Pre-Construction: A Solution to Cost and Supply Chain Woes

Construction teams are no strangers to cost overruns. However, the global supply chain disruptions over the past few years have further trimmed contractors’ profit margins. Although curveballs are inevitable, you can shield yourself from budget and timeline-threatening uncertainties by recalibrating your preconstruction approach.

What Is Preconstruction?

Preconstruction is the second phase of a construction project — after predesign and before procurement, construction and monitoring and postconstruction or closeout.

Many industry players call preconstruction the design stage because it’s where you draw up the blueprints, finalize the list of equipment and materials and evaluate cost estimates. In some construction projects, the development and planning stage also precedes preconstruction.

This phase is arguably the most important because it’s where project roadmap optimization happens. Outlining what you should do to complete the job and demonstrating to your client how you plan to do it are crucial for reducing your exposure to supply chain risks and minimizing budget overruns from start to finish.

The processes involved in preconstruction vary by project delivery model, which determines the composition of the design team. For example, in the design-bid-build model, architects and engineers deliver preconstruction services to the project owner. In design-build, the design and build teams collaborate during preconstruction since a single firm owns the contract for the entire project.

3 Preconstruction Goals to Reduce Cost Overruns and Supply Chain Disruptions

The decisions you make during the preconstruction phase determine how well you close the gap between your project’s initial estimates and final cost. Focus on these three targets to make your project less capital-intensive than it already is and finish it on schedule.

1. Prioritize Local or Regional Suppliers

Despite the severe push for sustainability, fossil fuels remain the global freight industry’s primary energy source. Crude oil and natural gas drive up construction input prices noticeably.

The inconvenient reality is that geopolitical events usually influence energy prices more than economic factors do. Take the Russia-Ukraine war, for example. The conflict had a ripple effect worldwide, inflating energy prices by up to 12.68% in South Asia. Other regions — including the United States — were less impacted but still saw price upticks of 4.27%-6.48%.

Oil and natural gas prices have surprisingly stayed stable amid Israel’s attacks on its neighbors in the Middle East. However, Iran’s direct involvement in the fight can send shock waves across energy markets.

During peacetime, global energy prices can still fluctuate as OPEC can nudge them in the more desirable direction for its members. The organization can shut off the tap or flood the market to raise or lower prices as it sees fit.

Imported construction supplies are highly vulnerable to acute energy price hikes. Goods needing to pass through treacherous shipping routes can take longer to arrive or cost more to transport.

American and Canadian contractors generally find overseas construction equipment and materials more affordable than domestically sourced ones. However, nurturing local supply chains can reduce lead times and construction work interruptions. This approach requires thinking outside the box and embracing unorthodox but accessible materials.

For example, exploring home design possibilities with bamboo during preconstruction can lessen your need to import steel and timber. This plant can grow in various climates, which means you can procure this renewable building material from domestic growers or those in friendlier countries in more politically stable regions.

2. Adopt Emerging Technologies

Digitalizing the phases within preconstruction should go without saying to ensure accuracy. Use cloud-based BIM software to collaborate and fix clashes when coordinating models. Takeoff and estimation programs streamline the quantification process for estimators and calculate prices precisely. These essential technologies reduce the chances of rework and procurement errors that can affect the bottom line.

Moreover, AI and machine learning can predict problems based on historical data, enabling you to prepare for contingencies. Allowing computers to analyze mountains of datasets to find patterns humans can miss to speed up quantification and yield defendable estimates.

Drones and augmented reality simplify site surveys and lend visualization to the design process. Viewing 3D structure representations in the physical environments helps your design team spot errors and minimize costly change orders down the road. Scanning job sites allows architects to experiment with various design scenarios in a 3D environment.

3. Rethink Hiring Practices

Put less emphasis on educational attainment and more on experience. Only some construction disciplines require college degrees.

Follow in the footsteps of self-perform contractors who value time in the field and time on tools heavily. High school or general education diplomas and certifications are enough to fill many vital roles — such as project managers, estimators, laborers, electricians, plumbers, carpenters, welders, solar panel installers and HVAC technicians. Other titles must satisfy additional requirements like vocational training and a commercial driver’s license for heavy equipment operators.

Postsecondary education shouldn’t be a construction career barrier. Removing unnecessary work requirements allows you to tap local craft talent pools instead of solely relying on overseas labor.

Although many immigrants are industrious and productive, communication breakdowns are less likely to occur when crew members speak the same language and share a similar culture. Plus, securing temporary work visas takes time and costs money.

Make Sound Decisions During Preconstruction

Favoring local and regional suppliers, minimizing design errors, preventing estimate inaccuracies and appreciating skilled talent can solve your cost and supply chain woes. Pursuing some of these goals may inflate expenses initially but can minimize cost overruns and delay-related losses.