How do you deal with escalating costs in construction projects?

In my opinion, labor issues do not create the kind of immediate or short term cost escalations being discussed here. If there is a shortage of skilled labor, no amount of money is going to make more labor magically appear.

1. Keep up with prices of materials. This never stops 2. Take care of your good people. Their consistent performance will keep you stabile on labor prices. 3. Trust your gut. If you know you are going to loose money on a project, don't take it. You don't need the expensive after pictures. 4. Save money from the good paying jobs in an emergency fund so you have money to weather the jobs that go poorly.

Construction cost is escalating in many countries due to so many factors as listed. Organisations just need to strategize to retain the people they have working with them. One of the ways labor shortage can be curbed is by Implementing employee recognition programs to acknowledge and reward exceptional performance. Additionally, enhance employee benefits packages, including health insurance, retirement plans, and other perks, to attract and retain some laborers. Although this will result in more expenses from the employers, this season requires organizations to give and "retain".

Expectations of the younger workfoce is substantially different than the previous generations. Better work/life balance, job satisfaction and some unconventional benefits play an important role to attract and keep good workers. One critical realization among the youth that can be leveraged to address the labor shortage is that, learning and developing hands-on skills may be much more rewarding than pursuning a higher education. Especially in a future where AI may take over many intellectual tasks, trade skills and knowledge may provide much better job security and pay.

The only thing constant in construction projects is “Change.” However, a modern project manager is equipped with the necessary skills [technical and social] to engage stakeholders, assemble the right team, plan proactively, and create an iterative feedback mechanism that aims to satisfy customer expectations. Also, initiating a scope freeze is a significant lever for controlling ambiguity, adequately understanding customer requirements, and steering the project toward creating values. Hence, the best way to deal with labor challenges is by empowering your team, encouraging regular feedback solicitation, embracing change, and delivering values as early and as frequently as possible. These methods work 99% of my projects.

Statement of the problem and provided solutions (anticipating and hedging) were far too generic. When anticipation is not an option (and lots of times it is not), agility and the resilience of the supply chain may be the most important factors. That being said, prices (manufacturing at the lowest possible price on the oher side of the world) and availability (more local manufacturing) usually work in opposite ways. Yet the experiences of recent years showed that availability can be much more critical from the strategic perspective.

Construction managers need to have an understanding of the supply chain that affects their materials. While this sounds straight forward it often is not. For example, the cost and availability of rebar is entirely dependent on the cost and availability of scrap metal. We have had periods in the U.S. where all scrap was being exported and bought up by China, having a tremendous negative impact on the prices and availability of rebar in the U.S. Other materials, such as prestressing steel strand, use almost no scrap metal, so at they should have been unaffected. However at the same time there was a shortage of Coke used to make that steel in the U.S. Supply chains can be much more complicated that some people realize.

My entire role is built around the value engineering of construction projects, to counter the increased costs of resources, but the biggest barrier for me is that people and businesses are too busy to see me and up-skill their business. Chicken or egg? Square wheel or round wheel?

Inflation of material costs and prices is one of the most difficult aspects of cost management. It involves the need for skills, experience, foresight and a lot of luck to be on the better side of project estimates. Application of cost planning and risk management techniques will help reduce the impact of a terrible stretch. With a well-defined project scope and limited changes, we can strategize procurement measures and policies to reduce material prices and availability

Maturity of the client in so far as defining requirements is crucial in managing scope creep. There is a direct relationship between the cost of making changes to scope and the point in the project cycle when the change is introduced. Having a tight scope reduces the risk of variations thereby managing the project costs close to the baseline as possible. Requirements management is therefore an essential part of project management.

This is by far the most dangerous aspect and can be extremely damaging. Clear management at pre-construction stage and stringent change controls are essential.Clearly a very complex issue that can manifest into huge proportions. I have been an advocate of this for all my career and still see examples of poor approach. Be pleased to help if anybody needs further advice.

My entire role is built around the value engineering of construction projects, to counter the increased costs of resources, but the biggest barrier for me is that people and businesses are too busy to see me and up-skill their business. Chicken or egg? Square wheel or round wheel?

A lot of risk in construction arises from poor understanding of, or inaccurate assumptions relating to ground conditions. Thorough ground investigation by competent practitioners, and review during construction of the engineering geological / geotechnical ground model can go a long way to minimise the impact of "unexpected" ground conditions (often more properly described as "unanticipated").

While there are Project management software systems that exists for long time now, by adopting new technology based systems will help in reducing the communication related issues. For example, using blockchain for sharing the data between the stakeholders and for automating many manual steps through smart contract can help reducing the risk.

Preconstruction communication is imperative to offer solutions that will care for the problems that were spoken of (rising costs for materials and labor). Thinking outside of the box is required to fix many of the issues that we are facing. We’ve been building the same way for generations and offerings such as offsite building is boosting productivity. I agree with the statement that I recently heard, “We do not have a labor problem, we have a productivity problem.” Manufacturers are coming out with solutions that care for several steps much quicker, with less labor, and less materials. When these solutions are utilized then we will have a great savings and be more productive. Check out the ECOMAXci Wall Solution by Rmax.

This would be a good place to introduce concepts like BIM, Digital Twins, etc... These tools allow all project stakeholders to communicate effectively and efficiently and they remain as valuable tools even after the project was completed.

There are a number of reasons cost increases, being unable to forecast cost is one, changes in engineering not budgeted for all lead into construction cost where cost is 3 times more expensive, to avoid cost increase Project managers need to continually forecast through Engineering making sure Construction know changes or material delays.

My entire role is built around the value engineering of construction projects, to counter the increased costs of resources, but the biggest barrier for me is that people and businesses are too busy to see me and up-skill their business. Chicken or egg? Square wheel or round wheel?