Coping with Higher Construction Cost

A recent CoStar article titled “Building Smarter: Strategies for Brokers and Developers on Managing Spiraling Construction Cost” discussed the potential that the dip in oil and commodity prices and the stronger dollar might lower construction cost in the short term. The article concluded that we should not expect this trend to continue and will likely foresee continued volatility in the markets. The article also addressed strategies for coping with higher construction cost. They included the following:

1. Avoid project 'scope creep,' and build lighter
2. Purchase materials smarter and in bulk
3. Know where the dollars are spent
4. Change the palette of materials
5. Build green and reap the benefits
6. Integrate more revenue-generating space and features
7. Leverage the contractor as a development partner
8. Bring the builder onboard early and consider design-build as an option
9. Fast track it
10. Build smart, energy producing or self-powered projects

What surprised me was that the rise in construction cost still catches projects off guard. Pierre Cowart, Vice President Leopardo Construction, was quoted saying

Despite ample publicity about the rising price of materials and cost overruns, "these issues still fly under the radar until too late in the project on at least 30% to 40% of the projects we’re working on," Cowart said. "When we get involved later in the process, it costs more to make adjustments to the project scope."

Here is a link to Leopardo Construction's white paper titled "Smart Construction:
Economical Building Solutions to Offset Soaring Material Prices". Great Resource!

Source: CoStar.com