Opinion: Tackling uncertainties in commercial construction

Grant Miller

Are you contemplating a new facility for your business but hesitating because the market feels uncertain? Join the club – and welcome to the party! Uncertainty seems to be the topic of the day.

It may seem that the current level of uncertainty and the reasons for it are a new challenge. Current, yes; new, no. As local construction veteran and leadership coach Larry Stock puts it, “It’s always something.” Over the course of my career, there has indeed always been a “something” to raise questions. However, a very tight labor market has been a constant – pointing to the fact that no matter what “it” is, construction carries on at a pace that fully utilizes industry capacity. The takeaway: Over the decades, uncertainty has been managed effectively, and the risk/reward analysis of go/no-go typically tilts in favor of go. You will not drive around Springfield and get the feeling that there were gaps in time when no buildings got built. What you see is a smooth progression in design trends and building ages indicating a relatively smooth flow of construction, no matter what else was happening in the world.

The key to successful projects – under any conditions – is identifying what worries you and then proactively managing those concerns. Commercial construction is inherently complex, and the people that choose the vocation are exceptionally creative, resourceful and capable of overcoming whatever challenge comes along. Obviously, there have been a multitude of challenges and possibly the highest-ever levels of uncertainty in the last five years. During that period, my company has been part of hundreds of commercial building projects, and we have seen the overall project teams achieve great success in meeting completion deadlines and project budget requirements. The biggest challenge during that time is that the local industry has been trying to keep up with record-setting volume – in spite of the uncertainty!

Just a few of the challenges and unknowns I’ve seen along the way include volatility in commodity prices such as oil and copper (numerous cycles), all of the supply chain issues, rising interest rates and inflation. Again, “it’s always something.” Always has been and always will be. The point is not to downplay the risk or the validity of the concern; it’s to recognize that area design and construction professionals have proven time and again that we can and will adapt and overcome to benefit the building owner.

What can a building owner do to confidently manage concerns? Firstly, choose reputable design and construction teams with verifiable records of completing projects on time and on budget, no matter the circumstances. A very close second: Begin the budgeting process early enough to build construction cost into your future business model. While construction costs, like the products your business sells, do increase over time, a good design and construction team will be able to help you develop a solid budget and then stay within it through the completion of a given project. After that, work with them to identify which elements of the project represent the highest levels of uncertainty and then communicate with the people closest to those things, the specific subject matter experts. If interest rates are a concern, be diligent in working with your finance professionals; if electrical equipment is a worry, pull an electrician in early; if tariffs are troubling, find out which elements might be affected and talk directly with those trades. Working closely with the companies that work daily in those specific areas will almost always yield proactive ways to avoid unnecessary costs and surprises.

The bottom line is that managing construction uncertainty is complex but doable. More definite is that operational detriment, or opportunity cost, of not having the facility your business needs, plus the certainty that future construction costs will be higher, will outweigh the cost of today’s risks.

Choose your partners carefully, manage the “somethings” proactively, and build with confidence. Then you can say, “I did build that,” and when things do smooth out, you’ll be in the catbird seat with a great new facility to fully capitalize on the opportunity.

Grant Miller is the president of the Springfield Contractors Association Board of Directors and the owner of Springfield Glass Co. He can be reached at gmiller@springfieldglass.com.