Preconstruction

The importance of an effective preconstruction process has never been more apparent, said Brett Poulos, national director of preconstruction and estimating at Burns & McDonnell, a Kansas City, Missouri-based construction company.

Construction input prices increased again in July largely due to price hikes in petroleum and natural gas, according to an Associated Builders and Contractors’ analysis of U.S. Bureau of Labor Statistics data. Though these costs have begun to stabilize over the past year, they still sit near 40% higher than in February 2020.

So, as construction projects face increasing pressures from rising costs and procurement challenges, the role of preconstruction in mitigating these headwinds is growing in importance. The preconstruction phase increasingly gives owners and developers a better understanding of the project’s cost, scope and schedule.

Here, Poulos talks with Construction Dive about his experience in the construction industry, his preconstruction focus at Burns & McDonnell and the overall role of technology today.

Editor’s note: This interview has been edited for clarity and brevity.

CONSTRUCTION DIVE: What is your background in construction and how has it prepared you for this role?

BRETT POULOS: I started my career in the field with a self-perform general contractor, where I ran a total station and shot line and grade for self-perform crews. Starting my career in the field laying out work, learning from craftspeople as well as trade foremen, assistant superintendents and general superintendents really gave me a firm grasp of what it takes to plan a work activity and build a project.

My responsibilities expanded over the years and I worked my way into a project management role leading projects of various sizes and complexity in both the public and private sectors.

Throughout my career I developed a strong understanding of the front end of projects and migrated over to lead preconstruction for a few business lines, and eventually grew into my current responsibilities.

What are your top areas of focus as director of preconstruction?

Our industry is evolving.

The craft labor force doesn’t have the depth-charts that it used to have. The industry has a collective duty to draw attention to the benefits of working in the trades, and that includes creating career opportunities for experienced tradespeople within preconstruction and estimating teams.

I don’t require a college degree to be an estimator or preconstruction professional on our teams. Time in the field and time on tools can be just as valuable as a college degree — especially for self-perform discipline estimators.

With that said, our industry is rapidly evolving on the technology front as well, and we have to make sure our processes, systems and teams are structured to embrace and leverage this technology and keep a competitive advantage.

How does technology come into play in preconstruction?

Technology is one of the most powerful tools in our toolbox. Tech allows us to connect and leverage data in ways that bring huge benefits to our clients and project teams.

For our business, as an integrated EPC and design-build firm, we can merge technology, teams and workflows, and leverage the entire design and construction process, and associated data, which brings tremendous value to our clients.

We're embracing technology, AI and machine learning in our preconstruction services, and we're developing some pretty innovative offerings to our clients.

But with evolving and advancing technology, there comes a great responsibility to make sure there are robust processes to maintain data integrity.

Why is preconstruction important, especially in the face of rising costs and supply chain issues?

Preconstruction is arguably the most important phase of a project.

I'm admittedly biased, but let me explain — a robust preconstruction process allows the client to make data-driven decisions early in the design process so they can fulfill their mission.

If their goal is to fit a project within a target budget or get their plant or facility online by a certain date, the data we provide during the preconstruction process is paramount to their success.

Preconstruction is the bridge of communication, data and decision-making processes between stakeholders. The foundation of a project’s success is built and cured during the preconstruction process.

What challenges are you dealing with this year?

Over the past few years, everyone has had a hard time predicting the future and making projections on market trends, commodity pricing, etc. That has been an industry-wide challenge through unprecedented volatility.

Outside of industry-wide hurdles, the biggest challenge we're facing is developing and deploying our strategy toward the horizon.

What I mean by that is we're firming up our processes and tech to align with emerging technologies and the future of the industry. One thing is for sure, tech innovation is going to transform our industry, and the entire preconstruction process — especially for integrated EPC firms.

Any other important trends you think readers should know about preconstruction?

Preconstruction can be a broad term. We view preconstruction as the entire front-end process of safety analysis, constructability, lead time and schedule analysis, target-value-design and estimating.

When your projects are EPC, design-build, or collaborative delivery, the preconstruction process is very different from design-bid-build. The level of preconstruction integration and involvement can vary depending on the project delivery method and the capabilities of that preconstruction team.

We have found that projects are more successful for both the prime contractor and the client when preconstruction teams are engaged at the earliest possible point of project inception because it's much easier to share a clear vision of a project with a long runway for data-driven decisions.

Brian Gallagher is vice president of corporate development at Oakbrook Terrace, Illinois-based contractor Graycor. Opinions are the author’s own.

The cost of building has never been more volatile. Tariffs on key construction materials like steel, aluminum and lumber are driving up project budgets across the country, compounding inflationary pressures already present in a post-pandemic economy. 

While headlines often focus on housing and infrastructure, the commercial real estate sector — particularly industrial and manufacturing construction — is feeling these cost increases acutely. These dynamics are not just squeezing budgets; they’re fundamentally altering how deals are structured, how risk is evaluated and how projects are executed.

As total development costs rise, the risk profiles of many projects are changing — prompting a reaction from lenders. Higher construction budgets often mean borrowers need more capital, either in the form of increased debt or additional equity. For lenders, this shifts key metrics like loan-to-cost and debt-service coverage ratios, especially in tighter-margin projects.

In response, financial institutions are adjusting their underwriting models. Many are requiring more detailed cost escalation strategies, larger contingency budgets and earlier confirmation of contractor pricing. 

In some cases, lenders and investors are having greater influence over the design and construction firm selection process. Some projects are seeing delayed closings or restructuring of deal terms, as initial pro formas no longer “pencil out” under the pressure of higher inputs.

Escalating costs are reshaping the capital stack altogether. Lenders are becoming more conservative, while equity investors are being asked to absorb greater upfront risk, particularly for new developments in uncertain markets.

Timing and cash flow

Another major impact of material cost volatility is the way it affects construction cash flow. With long-lead materials like structural steel, mechanical equipment and electrical gear experiencing both cost and supply chain pressures, developers are front-loading their procurement timelines. 

Materials that may have once been ordered mid-project are now being purchased as early as possible to lock in pricing and ensure availability.

This shift compresses draw schedules and requires more liquidity upfront, altering the traditional capital flow of a project. For industrial and manufacturing projects — where materials are heavy, specialized and sourced globally — this effect is magnified. 

Carrying costs increase, and working capital must stretch further and earlier. If developers aren’t strategic in managing cash flow, one project’s acceleration can jeopardize the broader portfolio’s liquidity.

Strategic adjustments

The development community is rapidly adapting with more sophisticated risk management strategies. One increasingly common approach is early contractor involvement — bringing construction teams into the design phase to help identify risks, recommend materials and lock in pricing sooner. Preconstruction is no longer viewed as a planning step, but as a vital tool for financial control and project viability.

Developers are also leaning heavily on collaborative delivery models like design-build and construction manager at risk, which encourage alignment between design, cost and schedule from the outset. Guaranteed maximum price contracts with built-in escalation clauses to hedge against future material spikes are becoming more common as a means of sharing and limiting exposure.

Procurement strategies are also evolving. Some owners are warehousing materials, purchasing early and storing on or offsite to ensure both cost and schedule certainty. This tactic, while requiring upfront capital and storage planning, is proving effective in volatile commodity environments.

Sectors at risk

Not all market sectors are equally exposed. Industrial, manufacturing, data centers and life sciences developments typically operate with higher return expectations, allowing them to absorb increased costs more effectively. Their value proposition — proximity to logistics corridors, production capacity or mission-critical operations — may justify the added investment.

Speculative office, retail and hospitality projects, however, often operate with tighter margins and less predictable demand. These sectors are seeing greater delays, cancellations or shifts toward renovation and repositioning rather than new construction.

As investors seek more predictable outcomes, projects with flexible designs and proven delivery partners are seeing stronger support.

A new new normal

Developers are increasingly viewing early contractor collaboration as essential to success. Locking in pricing and project teams, identifying risks early and modeling project feasibility during preconstruction allows teams to move forward with greater confidence, even in a volatile cost environment.

Investors, meanwhile, are drawn to opportunities with built-in flexibility. Projects that allow for scope adjustments, phasing or substitution of materials can better navigate uncertain markets. Many are also shifting capital from new development to renovation of existing assets, where fewer materials are required and timelines are shorter.

The question of how long these cost pressures will last remains unanswered. Much depends on national and international trade policy, including the direction of tariffs and geopolitical relationships. Domestic efforts to boost manufacturing capacity — especially for steel, electrical equipment and concrete products — may offer relief, but those solutions are long-term.

In the short term, construction and development professionals must operate with agility. That means strategic procurement, diversified supply chains, strong contractor relationships and financial models that can absorb more front-end risk.

The industry is evolving. Rising material costs due to tariffs are not simply a budgetary concern — they’re a structural shift in how commercial projects are conceived, financed and delivered. For those who adapt quickly and build resilient partnerships, this disruption presents not just a challenge, but an opportunity to lead.

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Technology has definitely played a role in preconstruction’s increased prominence in the overall build process today. But many experts see behavioral and process swings spurred by the pandemic at the root of systemic change for the industry. 

“Of course I wish there was a tool that can get us all to where we need to be, but there’s no tool,” said David Alford, regional vice president of preconstruction for St. Louis-based McCarthy Building Cos. “The development of broader trust and cooperation in the base relationship of the partners is what gets you there.” 

That said, when it comes to how projects of the future will be managed during preconstruction — roughly the period from project conception to groundbreaking — there’s not just one established path. 

Building construction “packages”

Even the idea of preconstruction having defined start and end points is starting to vanish as teams look to resource optimization. For example, teams might pull the trigger on certain trade packages (think supply-challenged power mechanicals) even as other portions of the project remain in the design phase. 

“On almost every modern project we are working in packages, from site work and foundations to enclosures and interiors,” said Nathan Lingard, director of design phase at Minneapolis-based Mortenson Construction. “The staging of starts into packaging allows us to advance certain parts of the design even while others are lagging. We almost always overlap construction. Project teams are starting to build while we are finishing design.”

Alford calls package delivery part of an intentional and necessary blurring of the lines that helps preconstruction better reach its paramount goal of optimizing the delivery of project scope on time and on budget. 

“The idea that ‘Here’s traditional pre-con, hard stop, now here’s construction’ is becoming antiquated,” he said. “It’s actually our goal to make it blurry so that you don’t know one side from the other. You just know a project team that works closely alongside the designers and owners delivered an exceptional outcome.”

From pre- to post-construction

Robust data storage within BIM-enabled point clouds and change management platforms that can document decision-making along the way also stretches preconstruction collaboration beyond the construction phase into building operations and facility management. 

“Extending BIM continuity from preconstruction into building maintenance is something we have done on a few projects and expect to see more of in the future,” said Matthew Verst, vice president of cost planning and estimating at Cincinnati-based Messer Construction. “Especially when people start to see the increasing value from preconstruction in driving quality and safety, even for maintenance and operations personnel.”

For Alford, extension of preconstruction collaboration tenets into building ops is another example of the blurred lines that could help dissolve traditional discord and disagreement across full project life cycles, particularly in the first year of use. 

“The experience of a project is always created in how it finishes, and we want our clients to have successful buildings that operate well, that work the way they were designed,” Alford said. “The satisfaction of the experience is significantly higher when you do it right like that.” 

Bumps on the preconstruction path?

The one area for concern shared unanimously by preconstruction professionals as the practice evolves is a human one: the possible lack of stamina amongst subcontractor and specialty trades in adapting to new project delivery models and the onslaught of technologies needed to support them. 

Indeed, many subs are already struggling to staff up crews or even bid on new jobs as they clear pandemic-driven backlogs and pivot to new projects. 

“People think about long lead supply chains, or material cost escalation, but one of the biggest factors that doesn't get enough attention is the impact of that backlog on the subs and their difficulty getting labor,” Verst said. “It is tough to get competitive bids on scopes, so strong subcontractor relationships are going to be a big key to the success of future opportunities.”

Doing more with less

Like many facets of construction, AI and robotics might ultimately help alleviate labor strife and the continued pressure it exerts on project costs and scheduling, as well as other technologies. 

For instance, Miller Construction in Ft. Lauderdale, Florida, adopted Agtek estimating software to save $500,000 on one project by lowering a building’s elevation by 6 inches. Meanwhile, Dusty Robotic’s drywall automation tools, used by McCarthy and others, have helped address labor issues on jobs, an example from the subcontractor community as a way to do more with less. 

Those are just two examples of new approaches preconstruction teams have incorporated into the process since the pandemic forced a change in project collaboration and perspective. 

“Technology will change how we do things, and I’ve seen it change things ever since I’ve started in the industry,” said Eric Orquiola, director of preconstruction at Denver-based PCL Construction. “Whether efficiency is found in technology or lean delivery or whatever else is out there, we need to change processes to meet client needs, because we can’t hire as fast as the projects are coming in.”

During the construction of the San Diego Padres’ Petco Park, Gary Birdsall said his project team at the time found itself in a “peculiar situation,” when a historic building stood in the path of the planned outfield foul pole. 

“It wasn't feasible to tear down this multi-story structure, so we needed an innovative solution,” said Birdsall, who worked at Bethesda, Maryland-based Clark Construction at the time of the project, which opened in 2001.

The result was a creative solution that required approval from Major League Baseball: A ball hit on one side of the Western Metals Building would be ruled fair, and the other side foul.

“This experience highlighted the importance of flexibility and out-of-the-box thinking in stadium construction, proving that even obstacles can be transformed into distinctive assets,” said Birdsall, now in the Denver area as the vice president of PCL Construction’s preconstruction sports division. 

The contractor has constructed several high-profile North American stadium projects. PCL’s current projects include modernizing and upgrading several of them, including:

• The $350 million Scotiabank Arena renovation project for the NHL’s Toronto Maple Leafs and NBA’s Toronto Raptors.
• The $300 million Rogers Centre renovation project for the MLB’s Toronto Blue Jays.
• The renovation of Crypto.com Arena, formerly the Staples Center, in Los Angeles.

As with working on a historic building, these renovations require creative solutions to complicated problems. At the same time, the fan experience at stadiums has evolved, and so too have the renovation projects designed to upgrade the technology at North America’s biggest venues.

Tight timelines

When upgrading an existing stadium, PCL and other contractors have short windows of time during offseasons, which often means stretching out the project over multiple phases and years. 

Even then, the timelines can grow and shrink depending on if teams make the playoffs or if the arenas host events like concerts in the offseason.

“On stadium renovation projects, much of our work is scheduled during the offseason, however it inevitably extends into the season with necessary prep and cleanup,” said Dale Koger, vice president of PCL’s sports division, also based in the Denver area.

As a result, Koger said, PCL teams find themselves working within occupied facilities behind the scenes, while meticulously trying to not disrupt the buildings’ schedule.

Eric Hernandez, a superintendent for PCL’s California buildings division, said he’s seen those challenges on Crypto.com Arena’s renovation. The final set of upgrades to the venue, first opened in 1999, will include renovations to the main concourse and tunnel club as well as redesigned locker rooms for home teams. 

“This [schedule] uncertainty makes planning difficult for the trades involved, requiring them to work overtime, including six-day weeks and night shifts, to meet the deadlines,” Hernandez said. “The necessity for the construction teams to vacate and clean the site before each event, effectively erasing any trace of their presence, intensifies the time constraints.”

At the same time, Hernandez said he’s noticed a shift in stadium construction and design toward those shorter timelines and fluid initial designs.

“This requires our teams to be highly adaptable,” he said. “It appears this trend will continue, leading to even shorter schedules and a greater need for quick adaptation.”

Upgrading technology

In Birdsall’s view, the “fan experience has been revolutionized.”

The modern pro stadium experience isn’t just a ticket and a seat, PCL’s stadium builders said. It’s an immersive experience with high-resolution screens, massive score boards, increased luxury options, fast WiFi and improved concession experiences.

“Over the past few years, stadium construction and design have been profoundly transformed by technology,” said Koger. “One of the most significant shifts I've observed is the emphasis on 'futureproofing' — designing stadiums not just for today's tech but for tomorrow's possibilities.” 

The futureproofing that Koger references will largely cater to the fan experience to enhance personalization and convenience, said Daniel Brown, senior project manager for PCL’s California buildings division.

“This shift toward more technologically sophisticated and fan-centric stadiums necessitates a seamless blend of design and construction efforts,” Brown said. “It's reinforced by a shared commitment to innovation and excellence, which is crucial in navigating the tight schedules and exceeding expectations we face today.”

And stadiums that populate iconic skylines factor into the often-cited pride for contractors pointing to the visible impact their work has.

“Stadium projects hold a special charm and prestige,” Hernandez said. “These projects create an opportunity for tradespeople to be part of something monumental. There's a deep sense of pride and legacy in contributing to such iconic projects, offering workers a chance to say, ‘I helped build that,’ and share a tangible piece of their legacy with their families.”

Construction has a reputation of being a Luddite industry. Extra costs and an aversion to risk-taking can make builders hesitant to try new technology.

But tales of success can be found, if one knows where to look.

Take, for example, Providence, Rhode Island-based Gilbane Building Co., which used New York City-based Trunk Tools to track 21,000 documents on a large stadium project in Wisconsin. The software saved Gilbane’s project team 20 to 40 minutes in travel and in searching for answers to each question, and more than $100,000 in avoided rework.

The firm thought the results were so successful, it went on to sign an enterprise agreement with Trunk Tools to roll out the tech nationally. 

Meanwhile, Edmonton, Alberta-based PCL, whose U.S. headquarters are in Denver, trialed Broomfield, Colorado-based Vita Industrial’s Load Navigator, which helped the builder work through high-wind days while hauling giant pieces of form work through the air. The team saw a 30% increase in efficiency, and one project manager said it could potentially save anywhere from thousands to tens of thousands of dollars. 

And LeChase Construction Services, headquartered in Rochester, New York, adopted Oakland, California-based Join’s preconstruction tech planning tools to help streamline its work and meet a key funding deadline on a $13.5 million school expansion in New York. The outcome? The team maintained constant forward momentum during the preconstruction process, and the school is slated for completion in spring 2025. 

Key to all three of these success stories is the deliberate measures that these contractors took to test these technologies before committing wholesale. It’s not simple — trialing new technologies and services on a job or a jobsite can be a stressful and complicated task. On top of the pressure to make the investment work, there may be a compounding drive to make a profit or see immediate results.

Below, construction technology experts provide their list of “do’s” and “don’ts” to help builders make sense of how best to pilot their next technology.

DO: Pilot for the right reasons

When piloting a new piece of technology, make sure you're doing it for the right reasons. A strong correlation between what the business needs and the goals of the pilot committee are important, said Alex Belkofer, senior director of VDC for St. Louis-based McCarthy Building Cos.

“I've seen a lot of folks go down the route of doing a pilot with a small group of people, and they come out with an end result, but if it doesn't meet the needs of the business, sometimes those pilots dissipate,” Belkofer said.

McCarthy has stakeholders that come together to make these pilots happen — its innovation team, emerging technology team and VDC team, Belkofer said. That group, which he calls a community of practice, loops in the teams on the jobsite, such as field operations and preconstruction, who implement the pilot.

DON’T: Skimp on investment

Companies that talk the talk, but don’t walk the walk, on innovation can potentially set their teams up for failure. It’s up to builders to make sure the teams in charge of innovation can get what they need to make their pilots work, said Tim Gaylord, corporate director of innovation for Redwood City, California-based DPR Construction.

While Gaylord acknowledged that margins in construction are thin, he noted how vital it is that innovation teams be able to work on these types of technology.

“If you don't have dedicated budgets that can help people try new things, and folks to help document and set these up, it's really hard to innovate when you're on a project,” Gaylord said.

DO: Know exactly what your tech does

Builders need to know what, exactly, they’re hoping to get out of it, said Jit Kee Chin, chief technology officer for Boston-based Suffolk Construction.

Chin used the example of Microsoft’s Copilot technology, the tech giant’s AI assistant that integrates with Microsoft 365. She said it operates best when given a specific set of parameters in the questions users ask. If someone types out a random question and receives a hit-or-miss answer, Chin says, then that user isn’t using the technology to its full potential.

“Understanding that and then having a way to know what it takes to be successful, to use and then actually get through that adoption barrier is super important,” Chin said.

DON’T: Fear failure.

Experiments are experiments. Don’t be afraid to fail fast, Gaylord said.

“I think there's a lot that can be learned from a tool that doesn't work out, but you have to have a structured way of capturing that and sharing that, which is tough. Let your people try new things,” Gaylord said.

Chin noted that construction is a high-hazard industry. But that can’t stop innovators.

“Take a risk. The industry needs to change,” Chin said.

DO: Learn from your peers

The world of construction is big — connecting with technologically advanced peers is a great way to understand these processes better.

Belkofer recommended going to conferences, speaking with stakeholders and user groups and sharing notes with other innovators to get a finger on the pulse of the industry and what it's doing with technology.

“Reach out. There's a network of folks out there that are probably doing and chasing a lot of the same things that you are,” Belkofer said.

Learning from peers doesn’t necessarily mean other companies, however — it could even be in-house.

And again, don’t look at failures as, well, failures. There’s a lot a builder can glean from a tech that doesn’t pan out the way it’s expected to, Gaylord said. For example, learning why it failed allows an innovation team to pass the lessons on, so the next person doesn’t make those mistakes.

“It’s kind of like investing in the stock market, right? They’re not all going to be winners, but if you can learn from them and share those lessons learned so folks aren't duplicating those efforts and wasting time, that's huge,” Gaylord said.

Tempe, Arizona-based Sundt Construction has tapped one of its own to lead the Southwest division within its Building Group. 

Stew Grauer, a 16-year vet with the employee-owned contractor, was promoted to senior vice president and Southwest district manager to oversee preconstruction, operations and business development for Arizona, New Mexico and Texas, according to a news release.

Grauer, who brings 40 years of overall construction experience to the role, earned his stripes at the firm through multiple assignments across its operations. Those include working as a preconstruction project manager, operations manager and division manager for Sundt’s Concrete Division.

“Stew’s career in the industry and his experience across multiple leadership roles at Sundt positions him well to lead our Southwest building team,” said Chad Buck, president of Sundt’s Building Group, in the release. 

Grauer’s market expertise is also expansive; his project portfolio spans the areas Sundt specializes in, including government builds, mixed-use buildings, healthcare, data centers, courts and detention facilities, laboratories and education facilities.

The move follows other changes in the 135-year-old company’s org chart. In October, Cade Rowley stepped up as Sundt’s new president and COO. 

Some notable projects throughout its history include building the University of Arizona in Tucson, the Los Alamos National Laboratory in New Mexico where the Manhattan Project unfolded and moving 10,000 tons of the original facing blocks of London Bridge from England to build a new span in Lake Havasu City, Arizona. 

A more recent project is the $174 million I-10 widening job in El Paso, Texas, which is currently in progress.  

The firm has 13 offices across California, Arizona, North Carolina, Texas, Washington, Utah and Florida.

Grauer holds certifications from the Design-Build Institute of America and the American Institute of Constructors. He has a bachelor’s degree in construction management from the University of Washington.