How can construction companies control building costs?
EXCLUSIVE: Experts say future-proofing feasibility studies can drive efficiencies for development teams
With the mantra of ‘cash is king’ more pertinent than ever before in the region’s building sector, construction budgets and cost control remain of critical importance to all stakeholders across the supply chain.
According to chief executive officer of building technology firm Construction Computer Software (CCS), Andrew Skudder, construction budgets are “particularly vulnerable” to inaccurate project estimates, changes to the design and the scope of projects, inadequate change orders and cost management, and poor site productivity and management.
While design and scope changes are to be expected – more often than not, tweaking a design to optimise a project is welcomed on all sides – accurate cost and time estimates using “leading software solutions will reduce risk”, he tells Construction Week.
Skudder says cost control is a process that should be ongoing “throughout the project lifecycle”, from the first estimate to the final account sign-off. This will ensure that the cost of a project is kept within the agreed budget.
It is [imperative] for contractors to do their due diligence in the pre-contract phase of a project, to capture all costs and time, and where possible, protect any uncertainty through their commercial agreements.
Despite this imperative, due diligence before a project breaks ground is also critical, particularly at the time of tendering. Cost consultants have a key role at this stage too, entering at an even earlier phase of the design process than has been the case in the recent past.
“We call ourselves – in addition to cost consultants – ‘commercial project managers’,” says main board director at Dubai-based Omnium International, Kieran Duckworth.
“That is where clients are really looking for that added value from the cost consultant – to engage at an early stage of the design process. We are definitely seeing a shift towards the cost consultants driving the evolving design of projects.”
Duckworth says the construction cost and contract management services firm favours “a statistical approach with buildings; to look back through various key performance indicators of the efficiency of buildings”.
With this in mind, the role of the cost consultant is crucial during a project’s feasibility stages, adds Skudder.
“It is [imperative] for contractors to do their due diligence in the pre-contract phase of a project, to capture all costs and time, and where possible, protect any uncertainty through their commercial agreements.”
Duckworth says that a great deal of focus “has been placed on feasibility studies” since the last market downturn. Indeed, these studies are relied upon at every stage, before clients even decide to break ground.
“For us, future-proofing that feasibility is about getting the cost consultant involved in the very first [analysis] that you are carrying out,” Duckworth says.
“We have seen in the past that a client might say, for example, ‘I want to build a 30-storey tower.’ They then ask themselves how much it cost them to build last time, and they take that rate and apply it to [the next build], without any real consideration of the actual design differences that may be applicable from one project to another. This can often lead to problems from the outset.”