There are so many variables that contribute to the cost of construction.
Some are controllable through design decisions, product selection, and construction methodology. That’s the tip of the iceberg…
The bulk of the iceberg is hidden, ever-changing dynamics within GC firms, subcontractors, and manufacturers.
Legacy procurement methodologies such as negotiated bids and hard bids fail to get to the next step that’s required to unlock the savings in the hidden iceberg.
Real Price Discovery & Optimization requires the power of the “invisible hand” that moves your GC and subcontractors through market feedback to continuously find a way.
TWO MAIN USE CASES
Increased underwriting confidence
You’re about to bid on land or analyze a development opportunity.
You call 1 GC and ask for a conceptual price. If the price is higher than it should be, you lose the bid on the land or halt development. If artificially low, you’re screwed. You’re basing a multi-million decision on one data point! You don’t want to reach out to 10 GCs because you don’t want to spin their wheels, spend relational capital, or build expectations…
With C Street, you put your conceptual drawings up there, and whichever GC in the area wants to spin their wheels would submit a price. No solicitation, no expectation. You end up getting 5-10 prices for your project. Gain confidence in your underwriting. Give banks and the investment committee confidence in their underwriting. Gain visibility into GCs and the landscape of prices.
A GC would NEVER base a hard bid on 1 subcontractor number… too risky. Why would you on land?
Lowering Construction Costs
You’ve developed your drawings. You want to drive down costs.
You try to generate VE ideas or get multiple GC bids. It’s good but not enough.
With C Street, you put your pricing package up there. We bring you qualified GCs to price it so you have visibility. We give them feedback on where their prices rank by total and by division to get them to optimize their price based on real market feedback. We solicit value engineering ideas from all bidders and from our expert network and have the bidders competitively price them. You get to see the landscape of prices out there and see them move down through that feedback loop. You can still pick whoever you want, but it’ll be a very informed decision.
C Street brings eyes, focus, ideas and time to your construction projects so the market finds a way to drive your construction costs down.
Case studies on the 3 forces:
Case study 1 - open market force
An experienced local developer was negotiating with 1 GC on a 50% CD set. Price was 119M. They trusted the numbers because it was an open book GMP with subcontractor backup. The project didn’t pencil so they put it on the open market. They found a GC for 97M. 18.5% lower. The GC had access to different subcontractors. They ended up executing the project under schedule and with some savings.
Case study 2 - feedback and iteration force
A developer who specializes in 1 product (podium wood frame multifamily) in 1 narrow geography (north boston) assumed they were getting the best possible construction costs for their projects due to their superior knowledge from specialization. GC 1 was at 72M. GC 2 was at 73M. Both had full subcontractor backup. The chief estimator of GC 2 said there is no way the project can be built for anything lower than 73M.
After getting feedback on where they ranked on each trade, GC 1 found a way to 68M. GC 2 found a way to 67M. This happened 2 more times and by the end, GC 2 found a way to 63M — same design, yet 10M lower! The chief estimator said “obviously there was a way as long as I wasn’t ranking 1st on each trade and we found it.”
Case study 3 - Crowdsourcing and competitively pricing VEs
A project had set a GMP of 111.2M after 18 months of traditional value engineering. It then started to crowdsource VEs from all the subcontractor bidders and select experts which were then competitively priced. It produced 342 ideas, worth 13.4M in potential savings, of which 8.5M were approved, all without reducing the rentability of the project.
Knowledge gives you an edge. Discovery gives you a wider and deeper edge.
18.5%
13.7%
7.6%
Developers who listen to themselves overpay most for construction
Developers who listen to 1 GC overpay 2nd most
Developers who listen to 3 GCs once in a hard bid overpay 3rd most
Developers who listen to the entire market continuously don’t overpay for construction