On today’s show we’re talking about how to rethink construction projects that might have made sense a year ago, but today’s higher cost, higher interest rate environment are looking questionable.
Costs are up across the board. The cost of capital has risen faster than the cost of construction and the compounding of those two makes for a massive increase in the cost of any new construction. Buyers are being cost conscious.
Purchase prices have already started falling and are likely to continue a downward trajectory for a while. Where they will bottom is unknown.
So if you have a project that looks like the costs are spiralling out of control, what do you do? Do you simply hang on and wait for better days?
That’s one option. But there might be additional hidden value that can be extracted. Maybe now is the time to consider value engineering the project. Value engineering is more than just being cheap, substituting less expensive components. It’s an exercise in making decisions that respect the original design sensibility, but actually save money.
Host: Victor Menasce