Role of preconstruction services in overall project quality

Construction risk

The role of preconstruction services in overall project quality

How a construction manager/general contractor can have a positive effect.

4 minutes read

Published 06/26/2025

Contractor and architects working in unfinished, empty open plan office

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Matt Klemmensen, Casualty Loss Control Expert
Shailen Patel, Leadership Development Intern

Preconstruction: From concept to construction

Preconstruction is the phase of construction where a project moves from predevelopment to physical construction. The primary activities are associated with moving the project from a high-level concept to a fully defined, shovel-ready program. Typical activities associated with preconstruction are moving the design from concept to construction documents (“CD”), contractor selection, and entitlements and permitting.

The general contractor (“GC”) role in preconstruction

Preconstruction is the ideal time for a contractor to come onto a project. Professional services by the contractor may vary from project to project, but will typically include design review, cost estimation, schedule estimation, virtual design and construction (“VD&C”), and logistics planning. When preconstruction is implemented efficiently, with a clear scope in mind, it has an overwhelmingly positive effect on the project. Preconstruction identifies problems in design, budget, and schedule before they require change orders. A thorough preconstruction phase can aid in preventing project delays.

Benefits of preconstruction

Avoid common design issues in a project

Peer review of specific design scopes

Identify opportunities to save on labor costs

Preconstruction services can help avoid common issues in a construction project that may be traced back to design issues, late changes to the project design that were improperly vetted, or had inaccurate material estimates. When drawings and specifications lack details, the contractor may select wrong materials, provide inaccurate estimates, and misinterpret the design. Constructability reviews can be performed prior to 100% completion of CDs to ensure better quality plans and specifications, and the design can benefit from the real-world experience of the GC.

Preconstruction offers further time for peer review of specific design scopes. Peer review tends to be one of the single most-powerful tools in the mitigation of design risk, particularly in critical, defect-prone systems. Employing a peer review, even in limited scopes, such as building envelope, can potentially identify and eliminate costly design and construction defects. VD&C, particularly if major craft providers are onboard, is an ideal tool for clash detection and pre-planning and sequencing the work.

Additionally, labor shortages are driving wage inflation and overtime costs, making labor cost estimation even more important during preconstruction. With skilled workers commanding higher wages and project schedules stressed, contractors should use preconstruction to identify opportunities to save on labor costs.

“The bidding trap”

40.5%

Material cost increase since February 2020

69.0%

Projects exceeded their budgets by >10%

Material costs are being underestimated due to competitive bidding. There has been a 40.5% material cost increase since February 2020. Construction projects, specifically large commercial projects, are complex challenges in the industry. A KPMG study states that 69% of all construction projects exceeded their budgets by over 10%. This is not an insignificant cost; this signifies an industry-wide failure to accurately estimate project costs across the industry.

Low angle view of a construction worker and aerial work platform with clear blue sky in the back.

Contractors are caught between two impossible choices: bid realistically and lose work, or bid competitively and absorb massive cost overruns, and mitigate costs through change orders.

Matt Klemmensen

Casualty Loss Control Expert

Munich Re Specialty – North America

Contractors are caught between two impossible choices: bid realistically and lose work, or bid competitively and absorb massive cost overruns, and mitigate costs through change orders. This is where preconstruction becomes critical. Contractors should have up-to-date material costs to provide accurate and consistent bids. For contractors to remain competitive, value engineering should be used to find cost-effective alternatives during the bidding process. Although this could reduce the contract value and shrink profit, this may be a better alternative than an abandonment or cost overrun, both of which could lead to costly disputes with the potential for litigation.

Public vs. private preconstruction disparity

While the standard project specific impacts are important, the changing economic environment poses an issue for contractors. Approximately 70% of contractors are struggling to find qualified workers, which is a contributing factor to abandonments and on-hold projects within the private sector. Private projects on hold increased 36.7% and abandonments fell 2.4% from last year. Conversely, when compared with the same data, public construction has seen a 25.3% drop in projects on hold and a 25.8% drop in abandonments. Although the public sector seems to be benefiting, private construction does make up 78% of the industry. Typically, an increase in public spending is a sign of a slowing private market; in turn, driving up competition for private work.

Preconstruction services no longer optional

The workforce shortage, material cost inflation, and private sector slowing is showing a shift to where preconstruction is no longer optional but necessary for project survival. Private sector contractors should adopt a nuanced preconstruction approach used by larger contractors in public works, to ensure their projects move forward toward successful completion. Preconstruction should not just be looked at as a potential profit center. Projects where contractors are involved in preconstruction will naturally benefit from the process with more successful and profitable outcomes. Preconstruction services present an opportunity for early engagement, risk mitigation, and a high likelihood of securing a negotiated bid contract that could result in eliminating the cost and time pressures associated with competitive bid scenarios.