Cost control

Probably the hottest and most challenging topic that has come up for me in recent months is that of cost control. The concept of cost control comes into play to a great extent in the design-build and design-assist worlds. But, it also should be of concern on traditional design-bid-build projects.

Cost control is just what it says – controlling the cost of a project. Every project has a budget that the owner establishes early in the conceptual phase, probably far before you as an engineer become involved. We, as part of the design team, have a responsibility to stay within the parameters of that budget, as do all of the other team members. It seems obvious and simple, but often it is much more complicated than that.

How can costs get out of control on a project? Generally, it is associated with scope creep, as the scope of the job gradually increases as the design is developed. So, what causes scope creep? It can be caused by many different factors.

Owners can cause scope creep if they request that the architect or engineer to include elements that were not part of the original budget. This is particularly true when the owner is not a single entity, but comprised of many different subgroups like user groups in a hospital. It is not uncommon for user groups to make requests of the architect or engineer because they are not thoroughly familiar with their budget limits, and, naturally, they will want to get everything they can incorporated into the design of their new facility. When this is the case, it is the architect and engineer’s responsibility to gently remind the owner that scope creep comes at a cost, and ask if they want to consider increasing the cost of the project or stay within the original budget.

If the architect or engineer doesn’t manage the owner-driven scope creep, often, the general contractor or construction manager will have to rein the owner in and remind them of their budgetary limitations. As the design professional, you have the responsibility of being sure this happens, since the GC or CM might not be aware of the fact that scope creep is occurring.

The architect can also generate scope creep, as their enthusiasm for design excites them to include design elements that were not in the original scope. This happened just recently on a design-build project when the architect mentioned in passing that the ceiling in a large room was a wood finish, making valve access panels a delicate subject.

The general contractor overheard this in the meeting and said, “Wood ceiling? That’s not in the budget! Make it acoustic tile, as it was supposed to be in the RFP!”

In this example, the general contractor happened to be present to overhear the mention of a scope creep issue. But, far too often they are not present, and the architect might generate design changes to suit their aesthetic preferences that cost the engineer money in redesign time, the general contractor money in general construction costs, and the subcontractors money in systems costs. If these cost control issues are not elevated and documented, they can lead the project down a path for which the owner is not willing to pay. If the owner puts the breaks on and says, “I’m not paying for that,” the design team will bear the cost of reverting the design to within budget.

In addition to the owner and architect, we engineers can be guilty of creating scope creep. Engineers can be just as overzealous as architects in their enthusiasm for their designs. In making designs more complex than necessary, the engineer drives up cost for either the owner or subcontractor, depending on the contractual state of the project. If the contract has not yet been signed, the owner will bear the cost of the scope creep in the bidding process if value engineering does not occur. If the contract has been signed, it will likely become a battle between the general contractor and subcontractor, and the engineer might be required to simplify the design at their own expense. As engineers, we have to be cognizant of practical, efficient design versus a design with an appropriate level of warranted complexity.

Cost control from a design-build perspective, in case you happen to operate in that arena, can be quite difficult indeed. Necessity demands that there is a close marriage between estimating and design in the design-build forum. From an estimating perspective, the inclusions and exclusions must be carefully defined, especially if the scoping documents are vague in nature, which is often the case.

Sometimes an estimate has to be based on schematic architectural drawings alone. When such is the case, everything must be quantified – the number of roof drains, the number of plaza drains, and so on. Often, these numbers can be defined based on square footage, such as one plaza drain per 500 square feet. When a bid is quantified in this manner, the engineer has to be aware of the parameters of the bid and design accordingly. If something happens to cause the design to exceed the bid parameters a red flag has to go up in the air to broadcast the fact that the installation is growing in cost.

As the architect develops the floor plans during the design process, a tally must be maintained of the plumbing fixtures. If the quantity of fixtures creeps up during the architectural design, another red flag must go up to warn the CM, GC, and/or owner that the project cost is increasing. It is very easy – in fact, it is human nature to start the engineering process when architectural backgrounds are received, especially if the design schedule is tight. However, you should not start designing until the plumbing is determined to be the correct scope. Otherwise, you will likely have to redesign to the proper scope at your own expense. 

Timothy Allinson is vice president of Engineering at Murray Co., Mechanical Contractors, in Long Beach, Calif. He holds a BSME from Tufts University and an MBA from New York University. He is a professional engineer licensed in both mechanical and fire protection engineering in various states, and is a LEED accredited professional. Allinson is a past-president of ASPE, both the New York and Orange County chapters. He can be reached at lagunatictim@gmail.com.

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