Welcome to the Build Analysis Frequently Asked Questions (FAQ) page, where we address common questions and concerns related to construction project management, cost analysis, estimating, and more. Our goal is to provide you with the information you need to navigate the complexities of the construction and real estate development industries. Dive in to explore a wealth of knowledge, tips, and best practices from our team of experienced professionals.
Construction project management is the art of directing and coordinating human and material resources throughout the life of a construction project. It relies on modern management methods to achieve predetermined objectives of cost, scope, quality, time, and participation satisfaction.
The key responsibilities of project managers are ensuring completion of project objectives, implementing necessary operations, efficient resource utilization maximization, and developing effective mechanisms for communicating.
Construction project planning is the process of creating a development plan that will govern the entire construction process. It involves:
A construction cost analysis is a comprehensive breakdown of the costs incurred while performing various project-related activities. It is done with several objectives in mind. These include:
In project management, cost estimation is the process of creating a forecast for financial as well as other resources needed for a project to be completed within its defined scope. In cost estimation, all elements of the project, such as labor and materials, are accounted for, and calculations are made to determine how much of each is needed.
During construction, cost management is essential. It begins with forecasting the cost of building physical structures and then managing those costs to efficiently deliver the project within the forecasted budget. The purpose of diligently implementing cost management best practices is to identify projected cost overruns that can put the project at financial risk. For large projects, it is advisable to have cost estimates done by contractors and independent estimators to ensure estimates are accurate and then periodically revisit estimates to ensure actual costs are in line with estimated budgets.
Construction estimating is a process aimed at anticipating the actual cost of building a physical structure. While making such estimations, estimators need to be as accurate as possible. If there are significant variations between estimates and the actual costs, contractors’ profit margins will be affected, and in effect, owners’ return on investment is at risk.
Preconstruction meetings are meetings organized before a project commences. They bring all project stakeholders in one place to discuss details about the construction. Such meetings are essential as they help ensure that all parties are on the same page and to minimize the risk of issues arising later.
During pre-construction meetings, you should expect:
Overhead costs in construction projects are costs added to the estimated costs to cater to cost variations during the project. They are calculated as a percentage of the total cost of materials, labor, and equipment. Overhead costs can be classified into two categories, general overhead (or indirect costs) and job overhead (direct costs such as general conditions and requirements).
Construction project management encompasses a set of activities done by a project manager that involves planning, coordinating, budgeting, and supervising the construction project. Depending on the role of the entity, project management team functions will vary from one to the next.
Project cost estimation is the process of predicting the quantity, price, and cost of the labor, equipment, and materials necessary to complete a project.
A project procurement management plan is a document that outlines how procurement processes will be carried out to ensure there are no interruptions during the project.
Construction project management is the process of ensuring that all aspects of a project take place as and when needed and within budget. It involves directing and coordinating both human and material resources during the project’s lifetime to achieve predetermined objectives.
Cost estimating is an essential part of a project. There are different methods of estimating costs that have varying degrees of accuracy and time needed. Suitability also depends on the type of project.
The two common types of cost estimating methods are rough order of magnitude (ROM) and the detailed unit cost method. Although the ROM method is fast and relatively accurate depending on the type of project, you will get more accuracy with the unit cost method of estimating.
A key tool available to determine the financial success of a project and helps control costs is the construction estimate, and during the project planning process, it is essential to develop accurate cost estimates to identify and calculate potential risk associated with a project.
For contractors, their estimates certainly influence whether they will be awarded the contract. Efficient resource utilization in a construction project is essential as it can affect the contractor’s income as well as the success of a project. A detailed unit cost estimate with feedback from vendors and suppliers will provide contractors a clearer picture of the project’s scope as it relates to trade quantities, pricing, and total cost of the resources needed to successfully complete a project.
For owners and developers, the construction estimate will contribute a significant amount to their total investment, which in turn can directly impact the project’s return on investment. A best practice approach for owners and developers is to request bids from interested contractors while also engaging with cost estimating consultants to develop their own. This will provide owners and developers more confidence in a construction estimate and mitigate the risk of potential gaps in a contractor’s bid.
Price estimates in project management for a variety of reasons. In addition to helping you determine the budget of the project, they also provide you with:
For accurate cost estimation, it is important to break down the project into multiple components that are more manageable. With each component, determine all the resources required to accomplish its respective portion of the project. Involving industry expertise and experience with similar projects can help make cost estimates more accurate and less time consuming.
Construction manager and general contractor are two terms that are often used interchangeably but have varying meanings. Understanding the difference between the two is crucial for owners and developers. The primary difference between construction managers and general contractors is their scope of work and level of involvement.
A construction manager, whether an individual or entity, supervises the overall project development, beyond construction activities, and is involved in the early pre-construction stages of the project life cycle including assisting owners and developers with site selection, feasibility studies, entitlement planning, procuring design consultants, plan check and permitting, and prequalifying general contractors for selection.
Other functions of construction managers include:
General contractors, however, will run construction-specific functions such as procurement planning, trade coordination and scheduling, managing subcontractor construction billing, ensuring construction quality compliance, and guaranteeing a safe construction jobsite for all personnel. A general contractor’s involvement in the project typically starts upon being awarded a construction contract and ends at construction final completion (with the exception of warranty work).
Adaptive reuse construction, a practice that transforms underutilized or obsolete structures into functional spaces, is swiftly emerging as a sustainable and efficient approach in the construction and real estate industry.
In today’s business environment, managing your corporate real estate assets effectively is more than just a necessity—it’s a strategic imperative. Aligning real estate strategies with business objectives can not only maximize your real estate investments but also drive your overall business success.
Understanding construction loan interest rates and factors influencing them is vital for borrowers financing projects. Economic trends like inflation and interest rate changes significantly impact rates from traditional banks and hard money lenders.
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