A Guide to Keeping Construction Projects On Budget
From planning and conceptual design through the end of construction, municipal construction projects may last for years.
Not only does this lengthy process have the potential to tax your staff by adding onto their regular workload, but these improvement projects also present numerous opportunities to go over budget. While cost and schedule overruns are typical of many construction projects, many of these overruns are the result of poor advanced planning that leads to the need for costly reactive solutions in the field.
The good news is that municipalities can take proactive steps to reduce the risk of cost overruns. In this guide, we outline five strategies that can help municipalities plan ahead and rein in construction project costs:
- By assessing and prioritizing projects based on need and community interest, municipalities can begin construction projects when it makes the most financial sense to do so.
- Once projects are prioritized, municipalities can effectively match their projects to grants and other funding opportunities to maximize their overall infrastructure budget.
- Through engineering practices that prioritize value and constructability, municipalities can reduce excessive spending and reduce the risk of expensive rework in the field.
- By addressing common construction delays early in the design process, municipalities can ensure that projects remain on schedule and within budget.
- Through partnerships with experienced construction professionals, municipalities can prevent overtaxing their staff members and avoid scheduling delays.
(To access a PDF version of the guide, download the file using the form above.)
1. Optimize Your Budget with Clear Project Prioritization
At any given time, most municipalities have long lists of capital improvement needs.
As these lists grow with needs that may range across a wide variety of projects, identifying a clear starting place can become increasingly difficult. For many municipalities, this overwhelming need can stall progress. For others, it may mean taking on projects without first taking time to identify strategies to rein in the budget.
Having a clear, up-to-date needs assessment on hand is critical. Such proactive planning gives municipalities greater control over project costs because an accurate assessment of maintenance and capital improvement needs allows municipalities to ensure that they’re able to move forward with construction as soon as funding becomes available.
EVALUATE CURRENT AND FUTURE ASSET NEEDS
Asset management is a simple yet effective tool to help municipalities stretch their construction budgets. By prioritizing construction project needs, asset management practices can provide a clear pathway for progress. This prioritization makes it possible to take action on a project when it makes the most financial sense to do so.
Asset management begins with conducting an accurate inventory of all of your departmental or agency assets and assessing their condition. This information should help identify which assets need maintenance versus replacement or help plan how to move forward with one option versus another based on certain funding scenarios. For example, you may determine that holding off on maintenance to a particular road that is currently in fair condition may mean creating a far more expensive project in five to ten years.
Engineering partners can often assist with asset management determinations to help municipalities decide the most appropriate path forward. With HR Green, this includes recommendations about which projects to perform now to save money in the years ahead, and where maintenance can be reduced for assets that will be ready for replacement in a few short years.
ALIGN PRIORITIES ACROSS ALL STAKEHOLDERS
While it might be simpler to prioritize projects based solely on a checklist, it is important to gain input from all stakeholders when prioritizing large projects. Having these conversations early is critical because agencies may find that the needs they have prioritized internally don’t always align with stakeholders’ priorities.
These key stakeholders might include city staff, engineers, planners, and consultants. However, stakeholders should also include the communities impacted by construction. Securing insight from your communities about their priorities through early public engagement will ultimately help build community support for projects as they move into construction.
CONNECT WITH PEERS FOR SHARED OPPORTUNITIES
The capital improvement projects for which you’re budgeting may be unique to your department. However, many municipal projects provide mutual benefit to other communities or agencies. This overlap may create an opportunity for shared funding that can help move certain projects higher on your improvement list.
Joint funding across counties and with your state can drive a project significantly higher on an asset improvement list. Additionally, connecting with peers at other municipalities may provide insight about strategies that can help guide your master planning and asset improvements.
2. Grow Your Budget with Outside Funding
Most municipalities find grants are necessary for moving progress forward on capital improvement projects, disaster recovery efforts, and other key construction and maintenance work.
However, securing funds for critical projects is not always an easy process. Typically, you face ample competition and strict requirements. Understanding how to stand out can mean the difference between success and failure.
Fortunately, municipalities can use several strategies to prepare their applications and bolster their chance of success.
PAIR PROJECTS WITH FUNDING BUCKETS
Having a clear list of assessment needs, as discussed above, will prove invaluable when it’s time to pursue grant funding. In addition, having a clear sense of project targets that meet specific grant application requirements gives municipalities an opportunity to align their lists of infrastructure project priorities with identified grants.
For example, if it’s clear that funding will be made available for roadway reconstruction projects, and your community has identified a project that fits this description, this may be an excellent project upon which to move forward even if it is lower on your list of prioritized needs.
Understanding the specific grant program’s financial requirements—such as local funding matches, for example—will also help you better position your grant request for success. When you’re trying to secure federal or state grants, you’ll find that joint projects tend to score better because the agencies approving funding often see multi-jurisdictional projects as a more impactful return on their funding. Prioritizing infrastructure projects that could be pursued jointly with another jurisdiction can increase your rate of successfully securing funds while lowering the total bill for your region.
At any given time, a range of funding opportunities may be available to match your prioritized projects. To remain abreast of these opportunities, municipalities may want to enlist their engineering partners’ support in creating a source-and-use-of-funds matrix that focuses on matching various parts of a project with a range of federal and state grants and loan programs. For example, you may find it possible to fund portions of a roadway project with federal funding for pavement and state funds for landscaping. While many grants require local matching funds, this added support can stretch a tight budget to cover a big project.
GET SUPPORT IN BUILDING THE CASE FOR FUNDING
Once you’ve identified the appropriate grant for your project, it’s time to prepare your application. This can be a daunting task for many agencies, particularly those lacking in grant writing experience. It is essential that the application present data that explains how the problem for which you’re seeking funding has impacted your community and how the grant can help alleviate this hardship. It may help to engage an engineer or consulting firm to define the project scope and provide an Engineers Opinion of Project Cost. This information further solidifies the case for receiving funding and serves as a crucial piece of the project narrative.
Because of the level of detail required to tell this story, obtaining professional assistance from a grant writing company or an engineering or planning consultant is often advantageous. To boost your application’s chance of success, you will want to work with a partner that has experience writing successful grant applications.
PREPARE FOR THE FUTURE
The time between application submission and award notice will vary for each grant, but funding decisions tend to be made within three to six months. For many municipalities, the challenge truly begins when the grant is awarded.
There may be a tremendous demand upon manpower to effectively manage the project once funding has been awarded. Your project team may have specific grant instructions and measurements of success to follow. This may include administrative requirements to meet, such as ensuring proper financial management, environmental studies, and other documentation. Effective project management will also be essential for establishing the design, bid, and construction phases. As a result of these intensified demands, it’s best to consider early on how you will manage your workflow so that you are able to act swiftly should funds be awarded.
In the event that your application does not secure grant funding, ask for feedback on the application’s denial. Getting feedback will help you gather valuable information to support your next grant submission.
3. Take Steps to Stretch Value Within Your Engineering Budget
With construction funds being limited for so many municipalities, designing projects in a way that stretches value within their engineering budgets as effectively as possible is critical.
However, it’s far more common for projects to exceed their budgets because they move too quickly from design to construction without addressing clear opportunities to save.
THE TRUE VALUE OF VALUE ENGINEERING
Value engineering is a key concept for reducing upfront project costs. While value engineering has gained a reputation as a way to cut costs by reducing project quality, effective value engineering is actually a systematic process for ensuring that a project design balances all project needs to function safely, reliably, and at the lowest possible cost. When done right, this design analysis process might lead to recommendations for improving both the value and quality of a project. It can also identify strategies to reduce the time needed to complete the project.
Value engineering can take many avenues. Among them, this process might identify alternative materials or design solutions that strengthen the project value over the course of its life cycle. Value engineering may find that the expenditure for a specific approach far outweighs the advantages. The key is to dig into the value of each design element to understand how it impacts constructability and long-term operation.
This systematic review of your project concept and design is best conducted by a multidisciplinary team of professionals not involved with the project. Larger government agencies might rely on a team of certified experts to provide this analysis for complex projects. Some engineers may also provide elements of value engineering in their constructability review process.
PREPARE A CONSTRUCTABILITY REVIEW
Inviting an experienced construction engineer to the design table is an excellent way to identify opportunities to reduce project costs early on. A constructability review performed during the design phase by a construction professional can ensure that the project design is buildable as is. This will reduce the potential for costly rework performed in the field.
The value of this approach comes from the fact that a construction engineer tends to view design plans from a different perspective than a designer. The design team must take a broad view of a project, focusing on the overall form and function. The construction engineer, on the other hand, is able to focus solely on the nuts and bolts of how to bring the project to fruition.
During a constructability review, your engineer partner is likely to check material quantities, confirm that there’s adequate space to develop a work zone, identify potential impacts to the construction schedule, and search for opportunities to optimize phasing. An experienced construction engineer can take your design and break it down to find slight modifications that can make the project easier and more cost-effective to build.
Through this review, you may also identify areas where planning wasn’t fully fleshed out, or quantity errors were made. By identifying those potential problems early on, it becomes easier to develop cost-effective solutions to mitigate them.
4. Reduce Construction Inefficiency to Prevent Cost Overruns
Construction efficiency is critical for keeping projects on schedule and reining in the potential for cost overruns.
Many municipalities find that a project’s construction phase feels like one long struggle to get ahead of potential schedule delays.
While you can’t always prepare for the unexpected, you can prepare for many typical causes of construction delays. In fact, with appropriate upfront planning and early assistance from your construction team, many common causes of delay can be easily avoided.
IDENTIFY UTILITY LOCATIONS EARLY
Despite being a necessary part of virtually every construction job, utility coordination is an all-too-common delay. If not implemented early enough, coordination conflicts can lead to months of delays and quickly derail a project schedule. Project teams may find themselves working around a delay of six months or more with costly redesigns meant to eliminate the utility conflict. And this solution is possible only if the utility infrastructure is moving a few inches away. Further moves can create problems for other portions of the project.
When utility issues are identified early enough in the construction phase, contractors can resequence project phases as needed. By building other portions of the project first, contractors can buy utilities time to relocate infrastructure and keep progress going on the project.
However, the best way to avoid this problem altogether is to address utility coordination during the design phase. This is the most effective way to identify utilities that will need relocation without creating a delay during construction. By moving utility coordination to the design phase, utilities gain time to put coordination on their schedule. Agencies can wait to solicit contractor bids on the project until it’s confirmed that the utilities are out of the way.
In some cases, it may also be useful to have a subsurface utility exploration (SUE) process in place early in the design phase as well. The ability to do subsurface exploration verifies that no new utilities have gone in even after the design phase utility coordination. It’s a useful tool for determining the exact location of the utility. Involving a construction professional in the utility identification process can help to define exactly what “out of the way” means.
SECURE PERMITS IN ADVANCE
Permitting is another part of every construction process that somehow still manages to lead to schedule delays because some permits can be more challenging to obtain than others. For example, it can take six months to a year to process an Army Corps of Engineers or railroad right of entry permit. Until you’ve dealt with this process once, you may not recognize the potential delay you’re facing until it’s too late.
Project teams should obtain permits as early as possible. In many cases, you can identify which permits will be required as early as the design phase. In other instances, you may be required to provide more detailed engineering or construction plans for how the work will be done. For these more detailed permits, having these documents as complete as possible is critical, so that the application process is not inadvertently doubled when the permit office reports that information is missing. These delays can mean starting the entire process all over again.
Working with an experienced construction engineering and inspection firm knowledgeable in a range of permitting requirements can give public agencies and municipalities an edge in construction efficiency.
CONSIDER TRAFFIC CONTROL OPTIONS
Project phasing presents an often-untapped opportunity to improve construction efficiency. While project phasing is typically considered early in the design phase, you can realize additional benefits by involving a construction engineer in this process. These experts can leverage their unique perspective for the maintenance of traffic staging and identify areas where it might make sense to work on multiple stages at the same time, combine several smaller stages into one, or work in a different sequence to keep the project on schedule. Your construction engineer might also be better equipped to factor in the type of equipment and manpower available to improve staging sequences.
Each of these simple solutions can mean significant cost savings for a project. By taking a proactive approach to mitigating these potential conflicts, municipalities can ensure they adhere to project schedules.
5. Explore the Cost-Savings Benefit of Staff Support
Any construction project, regardless of size or scope, can be a daunting undertaking for a municipality already busy with its typical day-to-day business.
From concept to completion, even small construction projects can take months to complete and carry unknown risks. Larger capital improvement projects can tax your staff for years.
If your municipal staff lacks experience in construction oversight, your team may soon find itself overwhelmed by monitoring the progress of the project and ensuring compliance with grant requirements. Fortunately, you can fill in these skill sets and support your staff while keeping your construction project on budget.
ASSESS YOUR STAFF’S CAPACITY
Before a construction project kicks off, it’s a good idea to assess whether your current staff has the capacity to adequately manage and administer extra work and see a project through from start to finish. Some projects carry the added complexity of managing and ensuring compliance with grant requirements. This might include administrative requirements such as proper financial management, environmental studies, and other documentation needed in case of an audit. These requirements can become more complex as construction begins, and a step overlooked can lead to added costs. Municipal staff may not have the knowledge or experience to provide adequate oversight of these critical components.
An honest assessment of your staff’s capabilities early in your project planning will give your organization time to either build up staffing or identify a consulting partner. A consulting partner could provide the critical support needed to successfully drive a construction project from design through completion.
An assessment of your project management needs might also determine that your staff’s capabilities will only be exceeded during certain peak workload times. For projects and programs relatively short in duration, staff augmentation allows municipalities to utilize consultant staff and expertise when you need them, but not keep paying for them when you don’t. For example, if you have a two year window where a large amount of work is planned, followed by a break of several years before new projects are ready to start, staff augmentation allows you to more easily adjust the size of your staff to fit the workload and budget.
CONSIDER PROJECT MANAGEMENT PARTNERS
For many municipalities, the specialized expertise of a project management partner can help prevent common financial sinkholes that lead to project cost overruns. A project management partner can handle tasks such as writing grant proposals, permitting, plan reviews, design, and construction engineering.
When choosing project management partners you have several options, depending upon the level of support you need. For example, projects with state and federal funding can benefit from working with a construction engineering and inspection team. These experts can provide support from overall planning, funding agency coordination, and control of your capital improvement projects from inception to completion, fully offloading these services from your staff.
Another alternative is an owner’s representative. An owner’s rep can take the lead role in overseeing field staff from the municipality and other firms to ensure that the project remains on budget and schedule. An owner’s representative works to protect the municipality’s interests, coordinate work, and communicate to the construction team throughout all phases of the project. For more comprehensive support, some reps might also perform site civil inspections and building inspections and oversee budgets, payout requests, and addendums.
Because these project management experts carry construction-specific insight, they should know what needs to be done for the project and how to best navigate around the potential problems such as those identified above. Experienced project partners can be invaluable for keeping your project on track without pulling municipal staff from their critical day-to-day work.
Keeping Construction Projects On Budget
Construction projects that balloon beyond their budget can be a major detriment to future improvement projects.
No one wants to embark upon a new construction project when they are still reeling from the impact of a previous project’s cost overruns.
However, keeping your improvement projects on budget doesn’t have to be a struggle. With the right expertise in place, municipalities can navigate around common pitfalls and guide their projects to successful completion. More importantly, they can position themselves to act when needs and funding opportunities align, providing the maximum impact for their communities at a minimal cost.
HR Green is here to provide solutions to keep your projects on track as we build communities and improve lives.
Whether we are providing civil engineering services, innovative management solutions to timely challenges, or overseeing the construction of a high-profile improvement, the projects we undertake with our clients connect and shape communities, drive redevelopment and sustainability goals, and improve processes for consistent value.
Learn more about how we can serve our municipality partners with the next solution.
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