How to Conduct a Construction Cost Analysis: Tools and Strategies
This guide to doing a construction cost analysis will give you the best strategies to track project expenses and keep costs low while accomplishing your goals.
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Everyone wants to believe that the healthcare facility in which they and their loved ones receive care is top-notch. The road to an excellent medical facility starts with construction. Therefore, healthcare construction projects are complex, making a tool like Avvir essential to the building process.
Healthcare and life science (labs, research and development facilities, etc.) buildings are often constructed in response to an immediate need. Those involved in construction know that their work will impact lives. Because of the critical need for such facilities (which became very clear during the early days of the pandemic), construction schedules are always tight.
Meeting the schedules is complicated by the dynamic nature of healthcare technology. Equipping a facility so it can house the necessary ever-advancing technology means working with very sophisticated equipment and systems. The systems may require great precision and be sensitive. Handling such equipment may require specialty subcontractors.
Navigating this complexity is a challenge and can result in slowdowns. Because of the potential life-and-death role the healthcare or life science project may play, construction slowdowns for extraneous issues, such as money, should be avoided at all costs.
Yet, owners and general contractors spend significant time applying for payment, reviewing applications, and processing transactions to keep the workforce paid and materials on-site as needed. Teams need to find a way to speed up this necessary task.
To help with this task, one team turned to Avvir. Read on to see how we were able to help them successfully construct a healthcare facility.
The 400,000-square-foot healthcare facility is in southern California. It’s a brand-new ground-up construction.
The team was working under the Integrated Project Delivery model, which requires alignment between all stakeholders from the design, owner, and contractor sides. However, there was a guaranteed maximum price for construction that shifted the burden to the general contractor.
As part of the construction, the team utilized Advanced 3D coordination down to the wall framing studs.
The team was challenged by an aggressive schedule, but ownership was forward-thinking and open to using new methods.
To meet the schedule, the team decided to challenge the traditional methods for processing payment applications. This was done because of the recognition that it could be a pain point and result in missed deadlines.
Instead of wasting countless hours on site approximating progress and then using industry expertise to make the impossible jump of applying that impression to a dollar value – the project team engaged Avvir to help accurately quantify progress within the context of cost.
Avvir helped the team extract the maximum value from their existing BIM and Reality Capture programs. To do so required that the data connect across platforms and project phases. Once mined, data needs to be utilized to its fullest extent. Data's usefulness is limited if its siloed. By using BIM as the Single Source of Truth, the project team was able to decrease project variables and simultaneously increase project confidence.
A single source of truth has multiple benefits, including increasing communication, improving productivity, and reducing rework/mistakes. BIMs are the best data set to become the single source of truth on a project.
Why? BIMs can represent all dimensions and aspects of a project in an accessible digital format. Yet, they are not used regularly as a single source of truth. The primary impediment to implementing BIM as the single source of truth is a lack of data standardization across platforms.
On the project at hand, the team turned to Avvir to bridge the gap. Avvir helped the team automate the process of mapping thousands of line items from their schedule of values to the corresponding geometry in the BIM. That information was paired with automatic progress updates via reality capture.
The result was that the team used Avvir as the 3rd party verification tool for signing off on payment applications. The same data/information had even more benefits. The team used this information to understand the value of what had been installed to date, which was important for financial reporting on their assets in construction.
By using Avvir, the team unsiloed data and increased its usefulness. The ability to connect data across platforms and project phases raised confidence that payments were appropriate and reduced the potential for money to slow up construction progress.
Consider some of the returns the team received by using Avvir.
The team was able to take steps toward the automation of payment applications. This reduces the chance for error and is a time saver. In addition, it leaves an audit trail, which is helpful for the current project and future projects. The team can review the data when developing bid prices on future projects.
Similarly, the team has an auditable pay application that is useful in dealing with trade partners and subcontractors. The pay apps submitted by the trade partners became auditable. The percent-complete for work in place could be verified by the Avvir portal to ensure billing accurately reflected the work completed to date. This increases trust and confidence which leads to a better working relationship among all parties.
A few elements were removed that are inefficient and waste time. Among these are trying to determine the percent complete on-site and going back and forth discussing what is the true percent completed with multiple parties involved. The end of this unpleasant (yet necessary) time-consuming process means fewer emails and haggling over minutiae and more time spent on construction.
Another time saver was having better insight into forecasted cash flow projections based on historical data and production trajectories. Teams can quickly and easily review if they are on a budget in terms of time and money. The information allows teams to take action before problems balloon and become overwhelming.
There was increased transparency between all project stakeholders - the trades, the general contractor, and the owner. There was transparency for the relevant stakeholders into the financial state of the project that they previously could never achieve. Because the information was readily available, there was no guessing or waiting around until the gatekeepers got to sharing it. This removes suspicions, saves time, and encourages cooperation.
Healthcare/life science buildings serve a vital role in society. Proper and swift construction of these complex structures requires the team to be on the same page. The team that constructed the Southern California healthcare facility turned to Avvir for help to meet their aggressive schedule. And they did. By using data from their BIM and Reality Capture programs, Avvir helped the team save time, quantify progress, and increase project confidence.
5/10/21
Team Spotlight
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