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Research Outline
Prepared for Harel M. | Delivered August 27, 2020
ROI for Design/Pre-Construction Investment
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Goals
To determine the amount saved per dollar invested during the design/pre-construction stage of a construction project.
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Early Findings
ROI for Design/Pre-Construction Investment
According to a study conducted by the
University of Florida
on the effect of pre-construction planning on cost and sustainability, the average saving cost of pre-construction planning is largely dependent on the
investment
in the implementation of pre-construction plans.
A survey conducted by the project revealed that companies that invested more in
implementing some pre-construction planning method
had more cost savings in their projects.
The study established a linear relationship between the
% cost savings (Y)
and the
% pre-construction planning (X)
as thus;
Y = 0.0483(X) + 7.1891
. Where the R-Squared value or the coefficient of determination is given as;
(R^2) = 0.0012
.
Another report by
Plan Grid
suggests that pre-construction cost represents between
1-3%
of a given project's total cost.
This means that "for a
$5 million project
, an owner would spend up to
$150,000
on pre-construction services."
Triangulation
Based on the above claim, that pre-construction cost represents between
1-3%
of the total cost of a given project, replacing (X) in the above equation (Y = 0.0483(X) + 7.1891) with 1% and 3% (in order to determine the saving cost range for a construction project);
When (X) = pre-construction planning cost = 1%, then, (Y) = cost savings = 7.2374.
Also; when (X) = 3%, then, (Y) = 7.2374 × 3 = 21.7122.
Therefore, the amount saved per dollar invested during the design/pre-construction stage of a construction project ranges between $7.2374 to $21.7122.
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