Valuable Resources - Having The Right Tools Before Planning A Capital Improvement
Updated: Jan 11, 2021
With the coming of a new year, we look to what lies ahead. 2020 certainly brought a unique set of challenges, so how will the "carryover" of these challenges impact the Upstate of South Carolina's construction market in 2021?
First, let’s set some context. Throughout the pandemic shutdowns of 2020, construction remained an essential business sector, allowing construction professionals to remain active in the workforce. Most companies implemented viral transmission mitigation procedures in order to minimize the spread of the virus across construction sites. This allowed construction projects to continue. As we enter 2021, what challenges does the impact of the novel coronavirus pandemic create for a business considering a 2021 or 2022 capital improvement?
The biggest challenge for upcoming capital improvements will be related to resource limitations. Prior to 2020, construction often felt the effects of limited craft and skilled trade workers. With these skilled individuals being in short supply, labor costs continued to rise as a way to retain qualified current employees, or as a means to recruit and train new hires. With up to 30-50% of the value of a capital improvement being allocated to labor costs, this creates a substantial impact on overall costs. Limited resources also lead to schedule impacts when not planned appropriately. Companies continue to work diligently to maintain and enhance their People as a resource with persistent strain.
Our geographic area has continued to grow with new large projects set to commence in 2021. These large projects will require a specific skillset to complete, adding to the strained resources in the skilled trades. These include projects like County Square in Greenville, the new Judicial Center in Spartanburg, continued expansion at TTI in Anderson, Whiteclaw Selzer in Columbia, and a host of other public and private developments already and soon to be announced. These projects and others will continue to further strain the "People" resource in our area, which may increase construction costs and prolong project schedules.
How do you mitigate this risk as you navigate your next capital improvement? Here are a few tips that we would recommend:
Select a team early: Choosing the right design partner and contractor are paramount to success. Allow them to work together early in the project for your benefit as you create and execute your plan. A team, working together with a common goal can create strategies that will mitigate your People resource risk.
Procurement: If your procurement procedures require competition, request design fee proposals from your potential design partners and general conditions/fee proposals from contractors. This will ensure you "check" the competition box. Ask for explanations of each firm's experience. Be sure not to overlook and undervalue the experience of the proposing firms, and more importantly the People being offered, as there is great value in their personal experience. Often, People's experience can translate into real savings at the project's completion.
Request References: References on the specific People planned for your project cannot be understated. Are the people that executed specifics projects still retained by the firm? Request a list of previous clients for whom the People that will execute your project have worked for. Actually take the time to contact these references. You will get valuable information about the individuals and their strengths and weaknesses.
People Resources: Make sure your contractor has a wealth of resources in the trade partner and subcontractor fields. A good contractor maintains great relationships with a variety of industry partners, which ultimately translates into better pricing for you. These contractors can also identify companies that are the right fit with capacity to work versus those unavailable or at capacity, translating into cost savings for your company.
Schedule: Monitor schedule progress not only in the execution phase of a project, but also through the planning phases. Maintaining a schedule throughout each step will result in reduced overall costs at project completion. If you see scheduling becoming a concern, don't be afraid to ask questions. A good contractor will have a plan to execute.
What can P+F offer as you evaluate your next improvement? We have almost 20 years of experience in the market. We have worked with a multitude of local and regional resources, continuing to place value on the expertise of our partners. We deploy "lean construction" methods on our projects to ensure timely schedules. More importantly, we highly value People, who are the ultimate drivers of the success of a project.
If we can help in planning and executing your next improvement of any size, feel free to Contact Us.
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