February 20, 2020 • 24 mins
In the construction industry, the cost of a building is more complex than simply adding up the sum of its parts. From labor rates to equipment prices and indirect costs, there are many factors affecting construction budgets. While your cost estimation might appear accurate at first, it’s crucial to understand cost control options so that you can respond to the unexpected and stay on budget.
To learn more, we caught up with Joe Stramberg, a principal in TreanorHL’s Student Life studio, and Blair Tennant, associate principal for Vermeulens cost consulting. Joe and Blair have worked together on various higher education facilities on campuses across the United States, and have presented on this topic at several national conferences, including Tradeline, ACUHO-I and more. On this episode, they talk about cost drivers, case studies and tools you can use to keep your facility on budget—without sacrificing design integrity or programming.
For a deeper dive into cost control, visit them at the Tradeline University Facilities conference this May, at the ACUHO-I conference this June.
Can't make it? Review some basic tips to implement cost control and share with your colleagues.
TreanorHL is a national architecture, planning, and design firm located in the United States. The company holds a firm belief in sharing resources and insights with professionals, clients, and building users to shape the space we use to live and grow as people. For more information, visit treanorhl.com.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Megan Brock (00:04):
Welcome to TreanorHL Talks, a podcast about
architecture planning and designtrends, as well as current
events and noteworthy topics inthe field. I am your host, Megan
Brock, introducing today'stopic: controlling cost and an
uncontrollable world. In theconstruction industry, the cost
of a building is more complexthan simply adding up the sum of
(00:25):
its parts. From labor rates toequipment prices and indirect
costs, there are many factorsaffecting construction budgets.
While your cost estimation mightappear accurate at first, it's
crucial to understand costcontrol options so that you can
respond to the unexpected andstay on budget. To learn more,
I'm catching up with JoeStramberg, a principal in the
(00:48):
TreanorHL Student Life studio,as well as Blair Tennant, a
principal for Vermeulens. Joeand Blair have worked together
on various higher educationfacilities on campuses across
the United States, including theUniversity of Kansas, the
University of Texas at SanAntonio, and the University of
Utah. Today, they will talkspecifically about cost control
(01:10):
for higher education residencehalls. Joe and Blair, thank you
for joining me today. Pleasetell us a bit about yourself and
how you developed an interest incost control.
Joe Stramberg (01:21):
This is Joe Stramberg, principal with the
Student Life group and I'vededicated my career to the
student life experience onuniversity campuses. It's what
I've been really focused on thelast 20 plus years and the focus
on cost control became in tofocus within the last five years
or so. The rising costs inhigher education has really put
(01:44):
a strain on student's ability toafford a university and access
to a university. So the clientsand industry have really been
demanding that we begin to thinkabout affordability for students
and how that plays into theoverall higher education
expenses and experience.
Blair Tennant (02:04):
Thank you, Megan.
I'm Blair Tennant, I am aprincipal with Vermeulens. I
have been cost estimating myentire career. You might hear
some A's or some oofs or outs orsomething in my voice but I'm
originally from Canada, studiedmechanical engineering and
finance. I'm a numbers guy, Istarted with Vermeulens right
out of school, been there eversince, it was 15 years ago. So I
(02:24):
live numbers.
Megan Brock (02:29):
Fantastic. Well, let's talk numbers. So I know
both of you have talked in depthabout this topic at several
conferences so far, but let'sstart a bit more broad. What are
some of the main cost drivers inhigher ed residence halls?
Joe Stramberg (02:42):
This is Joe. Some of the key cost drivers to
consider early in theprogramming and conceptual phase
of the work is a couple things.
One, the structural systemchoices that are out there, as
well as the mechanical,electrical plumbing systems,
those just between those twodisciplines of work, make
upwards of around 60% of anyproject of any residence hall
(03:06):
type project. So there andwithin each of those, there's
many choices that is availableto the design team and to the
client. And then it's aboutunderstanding the market that
you're working in, and theavailability of those specific
trades.
And ultimately, what theclient's end goal is for their
(03:27):
building product, whether it's akind of a light commercial type
facility, all the way up to aheavy commercial, heavy
institutional type facility. Sopaying attention to the various
types of structural systemchoices, and it can range from
concrete and wood concretepodium with wood structure, all
(03:48):
the way up to prefabricatedlight gauge metal studs. And in
the market, it's kind of in itsinfancy in the market is mass
timber, which is what we'rebeginning to see. It's very
early in its market, and that webelieve it's at the high end of
the cost currently. And overtime, those costs we believe
(04:11):
will come down and making itmore affordable.
Blair Tennant (04:13):
There are some trade-offs in the mass timber
where you can save on finishesby leaving wood exposed, which
actually is, you know, prettyattractive to most people. It
does save on schedule for formost projects as well. So there
are some savings with mastic.
Megan Brock (04:29):
Have you worked on any recent mass timber
structures?
Blair Tennant (04:32):
We have we have we have two that are under
construction now and so they arecoming into premium, but the
architecture is fantastic. Imean, well your Science and Tech
group is actually working on onein Toronto, with our team out
there right now, mass timber andbubble deck as well. I think you
know, like Joe mentioned, thereare so many system choices. Yet
(04:53):
so many budgets are set by costper square foot. So to know what
the cost per square foot isbefore you know which systems
you're shooting for is really,it's really impractical. You
can't you can't make a decisionuntil you know those parameters
and systems.
It's across the board right? SoJoe mentioned, you know,
(05:13):
structural systems andmechanically you have VRF and
DAV, right, which is variablerefrigerant volume and variable
air volume. So all thosesystems, you've got the same
thing for your finishes, yourskin, your site working
utilities are something youalways need to look at
individually, right? I mean,Joe, we had those two projects
(05:34):
where, essentially, if you tookthe same utility costs, and put
a different building on it, itwould double per square foot and
correct, because you justbasically have to look at your
site independent, double size,your building, and the cost per
square foot drops in half.
Joe Stramberg (05:48):
It is truly the wildcard when you're doing the
early estimating with a lot ofunknowns. And each site is
unique and different. And thatdrives the cost. And it can
range anywhere from 7-8% all theway to 15-18%. There's such a
wide swing in the cost of thesite work.
Blair Tennant (06:09):
You if you want to get your cost per square foot
down, just build a biggerbuilding. That's right.
Megan Brock (06:16):
So when thinking more about what's occupying that
square footage, how can abuilding program then also
influence cost?
Joe Stramberg (06:25):
Definitely, in some of the program influencers
is really about in particular,on residence halls, it's that
mix of the different types ofunits, balanced with the
amenities that are beingoffered. So you can think of
spaces that are shared with morestudents affords the project
more amenity type space. So thatmix of different types of unit,
(06:50):
whether they're traditional,single and double residence hall
units, to more semi-suite, whereyou've got a little bit more
independence, all the way up tosuites and apartments. Those
suites and apartments, typicallyall that amenity space exists
within the unit itself.
So there's a balance of thatunit mix and what the amenities
(07:12):
that are offered. And justthinking of it in terms of
square foot, beyond just thesquare footage, when you have
units that have are heavy inplumbing, those costs definitely
impact the cost model becauseit's more piping, more fixtures.
Whereas if that can be sharedmore across the students.
Blair Tennant (07:32):
The most cost-effective facility I've
worked on was a corridor housingright, so Texas A&M, their army
corps is literally a rectanglewith you know, rooms on both
sides and essential washroomright in the middle, you know,
showers and washrooms right inthe corner, right so that, like
Joe was saying that's a highlyefficient, but not really what
(07:55):
we build anymore. It's kind ofold, old school way of doing
things, but how you lay that mixout has a huge impact on what
you're paying.
Megan Brock (08:03):
That's a great point, Blair. And I think even
considering Joe's comments aboutwhat we're providing the
students, if the goal of thisfacility is to create community,
for example, that could rise thecost depending on where we're
going to locate those MEPsystems or how we want traffic
to flow through that building sothat we can meet that goal of
(08:24):
creating community or orwhatever that our clients are
trying to achieve with thisfacility. So, since we know
these goals at the start of theproject, thinking early about
cost could help us do what wewant to do without going over
budget. What are some other waysa building's layout might
influence cost?
Joe Stramberg (08:44):
And an example of some of our the way we approach
the early conceptual phases, istaking the program and looking
at laying the building out in anumber of different
configurations. At theUniversity of Texas at San
Antonio, we had like 15different schemes that we kind
of vetted down to about five andit was really about looking at
(09:07):
the program and how thearchitectural massing of how the
building was organized indifferent shapes, which has a
direct impact on the amount ofexterior building materials.
Which is probably one of themost expensive parts of a
project. The brick masonry, theglass walls, the windows. So the
(09:32):
ability to study that in termsof meeting the program. And
creating as efficient buildingas you can on a given site is a
strategy in a way to impact thecost as it relates to site
layout.
Megan Brock (09:48):
Great. So beyond the program and massing, and the
layout and all of thoseelements. What are some other
tactics that either of you haveused to help reduce cost?
Joe Stramberg (10:02):
I believe that starts with the design of the
individual student unit in termsof making it the most efficient
possible way, but yet providingthe amount of area that's
required, as well as the amountof area that provides the most
flexibility for the students tomove their furniture around. It
(10:23):
provides great flexibility andcreativity for the students. But
it minimizes that ratio betweenthe width of the unit to the
length of the unit, which thenagain, translates back into that
conversation around site andexterior building materials. So
it absolutely starts with thedesign of the unit, because the
units typically make up around70%, of a residence hall prod
(10:47):
project, in terms of its area.
And by doing simple things likereducing the width of a unit by
a foot, you can save about apercent an area, in the skin,
and the exterior buildingmaterial costs upwards of 3%
savings. But you're stillproviding the same amount of
area for that unit.
Blair Tennant (11:07):
So those are those are all great metrics on
getting the most program foreach square foot you have right
but when you're talking aboutcost, you also need to talk
about current costs and futurecosts. So a lot of these system
choices, if you put in a VRFsystem, it will not last as long
(11:28):
as a VAV system, right? So we'vecovered those. There's even
other options, right? Sobasically, everyone has been in
a motel room before. You know,there's little units on the wall
underneath the window, you cando that too. And they're very
low cost. But you'll be in 20years, you'll be replacing that
Joe Stramberg (11:45):
A number of times.
Blair Tennant (11:47):
Right. So from an institutional standpoint, a lot
of these institutions where Joeand I work, they want buildings
that are going to last 100years. So you may pay more
today. But if you look at itover 100 year cycle, you know,
some of those decisions you maketo get things down early, will
translate into more cost overtime.
Megan Brock (12:05):
Well, this is the question that everyone dreads.
But what are some trulyuncontrollable costs? And how
could we plan for those?
Blair Tennant (12:13):
So yeah, so the, the one piece that is
essentially impossible tocontrol, but possible to predict
is how the market is going tobid. Right? So escalation and
inflation aren't just a factorof how much your materials and
the hourly wages cost. It's moreof an output factor. So I just
(12:35):
had a phone call before westarted where a contractor said
oh we lost the job becauseanother contractor came in and
price super low and just boughthimself a job. So is that
deflation in the market? No,it's a contractor who really
wants work. So they bid it low.
And this is what happens as theeconomy starts to slow: bids go
(12:55):
down, because they're going tobasically room for lower
overhead and profit. Conversely,when you're in a really busy
market, people will be like,I'll take that job. But I want
10% fee on, you know, we're feesare normally 3-5%. But we'll do
it for 10. And everyone startsdoing it for 10. And the next
year, the market just blows up,for example, you know, Joe and I
(13:17):
have a project where thecontractors is getting a 9% fee
on their work, which is greatfor them. And all of their
competition was the same rate aswell. But it's kind of unheard
of. For us, we're used to seeingthings in the 3-5%. But that's
where the market went, themarket was busy.
And you know, it's not thatthey're they're gouging or
(13:37):
unfair, the competition was inthe same boat. And so those are
the things that you can't reallycontrol. But what we do at
Vermeulens is we are generallytracking the construction volume
in every market we're workingin. So as we see spikes in the
market activity, we'll do twothings: will carry escalation
contingency, and what we call abidding contingency. So
(13:59):
uncontrolled, but you can youcan use contingency to help
offset some of the marketconditions. Honestly, those
again, like kind of back toinflation and adjustments, you
know, a lot of that tariffinflation, that was just market
fear. If you look at steelpricing, it never really moved.
There was a short spike, andsteel right now is lower in cost
(14:22):
than it was 10 years ago. Right.
So was a tariff really that biga deal?
Joe Stramberg (14:26):
No, but that's something that's somewhat
uncontrollable, right?
Blair Tennant (14:30):
Definitely, definitely there are regulations
that are put in place, tariffs,taxes, even some, you know,
cities or municipalities wherewe have this conversation
yesterday with a nonprofitthat's kind of affiliated with
the city. So they have to usepayment performance bonds,
whereas when they do privatework, they don't have to use
(14:51):
payment performance bonds. Sothat adds you know, two and a
half percent 3% to the cost ofthe project. So again, those are
variables but if you're payingattention and planning well, you
should, should know which realmyou're in.
Megan Brock (15:03):
Speaking of planning well, Joe, I know you
have a tool you use to helpclients with planning out
building components and costs.
Would you tell us a bit aboutthat?
Joe Stramberg (15:13):
Sure. So at the beginning of the project, even
at the programming phase, whatwe like to do is even before any
pencil hits the paper, is reallydo a deep dive into all the
various components that make upthe budget for a construction
project. And then we take thatinformation and we look at it
from what would be the low endof the range in terms of its
(15:36):
quality, the middle range, andthen the high range.
So if you want to think about itin terms of like residential
kind of grade, at the low end,the medium, the middle, would be
kind of commercial, likecommercial, and at the high end
being an institutional 100-yearbuilding, as Blair was
mentioned. And it's a great toolto be able to set your target
(15:57):
budget, and then workingtogether with the client and the
design team, and if there's aconstruction manager on board,
going through each one of thosesystem components, and having a
conversation about the qualityassociated with that, and then
setting a range of what we wouldanticipate and expect that
(16:17):
product to come in at. And sowhen you look at it, you're not
going to have a building that isall in the low range, it's
typically a mix of the low,middle, high, at the end of the
day as your target.
Blair Tennant (16:28):
A lesson learned on that, too, is making sure
that the right people were inthe room to make those
decisions. I don't know how manytimes we've said, okay, we're
gonna go with all wirelessaccess for the facility. Next
thing you know, no, no, no, wecan't do that. We're hardwiring
every room, you know, we'regoing to use offline card
readers. And then security comesin and says no, online. So those
(16:51):
things constantly happen, makingsure that the the decision
makers are sitting at the tablewhen the choice is made.
Joe Stramberg (17:00):
And it's a tool to help you provide more detail
at the beginning of a project.
So it kind of sets the stage, asyou move, as the design process
evolves, and more of the projectis being documented. It's a
great tool to reference back toon the early decisions that the
collective team has madetogether.
Blair Tennant (17:18):
Rather than it's $200 a square foot building.
Joe Stramberg (17:21):
Right.
Megan Brock (17:22):
Well, I know I like cheat sheets. And that sounds
like a great tool and process.
So thinking more broadly interms of market influencers? How
has the market changed? And howhas that affected cost?
Blair Tennant (17:35):
One of the evolving trends I mean, it's
been around for most of mycareer, I guess now, but is the
shift to construction manager atrisk, right. And then also,
there's a P3 developer modelthat perhaps Joe can touch on.
But CM at risk is generally aconstruction manager at risk.
They come on board early in theproject, they're working with
(17:57):
their network of subcontractors,and essentially, it's a
negotiated price. So it's not abid, which you know, previously
historically it was, what do youcall design, bid build, right?
Now we've gotten to thenegotiated price, what happens
is, in theory, you're supposedto be transferring risk, that
(18:18):
the contractor is supposed to betaking the big risk away from
him.
But really what's happening isthey essentially, not inflate,
but cover off all the possibleall the possible things that
could arise in a project andcover it within the numbers,
which is great. Ultimately, I'mnot saying this brings you
quality. But generally you'repaying an inflated price. Even
(18:41):
further to that we're gettingthese institutions that are so
scared of bidding a project thatthey do a GMP at, at in the
design development stage ofdocument. And at that stage, you
know, every single person who'sguaranteeing that price has to
fill in the blanks on thedrawings, and make sure they're
covered.
So ultimately, you may be, youknow, you may be paying the
(19:03):
appropriate price, but you'relikely paying too high. So, our
recommendation is if you want togo the GMP route, then you
essentially wait until thedocuments are complete. So 100%
documents, you send them out,either essentially bidding the
job to their subs. And then youuse that information and you
(19:23):
allow them to have some type ofcontingency just to guarantee at
that point, but it's minimalrisk for them. It does bring new
risk back to the owner thatultimately brings you a lower
cost.
Megan Brock (19:34):
So essentially, your delivery method even
becomes a cost influencer.
Blair Tennant (19:39):
Yes, that's a good way to put it.
Megan Brock (19:42):
So what about value engineering? Should we be wary
of that?
Joe Stramberg (19:47):
I don't know if we should be wary of it as much
as you should be wary of it ifyou're having to take large
reductions to get the project inbudget. I think some of the
lessons learned over the pastfew years is we as designers, we
need to be asking more questionsduring the value engineering
process. And in particular, whenalternative systems are being
(20:11):
proposed, and making sure thatwe're digging deeper and
understanding the kind of biggerpicture impacts to the building
project. But I think all in all,value engineering is a good
tool, as you move from phase tophase, at an appropriate scale
of what you're trying to reducethe costs and provide the best
value.
Blair Tennant (20:32):
Yeah, I think all all too often, value engineering
becomes something midway nearthe end of a project, because
we're over budget, right. Andfortunately, at that point, a
lot of the structural systemsare set mechanical systems are
set. So you just startedattacking architecture, right?
And, and no one's happy. And,you know, building ends up being
(20:54):
something a little differentthan it was envisioned to be. So
our goal, like what Joe and I,why we do this, why we talk
about this is we want to get thebudget and the scope aligned in
the beginning, and we're neverlooking back. We aren't, we
aren't going back into valueengineering at the forefront.
Obviously, we want to look ateach system and make sure we're
spending the moneyappropriately. But we're not
(21:16):
trying to cut things out of theproject down the road, that's
really, the goal of what I do isto eliminate that.
Joe Stramberg (21:24):
And working with and working with the in
particular on the constructionmanagement, delivery methods.
And when they're part of theteam, working with them and the
client to make sure thateverybody's on the same page, as
it relates to, we don't want tobe value engineering stuff
during the design process. Andat the end of the day, the
(21:45):
contractor giving back millionsof dollars of work that could
have been included in theproject to begin with, that
doesn't do anybody any good. Soit's really a team effort to
make sure that we're balancingit as as closely as we possibly
can through each phase of theproject.
Megan Brock (22:04):
So what are a few points you would like our
audience to take away or keeptop of mind about cost control?
Joe Stramberg (22:10):
As it relates to benchmarking
is unique. And that's one toolto make sure you're beginning to
think about the project andgetting it within the ballpark
as it relates to the budget,that 60% of the project is going
to, as it relates to residencehall design work, is going to be
(22:30):
in your structural and yourmechanical systems. So those two
decisions right there is goingto impact more than half of half
of your budget. And that there'sas it relates to the program
itself, that there's choices asit relates to the unit mix and
the amenities that are offered.
And it's a balancing act.
Blair Tennant (22:47):
Yeah. And I think it kind of goes without saying,
you know, what we're talkingabout here is early detailed
cost model, right. So digginginto the detail early, is the
fundamental key. And to dealwith the market. Just keep an
eye on on basically the jobsmarket, and how you during the
projects.
Megan Brock (23:08):
Well, I appreciate your time. Thank you for joining
me today, Joe and Blair.
Joe Stramberg (23:12):
Thanks, Megan.
Megan Brock (23:13):
So Joe and Blair will be presenting on this topic
at the SWACUHO conference inFebruary, and ACUHO-I in June.
So catch up with them there fordeeper dive into cost control.
See episode notes, or visittreanorhl.com to learn more
about how we've helped ourclients with space solutions
that fit their unique needs andbudgets. By working as a tea,m
(23:36):
planning far in advance, andconsidering alternative paths,
you can ensure your budget willstay on track while designing
space that supports yourbuilding users' endeavors. In
higher education, it's all aboutthe students. Thinking about
their needs ahead of time willnot only keep your costs in
check, it also supports ourfuture leaders and critical
problem solvers. This is MeganBrock with TreanorHL, thanking
(23:59):
you for joining us on thisepisode of TreanorHL Talks.
TreanorHL is a nationalarchitecture planning and design
firm located in the UnitedStates. The company holds a firm
belief in sharing resources andinsights with professionals
clients and building users toshape the space we use to live
and grow as people. For moreinformation visit treanorhl.com
(24:22):
That's t-r-e-a-n-o-r-h-l.com.
Welcome to TreanorHL Talks, a podcast about
architecture planning and designtrends, as well as current
events and noteworthy topics inthe field. I am your host, Megan
Brock, introducing today'stopic: controlling cost and an
uncontrollable world. In theconstruction industry, the cost
of a building is more complexthan simply adding up the sum of
(00:25):
its parts. From labor rates toequipment prices and indirect
costs, there are many factorsaffecting construction budgets.
While your cost estimation mightappear accurate at first, it's
crucial to understand costcontrol options so that you can
respond to the unexpected andstay on budget. To learn more,
I'm catching up with JoeStramberg, a principal in the
(00:48):
TreanorHL Student Life studio,as well as Blair Tennant, a
principal for Vermeulens. Joeand Blair have worked together
on various higher educationfacilities on campuses across
the United States, including theUniversity of Kansas, the
University of Texas at SanAntonio, and the University of
Utah. Today, they will talkspecifically about cost control
(01:10):
for higher education residencehalls. Joe and Blair, thank you
for joining me today. Pleasetell us a bit about yourself and
how you developed an interest incost control.
Joe Stramberg (01:21):
This is Joe Stramberg, principal with the
Student Life group and I'vededicated my career to the
student life experience onuniversity campuses. It's what
I've been really focused on thelast 20 plus years and the focus
on cost control became in tofocus within the last five years
or so. The rising costs inhigher education has really put
(01:44):
a strain on student's ability toafford a university and access
to a university. So the clientsand industry have really been
demanding that we begin to thinkabout affordability for students
and how that plays into theoverall higher education
expenses and experience.
Blair Tennant (02:04):
Thank you, Megan.
I'm Blair Tennant, I am aprincipal with Vermeulens. I
have been cost estimating myentire career. You might hear
some A's or some oofs or outs orsomething in my voice but I'm
originally from Canada, studiedmechanical engineering and
finance. I'm a numbers guy, Istarted with Vermeulens right
out of school, been there eversince, it was 15 years ago. So I
(02:24):
live numbers.
Megan Brock (02:29):
Fantastic. Well, let's talk numbers. So I know
both of you have talked in depthabout this topic at several
conferences so far, but let'sstart a bit more broad. What are
some of the main cost drivers inhigher ed residence halls?
Joe Stramberg (02:42):
This is Joe. Some of the key cost drivers to
consider early in theprogramming and conceptual phase
of the work is a couple things.
One, the structural systemchoices that are out there, as
well as the mechanical,electrical plumbing systems,
those just between those twodisciplines of work, make
upwards of around 60% of anyproject of any residence hall
(03:06):
type project. So there andwithin each of those, there's
many choices that is availableto the design team and to the
client. And then it's aboutunderstanding the market that
you're working in, and theavailability of those specific
trades.
And ultimately, what theclient's end goal is for their
(03:27):
building product, whether it's akind of a light commercial type
facility, all the way up to aheavy commercial, heavy
institutional type facility. Sopaying attention to the various
types of structural systemchoices, and it can range from
concrete and wood concretepodium with wood structure, all
(03:48):
the way up to prefabricatedlight gauge metal studs. And in
the market, it's kind of in itsinfancy in the market is mass
timber, which is what we'rebeginning to see. It's very
early in its market, and that webelieve it's at the high end of
the cost currently. And overtime, those costs we believe
(04:11):
will come down and making itmore affordable.
Blair Tennant (04:13):
There are some trade-offs in the mass timber
where you can save on finishesby leaving wood exposed, which
actually is, you know, prettyattractive to most people. It
does save on schedule for formost projects as well. So there
are some savings with mastic.
Megan Brock (04:29):
Have you worked on any recent mass timber
structures?
Blair Tennant (04:32):
We have we have we have two that are under
construction now and so they arecoming into premium, but the
architecture is fantastic. Imean, well your Science and Tech
group is actually working on onein Toronto, with our team out
there right now, mass timber andbubble deck as well. I think you
know, like Joe mentioned, thereare so many system choices. Yet
(04:53):
so many budgets are set by costper square foot. So to know what
the cost per square foot isbefore you know which systems
you're shooting for is really,it's really impractical. You
can't you can't make a decisionuntil you know those parameters
and systems.
It's across the board right? SoJoe mentioned, you know,
(05:13):
structural systems andmechanically you have VRF and
DAV, right, which is variablerefrigerant volume and variable
air volume. So all thosesystems, you've got the same
thing for your finishes, yourskin, your site working
utilities are something youalways need to look at
individually, right? I mean,Joe, we had those two projects
(05:34):
where, essentially, if you tookthe same utility costs, and put
a different building on it, itwould double per square foot and
correct, because you justbasically have to look at your
site independent, double size,your building, and the cost per
square foot drops in half.
Joe Stramberg (05:48):
It is truly the wildcard when you're doing the
early estimating with a lot ofunknowns. And each site is
unique and different. And thatdrives the cost. And it can
range anywhere from 7-8% all theway to 15-18%. There's such a
wide swing in the cost of thesite work.
Blair Tennant (06:09):
You if you want to get your cost per square foot
down, just build a biggerbuilding. That's right.
Megan Brock (06:16):
So when thinking more about what's occupying that
square footage, how can abuilding program then also
influence cost?
Joe Stramberg (06:25):
Definitely, in some of the program influencers
is really about in particular,on residence halls, it's that
mix of the different types ofunits, balanced with the
amenities that are beingoffered. So you can think of
spaces that are shared with morestudents affords the project
more amenity type space. So thatmix of different types of unit,
(06:50):
whether they're traditional,single and double residence hall
units, to more semi-suite, whereyou've got a little bit more
independence, all the way up tosuites and apartments. Those
suites and apartments, typicallyall that amenity space exists
within the unit itself.
So there's a balance of thatunit mix and what the amenities
(07:12):
that are offered. And justthinking of it in terms of
square foot, beyond just thesquare footage, when you have
units that have are heavy inplumbing, those costs definitely
impact the cost model becauseit's more piping, more fixtures.
Whereas if that can be sharedmore across the students.
Blair Tennant (07:32):
The most cost-effective facility I've
worked on was a corridor housingright, so Texas A&M, their army
corps is literally a rectanglewith you know, rooms on both
sides and essential washroomright in the middle, you know,
showers and washrooms right inthe corner, right so that, like
Joe was saying that's a highlyefficient, but not really what
(07:55):
we build anymore. It's kind ofold, old school way of doing
things, but how you lay that mixout has a huge impact on what
you're paying.
Megan Brock (08:03):
That's a great point, Blair. And I think even
considering Joe's comments aboutwhat we're providing the
students, if the goal of thisfacility is to create community,
for example, that could rise thecost depending on where we're
going to locate those MEPsystems or how we want traffic
to flow through that building sothat we can meet that goal of
(08:24):
creating community or orwhatever that our clients are
trying to achieve with thisfacility. So, since we know
these goals at the start of theproject, thinking early about
cost could help us do what wewant to do without going over
budget. What are some other waysa building's layout might
influence cost?
Joe Stramberg (08:44):
And an example of some of our the way we approach
the early conceptual phases, istaking the program and looking
at laying the building out in anumber of different
configurations. At theUniversity of Texas at San
Antonio, we had like 15different schemes that we kind
of vetted down to about five andit was really about looking at
(09:07):
the program and how thearchitectural massing of how the
building was organized indifferent shapes, which has a
direct impact on the amount ofexterior building materials.
Which is probably one of themost expensive parts of a
project. The brick masonry, theglass walls, the windows. So the
(09:32):
ability to study that in termsof meeting the program. And
creating as efficient buildingas you can on a given site is a
strategy in a way to impact thecost as it relates to site
layout.
Megan Brock (09:48):
Great. So beyond the program and massing, and the
layout and all of thoseelements. What are some other
tactics that either of you haveused to help reduce cost?
Joe Stramberg (10:02):
I believe that starts with the design of the
individual student unit in termsof making it the most efficient
possible way, but yet providingthe amount of area that's
required, as well as the amountof area that provides the most
flexibility for the students tomove their furniture around. It
(10:23):
provides great flexibility andcreativity for the students. But
it minimizes that ratio betweenthe width of the unit to the
length of the unit, which thenagain, translates back into that
conversation around site andexterior building materials. So
it absolutely starts with thedesign of the unit, because the
units typically make up around70%, of a residence hall prod
(10:47):
project, in terms of its area.
And by doing simple things likereducing the width of a unit by
a foot, you can save about apercent an area, in the skin,
and the exterior buildingmaterial costs upwards of 3%
savings. But you're stillproviding the same amount of
area for that unit.
Blair Tennant (11:07):
So those are those are all great metrics on
getting the most program foreach square foot you have right
but when you're talking aboutcost, you also need to talk
about current costs and futurecosts. So a lot of these system
choices, if you put in a VRFsystem, it will not last as long
(11:28):
as a VAV system, right? So we'vecovered those. There's even
other options, right? Sobasically, everyone has been in
a motel room before. You know,there's little units on the wall
underneath the window, you cando that too. And they're very
low cost. But you'll be in 20years, you'll be replacing that
Joe Stramberg (11:45):
A number of times.
Blair Tennant (11:47):
Right. So from an institutional standpoint, a lot
of these institutions where Joeand I work, they want buildings
that are going to last 100years. So you may pay more
today. But if you look at itover 100 year cycle, you know,
some of those decisions you maketo get things down early, will
translate into more cost overtime.
Megan Brock (12:05):
Well, this is the question that everyone dreads.
But what are some trulyuncontrollable costs? And how
could we plan for those?
Blair Tennant (12:13):
So yeah, so the, the one piece that is
essentially impossible tocontrol, but possible to predict
is how the market is going tobid. Right? So escalation and
inflation aren't just a factorof how much your materials and
the hourly wages cost. It's moreof an output factor. So I just
(12:35):
had a phone call before westarted where a contractor said
oh we lost the job becauseanother contractor came in and
price super low and just boughthimself a job. So is that
deflation in the market? No,it's a contractor who really
wants work. So they bid it low.
And this is what happens as theeconomy starts to slow: bids go
(12:55):
down, because they're going tobasically room for lower
overhead and profit. Conversely,when you're in a really busy
market, people will be like,I'll take that job. But I want
10% fee on, you know, we're feesare normally 3-5%. But we'll do
it for 10. And everyone startsdoing it for 10. And the next
year, the market just blows up,for example, you know, Joe and I
(13:17):
have a project where thecontractors is getting a 9% fee
on their work, which is greatfor them. And all of their
competition was the same rate aswell. But it's kind of unheard
of. For us, we're used to seeingthings in the 3-5%. But that's
where the market went, themarket was busy.
And you know, it's not thatthey're they're gouging or
(13:37):
unfair, the competition was inthe same boat. And so those are
the things that you can't reallycontrol. But what we do at
Vermeulens is we are generallytracking the construction volume
in every market we're workingin. So as we see spikes in the
market activity, we'll do twothings: will carry escalation
contingency, and what we call abidding contingency. So
(13:59):
uncontrolled, but you can youcan use contingency to help
offset some of the marketconditions. Honestly, those
again, like kind of back toinflation and adjustments, you
know, a lot of that tariffinflation, that was just market
fear. If you look at steelpricing, it never really moved.
There was a short spike, andsteel right now is lower in cost
(14:22):
than it was 10 years ago. Right.
So was a tariff really that biga deal?
Joe Stramberg (14:26):
No, but that's something that's somewhat
uncontrollable, right?
Blair Tennant (14:30):
Definitely, definitely there are regulations
that are put in place, tariffs,taxes, even some, you know,
cities or municipalities wherewe have this conversation
yesterday with a nonprofitthat's kind of affiliated with
the city. So they have to usepayment performance bonds,
whereas when they do privatework, they don't have to use
(14:51):
payment performance bonds. Sothat adds you know, two and a
half percent 3% to the cost ofthe project. So again, those are
variables but if you're payingattention and planning well, you
should, should know which realmyou're in.
Megan Brock (15:03):
Speaking of planning well, Joe, I know you
have a tool you use to helpclients with planning out
building components and costs.
Would you tell us a bit aboutthat?
Joe Stramberg (15:13):
Sure. So at the beginning of the project, even
at the programming phase, whatwe like to do is even before any
pencil hits the paper, is reallydo a deep dive into all the
various components that make upthe budget for a construction
project. And then we take thatinformation and we look at it
from what would be the low endof the range in terms of its
(15:36):
quality, the middle range, andthen the high range.
So if you want to think about itin terms of like residential
kind of grade, at the low end,the medium, the middle, would be
kind of commercial, likecommercial, and at the high end
being an institutional 100-yearbuilding, as Blair was
mentioned. And it's a great toolto be able to set your target
(15:57):
budget, and then workingtogether with the client and the
design team, and if there's aconstruction manager on board,
going through each one of thosesystem components, and having a
conversation about the qualityassociated with that, and then
setting a range of what we wouldanticipate and expect that
(16:17):
product to come in at. And sowhen you look at it, you're not
going to have a building that isall in the low range, it's
typically a mix of the low,middle, high, at the end of the
day as your target.
Blair Tennant (16:28):
A lesson learned on that, too, is making sure
that the right people were inthe room to make those
decisions. I don't know how manytimes we've said, okay, we're
gonna go with all wirelessaccess for the facility. Next
thing you know, no, no, no, wecan't do that. We're hardwiring
every room, you know, we'regoing to use offline card
readers. And then security comesin and says no, online. So those
(16:51):
things constantly happen, makingsure that the the decision
makers are sitting at the tablewhen the choice is made.
Joe Stramberg (17:00):
And it's a tool to help you provide more detail
at the beginning of a project.
So it kind of sets the stage, asyou move, as the design process
evolves, and more of the projectis being documented. It's a
great tool to reference back toon the early decisions that the
collective team has madetogether.
Blair Tennant (17:18):
Rather than it's $200 a square foot building.
Joe Stramberg (17:21):
Right.
Megan Brock (17:22):
Well, I know I like cheat sheets. And that sounds
like a great tool and process.
So thinking more broadly interms of market influencers? How
has the market changed? And howhas that affected cost?
Blair Tennant (17:35):
One of the evolving trends I mean, it's
been around for most of mycareer, I guess now, but is the
shift to construction manager atrisk, right. And then also,
there's a P3 developer modelthat perhaps Joe can touch on.
But CM at risk is generally aconstruction manager at risk.
They come on board early in theproject, they're working with
(17:57):
their network of subcontractors,and essentially, it's a
negotiated price. So it's not abid, which you know, previously
historically it was, what do youcall design, bid build, right?
Now we've gotten to thenegotiated price, what happens
is, in theory, you're supposedto be transferring risk, that
(18:18):
the contractor is supposed to betaking the big risk away from
him.
But really what's happening isthey essentially, not inflate,
but cover off all the possibleall the possible things that
could arise in a project andcover it within the numbers,
which is great. Ultimately, I'mnot saying this brings you
quality. But generally you'repaying an inflated price. Even
(18:41):
further to that we're gettingthese institutions that are so
scared of bidding a project thatthey do a GMP at, at in the
design development stage ofdocument. And at that stage, you
know, every single person who'sguaranteeing that price has to
fill in the blanks on thedrawings, and make sure they're
covered.
So ultimately, you may be, youknow, you may be paying the
(19:03):
appropriate price, but you'relikely paying too high. So, our
recommendation is if you want togo the GMP route, then you
essentially wait until thedocuments are complete. So 100%
documents, you send them out,either essentially bidding the
job to their subs. And then youuse that information and you
(19:23):
allow them to have some type ofcontingency just to guarantee at
that point, but it's minimalrisk for them. It does bring new
risk back to the owner thatultimately brings you a lower
cost.
Megan Brock (19:34):
So essentially, your delivery method even
becomes a cost influencer.
Blair Tennant (19:39):
Yes, that's a good way to put it.
Megan Brock (19:42):
So what about value engineering? Should we be wary
of that?
Joe Stramberg (19:47):
I don't know if we should be wary of it as much
as you should be wary of it ifyou're having to take large
reductions to get the project inbudget. I think some of the
lessons learned over the pastfew years is we as designers, we
need to be asking more questionsduring the value engineering
process. And in particular, whenalternative systems are being
(20:11):
proposed, and making sure thatwe're digging deeper and
understanding the kind of biggerpicture impacts to the building
project. But I think all in all,value engineering is a good
tool, as you move from phase tophase, at an appropriate scale
of what you're trying to reducethe costs and provide the best
value.
Blair Tennant (20:32):
Yeah, I think all all too often, value engineering
becomes something midway nearthe end of a project, because
we're over budget, right. Andfortunately, at that point, a
lot of the structural systemsare set mechanical systems are
set. So you just startedattacking architecture, right?
And, and no one's happy. And,you know, building ends up being
(20:54):
something a little differentthan it was envisioned to be. So
our goal, like what Joe and I,why we do this, why we talk
about this is we want to get thebudget and the scope aligned in
the beginning, and we're neverlooking back. We aren't, we
aren't going back into valueengineering at the forefront.
Obviously, we want to look ateach system and make sure we're
spending the moneyappropriately. But we're not
(21:16):
trying to cut things out of theproject down the road, that's
really, the goal of what I do isto eliminate that.
Joe Stramberg (21:24):
And working with and working with the in
particular on the constructionmanagement, delivery methods.
And when they're part of theteam, working with them and the
client to make sure thateverybody's on the same page, as
it relates to, we don't want tobe value engineering stuff
during the design process. Andat the end of the day, the
(21:45):
contractor giving back millionsof dollars of work that could
have been included in theproject to begin with, that
doesn't do anybody any good. Soit's really a team effort to
make sure that we're balancingit as as closely as we possibly
can through each phase of theproject.
Megan Brock (22:04):
So what are a few points you would like our
audience to take away or keeptop of mind about cost control?
Joe Stramberg (22:10):
As it relates to benchmarking
is unique. And that's one toolto make sure you're beginning to
think about the project andgetting it within the ballpark
as it relates to the budget,that 60% of the project is going
to, as it relates to residencehall design work, is going to be
(22:30):
in your structural and yourmechanical systems. So those two
decisions right there is goingto impact more than half of half
of your budget. And that there'sas it relates to the program
itself, that there's choices asit relates to the unit mix and
the amenities that are offered.
And it's a balancing act.
Blair Tennant (22:47):
Yeah. And I think it kind of goes without saying,
you know, what we're talkingabout here is early detailed
cost model, right. So digginginto the detail early, is the
fundamental key. And to dealwith the market. Just keep an
eye on on basically the jobsmarket, and how you during the
projects.
Megan Brock (23:08):
Well, I appreciate your time. Thank you for joining
me today, Joe and Blair.
Joe Stramberg (23:12):
Thanks, Megan.
Megan Brock (23:13):
So Joe and Blair will be presenting on this topic
at the SWACUHO conference inFebruary, and ACUHO-I in June.
So catch up with them there fordeeper dive into cost control.
See episode notes, or visittreanorhl.com to learn more
about how we've helped ourclients with space solutions
that fit their unique needs andbudgets. By working as a tea,m
(23:36):
planning far in advance, andconsidering alternative paths,
you can ensure your budget willstay on track while designing
space that supports yourbuilding users' endeavors. In
higher education, it's all aboutthe students. Thinking about
their needs ahead of time willnot only keep your costs in
check, it also supports ourfuture leaders and critical
problem solvers. This is MeganBrock with TreanorHL, thanking
(23:59):
you for joining us on thisepisode of TreanorHL Talks.
TreanorHL is a nationalarchitecture planning and design
firm located in the UnitedStates. The company holds a firm
belief in sharing resources andinsights with professionals
clients and building users toshape the space we use to live
and grow as people. For moreinformation visit treanorhl.com
(24:22):
That's t-r-e-a-n-o-r-h-l.com.
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