Development

Cost-Conscious Construction

New Materials and Design Trends Can Cut Time and Money From Project Budgets.

Nationwide many office tenants are focused on either sprucing up and staying in their current space for the next two to three years until the economy turns or pursuing short-term lease deals that may improve their cash flow and upgrade their office environment at the same time. Concurrently, property owners are trying to please tenants while sustaining revenue streams by not sacrificing too much rent or paying out too many tenant improvement dollars. Yet today many tenants expect landlords to pay for retrofits that make their space efficient and appealing.

This power struggle plays out daily in the competitive leasing market, but hiring a construction manager who can evaluate the costs, effects, and risks of proposed tenant improvements can streamline the process for owners and tenants. With this approach, both tenants and landlords cover their collective risks while transacting lease deals that work for everyone.

As a result of the tight tenants' market and property owners' desires to deliver office space driven by cost pro formas, a turnkey approach with a construction manager can fit a defined scope of work into a limited budget. By working together upfront, landlords and construction managers can define turnkey deliveries that incorporate both tenants' environmental requirements and landlords' need for cost-effectiveness. While prospective tenants look for a variety of features in their new space, some of them do not automatically fit into the TI formula. Construction managers can identify cost-effective alternatives to high-end products and specialty items such as millwork, tile, glass, and lighting. This value-design process offers cost savings without sacrificing design and functionality.

Innovative Materials and Techniques

A steady evolution of new products and materials streamlines the retrofit process. Above and beyond the cost savings, many materials contribute to interesting, pleasing office environments and shorten the retrofit schedule.

The key to delivering cost-effective turnkey projects is to focus these materials in critical areas to maximize their effect. Some innovative materials and techniques that save money, reduce construction time, and increase office comfort during retrofits include the following:

  • Lumisite panels introduce light without reducing privacy. Many high-technology companies used these translucent panels in the mid-1990s to improve their office environments.

  • Clerestory, a well-known technique for introducing light into a building's interior, involves placing glass windows at the top of exterior walls to allow natural light into interior office partitions without compromising privacy.

  • Knockdown frames are more cost-effective than welded frames, expedite the construction schedule, and maintain the desired space aesthetics.

  • Aluminum frames are the most cost-effective knockdown frames and are applied after the walls are finished.

  • While the material cost tends to be the same, indirect light fixtures are more user-friendly than direct fixtures because they prevent glare and hot spots on computer screens.

  • Coordinating each floor's furniture layout with the power-source plan reduces wasted outlets as well as installation and material costs.

  • Being selective with soffits and using acoustical tile ceilings has the same effect at a fraction of the cost of drywall or “hard” ceilings.

  • Custom-built credenzas and reception desks are comparable in price to those supplied by furniture dealers.

  • Providing natural sunlight and optimal thermal comfort through careful design of the heating, ventilation, and air-conditioning equipment and controls system, as well as minimizing irritating odors by choosing carpets, composite wood products, and paints with low levels of volatile organic compounds, contributes to a healthier, more comfortable office environment, as well as higher worker productivity.

Technology also has caught up with the mechanical trades, saving both time and money. Computer-aided design is speeding up the entire design and construction process. A construction team's ability to share details and drawings electronically via programs like AutoCAD creates tighter tolerances in the field, improves quality, and shortens turnaround times for submittals, mock-ups, and requests for information.

Powerful, portable computing systems and laser cutters allow sheet metal and sprinkler contractors to speed up the fabrication process and reduce error and waste. For example, sheet metal detailers can work closely with project engineers to coordinate AutoCAD drawings and feed the information directly into a computer-driven cutter to fabricate exactly what is needed on site. A closely coordinated team can cut all of the sheet metal for a typical commercial floor in about one day. Sprinkler contractors also use AutoCAD drawings to precisely prepare a project's pipe structure. Automatically attaching pre-threaded pipe fittings also speeds up installation.

The Schedule Makes the Difference

Since a project's schedule greatly affects the bottom line, a construction manager can realize cost savings by improving efficiencies, closely managing subcontracted services, and shortening the overall time frame.

After developing the master project schedule — a detailed time line that captures all of the architect's, owner's, contractor's, and subcontractors' activities — a construction manager's first task is to complete a procurement schedule. This schedule checks material availability and verifies that a product can arrive on site by the required date. If the specified material is not available, the team either must make adjustments or select an alternate product that meets the design intent and program while staying within the original budget and schedule.

Given that a large percentage of the construction budget is labor costs, strong schedule management is a primary way to save money on a retrofit project. A good construction manager can shorten a project's schedule without incurring premium overtime costs by efficiently sequencing the subcontractors' work. This helps projects in two ways. First, shorter schedules mean fewer days that accrue general conditions costs. Second, efficient schedules mean more-effective use of labor and the chance to complete more work in a given time period, which allows subcontractors to price jobs aggressively. In addition, by completing projects as quickly as possible, landlords can realize rental revenue sooner.

When considering a turnkey versus a more-traditional approach to project delivery, landlords and tenants must consider the time and budget control associated with each delivery model. In the traditional approach, the client hires a designer to develop fit plans for each space and then bids the completed design out to a number of general contractors. This approach could take 10 to 12 weeks. If the bids are over budget, drawings are amended to reduce the cost and the project is either rebid or negotiated with the low general contractor bid. The second process could take another four to six weeks, with no guarantee that the budget will be met.

On the other hand, by hiring a construction manager tenants and landlords can reduce delivery time and be more certain about the budget's outcome. The construction manager can work concurrently with the designer to update budget information and guide the process to a successful conclusion. When speed to market counts, hiring a construction manager is the best option.

Trending Toward Efficiency

Today's tight economy is driving tenants away from overspending their TI dollars and moving them toward more-efficient office space plans that keep renovation costs at or below the allowances. In addition, many companies demand TI allowances that include everything from office furniture to local area network upgrades, which is referred to as the zero-sum approach.

Therefore, many landlords want the construction management team to assess tenants' needs early on and provide turnkey deliveries for fully functioning space as part of the lease agreement. The key to the zero-sum approach is to utilize as much of the existing building infrastructure as possible. The construction manager can evaluate the condition of the existing infrastructure and recommend ways to fully utilize existing conditions. With this approach, the construction manager assumes the risks of the design team and consultants, which helps both landlords and tenants: Landlords deliver high-quality products in cost-effective time frames, and tenants get more for their TI dollars.

Whatever approach tenants and landlords choose, the key to any successful retrofit is due diligence. The due diligence process ensures that retrofit or renovation strategies meet the tenants' needs and identifies potential hidden costs that could lead to dissatisfied tenants, as well as create problems for landlords. Most hidden costs lie in the building's infrastructure and its ability to meet tenants' needs, whether they are simple improvements or complex retrofits involving air circulation requirements, connectivity demands, new mechanical, electrical, and plumbing systems, and HVAC upgrades.

Minimally, due diligence should examine the mechanical and electrical infrastructures, as well as determine structural loads and constructability constraints. A building analysis also evaluates the property for compliance with existing building codes. In many states, new energy codes for tenant improvements are imposing efficiency restrictions in lighting, air conditioning, and fresh air changers, as well as requiring new fire alarms.

Construction managers can provide property owners and tenants with many timesaving and cost saving benefits. In the current tenants' market, owners are wise to consider hiring a construction team to select less-expensive, energy-efficient materials, manage the schedule, and perform due diligence for office retrofit projects.

James Stukel

James Stukel is vice president of the corporate division of Shawmut Design and Construction in Boston. Contact him at (617) 622-7000 or jstukel@shawmut.com.Green Building Practices Equal More Greenbacks From recycling construction and demolition equipment to selecting energy-efficient products that reduce consumption, green building practices are another way material specification and construction processes can save clients money during the retrofit process. Many states have taken aggressive steps to reduce solid waste disposal, and property owners frequently ask construction managers to lessen the retrofit\'s environmental effects. Through construction and demolition waste management, construction managers can maximize recycling rates and minimize construction-related debris disposal to landfills, thus achieving clients\' green building goals while reducing waste removal and disposal fees. In this process, owners separate construction waste and allow recycling companies to remove the material. Commonly recycled materials include metal studs, carpet, ceiling tiles, wallboard, brick, and vinyl tiles, among others. Source separation, or separating the waste into different containers directly on the job site, ensures that a higher percentage of material is recycled, which saves money. For example, a separated metal stud load costs half the price of combining the metal with other debris in a mixed-waste container for disposal at a construction and demolition processing facility. The increased rate of return offsets the higher costs of labor and training involved in on-site separation, and the construction manager passes these savings down to the owner. The construction process also produces irritants such as dust and odors, which contribute to air pollution and create unhealthy conditions for future tenants, leading to headaches, sneezing, and even sick-building syndrome. To protect building occupants and increase worker productivity, construction managers can prevent indoor air pollution by keeping dust away from heating, ventilation, and air-conditioning systems, creating a negative pressure zone to confine contaminants, and retaining a certified industrial hygienist to monitor indoor air during and after construction. A growing body of products, including curtain wall systems, windows, storefronts, roofing systems, and HVAC equipment and controls, helps reduce a building\'s long-term costs by improving energy efficiency and maintenance. Building owners interested in improving their properties\' long-term efficiency should seek the counsel of Leadership in Energy and Environmental Design-accredited designers and contractors to explore their options. Choosing a Construction Manager The right construction manager can mean the difference between meeting your project goals and losing time and money. But how do you know if you are choosing the right one? To position your team for success, follow this efficient process. Depending on the project delivery method, either the building owner or the tenant can make the final decision, but both should be involved in the selection process. The process involves three main components: pre-qualification, interview, and fee proposal. The pre-qualification period is intended to shorten the list of contractors who have demonstrated ability to lead the project effectively. A typical pre-qualification format is the American Institute of Architect\'s A305 Contractors Qualification Statement, which outlines information, résumés, and references for the proposed project team. This enables companies to highlight their strengths in completing work similar to the scope and nature of the proposed project, as well as allowing tenants or landlords to review each qualification under the same guidelines. During the interview, ask prospective construction managers to review the format of deliverables to illustrate how they understand the project and assess individual style. Remember that the manager will be your partner for the long run, so use tools such as score cards and post-interview discussions and take the time necessary to make the best choice. Once the list is narrowed, the next step is to engage in a competitive fee proposal process. The fee structure should include but not be limited to these items: overhead and profit, staff and management costs, supervision, general liability insurance, travel, and printing and copying. Other items such as cleaning labor, final cleaning, and safety and protection usually are included in the cost of the work. Proposals vary, so there are no hard-and-fast rules to follow. A good reference is the AIA 201-1997 General Conditions document, which outlines what is expected from a construction manager.

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