Stretching Your Dollars
There is no room for waste in today’s lean environment. Those retailers still building—and there are plenty of them, even if expansion plans have been scaled back—are charged with finding new ways to maximize their already tight construction budgets.
The good news is that such opportunities do exist. But it takes prudence, resourcefulness and teamwork, according to Bob Benda, chairman and CEO, Westwood Contractors, Fort Worth, Texas. Here are some suggestions from Benda and Westwood’s project managers to help retailers stretch their construction dollars.
Negotiated vs. hard bids: Contrary to what many people believe, negotiated bids are actually more economical for owners than hard bids, according to Benda.
Negotiated bids, he explained, provide for more aggressive subcontractor pricing, and owners get to share in any savings overage at project end. Hard bids provide less attractive pricing from the subs, and any savings per trade is lost to the general contractor (GC).
“We believe we actually made less money on negotiated bids due to the savings potential we give up, but we like and favor them because of the inherent less business risk, plus they allow us to get more involved in the upfront process,” Benda explained. “Negotiated bids are a win/win.” (Westwood’s business is split about 50% negotiated, 50% hard bid.)
Upfront GC involvement: Bringing the GC in during the design and development phase can help minimize costly changes and questions throughout the process while also providing cost-saving ideas and other tips.
“By minimizing changes or addressing vague plans upfront, owners will have fewer additional plans to reprint and fewer construction reworks after the fact, which equals less repair and replacement dollars and less time-delay costs,” Benda said.
There is also the potential for buying efficiencies. If asked, a GC should be able to suggest comparable-materials alternatives, potentially providing a better or more cost-efficient solution.
Faster starts: Having accurate plans, site surveys, mall approval and the building permitting ready to go from the start will help save time, energy and potential costs in the long term. Also, having at least temporary power working on day one of a project will help for a smoother build. “A faster start will alleviate some of the challenges and costs on the back end,” Benda said.
Materials: Look for material and labor costs to decrease due to the recession. “It’s a good market right now for wood-frame structures, which are coming in much lower than masonry and steel,” Benda added, “especially for projects under 10,000 sq. ft.”
Other money-saving tips include:
Look into bidding cheaper-rate utility contracts from non-regulated states;
Cut down on overnight shipping costs; and
Do as much as possible electronically (including electronic signatures). It is less costly and more environmentally responsible.