The Value of Preconstruction

10/27/2020

If you’ve ever been through a construction project, you understand it can get complicated before it even gets started. To break it out in broad terms, the construction process is made up of four parts: discovery, preconstruction, construction and close-out.  Depending on the project delivery type and procurement strategy used by the owner, the general contractor may join the team at a variety of points in the process.  

A solid foundation is crucial to support the building for years to come. The same goes for laying out a trusted partnership with your general contractor and getting them involved early in the process, so that they can provide accurate budgeting, constructability reviews, and help mitigate risk to the owner.

As a long-time general contractor, Perlo has been there, done that. We have seen the good, the bad and the ugly and want to share the components and benefits of preconstruction services to help you better understand the complexities of construction and to mitigate risks.  The bottom line is that the earlier your contractor is involved, the more they can control cost expectations and help design teams align the design to your budget. 

What is preconstruction?

Preconstruction is the phase of work that occurs prior to onsite construction beginning.   There are several components that make up the preconstruction process.  They are:

  • Initial building concept
  • Onboarding design consultants and contractor
  • Identify goals and expectations
  • Acquire property/complete site investigations
  • Ongoing budget updates, concurrent with design
  • Lifecycle cost evaluations
  • Manage the permit process
  • Manage subcontractor bidding process
  • Determine contract value

Preconstruction Phase: Goals and Expectations

During the preconstruction phase, a contractor helps an owner determine their goals and expectations for the work.  These vary from owner to owner and depend on the end users needs.  Project goals may focus on a variety of factors:

Schedule

Some project goals are deadline driven.  The most important factor is how quickly the work can be completed, even if it leads to a higher cost for the work.

Cost

The final decisions for the scope of work and chosen general contractor may be based on lowest possible cost or providing the best value for a set cost. 

Building Components

Projects that require an elevated level of quality and/or sophistication for the end user experience may care more about the quality and features of the building, with cost or schedule secondary to the finished product. The owner may prioritize low maintenance building operations, sustainability, increased safety for occupants and/or health and wellness.   

Remodels require extra elements that must be investigated, such as:

  • Determine existing structure type and floor plan
  • Complete hazardous materials investigations and subsequent abatement strategies
  • Match and source existing finishes
  • Determine existing utility locations
  • Determine best path for new utilities/ductwork/etc.
  • Safety for occupants

Following the establishment of goals and expectations, the contractor can identify project costs and establish a budget, review different types of building materials, evaluate schedules and constructability in order to best meet the owner’s goals. 

A contractor might also advise on how best to navigate the permitting process with the local jurisdiction and optimum timing for completing the work to mitigate weather or other concerns.

Common Evaluations during Preconstruction

The range of items that can be considered during preconstruction is extensive and largely dependent of the end goals for the project. A building that is a simple warehouse, for instance, may evaluate roofing types, site layout and phasing considerations.  But a remodel or larger development with a variety of end-users or more complex finishes will be far more extensive, which is another reason to get a general contractor involved early in the process.

Below are some common components that may be evaluated during the preconstruction process:

  • Site selection as it relates to cost or schedule
  • Site selection as it relates to local jurisdictional challenges
  • Phasing of work for efficiency or safety
  • Placement of building to minimize cost of sitework and utility connections
  • Timing of excavation work
  • Soil amendment options, such as cement treatment, early grading and rock placement, ground improvements or deep foundations, etc.
  • Types of heating and air conditioning systems
  • Roof structure type and roofing materials
  • Height and finish of interior walls
  • Flooring finishes
  • Wall finishes
  • Plumbing fixture types
  • Lighting plans and fixture types
  • Material selection based on sustainability goals
  • Sustainability measures such as solar, building lighting controls, landscaping modifications, etc.

Mitigating Risk

Construction is inherently risky business. To help mitigate that risk, bringing on a good contractor can never be done too soon. When exactly?  “At conceptual thought, ideally,” says Perlo’s Director of Estimating, Chris Culbertson.  “We can provide site selection input before you even buy property. We can provide budgets off a napkin sketch and help with design as you go. We can engage before there is even a design team on board, or help you find the right design team.” 

While no one can claim they can mitigate ALL risk on a construction project, they can certainly help minimize it, and assist the owner in knowing where risk is still a possibility. Some examples of mitigating risk that can occur during preconstruction include:

  • Identifying existing conditions so that dollars can be allocated appropriately
  • Completing an accurate budget for the work that will match the final cost
  • Identifying items that may be unknown and assigning appropriate contingencies and allowances to account for these items during construction
  • Engage the local jurisdiction to capture all requirements they may dictate
  • Engage the subcontractor market to ensure accurate costs and availability
  • Identify materials that have long lead times that may effect the sequencing of work
  • Identify alternative materials to mitigate cost or schedule concerns
  • Evaluate products for longevity/safety of occupants/cost of ownership over life cycle of building
  • Provide neighbor relations to prevent conflict during construction
  • Identify best weather windows to avoid wet weather

Cost of Preconstruction

There is significant value to an owner who chooses to engage a contractor during the preconstruction process.  When a contractor is engaged to provide these services, they will typically charge a rate for time spent by their team members for this work. 

Costs for preconstruction work may be as low as a few thousand dollars, or as high as $100,000 or more, depending on the size and complexity of the work. There is no set percentage that an owner can expect to spend, as it is wholly dependent on the individual project.     

An owner can utilize a variety of contract types to engage their contractor in a preconstruction agreement.  The America Institute of Architects offers several types of contract templates that can be used for this purpose.  We suggest consulting your legal team to determine which contract is best for you.  

Final Thoughts
The main takeaway from this week’s blog is to engage your general contractor early in the construction project to  stretch your dollars, reduce project risk and help you make quick and smart decisions for your business. Our teams are always available to discuss upcoming project opportunities.  No matter how small or large, we are happy to help. Reach out here for more information.

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