How Your Projected Savings Range is Calculated

Introduction: Quantifying the Financial Benefits of a Comprehensive Review

Accurate construction document reviews aren’t just about catching errors—they’re about creating measurable financial benefits. CHECKSET’s projected savings range helps clients understand the financial value of addressing issues discovered during document reviews. This article outlines how this range is calculated, incorporating reliable industry data and client-reported outcomes to provide a clear picture of potential savings.
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Step One: Establishing the Estimated Construction Budget

To calculate the savings range, the first step involves estimating the construction budget. This is done by multiplying the gross square footage of the project by a cost-per-square-foot (SF) multiplier. The SF multiplier varies based on key project attributes, including:

• Project Type and Sector: (e.g., healthcare facilities, office buildings, multi-family housing).
• Location: Regional construction cost variations impact SF multipliers.
• Complexity and Level of Finish: Higher-end projects or those requiring specialized systems have elevated costs.

This estimated budget forms the foundation for projecting potential savings.

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Step Two: Determining the Savings Range

Industry contingency budgets for construction projects typically range between 5% and 15% of the total construction budget. This contingency accounts for unknowns during design and construction phases. Contingency ranges vary by project type and complexity:

• High-Complexity Projects: (e.g., hospitals, laboratories, large urban developments): 10%-15%.
• Standard Projects: (e.g., multi-family apartments, office buildings): 5%-10%.

Based on industry studies, errors and omissions in construction documents often account for a significant portion of change orders and RFIs, which lead to cost increases. By addressing these issues proactively, CHECKSET reduces RFIs and change orders by up to 70%, translating into savings of 2%-5% of the total construction budget.

Supporting Metrics:

• According to a Construction Industry Institute (CII) study, change orders average 6-10% of project costs, with avoidable design-related issues contributing to a majority of these costs.
• Data from McKinsey & Company highlights that rework contributes to 5-10% of total project costs, much of which can be mitigated with proactive reviews.

CHECKSET’s comprehensive review process mitigates these costs through:

1. Reduction of RFIs: By clarifying ambiguities in design documents before construction.
2. Minimized Change Orders: Catching errors early reduces unexpected scope changes.
3. Schedule Optimization: Early issue resolution avoids delays.
4. Prevention of Legal Disputes: Improved documentation minimizes misinterpretations.
5. Avoided Rework: Efficient coordination reduces material and labor waste.
6. Improved Discipline Coordination: Prevents costly clashes and inconsistencies.

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Step Three: Calibrating Within the Established Range

Once the savings range is determined, the Priority Risk Index (PRI) of the review is used to refine the calculation. The PRI evaluates the severity and scope of risks identified during the review:

• Higher PRI: Projects with greater design complexity or significant issues have an increased savings potential, typically on the higher end of the range.
• Lower PRI: Simpler projects with fewer critical issues fall closer to the lower end of the savings range.

This calibration ensures that the projected savings reflect the specific risk profile of the project, offering a more tailored and accurate estimation.

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Conclusion: A Smarter Approach to Construction Budgeting

CHECKSET’s projected savings range is more than a number—it’s a tool that quantifies the value of comprehensive document reviews. By leveraging industry data and real-world client outcomes, we demonstrate how proactive reviews save 2%-5% of the total construction budget while reducing risk and optimizing schedules.

In an industry where margins are tight and uncertainties abound, addressing issues early is not just a precaution—it’s a financial imperative. With CHECKSET’s expertise, clients gain the insights needed to make smarter decisions, protect their budgets, and deliver successful projects.

References:

• Construction Industry Institute (CII): Insights into rework and cost overruns.
• McKinsey & Company: Strategies to reduce project inefficiencies.

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