Case Study: $200M Senior-Living Development

How a Non-Profit Developer and Their General Contractor Delivered a Flagship Project On Time and On Budget through Makom Management

Overview

A Top-20 and highly-awarded General Contractor in the Southeast specializing in senior living, multifamily, mixed-use, and student housing construction confirmed that they’d been awarded a highly-sought project. The project, a deluxe 320-unit senior living development valued at $200M, was located just outside a major southeast metro with significant demand. The project owner was a renowned non-profit organization with a strong portfolio of large and successful senior living developments. Because of its size and non-profit status cost control was a significant focal point during construction.

The challenge

Large projects require diligent preconstruction procedures to ensure the best people are put on the job. On projects like this, it’s crucial to secure subcontractors that can handle significant workloads while operating on a tight schedule in order to minimize delays and subsequent change order expenses. As one of the leading global consultants, McKinsey & Company states that too often, “capital project owners chase tight deadlines and rush through the front end of the process, they neglect several best-practice steps early in the project life cycle. This neglect often leads to delays—and higher costs—later.” In periods of volatile labor & material markets, securing highly-skilled subcontractors for complex projects is both difficult and costly.

The General Contractor faced significant pressure to complete the project on schedule and on budget. Labor & material markets were at near all-time highs, and relationships with subcontractors that worked on their previous projects proved no help in controlling costs. Midway through preconstruction the project was on track to be over budget. Substantial construction delays seemed inevitable.

The challenge was to key subcontractors and materials to the General Contractor at an expedited pace, all while staying within budget.

About the Project

• $200M Senior-Living Facility

• 320 Units; 4 Buildings

• 1st Floor Retail and Offices

• Park, Outdoor Recreation Facilities

Delivering the solution

Makom Management was brought in by the Developer to provide the General Contractor with supplement labor & material resources during preconstruction. The project was two months away from breaking ground. The General Contractor was confident in the majority of their trade and material partners, however, due to ongoing shortages framing contractors with the capabilities to work on large-scale projects were extremely limited. Even more, experienced framers with availability were quoting the project at more than twice the expected cost due to crew shortages.

This project was extremely difficult, and a unique solution was required to successfully deliver the project on time and on budget. There was no question that framing labor was in a shortage. Working in tandem with the General Contractor, Makom Management laid out a strategy that maximized subcontractor costs and ensured all trades would be on site at their scheduled time. The proposed solution was to package multiple trades under one subcontracting company. This solution streamlined scheduling and provided competitive pricing to the General Contractor for multiple scopes of work.

Through extensive relationships, Makom Management identified an experienced framing subcontractor with additional specializations in drywall, paint, and trim. This firm had highly-competitive pricing but was limited crew availability. Acting as an intermediary, Makom Management connected this subcontractor with another company that had 100+ skilled laborers with upcoming availability in their schedule. By combining their efforts, the framing subcontractor was not only able to work on the project, but because of the packaged deal, provide a combined quote below budget.

In one month Makom Management identified, connected, and delivered one subcontracting firm that had the experience and manpower to complete framing labor, drywall, paint, and interior trim for this project.

Altogether, Makom Management reduced construction costs by $8M.

Results at a glance