Page 36 — Office & Industrial Quarterly — December 2020 www.crej.com INDUSTRIAL — CONSTRUCTION Y ou have three bids on your desk and they’re all 15% to 20% over your budget. Your heart sinks. You’ve worked hard to get this project through design, you’re already in for permit, and you’re pushing up against your must-start date. At this point, there’s only so much that can be done with alternate finishes or scope reduction and even those will require rework and extending the timeline, eating into any cost sav- ings that are found. Project costs break down to be about 5% design, 40% materials, 40% labor, 10% subcontractor profit and 5% general contractor profit; you need a strategy to manipulate the largest portions of project cost – materials and labor – to your advan- tage. The strategy is simple: Hire your design and construction team to work together from the begin- ning. The real dollars on a project are spent with the decisions that happen during planning: site layout, geotechnical recommendations, mechanical, electrical and plumbing systems, and finish selections. The further along a project gets in plan- ning and design, the more difficult and time-consuming it can be to recover from oversights or mistakes and meet your project budget. Let’s start with design. When hiring an architect, talk to people who regularly work on construc- tion projects, like your commercial real estate broker, general contrac- tors and others in your network who have completed successful projects. Make sure the designers you consider have significant expe- rience in your construction type. For instance, if you are working on an industrial building, don’t con- sider firms that do 90% commer- cial office. Meet with a few firms, describe your project and find out if they seem to be aligned with your goals. Does their culture fit with yours? Are they someone you can envision working with for the next six to 12 months? Ask them to provide you with a design pro- posal, which could include architectural, structural, mechanical, electrical, plumbing, civil and landscape architecture ser- vices, as applicable to your project. Additionally, you might ask them if they can assist you in designing your tele/data, furniture and secu- rity needs and to include those in the proposal. When reviewing the proposals, study the fees for each firm but don’t get overly focused on them. With design fees representing about 5% of project cost, a 10% reduction in design fees has little impact on the overall project budget. Con- versely, selecting the wrong design team – one that is not competent, not experienced in your project type or not willing to listen to your vision – can have a significant impact on project cost. You want a design team that will work collab- oratively to put a realistic scope on paper; select the firm you feel will work best with you to design your vision and accommodate your proj- ect budget. Now to the contractor. As with the design firm, make sure to do your homework and ensure that the contractors you are considering have significant experience with your project type. Describe your project to them. Ask that they visit the project site with you. If there are multiple sites, let them help guide your decision of which one is best. If you have a site plan or sketch, share it with them. Consider the contractor’s experience with the design team. Would they be willing to perform the project as a design-build or design-assist model, providing you with a single point of contact, rather than managing mul- tiple partners? At this early stage, the scope is not well defined and full of assumptions, so you should expect some variability in the numbers, and the variability is not necessarily an indication of each contractor’s competitiveness. Many people make a mistake by getting overly focused on the low number here, referring to it as a “bid.” In fact, it’s not a bid, but rather a budget that was put together based on limited informa- tion. My suggestion is to average the numbers and use the average as your estimated project cost. Then select the contactor you feel best fits your vision for the project and seems most likely to work well with you to achieve it. If your desired budget is below the average of the estimates, be honest with your preferred contractor and tell them what you can afford to spend on the project. They should be able to tell you if there are options avail- able that can get you the project you want at a cost you can afford. We find that experienced custom- ers (like developers, construction managers and architects) are aware of the advantages of the entire team being on-board early and tend to select a general contractor at the same time as a design team. In fact, many select their design and contractor teams as a unit, using a design-build or design-assist deliv- ery method. Our most experienced customers have one contractor they work with on every project, which gives them consistency, accountability and unlimited pric- ing services for all their projects. Their contractor does not compete against other general contractors; they compete to meet the cus- tomer’s budget, which often can be even more challenging. On the other hand, customers who don’t build often (some of whom may only work on one project in their lifetime) tend to follow the adage of “three bids and a buy.” Their focus goes to trying to save on a 5% line item (contractor’s fee), while miss- ing the opportunity to manage the materials and labor portion, which is 80% of the project budget and where the real savings are possible. They select an architect, complete design and bid their project, often to find out that all three bids they receive are 15% to 20% over their budget. Today’s contractors are profes- sional services firms. Like architects and attorneys, reputable general contractors are professional organi- zations with high ethical standards. They are experienced profession- als who are your key to managing 80% of your project cost so you can design the project once, design it to meet your vision and design it to meet your budget. Get all of the project players in the room when it will have the greatest impact; assemble your design and construc- tion team early to spend less time managing the project, be more con- fident in the decisions you make and get into your space faster – all at a lower cost. s Be a pro: Assemble your construction team early Chris Alcorn President, Alcorn Construction Inc., email@example.com mation available in GIS format to enhance our knowledge. By combin- ing the hundreds of public databases with private database information, consultants have unprecedented resources. This immediate access to the knowledge of historic projects and public resources in a combined platform allows the real estate development community to have a much clearer picture of the risks of site development at the outset of a project. So the savings to the real estate and construction community can be great with an understanding at the outset of the project whether a site is situated in an area with shallow bedrock, contains wetlands or has ground water contamina- tion that exceeds the residential or industrial standards. It seems counterintuitive but forward-thinking consultants are looking backward. Finding and repur- posing historic data that has been left behind for purposes of planning tomorrow’s projects. Using today’s computing power and data requires forward-thinking and investment in capturing and storing this data in the proper way. However, once cap- tured, it is available forever. Digging up information that once took hours or days now can be attained literally in minutes. With these programs in place, this valuable information is available for the real estate communi- ty to understand and mitigate risks in days instead of months. This type of turnaround is right around the corner if not here already. Just start asking for it. s Cords Continued from Page 32 ease of access to transportation, a top priority in the industrial industry. But it’s Ascent Commerce Center’s location that makes it extra desir- able. Ascent, situated 10 minutes from Denver International Airport as well as FedEx and UPS hubs, is a prime spot for access to workforce, public transportation and major highways, making it an ideal loca- tion for e-commerce and distribu- tion companies. “The airport area is experiencing a tremendous amount of growth,” said Scott Caldwell, senior vice president at Lincoln Property Co. “Ascent Com- merce Center will benefit greatly from its premier location with excel- lent connectivity to the interstate, Denver International Airport and an abundant employment population. The development will be ideal for e-commerce and other warehouse users in the greater Denver area, with ultimate size flexibility rang- ing from 16,000 square feet up to a full-building opportunity of 312,000 square feet.” These developers chose Brinkmann Constructors as the general contrac- tor for both projects. Both projects are design/build, meaning the Brinkmann team came in early to find creative ways to save time and money with unique solutions to unique opportu- nities. “Brinkmann Constructors fre- quently delivers projects in the role of a turnkey design-builder,” said Lucas Rottler, Brinkmann’s director of preconstruction in Denver. “In this capacity, Brinkmann spearheads the project from the onset of site concept to deliver a cost-effective solution while handling all aspects of project development coordination includ- ing entitlements and permitting. The Brinkmann project management team uses engineering expertise to control the project design, which ultimately drives costs down while ensuring that the project fulfills the needs of the developer and end users.” The buildings are being erected using tilt-up construction, meaning slabs of concrete are poured, cured and then tilted to a vertical position and braced until the remaining struc- tural components are in place. “Brinkmann Constructors prides itself on being a proficient builder in the world of concrete tilt-up construc- tion,” said Lucas Rottler, Brinkmann’s director of preconstruction in Den- ver. “Tilt-up construction has been around for decades delivering a very cost-efficient solution for warehouses all over the world in which the wall panels are formed and poured on the job site utilizing the permanent slab on grade as a casting bed. With this approach, we can deliver projects in a very timely manner while fully con- trolling on-site production and elimi- nating costly trucking.” s Kooiman Continued from Page 31 Ascent Commerce Center in Commerce City features three Class A warehouse and dis- tribution buildings totaling 594,000 square feet on 33 acres.