There are potentially many different factors that can cause cost overruns on a construction project, but few independent construction cost managers would argue that the most significant of these include ensuring there is a fully defined scope of work that translates to a good set of contract documents and maintaining sufficient competition to obtain fully competitive bids (at all levels, including main contractor, sub-contractor and supplier levels) on those fully defined contract documents. On projects where costs have escalated out of control, it is often due to loss of control of these elements. The reason this occurs can often be traced back to the method of project delivery that the owner selected and the reason they selected it can often be attributed to a lack of fully impartial, independent cost advice. Increasingly popular fast track, collaborative type contracts, usually move forward on the basis of an estimated budget cost, with an undefined scope of work and with a single main contractor. With the right team and with very good management, these arrangements can be very successful, but they are also a recipe for serious cost control problems. This appears to be the case at the VA, where a foray into integrated design and construction contracts, similar to construction manager at risk, backfired, with Congress now set to intervene to alter the way large VA projects are constructed. Fast track collaborative type contracts can be the right choice, but rarely, should the reason for choosing them be based upon cost savings. Whilst bringing the contractor into the design process early can be beneficial, including producing cost savings, there are also significant cost disadvantages with moving forward with a single contractor and with an undefined scope of work. These may far outweigh any cost benefit gained through early contractor involvement. Employing the services of an independent construction cost advisor will help owners, designers and developers understand these advantages and disadvantages so that the best choices can be made.
Posted on: Fri, 02 Jan 2015 01:14:29 +0000
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