Breaking Down the System to Disrupt It
How Well Do You Know Construction Costs?
For those of you in the AEC industry, here is a simple test to determine how much you know about construction costs. Pick any building type you are most familiar with, and then answer the following questions:
- What is the average cost of construction per square foot?
- What is the average cost per square foot of an exterior wall assembly?
The chances are that you can answer the first bullet, but for even the most seasoned cost estimators, the second question is more challenging. It’s one that would require a lot of work with a lot of different subcontractors to figure.
In fact, at a recent Bautex presentation to a group of cost estimators, project managers and site superintendents, not a single person could come up with a reasonable answer. As walls are one of the most important components of a building, knowing the cost per square foot of a wall is a key piece of information that should be readily available to architects, cost estimators and contractors: Those that are charged with protecting the budget in an ever-tightening market have a difficult road ahead.
According to Turner construction, construction costs have climbed 5.51% nationally from 2018 to 2019 and 22% since 2014. This exponential growth is straining all of our resources, and we are spending more and more time trying to figure out how to save money. Yet the easiest way to reduce costs, a reduction in the total square footage of the building, is a recipe for disaster.
No one likes to build less of a project to save money; certainly not the client who ends up with less square footage of what they need to run their business.
The Current Cost Estimating System
So, why don’t we know the cost of a wall?
The reason is pretty simple: We often spend most of our time looking at the big picture and fail to understand how it all comes together. It’s easy to come up with a total cost of construction per square foot (you know the total of both the dollars and the square footage), but it is nearly impossible to break out the cost of the exterior wall.
While you can measure the square footage of exterior walls, nowhere do we sum the cost of the wall system. The reason for this is that the structure and building envelope is typically a designed assembly that pulls together a broad range of materials from different manufacturers.
This, in turn, means that all are purchased and installed by a fairly large number of trades in, what can be, a complicated series of steps. This makes decisions about how to design and construct a building a real challenge, especially when attempting to understand the true economics of each option.
Much of this blame can be placed on the system that we use to generate cost estimates. We have all been taught the benefits of following the CSI system of breaking down costs by division.
These divisions allow complex systems, such as an exterior wall, to be broken down by each of its parts. Steel studs are in Division 5, the exterior finish is in Division 6, the wall insulation and vapor barrier are in Division 7, etc. Each Division typically means a different sub-contractor and separate pricing.
When looking across a whole wall assembly, the number of elements to price may be between 5 to 9+ products. Additionally, within individual bids from subs, the cost of the exterior wall is often mixed with additional scope of work not related to what is being studied.
But, assuming you are able to get the costs per square foot of exterior wall per division for each of the wall components, what do you do next?
Right, you look for cheaper options within each division. It’s only natural to look at how the cost breakdown is made and run through each line item looking for alternates. The challenge with this approach is that the cost of the material is rarely more than 45% of the total bid. So, finding alternative materials that are 10% cheaper (a good win) results in nominal savings, if at all.
Why? When asking for a price per square foot of the exterior wall, you need to corral a lot of people, and the more you touch, the more their individual general conditions (mark-ups) begin to impact the bid.
With as busy as everyone is, general conditions are going up faster than the cost of the product. This means that when subs are asked to price different options, they rarely budge much from their initial bid. While the product cost may be less, the subcontractor is not motivated to give it all back to the contractor and owner. There is too much work out there to spend the time going through price reduction options through our traditional estimating systems.
So, when an architect or an owner asks how much cheaper one wall system is from another, it can be very difficult to provide a real number. In the end, the decision to use one wall system over the other is based on inaccurate or incomplete information that may end up actually increasing construction costs in the long run.
Break the Cycle By Breaking the System
Let’s follow the money in the old system. The more subs you touch, the more general conditions drive the cost. The more products you have, the more subs you need to build the wall. The way to break the system is to figure out a way to reduce the number of materials, by finding a wall system that requires fewer parts.
Traditional wall systems are not the answer; you have to look for more integrated systems that work across CSI divisions, not for product alternatives within each division. Doing so may require you to think differently about the wall, but the innovations that disrupt CSI divisions can help you bridge the gap between the budget and the cost estimate, and be the key to maintaining the integrity of the design, total square footage of the project, and a successful project outcome.
Bautex Block is one such system.
While it is often viewed — incorrectly — as similar to CMU or other concrete products, Bautex Block is a product that actually spans into other divisions. While it has found a home within Division 3 Concrete, Bautex Block integrates foam into the product during its manufacturing that serves as thermal insulation.
When combined with a simple fluid-applied membrane to prevent air and moisture infiltration, Bautex Block eliminates several products within Division 6 — sections that contain thermal insulation (continuous rigid insulation and cavity insulation) and difficult to apply sheet and joint-taped vapor barriers.
It can also eliminate several products in Division 5 (structural steel and light gauge framing), as well as simplify the attachment of sheathing elements, and it can reduce/eliminate several details that require joints sealants and compounds to overcome typically found in Division 7.
The benefit of fewer systems means that it’s quicker to build than other systems that take a complex sequence of multiple subs to create a water-tight envelope. The quicker a contractor can get “dried in,” the less susceptible they are to weather delays and can start the installation of interior Mechanical/Electrical/Plumbing systems and interiors.
Even without considering the impact of weather delays, the contractor will experience an overall reduction in construction time. A few weeks of savings can also reduce the overhead to manage the project to completion by the general contractor.
Save them time, reduce their weather delay risks and reduce the number of subs to coordinate with, and construction costs will definitely come down. A big win for general contractors; a huge win for building owners.
This almost sounds too good to be true, right? We understand, so we wanted to validate that the claims we have been making about cost, number of materials, number of subs and construction time do, in fact, play out as we have claimed.
In the fall of 2018, Bautex had an opportunity to bid on a municipal project that was based on a prototype design where the team wanted to know the true costs of different wall options. This was an essential task that they needed done to drive down construction costs on multiple projects.
The Bautex Wall System was put up against a number of “standard” wall types where the total cost of the wall and the total timeline of construction could be estimated. It was the perfect scenario for Bautex to go head-to-head with other wall systems; the same project design, with a single cost estimator based in South Texas, and a blank sheet of paper for each wall system (nothing could be hidden within mark-ups).
The construction management team was able to develop an integrated budget and a construction timeline for each of the different wall assemblies using the same methodology for each. A level playing field for a disruptive technology such as Bautex is tough to come by, so we asked to see their results:
The fact that the Bautex Block was less expensive for this project than concrete masonry or even concrete tilt panel makes sense for most people after digging into the details. But seeing that Bautex Block beat metal stud framing by 12% is usually a surprise for most who assume that light framing is the cheapest way to build any building. This fact may support why over 90% of the projects that have been constructed with the Bautex Block would most likely have been metal stud framed projects.
However, the real surprise for the estimating firm was the fact that even in the comparison with metal stud framing, they identified a reduction in construction schedule using Bautex, which will translate to even more savings for the owner than is represented above. Against concrete masonry and concrete tilt panel, the time reduction and budget savings were even more significant.
First Costs Are Only Part of the Story
If you have made it this far and you believe in the first-cost savings, the next logical step is to ask about long-term performance and maintenance. The good news is that in the same way Bautex Block was designed to disrupt the cost system, it was also designed to disrupt the performance challenges of the wall.
In other words, by using few materials with inherent performance characteristics — including resiliency, occupant health, life-safety, thermal efficiency, moisture protection, sound reduction and long-term maintainability — a Bautex Block wall will outperform each of the wall assemblies listed above.
This means that normal Return on Investment (ROI) or Net Present Value (NPV) calculations are irrelevant since a Bautex wall is both less expensive to build AND less expensive to maintain, plus yields an immediate return. This makes the decision to use Bautex Block even more attractive. For more information about the performance features of Bautex Block, check out the other technical blogs in our story hub.
Take back control of your budget and deliver on-time with a Bautex Block wall.