Construction costs Featured

8:00pm EDT September 25, 2007

Whether you are building from the ground up or renovating existing space to suit your business’s needs, new construction is never cheap. From materials to systems expertise to labor, owners need to be prepared to look for savings in every aspect of the project.

This is where project management — or process management, as Bob Toryak of CresaPartners likes to call it — becomes a vital part of meeting your company’s needs without exceeding your budget.

“A project manager should be a true advocate for the tenant, from the start of design through construction administration, and finally with restoration/close-out of prior space,” he says.

Smart Business spoke to Toryak about some of the hurdles owners will need to overcome during construction and how a project manager can help to identify savings.

What kinds of factors affect construction costs?

Costs can increase as a result of the economy. For example, copper went through a significant price increase last year. This year, costs have settled down. Dry wall is increasing in cost because of the energy costs to manufacture it, which has also affected the costs of other construction material. When Katrina hit, we had a big shortfall with many products. For example, on the electrical side, main panels for office space required a 17- to 20-week lead-time. These lengthy lead times can impact the clients’ move-in schedule.

What can be done?

We listen to our clients to understand their culture and needs. If management is changing to an open landscape plan, the use of wall systems that are premanufactured is a solution. Additionally, they can take the panels with them when moving again. The panels incorporate fabric and glass for aesthetics and, at the same time, provide flexibility for reconfigurations.

They are more costly, but the client can write them off over the term of their lease and realize tax savings.

As far as IT infrastructure, this can be more difficult. There are ways to get the same quality cable, but maybe with a different manufacturer. A lot of the cable has been imported from Europe. Clients have specifications they require, but they can get the same compliant quality without having to pay an extra 25 percent more for brand-name cable.

When should a project manager step in?

One of the most important things we try to do is get involved in the very beginning of a project. A project manager acts as a liaison with the client, the landlord and the contractors through the bidding process. Starting with the design process, a project manager can save clients money on the various tasks, such as architectural and engineering fees, wiring/cable and general contractors, as well as furniture and move coordination. A project manager can save a client anywhere from 27 to 36 percent, on average, in the Philadelphia region. We recommend that even if they do not engage CresaPartners, that they make sure that they have someone who has experience in various disciplines such as voice and data infrastructure, construction work, furniture systems and even financing. With that experience, costs can be driven down and the process far less complex.

How might a project manager help to find other savings?

For most clients, the biggest expense outside of the rent and tenant improvement allowance is furniture. All major contract furniture manufacturers have various lines of product at variable price points. You have to find out what the clients want. Are they design-conscious, just looking for functionality, or is there a tight budget to consider? Furniture can cost anywhere from $20 to $25 a square foot for brand-new, mid-price furniture and significantly more if they want high-end, designer furniture. Each manufacturer can bring the price in line to meet the client’s needs.

In the Philadelphia market, many of our clients are biotech, technology and health care companies that look at sustainability and green building construction for LEED Certification. As the project managers for a client, we encourage the use of products that are sustainable. A sustainably designed interior has many benefits, including energy savings and increased employee productivity.

The bottom line is that you need to listen to your clients for their specific needs and expectations so that the project can meet their goals, schedule and budget.

BOB TORYAK is director of Project Management with CresaPartners. Reach him at rtoryak@cresapartners.com or (610) 825-9564.