Building Communities: The Importance of Exceptional Construction in the Public and Municipal Space
Construction Manager at Risk Vs. Design-Build: What’s the Best Method for Your Next Project?
In construction, the first step in any project is determining a project delivery method that ensures the best outcome. Two popular methods that we offer at Miles-McClellan Construction are design-build and construction management at risk (CMR), which while similar in some respects, also have distinct differences that can be the defining factor in executing a project that is well-planned, goes smoothly and leaves all involved feeling satisfied with the results.
Keep reading to learn more about these delivery methods and when they are best utilized.
An Overview of CMR and Design-Build Project Delivery
First, it’s important to understand how these methods are different on a base level. With CMR, one of our skilled project managers commits to delivering a construction project within a guaranteed maximum price (GMP). That construction manager will be your consultant throughout the project, doing whatever it takes to ensure that all aspects of the projects are being handled properly and that there is a smooth transition from one phase of a project to the next.
With design-build project delivery, the design-build contractor teams with the chosen architect to complete construction based on your project needs and wants. Because of this partnership between contractor and architect, an established guaranteed cost is provided early in the process, allowing you to secure funding faster.
Advantages of CMR
Every strategy has its unique strengths. Let’s explore those in a CMR collaboration.
- If you have an architect who has worked well for you throughout the years, CMR allows you to continue working with the architect who understands your business and vision, while the contractor keeps that vision within budget.
- Because the construction manager is involved early in the project, they can provide valuable input during the design phase, which can lead to more accurate cost estimates.
- When a GMP is established from the very beginning, overrunning the budget is less likely.
- CMR fosters a sense of collaboration with everyone involved in a project, including, owner, designer, architect, stakeholders, etc., which leads to better communication and problem-solving.
- With CMR, the owner sets and leads the design while being financially responsible, giving the owner more control.
- We recommend CMR as the form of project method delivery for more hands-on owners.
Advantages of Design-Build
Now let’s explore the benefits of design-build project delivery.
- If your construction project contains multiples of the same type of building (for example, maintenance complexes, a tradition K-12 school, banks, and public institutions such as fire stations, police station, post offices, etc.) design-build is a very effective choice.
- The design-build contractor holds all of the risk for the owner by contracting with both the architect and subcontractors.
- With design-build, the design-build contractor and architect are partners, creating a situation that requires less checks and balances.
- Design-build can significantly reduce the overall project timeline, as both the construction and design phases of a project take place at the same time.
- We recommend design-build for owners who want to focus on their business instead of taking on the responsibilities of the construction on a heavily funded project.
Still Have Questions? Let Us Put You on the Right Track!
Overall, there is a give and take to both delivery methods that should be taken into account when considering your next project. If you still have questions and would like insight from construction experts with decades of experience, contact us today and let’s build excellence while finding your ideal construction solution!
2024 Q1 Economic Indicator
Contrary to earlier predictions of a recession in early 2024, the AIA and FMI now suggest a potential slowdown in the back half of 2024. While our indicators do point to a deceleration, our internal data and anecdotal evidence consistently demonstrate the robustness of the construction industry, which does not align with the notion of a significant downturn.
To summarize the AIA and FMI reports, they expect an increase in construction spending between 2-3% in 2024, followed by a rise of 1% in 2025. Accounting for the anticipated slowdown of construction over the next two years, the AIA points to three factors that, when combined, cause banks to tighten up lending, resulting in difficulty in getting projects started:
- Rising long-term interest rates.
- Higher construction input costs with input prices remaining 35% to 40% higher than pre-pandemic rates.
- Construction labor costs are continuing to rise at a 4% annual pace.
Despite the AIA Billing Index remaining below 50 for 9 consecutive months and the Dodge Momentum Index staying low for the past 10 months, the Charlotte and Columbus construction markets are still brimming with potential. Contractor backlogs, as measured by ABC and FMI, saw an increase at the end of Q1. This positive trend is mirrored at Miles-McClellan, where our backlog is higher today than it was at the end of Q1.
As you read the full report, you will learn more details about these numbers and trends.
Recent MM Bidding Experience
Immediately below is a summary from one recent bid effort, but it indicates what our teams are experiencing as they continue to price projects for our clients actively.
Sharing a recent bidding experience, Brad Bloomberg, MM Vice President, expressed, “Our most recent bid was for a local office remodel in downtown Columbus. The project primarily focuses on updating elevator lobbies, restrooms’ finishes, lighting, and ceilings. We had a prequalified list of limited subcontractors invited to the project. While the coverage was average on drywall and fire suppression, we received feedback from painters, electricians, and HVAC contractors that they were too busy with the existing backlog over the summer months to take on any new work.”
- Painting: 2 bidders of the 7 invited.
- Electrical: 2 bidders of the 10 invited.
- HVAC: 1 bidder of the 10 invited.
- Flooring: 2 bidders of the 6 invited.
- Drywall & Demo: 4 bidders of the 5 invited.
- Fire Suppression: 3 bidders of the 6 invited.
This level of bidding activity is typical for the summer months. We will monitor the trends and report on contractor backlogs in Q3.
Building Excellence from the Beginning: The Benefits of Construction Management at Risk
For over 46 years, our customers have trusted us to build excellence and find smarter solutions for all their construction needs to ensure the best possible outcome for any project. With comprehensive Construction Management at Risk (CMR) services, our strategic approach to crucial components of a construction project that include project and risk management, project cost estimate and budgeting and design and engineering services, we help our customers minimize risks, control costs and get projects completed on time and at the highest standard of excellence.
How Does Miles-McClellan Construction Approach Construction Management at Risk?
As with all of our projects, the process begins with one of our talented leaders serving as Project Executive and committing to delivering a construction project within a guaranteed maximum price (GMP). From there, the Project Executive takes on the role as consultant throughout the development and design phase, and does everything possible to ensure a project is prepared and ready to enter the next phase.
How Can Construction Management at Risk Benefit My Next Project?
In our experience, CMR with Miles-McClellan Construction provides several benefits that ensure a project is successful from beginning to end. These include:
- Projects Completed on Time – When a construction manager is involved early in the process, they can optimize the construction schedule and plan for multiple aspects of a project, including delivery of materials, procuring labor and equipment, coordinating various timelines, etc. Ultimately, this allows for increased speed of project execution.
- Construction Managers With Decades of Experience – Our construction managers have decades of experience, and are dedicated to client satisfaction and building excellence. They have worked with clients of all sizes in all industries, and found ways to overcome a variety of construction challenges. Learn more about their approach to construction and why they are the best in the business.
- Enhanced Synergies Between Stakeholders- Talented construction managers have the ability to foster a culture of collaboration and transparency amongst stakeholders involved in a project, which allows stakeholders to identify areas for improvement and construction managers to adapt and plan for changing project requirements. This goes a long way in enhancing stakeholder satisfaction.
- Cost and Pricing Transparency- As stated earlier, one of the hallmark features of CMR is the creation of a Guaranteed Maximum Price (GMP), which provides owners with cost certainty and transparency and ensures that projects remain within allocated budget constraints. This requires significant planning and cost monitoring from construction managers, and helps minimize the risk of budget overruns.
Ready for Project Success? Then Ask About Our Construction Management at Risk Services!
We believe in building excellence before construction ever begins and have the talent and expertise to provide a seamless and efficient design process that leads to exceptional results. Contact us to learn more about our CMR services and experience on time, on budget construction!
We Change the Spaces That Change Lives
As defined by Merriam-Webster, renovation is the act of restoring life, vigor or activity.
As the smarter construction company on a mission to build excellence, we are proud of our renovation projects that restore and bring fresh energy into the communities where we live, work and play. Steered by our skilled leaders and a talented IMMPact team, we have witnessed firsthand how exceptional renovation construction can transform communities and change lives.
Beautifying the Community Through Renovation
One of Miles-McClellan Construction’s most noteworthy renovation projects was our work on Wells Barn at the Franklin Park Conservatory in Columbus, Ohio. Wells Barn is an existing heavy timber barn frame from the late 1800s that was renovated into a new education, community outreach and events facility on Franklin Park Conservatory’s campus. One of the most complex construction considerations faced during this renovation project was finding a way to incorporate the original timber from the barn into the modernized version that met current building codes and was structurally sound. Ultimately, our structural engineer was able to design new studs that could be fastened to the existing timber, and C-channel beams provided an additional layer of support. The updated Wells Barn has been a great addition to Franklin Park Conservatory, and now holds a variety of events that benefit the community, such as cooking demonstrations, do-it-yourself cooking classes and tastings within the kitchen space, children and youth classes, adult classes, summer camps, lectures and conferences/symposia.
Family-Friendly Renovation
It doesn’t get much more memorable than having stingrays as a client! Well, not exactly, but we loved partnering with the Columbus Zoo for numerous renovation projects that included the Freshwater Mussel Conservation & Research Center, Nocturnal Building and Aviary upgrades to create a habitat/exhibit space for the Weedy Seadragon and renovation of an existing stingray touch experience. Due to weather issues, Miles-McClellan Construction had to find resourceful ways to complete the project, including repurposing soil used in other areas of the zoo undergoing renovation and using it to cover up miles of pipework.
Renovation That Improves Safety at Schools
Some of our most important renovations have nothing to do with aesthetics, but improving critical components of a space. For our work with Columbus City Schools, we led several HVAC renovations that would make schools safer for students and staff. Under the supervision of Brad Bloomberg, Vice President, HVAC renovations at Valleyview Elementary School, Westgate Elementary School and West Broad Elementary School included replacement of the HVAC systems, new electrical service and both structural and architectural elements to support the new systems. Working strategically, these projects were completed on-time and without issues.
Changing Spaces, Changing Communities, Changing Lives
Our renovation projects transform and improve the lives of residents. With every renovation project, we are doing our part to help our clients breathe new life into spaces that are vital to the community.
We believe in renovation that makes an impact. Contact us and let’s make a difference through excellent renovation!
2023 Q3 Economic Indicator
The forecast briefing headline included in this month’s Construction Executive magazine was short and simple, “The National Economy is Weakening.”
While speaking on the magazine’s 2023 Q3 “Economic Update and Forecast” webinar, Anirban Basu, The Associated Builders and Contractors’ Chief Economist, said, “the economy has been much stronger than I would have anticipated.” But while job growth, low unemployment and increased spending on construction are positive signs, Basu remains wary of the longer-term outlook, pointing to red flags such as skyrocketing credit-card debt and other industry economic indicators. “My view,” Basu told his online audience, “is the national economy is weakening, increasingly under pressure from higher interest rates, strikes, worker shortages and loss of production; borrowing costs are higher; and excess inflation persists.”
Our attached report, is one quick and easy way to see the trends behind the headline. The AIA Billing Index is on a four month negative trend, including the last two months below 50. The ABC and FMI backlog indicators are both on negative trends and neither has returned to pre-pandemic levels.
Quick summary: Contractor backlogs are lower right now and there will be less opportunities to pursue throughout 2024. For owners, this could ultimately result in increased competition and more competitive pricing.
A couple of examples from Q3 Miles-McClellan bidding and budgeting efforts:
- Craig Richards, Vice President, “Our division originally bid a sizeable renovation project to a large, international CM firm. During Q3, 2021, the wall protection package was worth $6.7M and was removed from the scope of work due to being over budget. The package was rebid during Q2 of 2023 at $7.6M. This was a 13% increase in 18 months.”
- Kevin Joseph, Project Executive, “My team is continuing to feel the effects of bad owner budgets. We recently were low bidder on a City of Columbus job that is 45% over budget. The job is unawardable and the City is now trying to figure out what they can do to value engineer the job. I’m not confident that value engineering will be able to make up such a large disconnect between the budget and the reality of local construction costs. We were also recently low bidder on a public job in Mifflin Township that is unawardable due to a blown budget.”
- Matt Recchiuti, Vice President, “Much like Kevin, really the only trend I am seeing is that Architects are woefully underestimating public budgets to owners, and almost all of the Public Work bids are having to re-bid to due a shortage of requested funds. We are still seeing delays in HVAC equipment and Electrical gear, most of the time up to a year.”
Leader Spotlight: The Impact of Building Community Success
“There is Always a Way.” – An Interview with Miles-McClellan Construction’s Vice President, Craig Richards
Not all heroes wear capes. Sometimes they wear badges and stethoscopes, and on our team, hard hats.
But often, everyday heroes are working hard behind the scenes, striving to make a difference in the community by creating spaces that provide a safe haven for those who need a voice, an advocate and support.
Miles-McClellan Construction is honored that we have been able to help these unsung heroes and their organizations build excellence by improving the spaces in their communities. In this interview with Craig Richards, an MM Vice President, he sheds light on his experience working with non-profit organizations throughout his career, how open communication is key to a successful collaboration and why working with non-profit organizations to build excellence is incredibly rewarding.
Q: What experience do you have working with non-profits?
A: Most recent non-profit clients include the Franklin Park Conservatory, Central Ohio Community Improvement Corp., Franklin County Landbank (COCIC), The American Society for Prevention of Cruelty to Animals (ASPCA) and the Upper Arlington Lutheran Church.
Q: Is there a certain type of non-profit client you work best with?
A: We always look for a client that is team oriented. The last few years have been tough on the construction industry with the pandemic, which then led to inflation, rising interest rates, material supply chain issues and labor shortages. Despite all of the negativity and rising construction costs, our non-profit clients continued to keep a positive attitude and never lost focus of their mission to improve communities. In lieu of pointing fingers when budgets and schedules were threatened, the teams worked together to find a way to achieve the goal. That is the type of client we look for, regardless of the client’s industry.
Q: Why do you like working with non-profits?
A: Non-profit client missions align with Miles-McClellan Construction’s. Miles-McClellan Construction’s mission is building leaders and long-term relationships, and non-profits missions are typically about building/improving communities. Building relationships and communities go hand in hand in my opinion, which makes Miles-McClellan Construction a good fit.
Q: What do you and your team bring to the table – why would non-profits want to work with you?
A: Miles-McClellan Construction is flexible, collaborative, and transparent which fosters an environment of trust. You will never hear Miles-McClellan Construction place blame on other team members or deflect responsibility. We want to be their partner, and strive to be the easy button.
Q: Do you have an example of “how you saved the day” for a non-profit?
A: Unfortunately, we are not superheroes, therefore I can’t say we have ever truly saved the day. However, we recently had a project where the HVAC equipment was delayed approximately six months and was going to prevent the client from occupying their new building ahead of their current lease expiring. The design and construction team were able to come up with a temporary heating and cooling system until the HAVC equipment finally arrived, and was able to get the client in their new building two weeks ahead of schedule with a temporary occupancy. This was definitely not an ideal situation, but we saved the day by providing a temporary solution.
Q: Is there any specific advice you have for non-profits?
A: Invite your construction manager into the process as early as possible, and challenge them to think outside the box when times get tough. There is always a way!
How can we help the non-profit heroes in your community? Under the supervision of leaders such as Craig and our hardworking team, Miles-McClellan Construction has helped improve communities and make them a safer space for residents. If you are a non-profit with a building project, contact us today and let’s work together to make an impact.
Second Quarter Economic Indicator – A look back
As we quickly pass Q2 and move into Q3, we are starting to understand better how the year will shape up. I recently had a chance to review The Conference Board’s (TCB) website for a description of what they see ahead. TCB’s mission is to be a “member-driven think tank that delivers Trusted Insights for What’s Ahead to help our members improve performance and better serve society.” In a bullet point summary, TCB’s most recent update included:
- Real GDP rose by 2.4% in Q2 ahead of the expected 1.8% forecasted. This resulted from a weakening demand in consumer consumption being more than offset by business investment.
- Consumer consumption growth of both goods and services cooled in Q2. This trend is expected to continue for the remainder of 2023 due to three factors:
- real disposable income is down;
- pandemic excess savings are gone, and consumers are carrying historic debt levels;
- mandatory student loan repayments are set to resume.
- Business investment did more than offset the decrease in consumer spending in Q2, showing sizable spends in transportation equipment, facility structures and intellectual property products. However, this information came with a warning: TCB expects weakening consumer demand throughout the remainder of 2023, combined with high interest rates to reverse business spending trends.
A couple of examples from Q2 Miles-McClellan bidding and budgeting efforts:
Craig Richards, Vice President, “Our division originally bid a sizeable renovation project to a large, international CM firm. During Q3, 2021, the wall protection package was worth $6.7M and was removed from the scope of work due to being over budget. The package was rebid during Q2 of 2023 at $7.6M. This was a 13% increase in 18 months.”
Matt Recchiuti, Vice President, “Our team recently rebid a steel package. Our original steel package was quoted at $53,500 in February 2023, and after the project rebid in August 2023, the final (unchanged) steel package was purchased for $58,000. This is almost a 17% annualized increase in steel pricing.”
Kevin Joseph, Project Executive, “One notable and frustrating reality that my team faces is the fact that more than half of the projects we bid this past quarter were so far over budget that the project could not proceed. It seems that across various industries and types of projects, owner’s budgets have not caught up with the price increases that exist in Central Ohio. Some owners mention that they plan to wait to rebid work once prices decrease, but we have not seen any indication that this is a realistic plan.”
While at times it may feel like we are spinning our wheels with all the budgets and rebidding, we would rather provide realistic, inclusive budgets and bids then submit low numbers with the hope of winning and not failing.
