Top 5 Hidden Commercial Construction Cost Overruns
When planning a commercial construction project, the estimated price is not always accurate. There are many factors that go into making up this cost including design changes, material substitutions and other unforeseen circumstances which could lead to increased costs for your business.
Here are five ways you can minimize costly surprises when managing your construction project:
Incomplete Specs
On a common note, the contractor will meet with the business owner or developer and discover that materials they were expecting are not accurately specified in architectural drawings. Updating plans to ensure requirements is met often results in unanticipated costs going over budget.
Inaccurate Estimate
It’s not an exact science to estimate the cost of a commercial construction project. An inexperienced contractor may have bid too low and require significant investment, or it could be that you underestimated your original plans for the renovation – resulting in potential cost overruns depending on what contract is used. When hiring contractors, make sure you check their estimated price with your own one; if they seem cheap compared to yours – beware.
Change Orders
So when the owner or project manager decides to make changes during the construction process, no matter how minor they may seem at first, a change order is created. Every time this happens it can add to your costs and result in excessive cost overruns if you don’t go about things carefully.
Site Problems
Although the commercial contractor will conduct a site visit, it is impossible to predict every unforeseen occurrence. In some cases, unexpected site or building problems may not be discovered until construction begins.
For instance, a problem with the soil or runoff might only emerge as workers are preparing for foundation/demolition work and structural damage in renovation projects can often go undetected until after walls have been demolished. These issues alone could lead to cost overruns
Material Availability
Sometimes, the material specified in a bid proposal may not be available when construction begins causing delays or substitution changes that could alter the original cost. In other cases, building owners might decide to make material changes after installation resulting in additional fees and construction delays.
How to Minimize Cost Overruns?
There are several ways that business owners and developers can help reduce the likelihood of cost overruns.
Contingency Fund
A contingency fund can help minimize any construction surprises. Having this extra 10% of the total bid estimate will allow you to handle anything that pops up along the way during your project, which makes it much less likely for an issue like this to ruin all of your hard work and planning.
Choose a Design-Build Contractor
A design-build commercial contractor brings together the best of architectural and construction teams to make a project run smoother. The process is more efficient, less costly for clients, and better communication between all parties involved can be expected.
Ask for a Hard-Bid
Asking your commercial contractor if they offer a hard-bid delivery method is important. When you provide the contractor with all of the details for what needs to be done, along with how it should look once complete, this will help them give an accurate quote that won’t change drastically later on during construction.
At JeBailey & Co., we manage commercial and industrial projects in a wide range of markets. We specialize in construction management services, so you can trust us to deliver the best results possible for your project.
Contact JeBailey & Co. today at (407) 559-6412, or email us at info@jebaileyandco.com to learn more about our other services or request a quote!
