Preconstruction: What’s the Real Cost?

Why Contractors Should Be Spending Money Upfront to Save Costs Down the Road

Preconstruction costs typically range between 1-3% of total project value. Meaning, for a $5,000,000 project, an owner would spend up to $150,000 on preconstruction services.

So why are construction teams spending so much money on preconstruction? While 1-3% seems like a huge investment to make before construction begins, done correctly, contractors can save significant money and time.

What Is Preconstruction?

Before we get too far into why contractors are spending so much money on preconstruction services, it’s important we define what exactly the phase entails. Preconstruction is the phase of a project in which the client and the contractor work together to define the scope, schedule and cost of the entire venture. Defining the project’s scope can include any or all of the following processes: design decisions, environmental studies, land and permit acquisitions, engineering evaluations, risk analysis and more.

Navigating the many moving parts of the process can be overwhelming. To learn more about what the phase entails and dive right into our tips for success, download our ebook titled “9 Best Practices for Preconstruction Success.”

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Preconstruction’s ROI

Thorough and accurate evaluations during the preconstruction phase help set client expectations, as well as identify possible efficiencies and cost-saving measures that builders can implement when moving on to the construction phase. All of this work also helps a client determine if a project is viable, or if it is too complicated or expensive to undertake.

With all that in mind, it’s clear that the ROI of thoughtful preconstruction investment is significant. Without a proper plan, it’s hard to get a massive construction project off the ground. Without that same plan, it’s even harder to stay on schedule or identify areas for improvement for cost and schedule savings. Contractors and owners alike should be adopting a mentality of ‘spend now to save later’ on their projects and leveraging preconstruction to facilitate that goal.

Best Practices to Consider in Preconstruction

Any large construction project will have unforeseeable challenges during construction. Fortunately, there are steps you can take that will help you avoid, or at least minimize these risks. Our ebook overviews the best practices that can help you plan for success including:

• Establishing Clear Lines of Communication
• Conducting Collaborative Scheduling
• Creating Site Logistics Plans
• Leveraging BIM
• Formalizing Issue Escalation and Budget Forecasting
• Adhering to Permitting and Local Ordinances

Subcontractor and Owner Relationships

A critical aspect of any construction project is the relationship between the owner, the general contractor and the subcontractors. Finding a way to bring these groups together with the intent of facilitating information sharing, collaboration and communication is a critical factor for success. Many teams are successfully leveraging productivity tools (like PlanGrid) with the intention of improving these critical relationships.

Setting Up a Project for Success

It is clear that preconstruction can fit into any project, no matter the delivery method the owners use. When the phase is thoughtfully managed, it will head off many unforeseen challenges in construction. The more a team is integrated into the build from planning and design to the day the owner takes delivery of the project, the better the chances that the entire enterprise will come in on time and budget. Preconstruction is planning. And planning is the key to success.

To explore these best practices in greater detail, get tips for sustainability and green construction and dive into the different project delivery methods and how they wrap up into preconstruction, download our ebook titled “9 Best Practices for Preconstruction Success.”

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Teams that have a robust preconstruction practice are much more likely to deliver projects that meet owner objectives with greater success. After implementing these best practices in your teams, you’ll be on the right track to deliver better projects at a lower cost.