2013 Saskatchewan Real Estate Forum SESSION C3 MANAGING - - PowerPoint PPT Presentation

2013 Saskatchewan Real Estate Forum

SESSION C3

MANAGING CONSTRUCTION AND DEVELOPMENT COSTS IN THE SASKATCHEWAN MARKET

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• Sask. Dev. Costs - Context

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Capital Construction Price I ndex: Sask Trends Monitor

 Sask Trends Monitor has developed a simple index to measure price change in the cost

• f capital construction. The index

includes changes in the cost of both labour and materials. It is published in the monthly newsletter.

 The index has grown by an average of 3.8% per year from 2003 to 2012.

April 15, 2013 1

0% 1% 2% 3% 4% 5% 6% 7% 8% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Annual Rate of Price Change, Sask Trends Monitor Capital Construction Price Index, Saskatchewan, 2003 to 2012

average

• Sask. Dev. Costs - Context

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The Perfect Storm

Demand – Mining, Oil & Gas

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$0 $1 $2 $3 $4 $5 $6 $7 $8 2003 2005 2007 2009 2011 2013 intent

Capital Investment in Construction of new Buildings and

Facilities, Excluding Housing, Saskatchewan $ billions mining, oil and gas all others

Demand – Wage Gap

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$500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 2005 2006 2007 2008 2009 2010 2011 2012 Average Weekly Earnings Including Overtime, Hourly Paid Workers in Saskatchewan

Non-Residential Building Construction Heavy and Engineering Construction

Demand – Materials vs. Labour

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• 7.5%

3.5% 8.7%

• 0.1%

0.2%

• 9%
• 6%
• 3%

0% 3% 6% 9% 12% 15% 2009 2010 2011 2012 2013 YTD Annual Change in Price for a Basket of 31 Construction-Related Commodities

percent change from a year ago

Construction materials similar Labour costs increased

Demand - Construction

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Supply - Historical

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Supply - Demographics

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• utmigration

Supply - Immigration

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Supply - Immigration

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Design-Bid-Build

Traditional Method ADVANTAGES

 Competitive Tendering ?  Lowest risk factor-

>Owner

DISADVANTAGES

 takes longer to complete  adversarial or

confrontational relations

 High risk –> Contractor  Competitive tendering

not guaranteed

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Construction Management

Relationship Based Team Approach Variations CM as Advisor CM as Agent CM as Constructor CM at Risk

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Construction Management

ADVANTAGES Early commitment of scarce resources Better value Less confrontational Less complex /risky > DB Expertise at early stage Better able to manage budget and schedule Value Management Final costs – early Opportunity to fast track the design and constr’n. Owner and Architect have direct relationship select constructor based

• n ability vs. price alone

Less litigious Risk and management with Contractor vs. Owner

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Design Build

DB with Bridging Consultant

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Integrated Project Delivery

“a project delivery approach that integrates people,

systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction.”*

* American Institute of Architects

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TRENDING

Integrated Project Delivery

PRINCIPLES Mutual Respect and Trust Mutual Benefit and Reward Collaborative Innovation and Decision Making Early Involvement of Key Participants Early Goal Definition Intensified Planning Open Communication Appropriate Technology Organization and Leadership

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Q & A

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