Whether a recession is here or will begin in the coming months, the difference between a successful project and a money pit during unsteady economic times is preparation. It is important to implement best cost practices early on to reduce the risk of unexpected price hikes and material delays throughout the lifetime of a project.
Financial Flexibility is Key
As the economy dips, financial flexibility becomes paramount when approaching construction. Understanding all aspects and cost drivers involved with a project not only saves money but ensures that the possibility of even constructing a building within budget becomes a reality.
Part of this flexibility comes from developing a thorough value management log alongside the initial project budget. This log is designed to be used as necessary throughout the preconstruction process to ensure that the client’s budgeting needs are met. The specifics of this log will vary depending on size, scope, and complexity, creating a customized cost management system for each project.
In the current market, a desire for future flex space can come at the expense of the building itself. For this reason, the earliest conversations need to be about the why – why do you need this building? What purpose does it have to serve to meet your requirements? Breaking the desired structure down into its essential components will help identify a concrete core cost, with wishlist items added as the budget allows.
Empowering Decision Makers
While the supply chain stress is easing, the reduction in lead times due to the recession does not bring scheduling back to what it had been pre-pandemic. This reduction should not encourage a slow-down in decision making, as there are still several elements, such as chip issues, that can significantly delay a project. Decision-makers need to be empowered early on – quick, precise decisions are key to avoiding cost escalation and significant material delays.
Furthermore, questioning schedules should always be a key component of the contractor selection process, but it is even more pertinent with the current economic climate. The most appealing schedule is not necessarily the one that most accurately reflects the timetable of a project.
While there is no one-size-fits-all answer to satisfy every situation when it comes to construction during a recession, the implementation of these best practices are sure to lay a firm foundation for your project.
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