3 Things to Consider When Budgeting for Your Real Estate Projects in 2023

February 6, 2023

Supply Chain Issues

Now that we are almost three years since the start of the pandemic, the majority of us have adjusted our expectations for how long it takes to obtain materials and equipment for our projects. In-house manufacturing has been slowed due to the reduced number of employees (which arguably may be the new norm for the foreseeable future), and the problems have been compounded due to inflation and various global concerns. As a result, it takes longer to make things, and supply chain delays and disruptions are typical. As owners reps, when we proactively factor these delays into our project timelines, we shield our clients from the anxiety and unrest which come from budget uncertainty. 

Labor Cost

Most commercial-related industries have not brought back a full pre-pandemic workforce as of yet, and high school graduates have been entering trade schools at decreasing rates for some time now. Both of these factors have led to labor shortages for contractors. Contractors’ labor costs are typically higher now compared to several years ago, because they are simply uncertain about staffing. The number of field staff working on projects may be limited, and they may not be certain they’ll be able to provide the same level of expertise for any particular project. High-quality employees are demanding high salaries, and if companies want to hire good employees, they have to pay for it. This makes field labor cost a huge variable in project budgeting. The same can be said for office employees as well. Unfortunately, many of the design and FF&E-related firms are dealing with similar challenges as it relates to employee retention and growth.

Material Increases

In addition to supply chain disruptions for manufacturing, material prices continue to steadily increase. The majority of typical items you see on a construction project such as lumber, steel, and drywall have continued to rise and/or fluctuate since before the pandemic. Clients have hope pricing for these items will eventually go down in the near future, but as of early 2023, this is unfortunately not realistic. At this point, budgets should be made based on the assumption that material costs are changing just about on a daily basis, and should be updated frequently.

Testimonials

Corporate Renovation for DPS Group - Conshohocken, PA

Due to the extreme pace our business has been growing, we were in need of new office space sooner than later. However, we didn’t have the bandwidth to manage the process internally. The FGX Group was able to get started immediately with assembling an overall project budget and schedule in order to set proper expectations, particularly important in today’s real estate climate. He was instrumental in design oversight, and assembling the balance of the project team including the general contractor, IT related vendors, the furniture dealer, and all other pertinent firms. We are thrilled to be in our new space and couldn’t be more grateful for having Frank to assist us with the process so we could concentrate on continuing to grow our business.

Ryan McDonough, Senior Vice President – Project Operations, DPS Group

Self Storage Renovation Projects for Home Star Storage - Various Locations

As someone who works in self storage conversions, I work with The FGX Group on all my major projects. Unlike ground-up construction, conversion projects often have unexpected circumstances and last-minute surprises that don't necessarily jump out from the beginning of the project, even with careful planning. Working with The FGX Group, I know our team is ready for the unexpected in each project – whatever that may be. We appreciate working closely with them to bring more well-built storage projects to fruition on-time and on-budget up and down the eastern United States.

Joseph Murphy, Chief Operating Officer, Home Star Storage

Renovations to Children's Dental Management - Philadelphia, PA

Frank Gallagher and The FGX Group were instrumental in assisting me to assemble the project team and formulate a plan to complete our new Orthodontics and Surgery Center suites in Philadelphia. With Frank’s help in managing the contractors, various vendors, and coordination activities with the landlord, it allowed me to concentrate on other responsibilities at CDM. Frank has a knack to bring everyone together to focus on one goal. I would work with him again.

Jim DeFruscio – Children’s Dental Management

Renovation of Medical Office for Pure Dental Brands - Upper Darby, PA

From my perspective, here is what The FGX Group did that helped us achieve a successful build out of our new office location: Their contract spelled out all of the responsibilities that they would own, and they carefully broke down all of the job functions and steps with milestones; they also made it clear what were their vs. our tasks; they outlined the project timeline and costs and lived by them; they were 100% successful as a project manager because they kept us on track and had excellent communication and follow-up skills; they owned a number of key tasks around permitting and working with the local town/city that we could not have known about or handled – and they were done successfully; and they escalated issues when appropriate and prepared us in advance of issues, so that when they came up, we could quickly resolve.

The results were excellent – the office is beautiful, and it has helped us grow our business!

Frank Coliano, Chief Executive Officer, Pure Dental Brands

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Contact

Address

26 Treaty Dr, Wayne, PA 19087

Email

frankgallagher@thefgxgroup.com

Phone

 610.331.6354

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