Cost overruns are a nightmare for any construction project, whether it be new building or remodeling. Exceeding expected costs can cripple a project if they go too far. There are 5 common things that can lead to cost overruns, but are almost completely avoidable if scope of work is used with a design-build contractor. Here is how design-build can overcome these common problems that lead to such costly overruns.
Incomplete or Unclear Plans and Specs
With design-build, every aspect of a design plan is hammered out before it goes to the building. However, if and when plans are found to be unclear or somehow incomplete, the design and building teams work under the same roof. This means that solutions can be hammered out much more quickly. However, by having a scope of work, clarity and completeness are sought after before a hammer hits any nail, reducing the potential for costly change orders which can lead to extra work.
Finals Costs Unknown
Known as “cost plus bids,” the actual final cost of a project is often unknown. If all factors aren’t accounted for in a scope of work, this can lead to actual costs being far higher than estimates. With a scope of work, the cost surprises can be kept to an absolute minimum by making allowances for potential extra work that may have to be done to complete certain tasks. That way, sacrifices in time and money, or potentially even aspects of the design, can be kept to an absolute minimum.
Hidden Surprises at the Job Site
The most common cost overrun that we all know about is unforeseen surprises that crop up during a project. These tend to be hidden problems: such as insect damage, structural issues, water damage, wood decay, etc. A diligent inspection sometimes can detect these issues before actual work begins so that potential repairs can be built into the scope of work. This is why most design-build contracts include a percentage of the budget that allows for these hidden conditions. This allowance can relieve a great many budget headaches later.
Construction or Design Errors
With design-build having the design and construction teams under the same roof, errors that may occur due to communication issues are kept to a minimum. Having to do the same work twice is not something that’s allowed for in any budget, really. By having the scope of work completely understood, many errors that can occur due to the plans not being clearly communicated can be eliminated.
Changes by Property Owner
During the course of construction, it’s very common that you as the homeowner may choose to upgrade to a better material (flooring, roofing, windows, etc.) You may also decide to change around a layout that may be difficult to do after installation has begun. One tricky thing about design is that sometimes you may not consider a material or design change until the process is already underway. It’s sometimes hard to visualize things until the work is already taking shape. Many times, these changes are going to be for the better. When creating the initial scope of work, design-build contractors will go over all of the material and design options so that you’re well informed of what any upgrades will cost if done in the course of work. This type of overrun is not entirely avoidable, but at least you’ll have a good idea of what the associated extra costs will be if certain changes are made.
By having a better understanding of the true cost of a project, design-build scopes of work may appear to produce a higher estimated cost than you might at first expect. However, the great advantage to this higher estimate is that allowances are built in for the common issues that can lead to cost overruns. Even if cost overruns aren’t completely avoidable, they can all be greatly alleviated by having costs more accurately planned for in the initial scope of work. This planning can give both you as the owner and the contractor peace of mind that the project won’t stall or go way over budget due to overruns.