How Offsite Interior Construction Promotes Holistic Budgeting

Offsite Interior Construction Cost Certainty GRIT

When you’re thinking about your interior construction budget, it’s important to think broader and long-term. That means taking the “whole life cost of a space” into consideration, rather than just focusing on the first build cost.

Why? Because it will help you achieve cost certainty on the build, and even see some ROI on the building materials.

You set a construction budget, and what happens a year or two later when the project commences? That budget isn’t accurate anymore. Then you have to go back to the client for that dreaded and painful "VE" conversation. Or worse, you have the scope reducing conversation.

In the current environment, you are addressing anywhere from 10-25% increases in materials and labor costs over the budget you set a year or so earlier. This outcome is as automatic as the rising and setting of the sun.

Yet you endure it time after time after time. This is just the way it is.  And it will continue to be the case, given the old school processes and methodologies encumbering today’s interior construction industry.

The relevancy and longevity of interior construction are worth considering for any build project. Tenants are going to live in a space for 5,10, or even 20 years. Everyday their needs, along with the flexibility and durability of that space, are the key concerns. For you...the construction budget is always a key concern.

Here are a few reasons why taking a holistic approach to your construction budget will ultimately save you time and money—and provide cost certainty.

Maximizing Cost Certainty vs. Minimizing the Construction Budget

At the end of the day, what’s more important—maximizing cost certainty or minimizing the construction budget? In this extensive research, making cost certainty the primary objective turns out to be a smarter approach to construction budgets.

"Allocating more resources to the preconstruction period to refine design assumptions and investigate actual site conditions gives the agency more control over the final cost of the constructed project. In other words, investing in preconstruction activities increases cost certainty."

In conventional construction the known equation of an overall construction budget is represented by 70% labor cost and 30% material cost. When labor costs increase—as they have and continue to at unprecedented rates—70% of your entire project budget is adversely affected with increases. When costs of materials rise along with labor cost, you can’t avoid similar increased cost to the remaining 30% of your budget.

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A technology-driven design assist and offsite construction software provides massive benefits, like: speed, accuracy, quality, and a “cost certain” interior solution that no conventional process can promise. While we can’t avoid the reality of rising labor costs, at GRIT our equation is flipped. 

Only 30% of our budgets represent labor, while the other 70% are materials. These are high utility materials you own for reuse over the life of your space, not just purchased to dispose of the next time you have to touch it. You simply can’t get that with conventional construction.

Cost Certainty: Offsite Construction Beats Conventional

So what allows for off-site manufactured cost certainty that doesn’t happen in conventional construction? Quite a few elements...

  1. Visual Certainty - Virtual reality software for planning and design removes assumptions or the lack of ability to understand the results of 2D planned functions in a 3D world. You can see mistakes and identify poor planning or design before anything is ordered or built. 
  2. Production Certainty - Pristine, dry, and temp-controlled factory environments provide for exacting measurements and the highest design aesthetic for all components. Your complete interior is pre-built in the factory, then shipped RTA to your site. 
  3. Schedule and Installation Certainty - Offering early, accurate, and “hold to” scheduling and installation schedules means you can greatly reduce the time and labor requirements on site to complete the entire vertical buildout of a given interior construction site. This results in shortening the overall construction schedule and providing an earlier occupancy date for the owner. 
  4. Safety Certainty - Because the work of 8-12 different trades is performed in the controlled environment of a factory, the likelihood for accidents that typically occur in often dangerous site conditions is drastically reduced. Due to often cold, poorly lit, dirty and crowded conditions—with multiple trades all fighting for the same space in order to meet deadlines—accident risk is much higher. 
  5. Cost Certainty - It’s the entire process, not just the pricing exercise that allows GRIT and DIRTT to ensure peace of mind around design, quality, schedule, safety, and overall pricing for your interior construction project.  

How Solid Technology Delivers Cost Certainty

According to the 2017 International Construction Costs Report by Arcadis: “Costs associated with constructing the infrastructure and buildings of tomorrow remain both varied and hard to predict. Shifting commodity prices, significant political moves, and currency volatility add to the dynamic mix, resulting in complex investment decisions and the need for greater certainty of return.”

This is where technology comes into play, bringing efficiency and accuracy into a build from the get-go. We use ICE software to determine the exact cost of your project as you design the space. In the ever-changing construction world of materials and labor costs, technology like ICE software helps us quote a project accurately so you don’t experience any surprises down the road.

Sure...in two or three years, the cost of aluminum or veneers will inevitably change. If that happens, we absorb the costs rather than passing them onto you as a client. In other words, if we quote you a price for a school or hospital interior build package today, as long as the scope doesn't change much in 3 years, our quote won't either.

When we priced out a project for a medical office building (MOB) about a year and a half ago, they ended up putting the job on hold because our DIRTT solutions were 20% more expensive than a conventional build at the time. Recently they came back to work with us, because all of their conventional construction costs increased while ours stayed the same. So, the budget gap no longer existed.

That's the big difference we're talking about. First cost budgets and final signed contract price can be two very different numbers. If you control 70% of that number, and know it will remain the same from start to finish, cost certainty is all yours.

Enjoy Cost Certainty When You Think Long-Term

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Leveraging technology with flexible interior solutions truly brings a level of cost certainty that can’t be found with conventional construction. Even though a DIRTT build may cost more than a conventional first build cost, you will more than reap the rewards with savings on operations and maintenance. Building with GRIT means your space stays relevant and functional over time. 

For example, adding an outlet will be infinitely cheaper, faster, and cleaner to do with DIRTT walls versus drywall walls. You’re not bringing in different people to cut the drywall, clean up the mess, patch the drywall, bring in the power and data, then patch and paint. You’re just taking the tile off, putting the power in, cutting a hole in the tile, and putting the tile back into the wall. It’s all very “plug and play.”

With conventional construction, an outlet change would quickly escalate into an expensive, time-consuming event. With DIRTT interiors, something like this doesn’t have to be an event at all. It can be done in about two hours for a few hundred dollars, with little to no mess or noise disruptions.

DIRTT solutions allow your space to live longer and to develop and change as you need it to. As such, making changes to keep your interiors relevant is much less expensive—it’s quicker and it’s cleaner—overall, it’s less disruptive. These are all cost savings, backed by the peace of mind that comes with cost certainty.

Sound like the way to go? Let’s start your next interior build with more certainty and ease.

Angela Glatz