The cost associated with a construction project is naturally high and generally represents one of the most important investments in the life of a person or a company. Having a team of specialist professionals who watch over your interests and protect your investment can represent a lower cost than you think.
Many times, clients decide not to hire a Construction Management or Supervision, trying to avoid a higher expense than what a construction project already represents, and it is logical. It’s better to invest that resource that will be much needed in equipment or that we can allocate to build more square meters. However, reality is often more complex than that.
The costs of Construction Management tend to vary and each company has its way of quoting the work. So there will be some who charge a percentage on the amount spent on the work. Other companies prefer to charge a monthly retainer. At BFC Architects , we have the philosophy that the fairest thing is to charge what it actually costs us to provide the service, that is, the time that the staff we are using for each stage of the project occupies.
For example, in the initial stage during the determination of needs and start of preliminary projects, it is common that we only require a Construction Manager and that will be the only charge we will make to the client. As the workload grows and the specialties to be executed on site increase -as well as the responsibilities-, more personnel will be integrated into the staff, with the prior approval of the client. Similarly, as work items are completed, we can stop occupying -and charging- the services of some specialists. By reducing the staff we reduce the cost to the Client. There are many variations depending on the amount of investment and nature of the building; but usually the amount of our services tends to oscillate between 4% and 6% of the total value of the investment.
But beyond the cost, the
value of the service should be analyzed. In construction, errors always come with a price. A poorly made decision, a poorly specified team, an unknown regulation, a poorly drafted contract, etc.; will undoubtedly cause additional outlays that could have been avoided under the expert eyes of a Construction Management. How much will it cost to correct the path after such an error, when you have an army of people of different specialties and perhaps different companies advancing rapidly; when you have a delivery date that cannot be moved; when there are contractual commitments that cannot be postponed or when there is newly built construction that must be demolished? The amount is incalculable and these are things that good Supervision is trained to avoid since we see them every day.
However, this is to a certain extent “intangible”, as it is based on the “what ifs”. But there is another way in which a Construction Management can mean savings for a project that is much more objective and is in the work of reviewing volume generators of work and progress estimates that we do every day. Historically, statistics show that we have saved through this route between 8% and 14% average of the amount of work that contractors and suppliers try to charge, either by detecting errors in mathematical operations, duplicated concepts, unexecuted works, etc. that are attempted to be charged in good -or sometimes not so good- faith and that are improper. Above we were talking about that our participation has a cost of around 6% of the amount of the work. If only in the review of estimates we save, let’s not say 12%, but 8% of the amount of the work, the cost of the service not only pays for itself, but it returns money to you.
But even assuming that contractors always charge what is fair and we do not save anything through that route and that the Management service is paid with the work budget, it would be necessary to consider
how much it costs the peace of mind of knowing that your investment is under control, that it is watched over. To this, another advantage should be added and that is that the nature of our work allows the entire construction process to be clearly documented and available for review or internal or external audit during the construction process or afterwards.
Undoubtedly, this point must have some value for your organization.
Of course, you have the option not to hire external Supervision and better grow your internal staff with your own personnel, but that comes with another series of advantages and disadvantages that we will discuss in another article later.
For these reasons, the most important and fastest-growing companies where it is customary to have a lot of clarity in the processes, or the Institutions that by law are obliged to do so because they understand the value of these services, cannot even imagine starting a construction without being accompanied by a good Construction Management, from beginning to end.