenses involved in a construction budget:
- Direct costs – Equipment, materials, and labor
- Indirect costs – Design consultants, legal fees, insurance, administrative costs, land surveys, etc.
- Profit and Overhead
How do I estimate the construction cost for my project?
As a project owner, you can either hire a professional cost estimator or use construction cost estimating software to get accurate projections. Or else, request a general contractor to provide estimates based on your project’s scope and feasibility.
Relevant Resources:
Tips on How to Control Office Tenant Improvement Project Costs
What Does A Commercial General Contractor Do?
Constructive Solutions, Inc. is a full-service commercial construction company serving San Francisco and Bay Area.
Whatever your vision, we have the resources, experience, and insight to make your concept a reality, and a space where your business can flourish.
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