IIW Minnesota

Are You Optimizing Your Facility Budget?

During any construction project, leaders make thousands of decisions. Knowing what decisions need to be made now and what can wait becomes critical. Throughout the process, leaders balance a wealth of variables while keeping the three-legged-stool of quality, quantity and budget in check.

Planning with Light BulbOne of the tools to assist leaders during the design and construction process are alternate bids. They allow leaders to manage the budget, request bids on different options and wait until the last responsible moment to make a decision. Often, the alternate is a more expensive option that the organization would like to have, if the budget allows. (Read about creating a complete early budget).

An organization, for example, may want to open up a space by providing an aluminum framed glass wall and doors, instead of a solid wall and doors. Both options are drawn up, with the base bid having a solid wall and doors and the alternate bid having an aluminum framed glass wall and doors. Both options are bid and if the owner elects not to pursue the option immediately, we work together to determine the last responsible moment this decision can be made. Usually bids such as these have time limits as to when the alternate bid can still be accepted.

While just about anything can be set up as an alternate bid, some are easier to implement than others. As ideas for alternate bids arise, we talk through with clients the implications of each alternate, and whether an alternate is simple or difficult (and expensive) to prepare.

Typically, the more items an alternate impacts, the more difficult to prepare and to bid cleanly. Requesting an alternate bid for expanding a room, for example, requires two different sets of floor plans, structural calculations and drawings, footing and foundation plans, and generally a host of other drawings to clearly describe the alternate. In these cases, organizations often decide the change is too expansive and not worth incurring additional design and engineering costs to prepare. Instead, they choose one of the options upfront.

Here are three common uses of alternate bids:

  • Finish Upgrades
    Finishes are often an easy alternate to consider. Different finishes are typically simple to identify and to set up to bid as alternates. Organizations may choose a less expensive option for flooring in a given space with the option to upgrade it to a different product. Decisions on many finishes also can be made later in the process, depending on the lead-time to acquire the product, making them prime candidates for alternate bids.
  • Lighting
    Every building needs lighting, but the type can greatly vary. It’s common for organizations to outline two options – a primary and a potential. When LED lighting first came out, organizations often requested a base bid for fluorescent lighting and made LED an alternate. Over time, as the LED lighting technology matured, we saw the fluorescent and LED lighting bids get closer in cost. Now it’s more common for LED to be the primary bid.
  • Technology Infrastructure
    We’re seeing technology infrastructure capture a growing percentage of the construction budget. It can be challenging to look to the future and understand the wiring and backend needs of a facility. Leaders may choose to make Category 5 cable (CAT 5) the primary bid and make fiber optic an alternate bid to enable the facility to further increase its bandwidth. Or they may request alternate bids for additional technology drops in the facility.

A budget is not a one-time and done task. You’ll make budget decisions throughout the design and construction process. It’s prudent to explore alternate bidding options and make some decisions later when you have a better handle on the costs and the ripple effects.

It’s a balancing act. Knowing what decisions you need to make now and which ones can wait enable leaders to effectively deliver on the facility vision and be satisfied with the finished product.

What’s a facility question you have? Ask it here.