CONSTRUCTION COST MANAGEMENT

BUILDING AND RENOVATION COSTS TIME, MONEY, AND EMOTION
Building and renovation projects frequently involve three basic human elements, namely: time, money and emotion. Effective business management of costs, quality and time constraints on building and renovation projects however, also requires attention, experience and professional construction skills, to assure the highest level of attainable goals successfully, and with a minimum of emotion.
Basic techniques employed should include legal principles, budget and time constraints, planning and feasibility studies, programming, development of design criteria, preparation of well-defined construction documents, bid and contract negotiations, and administration of construction contracts through completion and occupancy.

The essential stages of a construction project should include:
1. Feasibility. review zoning, density, site quality, soil bearing values, environmentally “clean” site.
2. Prepare design manual. Consider efficacy of design-build contract.
3. Prepare budget, set time constraints.
4. Interview Architects and Engineers; consider “partnering”.
5. Interview construction managers; consider “partnering”.
6. Review construction designs, correlate budget, authorize document preparation.
7. Advertise for and receive competitive bids, with bid bonds, performance bonds, insurance certificates, etc.
8. Review bids, contractor qualifications, award contracts.
9. Administer contracts, construction, payments; document thoroughly (video).
10. Punch List before beneficial occupancy or final acceptance.
11. Receive guarantees, warrantees, Owner’s Manual.
12. Final payment, conditioned upon lien releases.

Reductions in price may be achieved only with better risk allocation. Punitive damage clauses in construction documents have a corollary; namely, that such clauses will only encourage contractors and suppliers to insulate their bids with higher prices.
Preliminary planning and estimates of cost, time and quality, provide the guidelines as a roadmap for better projects, through controlled and monitored budgets, economic and physical feasibility, better defined project scope, timing, and the initiation of project management. Above all, never assume that the Architect, Engineer, Contractor, Subcontractor, or Supplier will perform services, or supply anything not specifically required and expressly stated in their contracts, whether done gratuitously, or for sums certain !
Certain early warning signs that must be recognized and addressed immediately include: program “creep”, building “footprint” or configuration, exterior materials or cladding, interior finishes, and other methods and materials of construction.
Project delays seriously affect costs and may result in uncontrolled overruns, unless subject to review and control. Hidden costs, “extras”, delays in access to site and storage areas, Owner and/or governmental approvals, etc. are among a few of the other issues seriously affecting final costs, quality and time constraints as well.
Construction project management is business management and administration of highly technical and critical masses comprising the construction process. The guidance of experienced professionals may prove invaluable to an Owner seeking to minimize emotion and to effect delivery of quality projects, on time and within budget.
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AUTHOR: J. NORMAN STARK is an Attorney-at-Law, a Registered Architect, (AIA, NCARB) Registered Landscape Architect, Interior Architectural Designer, and Senior Appraiser (ASA), admitted to practice law before the Bar of Ohio, the US District Courts, Ohio and Illinois (Central Dist.), the US Court of Appeals, and the United States Supreme Court. He has experience as a Mediator, Arbitrator and Litigator in Construction, Business, Public Works, Real Estate and as an Expert Witness. His office is in Cleveland, Ohio and Sarasota, FL.