Does this multifamily building dilemma sound familiar?
Pipelines are full. More work is coming in. Teams are busy. But costs are rising and budgets are being squeezed. The post-COVID building landscape is definitely a bit perplexing.
Overhead, staffing and hard costs are all creeping upward. It can feel like a moving target. Most concerning are lumber costs, which have skyrocketed more than 2X in the last two years. With many multi-family projects returning to the pipeline, the new challenge is making the numbers work.
Lumber and Materials Costs Rising
With lumber and other costs rising, what variables of the building equation can be adjusted to keep you on budget? What levers do you have in your control?
At first pass, it’s easy to feel boxed in. It can be very frustrating. However, if we pull back the layers, as some savvy developers have, there can be surprising cost savings.
Can a more efficient structural design help reduce lumber and other construction costs? The answer is an emphatic “maybe.” But exploring that “maybe” can often lead to amazing results that reduce budget pressures.
Designs Vary from Engineer to Engineer
Experience shows that engineering plans vary dramatically from one engineer to another. Builders often hear from sub-contractors that there is seemingly no rhyme or reason for the variance of design approaches from one engineer to another. “How can one engineer design a 16-inch podium slab and the next engineer design the same project with a 12-inch thick podium slab?” Well, if you look at thousands of structural designs, as we have, you will see that approaches cover a surprisingly wide spectrum that vary not only between firms but between one engineer and another in the same office. The bottom line is some structural designs will be lean, while other designs are massively bloated with over design. How is a builder to know which design he has?
Builders Concerned with Spiraling Costs
With the current landscape of spiraling construction costs, our firm has recently received a record number of requests from builders who are concerned with structural over-design.
Surprisingly, most of these requests come from builders who are pricing out plans that are already underway or even permit ready. What we have found is quite an array of opportunity. Sometimes we assess plans and there’s not much there, so the builder can cross over-design off the list of variables to consider. In other cases, we’ve found a mother lode of construction savings.
In several cases, contractors stated a re-design helped achieve $500K to $1M in savings. The decision to scrap the existing design and invest in a new design added hard costs up front but literally saved the overall budget.
Lack of Uniformity in Structural Designs
So if all structures are designed within the same code standards, why are structural designs not more uniform?
It takes a lot of effort to optimize a design, as opposed to simply calculating something that works. To put it another way, many SE firms operate with “job shop” type production where every project is handled as semi-custom. Accordingly, the emphasis is finishing the job on time and making sure it works rather than taking the time to ferret out every efficiency that can be achieved.
How Specialization Yields Efficiencies
Because multi-family projects typically have repetition and volume, much efficiency can be obtained with an investment into enhanced and more accurate structural modeling. Therefore, vastly improved design efficiencies can be achieved by SE firms that have deep specialization in multi-family projects and that are large enough to support dedicated senior personnel engaged in R&D.
Another factor affecting design efficiencies is the internal organization of SE firms, which tend to divide clientele among Principals, each heading autonomous design groups. Under this structure, design approaches are not unified and can vary significantly from one individual to another.
We hear from builders who are concerned with design inconsistencies emanating from the same SE firm. New jobs that are very similar in scope to past jobs can contain different plan details. This inconsistency can be very frustrating to the field and create construction inefficiencies.
Best practices prove it’s better to have a formal system to ensure the highest thinking is uniformly incorporated into the details of every project. Few SE firms take advantage because it takes a lot of organizational effort to maintain a formal standardization process. But with standardization and specialization, it is possible to have a system where an RFI received in the morning on one job can be incorporated into another project completed that afternoon, so the improved detail is incorporated regardless of the individual engineer working on either project. This efficiency is proven to save time and money with often dramatic results.
For builders with multi-family projects that are experiencing post-COVID budget woes, it may be profitable to take a strategic look at your structural design approach.