Maximizing ROI in Commercial Construction: 8 Strategies for Success
Commercial construction projects are complex and expensive endeavors. Therefore, maximizing return on investment (ROI) is crucial to the success of these projects.
In this blog post, we’ll discuss 10 strategies to help your commercial construction project generate a higher ROI.
The Importance of ROI in Commercial Construction With Construction Management
ROI is an important metric for any business, but it’s especially important in commercial construction because these types of projects generally are very expensive, and it can be more challenging to make them profitable.
A number of factors affect the ROI of a commercial construction project, principally the cost of construction, the rental or sales price of the property, and the operating costs of the property.
Construction costs vary depending on the size and complexity of the project, location of the property and materials used. Property rental or sales prices fluctuate according to location, type of property and demand for commercial space in the area. Operating costs include rent, utilities, insurance and maintenance, among others.
ROI helps a project owner determine whether or not a commercial construction project is feasible and make decisions about the scope of the project. For example, if the expected ROI is low, you may need to scale back the project or consider other options. ROI also allows you to identify potential risks and challenges and take steps to mitigate them.
By understanding and tracking ROI, you can make informed decisions about your commercial construction projects and maximize your investment.
Strategies to Maximize ROI in Commercial Construction
1. Plan Wisely
Before starting any construction work, it’s important to have a clear understanding of the project’s scope, budget and timeline, as well as the state of the local market. As project owner, you must also have a well-defined plan for managing the project, including contingency plans for any unexpected events that may occur. Proper planning and preparation help minimize delays and cost overruns, which can significantly influence ROI.
2. Choose the Right Construction Company
The construction company you choose can be the key to the success (or failure) of your project. Choose a company that has a good reputation and ample experience in commercial construction. Make sure the company is a good fit for your project and that you have a good working relationship with key contacts in the firm.
3. Manage Your Budget
One of the most important things you can do to maximize ROI in commercial construction is to manage your budget skillfully. This includes creating a realistic budget, tracking your expenses and making necessary adjustments. It’s also important to have contingency plans in place in case of unexpected costs.
4. Consider Using Design-Build
A design-build approach can save time and money. Having the same team of people responsible for both the design and construction of your building can help to avoid delays and misunderstandings.
5. Use Quality Materials and Workmanship
Using high-quality materials and skilled workers helps raise the standard of the construction work and improves the building’s durability and longevity, therefore increasing its value over time.
6. Be Prepared for Change Orders
Change orders are a common occurrence in construction projects. Be prepared for them and have a contingency plan in place. This will help to minimize the impact of change orders on your budget and schedule.
7. Harness Technology and Innovation
Technology and innovation typically have a positive impact on ROI. For example, using building information modeling (BIM) architects can create digital model buildings that result in more accurate construction plans and fewer errors and omissions. Advanced construction methods, such as prefabrication and modular construction, can help reduce construction time and costs while improving quality.
8. Focus on Energy Efficiency and Sustainability
Energy efficiency and sustainable features, such as green roofs and rainwater harvesting systems, boost environmental performance and enhance property’s reputation, thus increasing its value and marketability. Energy-efficient buildings also cost less to operate and maintain.
By carefully considering all of these factors and following these strategies, commercial construction projects can be completed on time, within budget and to a high standard of quality. A successful project delivers a good ROI.
For more information about ROI in commercial construction, or if you’re ready to discuss your project, contact us. CIC Group has 40 years of experience in commercial construction and a reputation for unwavering excellence.