As a developer, your ability to keep costs low during construction is essential. It contributes to the overall success of the project and makes you more marketable which is why partnering with key trades is the topic of this post.
Keeping costs low during construction is easier said than done as real estate construction projects are robust, with many elements contributing to costs. With the Covid-19 pandemic in 2020, supply chains were disrupted. This led to a reduction in the production of materials such as steel. Now, there is a shortage of such materials, resulting in price increases and unpredictability.
A significant factor in controlling construction costs is planning and price predictability. With the shortage of supplies and volatility in prices, and challenges such as labor shortage projected to continue, it is essential to find other ways to control construction costs.
One such method you can use is partnering with key trades.
Key Trade Subcontractors to Partner With
Commercial construction projects entail a lot of different micro projects that require different skills. With different professionals and their teams contributing to the project’s success, you must bring in the best of the lot. Subcontractors are reliable and convenient as they can handle multiple aspects of a construction project. However, they may not be the best option when it comes to cost management and expertise.
This is where key trade subcontractors come in. They are specialized in specific elements of construction projects, enabling them to deliver higher quality work and allow you to save on costs. Key trades can contribute as much as 50% of the total costs in construction. Some of the areas where you should partner with key trade subcontractors include:
- Plumbing
- Structural steel
- HVAC
- Concrete
- Electrical
- Rough carpentry
Benefits of Partnering with Key Trade Subcontractors
By specializing in one area, key trade subcontractors charge more for their work. However, they will offset this cost in other areas as they offer several benefits.
1. Better Prices
One of the primary areas to be keen on in construction cost management is the price of raw materials. Any deviation from the projected price, however minimal, may have a significant impact on the total cost, affecting your ability to complete the project within budget. In recent months, this has been a significant challenge as prices have been volatile and rising.
Part of a subcontractor’s job, albeit indirectly, is to help source cheap materials. Partnering with key trade subcontractors will help you get better prices on materials. Since they are specialized in specific niches, their relationships with suppliers within that area are much stronger. This gives them access to the best prices in the market.
More importantly, they are also purview to more accurate projections on material availability and prices in the future. Such insight allows you to plan for future stages of the project with more confidence.
2. Expertise
Though keeping construction costs low is a key objective, it should not come at the expense of quality work. Through specialization, key trade subcontractors are more knowledgeable and better in their practice areas. This will translate to higher-quality works and finishes.
In construction, delayed completion is just as bad as going over budget. Their expertise and experience also mean that they are more efficient and can complete projects faster.
3. Workforce Availability
Shortage of labor has been a significant challenge in commercial construction in recent years. A problem that the pandemic has further exacerbated. Findings from the 2020 Construction Outlook Survey by the Associated General Contractors of America (AGC) best demonstrate this. Filling both salaried and hourly craft positions is challenging for 81% of construction companies. Furthermore, 72% of construction firms expect this to be their biggest challenge in the coming year.
Instead of worrying about where the skilled labor for your next project will come from, partner with key trade subcontractors. Such a relationship will allow you to develop frameworks for collaborating over more projects.
4. Capitalize on Economies of Scale
As a developer, you may have multiple construction projects ongoing at the same time. Or, you have others lined up after completion. The purpose of Partnering with key trade subcontractors is to draw long-term value from the relationship.
Instead of inviting them to bid on single projects, ask them to submit bids for all your projects. They’ll benefit from more work, and in turn, they’ll be willing to reduce their prices. This also gives them more bargaining power when negotiating with suppliers.
Take Control of Your Commercial Costs
Though you may have to pay more for key trade subcontractors, the cost will be worth it in the end. Savings on material costs alone can be worth millions, depending on the scale of the project. Another element of controlling costs is accessing crucial insight into the unique risks of each project.
Build Analysis has a team of construction experts specialized in performing pre-construction analysis. Contact us today to gain pre-construction insight that will make your projects more successful.
