SOURCE: Leopardo Construction

August 12, 2008 10:05 ET

Avoiding Scope Creep, Fast Tracking and Changing the Palette of Materials Among the Solutions That Smart Builders Can Provide Companies to Offset Rising Construction Material Prices

White Paper Offers 10 Strategies for Building Smarter, Saving Money and Getting the Most Out of a Contractor in Today's Economy

HOFFMAN ESTATES, IL--(Marketwire - August 12, 2008) - The perfect storm of soaring fuel costs and intensified global demand has caused major volatility and rapid escalations of construction material costs. Despite these obstacles, experienced builders have a variety of solutions they can provide companies to offset the escalating material costs and still develop new facilities for growth and expansion. In a recent white paper titled "Smart Construction," Leopardo Construction highlights 10 economical building solutions for offsetting the skyrocketing material prices and realigning construction budgets with original expectations.

Since January 2004, the price per gallon of gasoline at the pump has risen 167 percent and diesel fuel has jumped 252 percent. The cost of fuel has a tremendous impact on petroleum-based materials such as plastic, asphalt, rubber, PVC, insulation and roofing shingles. The price of asphalt, for instance, increased 47 percent in the last 12 months. Beyond petroleum byproducts, every single construction material requires manufacturing and transportation -- sometimes across thousands of miles -- which consume fuel.

According to the Leopardo white paper, while fuel prices may eventually come back down, any signs of material price stabilization are in question for the foreseeable future because of the plummeting value of the U.S. dollar and massive global demand.

Below are the 10 construction strategies Leopardo Construction outlined in its white paper that will offset the dramatic increases in material prices to provide considerable savings. For the complete 16-page paper, including in-depth solutions and examples, please visit http://www.leopardo.com.

10 Construction Solutions to Offset Soaring Material Costs

  1)  Avoid scope creep and build lighter

      Working together, owners, architects and contractors
      can identify wasted space and make a facility as functionally
      efficient as possible.  Instead of building for growth today,
      consider building a smaller, more flexible facility that can
      easily expand later to fit the company's growth needs. Early peer
      reviews or independent second opinions of drawings and documents
      may uncover several areas where leaner foundations, framing or
      enclosure systems may be used without compromising the building's
      safety, integrity, durability or functionality.

  2)  Purchase materials smarter and in bulk

      The strategies employed in the procurement of materials can lead to
      significant cost savings.  Large, veteran contractors have
      well-established purchasing channels as well as pre-construction
      experts on staff who can assemble material and equipment packages
      that are much more attractive to suppliers and increase the builder's
      ability to negotiate the best prices and delivery dates.  Lead times,
      comprehensive costs and usage figures are more important than ever
      for determining and securing bulk and wholesale pricing.  By studying
      market trends and cost data, contractors can forecast prices and
      conclude the most cost-effective purchasing solutions.

  3)  Know where the dollars are spent

      By taking a step back to look at trends and expenditures,
      construction firms can truly understand where the most dollars are
      spent and dedicate the appropriate resources to deliver the most
      substantial cost savings for the client.  Nowhere is this more
      evident than interior construction where almost half of the entire
      interior building budget can be tied up behind the walls or above the
      ceiling.  For example, Leopardo's research reveals that, on average,
      24 to 26 percent of comprehensive interior construction budget is
      committed to electrical costs alone.  The variance from low to high
      electrical bid was also sizeable with swings as high as 20 percent.
      On a $1 million electrical job, that potentially means a low bid of
      $800,000 and a high bid of $1.2 million.  In this case, a seasoned
      builder with meticulous estimating experience, coupled with knowledge
      of the market and the ever-changing subcontractor community, can save
      the client $400,000, which can be spent on the interior design or go
      back in the client's pocket.

  4)  Change the palette of materials

      Using substitute materials that are lower priced, less volatile, more
      sustainable or more labor-efficient will result in significant
      project cost savings.  Pre-assembled or pre-fabricated materials such
      as pre-cast concrete panels used for a structure's enclosure system
      can help trim a construction schedule and produce considerable
      savings.  By changing the palette of materials, Leopardo expedited a
      suburban police station project that was stalled for five years and
      saved its client $200,000.

  5)  Build green and reap the benefits

      The myth is that sustainable construction costs more, which is not
      always the case.  While seeking Leadership in Energy and
      Environmental Design (LEED) status carries a variety of consultant
      and registration fees, using green building practices, materials and
      systems may actually cost less than their non-green counterparts,
      and provide immediate and long-term savings.  For example, a green
      roof, which started as the poster child of the green building
      movement, is commonly associated with high costs.  However, a
      building can achieve many environmental benefits by using white
      thermoplastic polyolefin (TPO) roofing membranes that cost
      one-third of what a standard intensive vegetative green roof
      typically runs.

  6)  Integrate more revenue-generating space and features

      Working closely, the entire project team can maximize a building's
      rentable square footage.  Adding more rentable square feet or
      converting a non-rent producing space, such as a rooftop terrace,
      into a rent-producing area will earn the owner additional revenues
      to justify upfront costs.  Other revenue-generating strategies
      include moving mechanical systems to the roof to free up floor space,
      incorporating cellular or communication technology on the roof, or
      hanging promotional signage on the side or top of the
      building.

  7)  Leverage the contractor as a development partner

      Seasoned construction firms like Leopardo have the resources,
      relationships and know-how to be a trusted development partner on
      most projects.  Some contractors are savvy enough to counsel or
      collaborate with clients on sale-leasebacks for freeing up precious
      capital, tax-engineering strategies for depreciating property quicker
      and lowering the net tax base, alternative financing methods,
      municipal grants and economic development incentives.

  8)  Bring the builder onboard early and explore the design-build
      delivery method

      Delaying a project, even by just a couple months, could cost millions
      of dollars in material price increases.  An early partnership between
      architect and builder will speed up the delivery, avoid costly
      escalations and translate to more efficient value designing, the
      ability to address critical MEP systems considerations and helping to
      prevent re-design.  The design-build method economizes and
      streamlines projects by overlapping the design and construction
      phases with the contractor assuming the majority of the risk.
      Design-build commonly produces substantial profitability and is
      popular for turning seemingly unworkable projects into legitimate
      opportunities.

  9)  Fast track the project

      Fast tracking construction moves away from the traditional linear
      building process and overlaps the design and construction to enable
      portions of the project to begin before the design is completed.
      This creative sequencing will allow the project to start much earlier
      in the design phase and save both time and money, especially on big
      projects.  Fast tracking also gives more flexibility for builders to
      navigate weather conditions and stay on schedule.

  10) Build smart, energy producing or self-powered projects

      Take notes from world architecture, engineering and construction,
      including the arrival of energy positive buildings.  Dozens of new
      and exciting eco-towers are being built that will eventually catch
      the eyes of all industry leaders and shepherd the next generation of
      design and construction.   One such building is the Dynamic Tower in
      Dubai, which is the labeled the world's first building in motion.
      The tower, which is expected to be complete in 2010, will use 360
      degree rotating technology to change its shape.  Between the 78
      floors, 77 wind turbines will be positioned horizontally to produce
      enough green energy for the tower itself and several other nearby
      buildings.

As the paper concludes, smart contractors truly understand that the term "saving" goes well beyond dollars and cents. They work hard to counsel clients on price escalations, material demands, supply shortages, alternative methods of construction, lifetime costs, efficiencies and impact on the environment. With a sophisticated builder onboard early, companies will have countless solutions for offsetting the rising material prices.

About Leopardo Construction

Leopardo Construction, one of the nation's premier construction companies and a recognized leader in sustainable building practices, offers preconstruction, design-build, construction management, general contracting and development services across several vertical industries. In 2008, Leopardo was recognized by Engineering News-Record magazine as one of the nation's largest 400 contractors. The company's team of 500 experts has specialized capabilities in interiors, healthcare, senior housing, retail, office, industrial, residential condominiums, aviation, hospitality and community-related projects such as libraries, churches, municipal and educational institutions.

For more than a quarter century, Leopardo's family of employees has been committed to quality construction, superior client service and tremendous value. In addition to its corporate headquarters in Hoffman Estates, Illinois, Leopardo Construction has offices in Chicago and Mount Pleasant, South Carolina, as well as job sites across the nation. For more information, please visit http://www.leopardo.com.

Contact Information

  • Media Contact
    Todd Andrlik
    Leopardo Construction
    847.783.3950 office
    630.302.8633 cell
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