Construction Attorney Calls For Construction Cost Overhaul

By Nichole Altmix

To mitigate the effects of the growing recession, industry leaders are calling for better cost management on projects in New York, where, according a report released by the New York Building Congress, construction costs are markedly higher than the rest of the nation.

According to the report, factors such as higher labor costs and insurance rates and liabilities, prevailing wage mandates, union requirements, environmental mitigation costs and a limited number of available sites, keep costs in New York City considerably higher than the national average. Additionally, land costs have skyrocketed beyond all other factors, driven by returns in the luxury condominiums and office markets of New York. 

Manhattan-based construction lawyer and author Barry LePatner has been traveling and speaking to industry and government groups urging them to be more efficient in the cost management of public projects.

LePatner says public projects cost American taxpayers, corporations and developers more than $120 billion annually in unnecessary construction spending and recommends equally balancing three concepts when planning public projects: risks associated with new construction, more efficient performance and fair pricing. 

“The nation is poised to embark on unanticipated remedial infrastructure work that will cost $1.6 trillion,” said LePatner, who has been traveling the country over the last year speaking about inefficient spending. “Turning this amount of funding over to an unreformed construction industry without tightened controls would be a financial disaster.”

LePatner proposes comprehensive due diligence on prospective team members; insisting on 100 percent complete and coordinated construction documents before commencing construction; carefully evaluating the cost benefit of fast-track and design-build project delivery; considering payment of a “risk premium” in exchange for securing a true fixed-price contract; and providing a system to quickly resolve change orders, delay claims and other disputes, will save the construction industry.

However, New York Building Congress President Richard Anderson argues there are more pressing issues currently facing construction teams. “Costs are always a priority, but many other issues present challenges to the industry,” he said. “Resuscitating the economy and generating jobs and development activity are even more important.”

According to a study produced by NYBC in late 2008, leaders are predicting an increase in construction costs to one percent per month through 2010.

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