With more than 40 years in construction, Barry LePatner knows a thing or two about the efficiency and cost challenges facing the industry.
As founder of New York City-based construction law firm LePatner & Associates, he represents owners to recover costs from projects that have gone over budget, while seeing first-hand the inefficiencies that lead to schedule delays.
He authored "Too Big to Fall: America’s Failing Infrastructure and the Way Forward" in 2010, long before infrastructure was a daily news item, and has a distinct viewpoint on what can help construction dig itself out of its productivity morass: more and better use of technology.
Construction Dive sat down with LePatner to talk about the economic challenges facing the industry, and how companies can leverage tech to be at the leading edge of innovation in a sector that is often portrayed as anything but.
Editor’s note: This interview has been edited for clarity and brevity.
CONSTRUCTION DIVE: At the end of 2022, construction had a lot of challenges. We’ve got inflation, cost increases, supply chain hurdles, the infrastructure act and worker shortages. What is your outlook for [2023]?
BARRY LEPATNER: If you look at where we are today, we are far beyond the normal, cyclical nature that we’ve all become used to in construction.
There’s no economist today who can say the current period is like any other time we’ve seen before, from the 1970s on.
People talk about a recession, but then contractors are optimistic. We’re at 3.5% unemployment and just added a quarter million jobs to the economy. So a recession? I don’t know.
But I do know a lot of people are going to make major mistakes in this environment. They’re going to see their backlogs go up, and they’re going to plan for that.
But as interest rates continue to rise, and the price of land stays high, my owner clients are going to give a lot more thought as to whether they want to build more hotels or warehouses.
So, I wouldn’t advise people to stay optimistic. What I would say is have cautious optimism, but change the old Neanderthal ways in which the design and construction community has historically operated.
What do you mean by that?
It means this is the best time to increase your investment in technology and promote the young people in your organization, because they're the ones who know how to use it. Technology is driving every other sector except construction.
What kind of technology should they adopt?
On larger scale projects from $150 million up to $1 billion, what owners need – and what lenders are requiring – is an assurance that there's not going to be 20% and 30% cost overruns.
Nobody gives those assurances, because they’re living off the myth of guaranteed maximum price contracts, which are not guaranteed, and which nobody knows what the final price is going to be.
The way forward is to make sure everyone on your design and construction team is experienced in Revit and BIM, because you can design a building, with all its complexities, and have every subcontractor give you an actual fixed price, down to every nail and screw.
BIM has been around for decades. Why isn’t it more widely adopted by now?
Contractors don’t want to wait the extra month or two for those designs to be developed.
So, they start construction earlier in the design stage, and then the caveats come in from contractors who say, we have these partial drawings, so we’re going to start building from them. But we can't give you a complete estimate because they're not final.
So it’s a Catch-22. Builders want to build, but designers need more time to plan. How do you fix it?
You’ve got to manage the process, where everybody does a complete and coordinated set of design documents from the get go.
That’s the only way I can get a true fixed price, because every contractor and subcontractor and supplier can look down and say, I've got to order X amount sheetrock, or X amount of windows, and you get a fixed price for each line item.
And this is a great time for that, because anybody who can do that now, in this environment, has just become much more valuable to owners.
Much more valuable than the contractor who’s been doing it the same way for 40 years and says, Well, I’ve got lots of experience. That's for sure.
That’s great, but what about the huge changes in prices we’ve seen recently. How do you plan for that?
Are there uncertainties on every construction project? Yes.
Are there contingencies that should be made? Of course, which is why every owner puts a 10% contingency into their projects.
For the last two and a half years, I've told every client you need a 25% to 30% contingency because the supply chain is broken.
If you could wave a magic wand and solve one issue in construction that would have the biggest, positive impact, what would it be?
Bring the industry into the 21st century with advanced technology, and make it compulsory for everybody to do business with it.
Look, architects design plans in Revit. But when they go out to bid, all of the subcontractors pick up a copy of the paper drawings and specs. You see it on every jobsite, while they should be looking at them on an iPad instead.
Because when you do, you can call up the most up-to-date, detailed set of plans and specs, and look at it with everybody, all at the same time.
That’s the way to get ahead.
This article was written by Joe Bousquin from Construction Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.
