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A SUCCESSFUL CONVENTION
center can be the crown jewel of a city’s economic development
efforts. However, getting such a complex project built on time and on
budget—while satisfying the competing demands of stakeholders and managing
escalating costs over the years between concept and reality—requires careful
planning at the beginning and diligent follow-through to completion.
Convention centers are built not only with bricks and mortar, but also with
hopes and dreams. Due primarily to dramatically escalating construction
costs, civic leaders who initiate such projects frequently find themselves
challenged to complete the project within the original budget.
Convention centers typically require years of study and work between
conception and completion, and 100 percent cost increases are not uncommon
over that time span. Anyone involved in the construction process is well
aware of the reasons:
■
Annual costs increases, which once held steady at a rate of three
percent, climbed as much as 10 percent in 2004 and even
higher in
some parts of the nation.
■
Energy expenses spiked in mid-2008, further driving up the costs of
everything from building materials to transportation to
labor, a long-term
trend that appears likely to resume beyond the current
recession.
■
Inadequate planning and budgeting trigger a domino effect of ever-
higher expenses.
The hard reality is that cost
escalation in convention center construction is unavoidable. There is a
substantial difference, however, between cost increases and simply failing
to meet project budgets. Understanding that distinction—and taking the
necessary steps to address the problem—often can be the difference between
an affordable project and one that either busts the budget or requires
significant compromises in design and construction.
STARTING OFF RIGHT
It is impossible to overstate the importance of comprehensive planning and
budgeting before the first shovel hits the ground. Everyone from political
leaders to economic development executives to citizens is eager to look at
dazzling design concepts and see the structure take shape. But demonstrating
disciplined planning early
in the project is the best way to prevent innumerable cost-control
challenges later.
In complex construction projects, most cost management problems begin in the
earliest stages. A successful project involves following a methodical
process to determine project scope, uncover potential problems in advance
and anticipate the forces that will affect the budget. Rather than
announcing a budget number—which quickly becomes gospel—too soon, community
leaders need to clearly explain the planning process to the taxpayers who
will pay for the project.
Bringing together all stakeholders in a significant community
decision-making process and securing their agreement on goals and desired
results is one of the most important investments leaders can make when
contemplating a new, expanded or renovated convention center. This task can
be daunting:
■
All stakeholders must agree on the project’s goals, priorities and
desired outcomes.
■
Community leaders must commit to the time, planning and budgeting
necessary to create an on-time, on-budget project in
which the
community can take pride.
■
Owners should secure the services of experienced construction
specialists, including a program manager, architect and
builder, as
early as possible in planning the project. In later
phases of a project, it
is usually too late for the professionals’ expertise to
significantly
contribute to cost control.
Eighty percent of a convention
center’s costs are driven by how the facility will be used. Therefore, it’s
critical to conduct a feasibility study to identify the competitive and
economic rationale for the project. This study should result in a document
that defines both the costs and the benefits that the community can expect.
The feasibility study also helps define the competitive niche the convention
center will fill, an important justification to remember in the design phase
when individuals or community groups begin to advocate for adding just one
more feature.
A qualified estimator can price the project in today’s dollars and look at
the anticipated construction schedule, escalating the estimate to the
midpoint of the projected construction time. Pro-gram managers, architects
and construction management consultants can assess the unknowns to further
refine and verify initial cost analysis. An experienced architect also can
help the project’s owners establish a facility program to designate, for
example, the building’s technical features and the amount of pre-function,
ballroom and storage space needed, in order to provide the foundation for
the construction estimate.
For political as well as economic reasons, it is better to present a big
budget number up front than to start with an artificially low and
comfortable—but unrealistic—number that will be significantly exceeded
later. Planning for the necessary cost controls is a lengthy process, but it
will provide the right kind of information an owner needs to control—or even
reduce—the project’s costs.
MAINTAINING COSTS DURING DESIGN
After the project’s program-based cost estimates are approved, the early
part of the design process is the best time to control project costs. One
way to do so is by expecting the unexpected, which is bound to happen on any
project. Typically, the invisible elements of a construction project, such
as unexpected environmental conditions or archaeological discoveries,
require the biggest contingencies. Also plan for:
■
Design contingencies, such as differing building code
interpretations.
■
Construction contingencies to respond to unexpected developments
without costly delays.
■
Owner contingencies, such as old utility lines that must be removed.
At least two sets of eyes should
review cost estimates. Both the owner and designer should engage experienced
cost estimators to analyze project costs and identify and explain or resolve
differences. This may be one of the easiest and most fundamental strategies
for controlling costs and is an excellent form of creating checks and
balances.
Owners also should allow adequate time to secure competitive bids from
multiple construction bidders. Perhaps the most important factor in
controlling costs is collaboration among the owner, the designer and the
construction specialist, who should jointly develop processes to respond to
situations and to one another with timely, well-informed decisions.
EXTERNAL FACTORS
Finally, project leaders must anticipate external disruptions. These
recommended measures can help keep costs in check:
■
Be diligent about the nature of bidding, the commoditization
of construction products and the varying price impacted
by world
markets and events.
■
Re-bid parts of the project or even the entire project. It is possible
that
in the time since the original bid process,
circumstances have changed so significantly in the
national economy
or the regional business climate that a new round of
bidding may bring
new contractors or greater competition (or both) to get
costs closer to
the available budget.
■
Owners may be able to bring competing and lower cost estimates to
their contractors and use those estimates to
negotiate or leverage lower costs. If no opportunity
exists to apply
competitively lower costs to the project, consider
downsizing the
project scope.
■
Owners also may consult the designer and builder to move down the
quality scale on construction and finish, furniture and
equipment from
best to better to good. Another option is shortening
the facility’s
expected life by installing electrical, climate control
and other systems
that are less expensive be cause they will not have to
operate as long.
Obviously, none of these
alternatives or cost controls is particularly attractive. Considering
them is an important reminder that the best strategy is for community
leaders to start planning and budgeting early in their consideration of
a complex construction project, including earning buy-in for a feasible
plan from all stakeholders.
Following that, considerable time and energy must be invested in the
heavy lifting of pre-design and pre-construction work. That investment
will allow the entire community to work flexibly and realistically with
experienced construction specialists who add value to the process.
Successful, on-budget convention facilities that return a positive
economic impact are achievable—even in today’s economy—but like anything
worth achieving, they require planning, discipline and hard work.
fm
This summary was excerpted from a
white paper written by Donald I. Grinberg and J. Todd Achelpohl of HNTB
Architecture.
Donald I. Grinberg, FAIA, LEED AP, is principal
architect and national diector of convention center architecture for
HNTB Architecture Inc. Based in HNTB Corporation’s Boston office, Don
oversees the firm’s convention center work.
J. Todd Achelpohl, RA, has 21 years of master planning and design
experi¬ence and has created successful designs for a wide variety of
public and private projects. He serves as director of design for HNTB
Architecture and leads design for the Kansas City architecture studio.
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