How to successfully run a project with all of the current market turbulence?
The number one question we get asked lately about commercial construction project management is: how can anyone run a project successfully with all of the market turbulence? So many of our raw materials are in shortage; from paint, roofing insulation, steel of all kinds, and electrical supplies. Even when we do get pricing most of it isn’t valid for more than 10 days and manufacturers will invoice what they want when it does ship months later. Making matters worse, the market is busy and subcontractors are facing huge labor shortages. Many of them are opting to not bid on projects.
This has led to volatile conditions when trying to plan for a new or renovated facility. No one knows when all of the material will be available or how much it is going to cost when it is.
Does this mean all construction needs to stop? Not exactly. The best strategy to adopt if you are thinking about a project is to hire the General Contractor early. With detailed daily insight to the shortages, trends, and pricing swings, no one is more uniquely suited to providing insight early, while your plans are still being developed.
We have worked with several clients lately that hired Welsh early and we were able to order roofing materials, RTU’s, and electrical switchgear before we even had final permit plans to review and submit. Does this mean the client signs their livelihood over to the GC? Not at all. A simple fee proposal and open book concept protects the owners and the general contractor while seeking to remove as much RISK as possible. It includes simple, agreed upon preconstruction fees and a not-to-exceed-number of preconstruction hours that are chargeable. Then, as the GC identifies critical items that need to be ordered, all parties agree about who bears the risk if the project fails to move forward. Over my career I have learned that every project is unique, so this strategy may not fit for every circumstance. But for the clients that absolutely KNOW they are doing a project, hiring the GC Early is a SLAM DUNK. It can mean the difference of getting in on schedule or getting in late and paying SIGNIFICANTLY more for the project.
For clients that absolutely know they are doing a project, hiring the GC early is a slam dunk. It can mean the different of getting in on schedule or getting in late and paying significantly more for the project.
The key to this all is honest and clear communication. Now more than ever, this style of construction management is the most impactful. Picking the right team EARLY helps ensure a certainty of outcome and success on your project!
DAN PERRY
Project Manager, Welsh Construction