Metro-Can Construction

Peter Wheatley

Years ago, my wife decided to renovate our home. Built in the 60’s, it had plenty of charm in a great neighbourhood, but was in desperate need of a modern update.

After a few meetings with a designer and parting with a decent chunk of after-tax dollars, we had an inspiring design, a bright and inviting open concept with an 800-square-foot addition. Throughout the process, our designer assured us that it was all possible within the budget we had allocated. I wasn’t so sure.

We approached a few reputable builders to get pricing and as I had feared, estimates from all three came in at nearly three times our budget.

At this point, we realized it would have been a better strategy to choose a builder to sit with us during those design meetings and offer constructive feedback. Lesson learned.

Design fees spent and feeling deflated, we simplified our approach with an improved living space layout, updated look, but no added square footage. In the end, we stuck to our construction budget and got most of what we wanted. That experience mirrors a familiar scenario on a much larger scale across our industry today.

Overall, the real estate market across Canada remains soft at best. Political pressure, market saturation and a declining population are all forces that continue to resist new construction starts in ways that many have seen coming for some time.

"We realized it would have been a better strategy to choose a builder to sit with us during those design meetings and offer constructive feedback."

Despite this trend, some segments of real estate development remain in demand, presenting opportunities for land developers, general contractors and trade contractors alike. In short, competition is high for fewer projects, with great-value opportunities for developers who are ready to build.

Two key questions are present in this discussion;

1. How are construction companies offering the best value to prospective clients?

2. What can builders do to manage risk on lean margins?

It has long been the belief that the best way to get the lowest price on a construction contract is to invite general contractors to bid on a project design through a competitive tender. But with so much financial commitment at stake, construction-savvy developers are seeking greater transparency and control over the construction procurement process, leading to a construction management framework. As a result, the demand for pre-construction services is gaining a lot of attention. For many in the industry, this is a welcome shift.

With ever-increasing municipal fees and taxes tied to the development and building permit process, many owners are looking for ways to lower other soft costs, including design fees. This can sometimes mean fewer drawings, missing information and a lack of design coordination. Design details are downloaded to the trades, resulting in gaps in scope and costly owner change orders. These added costs, often paired with schedule extensions, add strain to project relationships.

There is a better way. Over the past decade, the definition of pre-construction has evolved substantially. In the past, this phase has been understood as the budgeting, tender and planning process leading to the start of the construction schedule. Now, it means much more.

Yes, professional project management firms acting as owner representatives can provide strategic guidance to developers, but experienced construction managers can offer services that include early review of design drawings and trade input, months before they are ready for tender. The result is a collaborative and informed process in which the construction manager is engaged as a team player, tasked with informing the design process through real-time pricing validation and constructability assessments, rather than merely serving as the builder.

Providing this valuable insight before contract commitments are made leaves time and space for value engineering and design refinement that benefits design teams and developers alike.  As with other consultants, there are fees for these services, but they are usually a small fraction of the cost of change orders that are more likely to arise later in the construction schedule. Spend a dollar today to save a hundred once the project is in motion.

In many cases, the construction manager will credit back some or all of the pre-construction fee if they also become the builder. Today’s model of pre-construction planning presents an opportunity for a more thoughtful design process that considers detailed construction logistics and sequencing before any contracts are signed or any shovels break ground. Whether it’s a home renovation or a $100M tower, getting ahead of the construction timeline with a solutions-based approach offers exceptional value and should be the norm not the exception.