Construction Costs Savings – A ‘sure fire’ way

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How To Achieve “Construction Cost Savings”

Here at SCM Projects,  we have proven time and again that through utilising our time trusted methods we can bring about construction costs savings. But the biggest hurdle we face is that people tend to view our services as a cost center, whereas this need not be the case and frequently isn’t as we can demonstrate.

Good Project Management leads to Construction Costs Savings

The best way to illustrate that is by giving some case study examples

construction costs savings
65 Pear St Greenslopes

Greenslopes project saves $110,000 & achieves higher quality finish:

To illustrate this point again we were appointed to take over a small project of 4 large town houses at 65 Pear street Greenslopes, a Brisbane suburb just south of the city. The developers were a syndicate of 4 unrelated people from different parts of the country, cobbled together by their various financial advisors who had introduced them to the builder / promoter of the development who in turn promised them an “armchair” experience. Their advisors earned substantial commissions for doing so.

In this case they even had a project manager though they were unaware that it was a subsidiary of the builder. Big mistake!

This syndicate signed a building contract for $1.1 M and paid a 5% deposit [[$55,000] to the builder. Having also paid him $20,000 to remove the existing house. In addition they paid him a further $40,000 to have their near level vacant site ‘cleared’, something that is usually done with demolition, which didn’t happen before the builder (and PM) went into liquidation.

Doing the math you will see that they were in for in excess of $100,000 with little to show for it. Making things worse they had lost a lot of time and the documentation available to continue was scant and needed to be revised to continue with any certainty. What a mess!

 

After sorting out the mess – Roll forward 5 months having appointed SCM – and the job was under construction with a fully specified fixed price building contract for less than $1.0 M and with better inclusions than previously. Were they in front?

Well yes they were to a significant degree. A substantial amount of their pain was alleviated by that $100,000 + construction costs savings we achieved – our fee was less than half those savings. Imagine how much better off they’d be had they appointed an independent PM from the outset. That’s the Opportunity Cost – added to the value of time lost.

This is just another example showing that the lack of competent independent PM is what really costs money.

construction costs savings
Adamson St Wooloowin before

Wooloowin Project achieves Construction Costs savings exceeding $250,000

When approached by Australian Property Investment magazine to demonstrate how Project Management achieves savings we showed how using a competent Project Manager [PM] reduced construction costs from around $1.1 M to just under $850,000 on Rob Swinton’s Adamson St Wooloowin project. Pretty obviously you will realise that this saving far exceeded the PM fees by many times over. In fact is was almost by a factor of 10 times.

{if you missed it you can read it here}
What we didn’t discuss in that case study article was the cost saving relating to ‘Project Time’ and the reason we didn’t is because we didn’t actually save any time. The reason why you ask? That’s easy and it’s because we were only appointed some 20 months after our client’s first approach to us.

 

 

The Value of Time:

Had we been appointed then the project would have been completed much earlier and Rob would have saved even more money! He’d have saved around a year in Project Time and he’d have had greater construction costs savings too as those rose during that lost year. These together add up to tens of thousands of dollars, but even so there’s more. There’s ‘opportunity cost’ ! If Rob had completed his project earlier he would be freed up for another project before land prices jumped. {it’s now completed – read how we rescued it twice here}

construction costs savings
We’ll keep more dollars in your wallet

 

construction costs savings
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