Challenges Faced by Commercial General Contractors

Despite a rise in production last year, the construction industry is still likely to make a sluggish recovery. As the economy continues to recover from its recent downswing, the commercial construction industry also continues to grow. However, the industry is still encountering challenges that can affect businesses and investors. When it comes to effectively addressing and handling these challenges, hiring an experienced commercial general contractor is a good way to ensure that your project goes smoothly and successfully. Things are looking up a bit for the construction industry though.

New construction starts have been strong in recent months, construction spending rose throughout much of 2011, the production of construction materials has been up for six months in a row, and Caterpillar, Inc. and other large companies have posted strong earnings reports for the past couple of quarters a hopeful sign that small and mid-sized companies will also do better. However, the industry still faces plenty of challenges. Small companies for the most part are struggling because of the sluggish economy, increased competition, rising insurance costs and a shortage of excellent workers. The largest challenge, by far, commercial general contractors say, is the economy. Although the unemployment rate is dropping and the U.S. economy is showing other signs of recovery, economists and others say the recovery of the construction market will lag behind the overall economic recovery.

Commercial general contractors say homeowners and other customers are savvier in the wake of the recession and typically get three or four estimates before they decide whom to hire. This means commercial general contractors are competing for work against two or three of their peers now, compared to one or none before the recession.

People used to call and say, ‘Come do this job for me,’ and they’d get around to asking what it would cost. Yet another challenge is rising insurance costs. Insurance market conditions for U.S. construction fi rms began deteriorating in the second half of 2011, and that is expected to continue this year. Large losses and reduced investment returns caused many U.S. insurers to seek rate increases in 2011. As a result, rates for various construction product lines, such as general liability, builders risk, excess casualty and others, rose, forcing up costs for commercial general contractors, who passed them on to their customers. Cost overruns. Sometimes, projects can get “carried away” and can end up costing significantly more than anticipated. This can occur if materials need to be changed, if there are unexpected delays or additions, or if the planning got out of hand and the building ended up a bit more showy than originally anticipated.

How to Speed Up Commercial Construction

After an unfortunate slumping period in new commercial construction projects, we are happy to report that new development projects are in full recovery mode. This trend has been pointed out through a series of leading indicators including deliveries of new building supplies throughout 2014.Another indication of a growth spurt in the commercial construction industry is found in the Architecture Billings Index (ABI) which comes out on a monthly basis. In the ABI there was a sharp three point jump in May of 2014, as compared with the previous month. Thus, the need to speed up the process of commercial construction has become even more crucial.

“In commercial and residential construction, cost-effectiveness, speed and safety count and functionality dominate over prestige.” This is an excellent and pertinent quote. While factors like cost-effectiveness and speed definitely do count in the world of commercial construction; SAFETY CAN NEVER BE SACRIFICED!! Safety is the number one concern in all commercial (and residential) building projects. In this article we will look at how to speed up the commercial construction process WITHOUT sacrificing safety.

The often complex world of commercial construction is ever-increasing in demand. The range of projects vary from office complexes to shopping malls to factories to luxury hotels. Technically; although there ARE differences, commercial construction projects can also be housing developments or apartment complexes. Typically budgets are tight and the time-frames within which a commercial project can be completed are fairly narrow. Therefore speed definitely counts. An excellent construction company CAN deliver primo results under such conditions. The finished product is often visually gorgeous and is completed within the necessary time-frame and safety IS NOT SACRIFICED!! It pays to hire a reputable company for such a project.

“New Formwork and Scaffolding Supplier on the UAE Market Innovation made in Germany now at home in Dubai.” MEVA Formwork Systems is based in Germany and now boasts that it is the most prolific supplier of Scaffolding (& Formwork) equipment in the Middle Eastern countries. This equipment is essential to the process of speeding up commercial construction projects because it allows workers to complete projects without the use of cranes. In fact; most frequently, the cranes cannot even be used for these types of projects because they are too large to fit in the allotted space. What was once an inaccessible area for these construction workers, the same workers are now able to complete their projects with the use of this MEVA equipment. They can personally assure that all processes of their specific project are completed with SAFETY in mind. Not only for the safety of the building’s future tenants; but also the safety of the workers who are assigned to that specific project. These are of huge benefit to the industry.

Much more information about MEVA (and possibly products by similar competing companies) is available on the Internet. Just go to your favorite search engine and type in the heading name. Not only is there more information specifically about MEVA, there is info and news about other techniques used to speed up commercial construction projects without sacrificing anybody’s safety.

Commercial Construction Tips – How to Avoid Going Over Budget

A commercial construction project can seem like a never-ending balancing act, like keeping a series of plates spinning. One plate represents keeping the project on schedule. Another spinning plate is ensuring that construction is completed properly and safely. And still another spinning plate is containing the project budget.

A commercial construction budget is influenced by a number of factors. Exceeding the budget can easily occur for reasons beyond the control of the owner, contractor, and project manager, including:

• A sharp increase in materials costs during construction.

• Weather fluctuations that slow or halt construction.

• Work stoppages.

• Frequent alterations to the design, materials.

Make a list

As one industry writer stated, estimating a project’s cost is the first step of construction cost containment. The project budget should list the essentials (non-negotiables) as well as the negotiables (the aspects of the project that can be reduced, modified, or eliminated in order to contain costs. Each line item should be carefully researched, sourced, and have a realistic cost applied to it. The budget should also include contingency funding.

Cost control challenges

Cost containment challenges are not always line item-related. There are a number of less-obvious but significant challenges to staying on budget, including:

• Poorly defined scope of project.

• Flawed estimating methodology

• Lack of project management policies and controls.

• Unrealistic scheduling.

• Insufficient planned-to-actual cost comparisons.

The big three

This trio of cost containment issues has been stated before and they are worth stating again. If The Big Three of budget issues are carefully managed, you can reduce or eliminate a number of budget overruns:

1. Incomplete design documentation: the architect’s rendering, plans, and specs that are turned over to the owner or project manager do not always include the in-depth details necessary for realistic budgeting.

a. Solution: the contract between the owner and architect should specify that all members of the architecture team will provide complete details, specs, documents, and drawings related to the project.

2. Pre-bidding document review: some contractors do only a general review of documentation before submitting their bids.

a. Solution: the language of the project owner’s contract should require all contractors who submit bids to acknowledge, in writing, that they have reviewed all specifications and plans. The bid price should cover all identified and “implied or express design intent” work.

Any materials or changes to design that the contractor feels are essential to successful completion of the project (but weren’t identified in the project/owner’s documentation) also should be included in the bid, along with explanations for the additional items.

This requirement should reduce or eliminate the need for contractors to seek additional compensation based on additional work necessitated by information “not shown on the original plans and specifications.”

3. The low-ball bid: underbidding can put the entire project at risk and cause it to far exceed the budget.

a. Solution: solicit bids only from trusted contractors who have successfully completed similar projects. They should have documentable records of completing projects on budget and on time.

Another cost containment option

Another cost containment option is to hire a skilled construction cost estimator. That person or team works with you to help you avoid out-of-control expenses, keep construction costs down, and ensure the project is completed within the agreed-upon timeframe.

It’s up to you

Ultimately, it is the owner and project team who are responsible for overseeing each phase, change order, and plan alteration to the construction project. There should be a well-defined process for change order submittal, review, and authorization. There also should be continual monitoring and updating of the budget so that you and your team know where the project financially stands all the way to completion.

Commercial Construction Techniques

In this article we will explore some old and some new construction techniques that are considered by experts in the industry to be alternative techniques. Perhaps this information will inspire some future innovative building designs. The techniques discussed here are in random order and are not intended to display any particular construction preferences.

If you would like a building designed that is pretty quiet and contains outstanding thermal mass, use the Insulated Concrete Forms technique to construct it. Although some builders use this technique strictly for foundations, it can be used to create entire structures. Some cons to using the ICF technique is that it can be fairly expensive to build and also difficult to modify once the structure is complete.

One older construction technique that is still relatively popular is using various types of wooden logs. The materials used here can range in coping techniques with specific wood type-appropriate thermal barriers between the logs to insure an airtight structure. Detailing with this kind of technique is crucial to each project it is used for. Log construction techniques are seldom utilized for commercial structures; but in some regions of the world can be a choice preference for homes.

There is also the option of commercial modular buildings. These are non-residential and code-compliant structures which are built anywhere from 60% to 90% in an offsite environment and then delivered to its ultimate destination. Upon their arrival at this destination they are put onto a concrete foundation. The end result is a totally completed structure ready for occupancy by business owners (who then add their own specific furnishings and details to the inside of the buildings.)

An especially attractive form of commercial construction technique is known as float glass. This technique is “made by floating molten glass on a bed of molten metal, typically tin, although lead and various low melting point alloys were used in the past.” The standard result of this method is an extremely flat surface with a uniformed thickness to it. This technique is most frequently seen in beautifully constructed office buildings and sometimes entertainment-oriented buildings such as an opera house or a building where a symphony orchestra might perform. They are very lovely to look at and attract much attention wherever they exist.

Of course, one of the most-often used types of commercial construction materials is steel, especially as a building’s internal support system. In general steel is utilized in addition to the builder using other materials to construct walls and floors. Steel is an environmentally-friendly material, structurally secure and energy efficient. Additionally, it is cost effective and can be easily modified. One huge disadvantage is that steel is a conductor of heat. A second con is that; if poorly constructed, the steel can corrode over time and it must be repaired to avoid serious consequences from occurring.

What Is Commercial Construction?

The term commercial construction is used to refer to any kind of construction project where the eventual outcome will be a commercial property rather than a residential property or industrial property. It can include warehouses, hospitals, sports centers, shopping centers and hotels, as well as some types of reconstruction and refurbishment of historic buildings. One commercial construction firm may not necessarily be responsible for all aspects of the creation of a commercial property from conception to completion, and a variety of different people may be involved, however some well-established construction firms are able to take complete control of all aspects of the construction process.

Commercial properties differ from residential properties because commercial properties are not intended as full time homes, and therefore the needs, rules and regulations connected to commercial properties differ from those associated with residential properties. Those who are wishing to build a commercial property, or adapt a former residential property into a commercial property are usually required to get planning permission in order to be able to do this. If special planning permission is required, it must be properly obtained before any physical work is carried out, or else the owner may be required to undo or remove all the work which has been carried out.

There are different types of commercial construction companies available. Some construction companies will only be contracted once planning permission is received, and once all surveying etc has been called out at the place where the construction will take place. These companies will work according to the pre-approved architectural blue prints which have been commission by outside investors who wish to develop or build a property for commercial use. Other types of commercial construction company will take charge of the whole process from conception to completion, having either designed and funded the project themselves, in the hope that they will be able to sell or lease the property when it is completed, or having been contracted out by a private investor.

It is one of the construction company responsibilities that all commercial properties adhere to all local commercial building regulations, and if any of these regulations are not adhered to fully, then the construction company may be liable for any damages. In recent years, building regulations for commercial properties in many countries have been extended to take into account changing environmental standards.

As well as being partial responsible for the health and safety of those who will use the commercial property once it is completed, commercial construction companies must take partial responsibility for the health and safety of its own workers. Any building site is a dangerous place to be, so it is important that all workers in construction companies understand the rules and regulations which are put in place and designed to help to keep them safe. All construction workers should be taught the importance of wearing the correct protective clothing whilst they are on the building site or using building equipment: hard hats and high visibility jackets can help to save lives.

Commercial Construction Tips – How to Stay On Budget

Keeping a commercial construction project on budget requires determination, vigilance, creativity in problem-solving, and diplomacy. It begins almost at the moment a project is conceived and continues throughout the entire construction period.

There are many reasons a commercial construction project will go over budget. Some causes simply can't be adequately assessed or budgeted, such as delays and materials losses caused by a natural disaster. But many causes relate to poor planning and even weaknesses in the budgeting process itself.

Typical Cost Control Problems

Cost overruns on a construction project happen, despite the most careful planning and control efforts. Some common causes for overruns include:

  • Lack of a well-defined project scope.
  • Poor estimating methods (or standards).
  • Out of sequence start / completion activities.
  • Inadequate comparison of planned-to-actual costs.
  • Unanticipated technical problems.
  • Poor (or no) project management policy and control practices.
  • Faulty schedule resulting in overtime or idle time expenses.
  • Escalating materials prices.

Three Big Mistakes

Review some of the more egregious construction cost overruns of recent years and you might see a familiar pattern to budget overruns. They are commonly made mistakes that can be adjusted and corrected during the contracting phase of a project.

Managing these three weak areas may mitigate or eliminate many of the problems listed above:

  • Incomplete document design: a project owner may hand over the architect's plans and specs to the contractor believing that every detail has been identified. In truth, the owner-architect agreement often only requires the architect to present the plans and specs of a general design intent. The complete in-depth details may not be included. The lack of complete design information places the contractor in the position of demanding more money for work that had not been clearly defined in the plans and specs. Multiple change orders and budget overruns result.
    • Resolution: the owner-architect agreement should specify that the architect will provide a 100% complete set of drawings, specs, and all related documents prepared by engineers (and others working on the project). Responsibility for overages caused by incomplete design falls back on the architect, not the contractor.
  • Complete review of documents prior to bidding: the contractor may seek additional compensation for necessary work that, according to the contractor, was "not shown on the plans and specifications."
    • Resolution: the project owner's contract language should stipulate that all contractors wishing to submit bids must affirm they have reviewed the plans and specs and fully understand the scope and intent of the project. Their price should cover all necessary work to fulfill the "implied or express design intent."
  • The lowest bid: the project owner may face many pressures from investors, shareholders, and board members to accept the lowest bid. But lowest isn't always the best. Underbidding can be risky and costly.
    • Resolution : work with trusted contractors who have completed projects similar to the current one. The contractor with a track record of successful on-time and in-budget builds is far more likely to be able to produce the same results for your project.

The root of successful budget containment lies in allowing a sufficient amount of planning time to thoroughly define the scope, schedule, quality, risk, resources, and budget for the construction project before the bid invitations are sent out to contractors.

Using Careful Commercial Construction Planning

Commercial construction projects, whether large or small, require careful planning and scheduling. The availability of materials and resources are influenced by many factors that must be taken into consideration. Deadlines are vitally important to many construction projects, where time means money and delayed projects result in significant fines.

In addition to careful advanced planning, commercial construction projects require flexibility as delivery dates shift and activity proceeds at an unexpected pace. Communication is essential during any planning phase and well into the project as it makes its way toward completion. In addition, commercial construction projects have enormous budgets that must be carefully monitored and adhered to. Cost overruns can result in significant losses to the company in charge of the project.

Using an effective, well designed, construction software can help keep a commercial construction business on track. It can enhance the company’s ability to oversee and evaluate the project thereby reducing costs and cutting expenses. Computer software can definitely speed the decision making process and improve communication between project managers and company management.

Cost management is crucial and employing appropriate management techniques can make the difference between bringing a project in on time and within budget and excessive costs and expenses. Estimating prior to bidding on a commercial construction project is the start of cost management even before the project is underway. If it is a project that is given to the lowest bidder, a company’s bid requires careful examination to make certain a profit can be made it the job is won.

Once under way, proper planning and careful record keeping takes over to continue to analyze the profitably of the project as it is underway. Construction managers and project managers oversee various aspects of a large commercial project for profitability as well as scheduling and materials coordination. Some managers work on only one project, others are responsible for multiple projects at once.

Another important element of any commercial construction project is safety. This is a complex aspect of commercial construction planning and thorough knowledge of laws and regulations is a necessity. Most companies have a site safety manger to keep employees and contractors informed and in compliance with these regulations. Safety violations can result in fines and injuries result in lost time, as well as, unnecessary medical and disability costs.

Careful planning of a commercial construction project will bring a project in on time and within budget. No construction company wants to work at a loss, even though on occasion it may be unavoidable. If it happens too often, the company will not survive.

Large commercial construction projects have benefited greatly from the advancements in construction technology and computer software. They have made it possible to improve the accuracy of materials and labors calculations and assist management in planning as the project proceeds. Efficient planning and appropriate adjustments made in a timely fashion throughout the project will increase profits and minimize expense and this is easier to do now than ever before.

5 Handy Commercial Construction Tips

You might have been put in charge of a commercial construction project recently, and though you appreciate your boss's stamp of approval on the work you are capable of doing, you might not know all of the components that go into the project. Here are some handy tips to keep in mind as the project progresses.

1. Start by hiring a good general contractor and then put together a practical budget for your project. This budget will need to be presented to the project owner, aka your boss or maybe even someone higher up than that, for approval. Be sure it is comprehensive. Your boss will want to know just how feasible the project is when he or she presents it to the board for approval. That budget will also be what the finance team will use to obtain financing for the project. If the budget indicates that the project location needs to be moved or that something needs to be scaled back, now is the time to make those changes.

2. Your boss or the board of directors might have one vision of what they want to see, but it might not actually be practicable. The project owner should be a part of the planning process so he or she is comfortable with the changes that are made. Also, while you are in the planning process, be sure you bring in all of the residents including those who will be using the building when it's all complete.

3. Once you have the plan in place, it's time to set up the schedule. If your project owner wants a specific date to open the building included, that should be the place to start and then work the schedule back from that date. Be sure to build in a buffer along the way to compensate for any delays that might happen. Actually, make that will happen. The unexpected is always to be expected. With a schedule in place, your general contractor can keep you appraised of the progress, and also let you know about any delays that were encountered.

4. Don't be afraid to work within your own limitations. It's OK to admit what you don't know, and when it comes to construction, relying on your experts to guide you is not only okay, but a good idea. Your contractor will also know what will be needed in terms of how to best keep you up to date on the project's progress.

5. Communicate, communicate, communicate. There is no such thing as too much communication. Your contractor will need to provide you with regular updates, and you will need to ask key questions to make sure you and your contractor are staying on task. Open communication reduces problems and generally catches them at a point where they are more easily solved. New apps available particularly for Apple products are great communication resources. From the bid process with SmartBidNet to portable CAD apps that let you do quick drawings on site and send them to anyone by e-mail, apps can help everyone stay on target.

These five tips are some of the main ones that will help you be successful. You can also check out some of our other posts for more information about commercial construction. Happy building!

Commercial Construction Staking

Construction staking for commercial projects is a crucial step in the building process that can directly influence whether a project finishes on time, on budget, and free from errors. It is in the best interests of the construction company or developer to utilize the skills of a qualified registered land surveyor to perform the staking. A good surveyor will interpret the plans and layout the project to best fit the site as the designer, engineer, or architect intended. By having someone with the skills and knowledge of a professional registered land surveyor, the builder can be certain of the accuracy and reliability of the results.

Commercial construction staking is needed for a variety of different projects, including subdivisions, streets, utilities, and more complex, multi-story building sites. Construction staking is, at its most basic, the laying out of survey points on the ground to act as a guide for constructing site improvements. In many ways, construction staking can be seen as the opposite of the as-built survey. The as-built assesses a building or project after completion to ensure that is was built according to the plans. Construction staking is performed at the beginning of the project to make sure that the project is built according to plan. Good construction staking will lead to a good as-built survey.

Construction staking, especially in a commercial application, calls upon all the skills that a land surveyor possesses. They are required to complete a boundary and topographic survey to ensure that the property matched the site plan and engineering design. They must also perform field staking for mass grading, building offsets for construction, utilities (sanitary sewers, water mains and storm sewers), as well as any parking lots, streets, curbs, or gutters. These are all done before the surveyor even begins to address the proposed buildings on the property.

Once a surveyor moves on to staking the proposed structures, he provides the location and grade stakes for building foundations, walls, and column lines. This is a crucial step in the process. If the buildings foundations are not staked properly, it can be a very costly mistake for the construction crew that could have the potential to ruin the job altogether. A knowledgeable land surveyor is a builder's best tool to avoid foundation problems further on in the process. A good surveyor will establish a coordinate network with horizontal and vertical controls from the beginning of the property and use it to calculate and determine the exact corners and levels of proposed structures.

While construction staking is seen by many to be a simple step at the beginning of a project, it can have very dire ramifications for the rest of the project if not completed correctly. In commercial projects, the importance of a well-performed construction staking is magnified, given the larger structures and vast amounts of money the construction staking affects. It is money and time well spent to make sure that a qualified individual with the proper surveying knowledge and experience is conducting your construction staking survey.

10 Great Commercial Construction Tips

Commercial construction can be a big undertaking, both literally and figuratively. You might think you have it all under control, but do you really? Here are ten tips that will help make your next commercial construction project a success.

1. The lowest bid is not always your best choice. It’s a counter-intuitive thought compared to everything we have been taught. But even in these times of wanting to be sure to keep the bottom line in check, it’s important to find the best price for the project. Sometimes the low bid is that way because the contractor has no idea what the job entails, and other times they will come in low, get a payment or two, and then abandon the job.

2. Go online and do your research. Check references, run the contractor’s board numbers, and study the backgrounds of your contractors so you can know before you sign on the dotted line just what you are getting. The internet can also be a source of information about current trends in commercial construction.

3. Find a contractor who specializes in what you want done. Sometimes the biggest isn’t always the best. A smaller contractor who is more adept at smaller jobs might be just the right thing your job needs. If you are revamping a store, consider finding contractors who specialize in retail space renovations.

4. Start with the general contractor and build from there. By bringing the general contractor into the job first, you are able to use their knowledge on the job from the beginning and have them help guide the project.

5. Go ahead and add on that maintenance agreement. Once the job is done, you want to ensure that your project will last for years to come. A good maintenance contract that checks over the equipment is a great idea to clean and maintain things like your furnace or drain pipes. A quick cleaning now is much cheaper than an expensive repair later.

6. Does the goal of the project further your company’s image and brand? If it doesn’t, it might not be the right project for you. This is a big capital expense, and you want it to pay off with a solid return on investment for you.

7. Your project should make sense. Do you have custodial closet doors that open inwardly? Did the customer service booth end up with only a small front-facing window? Double check the design proposal before you go out to bid to ensure that the concept diagrams and blueprints make sense and lead to positive workflow.

8. Along with number 7 goes ensuring that the areas like the office supplies and the copier are easy to get to and are going to keep things efficient in the office or administrative area.

9. Decorate in such a way that the colors and furniture enhance your brand and your company’s image. Your customers should feel like they are welcome in your new place, so be sure your contractor includes an interior decorator in the plans.

10. Be sure your contractors are all on board with the project and are capable of meeting the deadlines. This point is probably the most important one of all. Any delays are costly both financially and in terms of getting your business going again in the new location.

Hopefully these tips will help get you going in the right direction for your next project. Happy building!