What To Do If Your Budget is Cut Mid-Construction

  December 28, 2010

Today's tip is about what to do if your construction budget is cut after design is already complete and construction is underway. Over the last several years, this has been a semi-common occurrence, but owners need not throw up their hands in defeat. Here are a few suggestions.

Take, for instance, what The Related Companies, a New York developer, did when they were forced to cut the budget for their 1.2 million square foot mixed-use facility in New York by 20 percent from $500 to $400 million. Their first step was to renegotiate all their contracts with the trade unions in order to lower labor costs a bit and spread out costs.

But the more important thing was when the team sat down to figure out how to tweak the design, and realized how much fat there is in standard development practices. By focusing on eliminating redundancy - combining mechanical rooms, in one instance - and “trimming the fat to replace it with meat” the team was not only able to get the building into the new revised budget, but also maintain its goal of a LEED Silver certification. By showing that LEED strategies, including commissioning and registration fees, were only 0.27 percent of construction cost, and would be paid back in one-and-a-half years, the advocates for keeping LEED on the project were able to do just that.

Charlotte Matthews, VP of Sustainability for The Related Companies, says the process was a bit of a blessing in disguised - the team really learned how the integrated design process can allow designers to see how systems complement each other, and therefore make buildings smarter. And what’s more, "when you run the numbers, sustainability stands up for itself," she says. She says that their LEED consultant told them that in his 25 years of practice, he’d never seen a building get redesigned to be MORE efficient. The building is expected to be completed in mid-2011.


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