Pricing construction is like a game of chess
The advantage
Fewer building costs
Shorter schedules
Less cost growth
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· Building Cost Savings
· Waste Minimization
· Inventory Optimization
· Innovation and Collaboration
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Main cost contributors
Here’s how to win it.
The learning curve
The solution
Contractors must understand the market and know how to predict it early enough to alter design decisions.
Contractors that fail to do this may incur some shocking overages for owners.
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month delay
6
On an average $50 million-dollar project, delaying the start just six months could result in $1.25 million in potential cost increases, even with zero changes to the scope. Gaining certainty in the development and preconstruction planning process is more critical now than ever.
Mac Hoenicke, Balfour Beatty,
Florida project executive and procurement expert
The pricing challenge
What’s the current state
of the industry?
Despite its increased adoption, many contractors aren’t prepared to assume leading responsibility for understanding an owner’s needs and ensuring they’re properly and cost-effectively translated through design development.
The learning curve
The solution
Since 2014, construction prices have risen 5% year over year. Several factors contribute to this trend.
Learn our process
It’s critical for owners to partner with experienced
design-build contractors like Balfour Beatty. Our work on design-build projects across the U.S. has taught us that communication is the cornerstone of success and risk mitigation on a design-build project.
Keeping costs down
We listen to each partner’s perspective and ask the right questions upfront. Then we develop and value engineer plans that establish the overall vision.
• Develop realistic
project schedules
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=
$1.25M
in cost increases with
zero changes to scope*
Some pricing factors are out of contractors’ control, others can be effectively managed. Learn about our proactive pricing approach.
Be transparent
• Involve trade partners
in key decisions
• Minimize
potential risks
• Communicate mistakes
quickly to execute solutions
Listen and plan
Transparent teams are successful teams.
Our teams:
The more accurate the drawings, the more precise trade partners can be with their pricing.
Push for precise drawings and specifications
The timing of a project start can have a major impact on cost and scope. We lock in pricing early through strong trade partner relationships.
Lock in pricing
2016
2017
2018
2019
2020
8%
Aluminum
12%
Copper
15%
Steel
Evolving trade policies
Not unlike other design-build projects, the Pentagon Memorial team defined budget and schedule parameters as the design solutions evolved. The highly flexible design-build team blended a pace for planning, coordinating and execution of workforces to push the project at impactful technical and social milestone points.
Market fluctuations
Labor shortages
Since 2016, key materials have rapidly escalated in price.
8%
Aluminum
12%
Copper
15%
Steel
Market fluctuations
Evolving trade policies
Labor shortages
Global economics have impacted the cost of many construction materials sourced from outside the US, including:
Countertops
Doors
Cabinets
Misc. raw & finished goods
Appliances
Windows
Fewer skilled trade workers mean:
30%
of the current workforce is expected to retire
over the next decade
• Increased competition
and demand
• Higher labor costs
We expect a tight labor market for the foreseeable future
In the past, construction budgets were built from current market costs.
Today, you can’t rely on historical pricing to build your budget.
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