When COVID-19 struck a year ago, the pandemic caused a great deal of uncertainty and issues for businesses everywhere. As vaccines continue to roll out and businesses re-open, positive signs in the commercial construction industry are continuing to grow. Many projects that had stalled out in 2020 are re-starting and businesses are looking beyond COVID-19 to begin talking about new project starts.
There are lingering effects of the pandemic that could cause challenges for construction projects. Material cost increases, supply chain shortages, and labor prices due to high demand are all very real concerns. If you are considering a commercial construction project in the next 12 months, here are some suggestions that will help you avoid pitfalls:
- Stay Updated on Project Budgets. With construction costs continuing rise, it is essential to communicate regularly with your builder on the price of your project. This may require your contractor to update your budgets more often than normal, but it will also keep costs from escalating without your control. When your project is bid and final pricing is established, be sure to execute your contract in a timely manner so pricing can be locked in.
- Value Engineering. Be open to different construction methods or design ideas that may save money and time on your project. Value engineering is the process used to identify and eliminate unwanted costs while also improving the function and quality of the project. It can be a very useful tool both in the design phase and after bidding to help gain the best possible value for the lowest cost of your project.
- Invest Time in Planning. Time is money, and by saving time on your project it can also mean saving you money in the long run. Spend time up front focusing your attention on a thorough plan and communicating with your design and construction team about your goals. Focusing on the plan can help build a realistic schedule and identify potential problems early in the process. Working together as a team with your architect, engineers, and builder to take control of your project planning early and throughout the building process will help avoid costly delays and change orders.
- Project Incentives and Loan Programs. With interest rates continuing to stay low, owners have many options for generous financing on their new projects. The U.S. Small Business Administration (SBA) offers loans such as the 504 and 7A programs also offer opportunities that can enhance your borrowing power with lower down payment and longer amortization periods. New and growing businesses can find many resources available to help make their building project a reality. Incentive programs such as tax credits and grants are available to support things like job creation, capital investment and training. Tax Increment Financing (TIF) is also a tool that municipalities use to stimulate economic development in a targeted geographic area. Many State and local resources also offer low interest loans which can be used to help close the gaps in financing a project. You should speak to your lending institution about all these possibilities.
No matter the current market challenges, experienced professionals can help you navigate the market and make the best choices for your long-term investment success. It is not necessary to settle for less or pay more. Through prioritizing goals, utilizing thoughtful creative solutions, and planning, you can meet the challenges head on and create the project that you will be proud of.