Exploring Myths, Realities and a Call to Action
We all like to save money and some of us have a belief that if we wait to make a purchase, a better deal can be had.
That may be true for buying a car or waiting for a clearance sale at your favorite retailer, but not so much when it comes to building or renovating a commercial building. The commercial and industrial construction market doesn’t see buy one get one offers or black Friday deals.
I often have clients ask if they should wait until next spring to start their project with the perception that they can draw better construction pricing while contractors try to fill up their schedules.
The truth is that if you are able to begin your project now as opposed to later, you should jump at the opportunity.
The Realities – Construction Costs Will Only Increase
When was the last time you heard that costs for construction or renovation were trending downward?
If you said “Hmmmm … I don’t believe they’ve ever gone down”, you’d be right.
From our perspective, we always strive to solicit competitive construction costs from our suppliers, find the most cost-effective combination of equipment and labor to meet project deliverables, and use a “just right” blend of seasoned project managers and sophisticated planning and management software to keep project costs and schedules on track.
But as much as we can do to make our construction proposals as competitive as possible, the realities are that it is less expensive to build or renovate now than it will be in the future.
- Labor costs are rising and will continue to rise as the minimum wage level increases, and as contractors are forced to offer attractive benefits packages to recruit and retain employees.
- The need to hire employees with new skill sets, particularly in the area of technology, add to rising costs.
- The costs for basic materials – concrete, steel, wood – continue to rise year after year.
- The need for owners to comply with an ever-growing list of building code requirements, including life safety and energy code compliance measures, means additional costs will be necessary.
- The need for contractors to comply with an overgrowing list of Federal and state regulations – safety, environmental, materials disposal, and more – increases costs year after year.
- In the state of Wisconsin, you must ensure that your project does not encroach on wetland areas. In some cases, a wetland determination and delineation may be required. This procedure can only be completed when soils are not subject to frost or freezing conditions, or nominally between late April and October. Miss the window and your project will be delayed.
Historically, costs for construction rise 3% to 6% year over year.
In one case where an owner came back to us to revive a project that had lain dormant for 3 years, the cost for that project, without any design or specification changes, grew by an additional 25% due to external factors beyond their control or our control.
Case in point:
We have seen the cost per yard of ready-mix concrete grow by nearly 20% in a three–year span. The cost of rebar is approximately 14% higher and framing lumber - while more prone to seasonal pricing fluctuations - is approximately 10% higher in the same three-year timeframe.
Finally, consider the loss of productivity, revenue and profits you face from not having the necessary space to meet your customers’ demands. While your decision is delayed, and you lack the capacity to deliver products or services because of space considerations, your competitors are filling the void.
Those are lost opportunity costs.
So, What’s a Business Owner to Do?
Simply put, here’s your call to action: get started now.
That means finding and hiring a well-qualified, reputable contractor that can walk you through a design build process and explain how to choose the best contractor. We’re pleased to offer two free resources that you can download for free with a click on the image below. Can you afford to wait?
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Connect with us for a no cost or obligation consultation.
We would be pleased to discuss your next build or renovation project and guide you on your path.
Contact us or call Chris Herzog, V.P. of Business Development at 920-901-0667 today.
At A.C.E. Building Service, our reputation is our foundation…a reputation that started in Wisconsin in 1963 and has continued to flourish throughout the decades. A.C.E. offers commercial and industrial construction services to owners and facility managers in Green Bay, Manitowoc, Sheboygan and the Lakeshore area. Our customers will attest to the fact that our ability to listen carefully to their needs has kept them coming back to us as their preferred design-build contractor. Integrity, trust, fairness, honesty, reliability, responsiveness and respect—these are the qualities to which we remain true. We welcome the opportunity to talk to you about your project.
Interested in learning more? Download the “How To Choose The Best Contractor For Your Industrial Project” guidebook with a handy checklist of questions to ask when choosing a contractor.
