How to Anticipate and Overcome Roadblocks in Multifamily Ground-Up Construction

Multifamily developments are peaking across metro areas in the U.S., reshaping neighborhoods and changing city skylines as the demand for housing remains strong. In Chicago alone, the multifamily market added an additional 7,800 units in 2023, bringing the total sales volume to $3.9 billion.

With this healthy activity comes the increased need to anticipate and plan for challenges that inevitably arise in multifamily, ground-up construction projects. Along the way, headwinds to timelines, budgets and design outcomes can often emerge, but proactive strategies and a proven track record can help mitigate major setbacks in multifamily construction.

Below are the top roadblocks often faced in multifamily construction and solutions to effectively overcome them.

Uncover unexpected site conditions before breaking ground on a multifamily project

Even with months of due diligence, unforeseen site conditions can throw even the best-laid plans off course. Issues such as unstable soil, outdated underground utilities or contamination from former industrial use can surface once work has started and lead to unexpected site work. These roadblocks are normal, especially in metropolitan areas, but they can slow progress and drive up costs.

To minimize the impact of these surprises, work early on with a multifamily contractor to conduct a feasibility assessment and to coordinate geotechnical investigations and utility mapping, which may reveal potential issues before breaking ground.

When unexpected site conditions arise, change orders often become necessary to adjust the project scope. Establishing a clear process for evaluating and managing change orders ensures that any adjustments are handled systematically, keeping stakeholders informed and maintaining the project’s momentum despite these obstacles.

Why permitting and zoning matters in multifamily design

Once a project achieves feasibility and secures entitlement, the next step is to obtain permits. Permitting and zoning approvals can further shape a project’s design, budget, and timeline by setting limits on building uses, heights, style, and density.

Understanding local zoning laws, building codes and permit requirements can streamline this process.

Reining in cost overruns on multifamily projects to stay on budget

Cost overruns are a constant undercurrent in the construction industry. A recent global study showed that nearly 70% of projects in the U.S. exceeded their planned budgets by more than 10%. In the same regard, 75% of projects experienced delays that exceeded 10% of their scheduled timeline. These numbers indicate the need for better planning, risk management and process improvements to meet budgetary and scheduling targets more effectively.

The figures further suggest that these overruns and delays, compounded by heightened costs fueled by inflation, labor shortages and material price volatility, could take a bite out of real returns in multifamily projects. In an effort to counter these challenges and increase margins, project stakeholders can focus on the following key areas:

Set Up a Contingency Fund: Allocating 10-20% of the budget as a contingency fund provides a buffer for unforeseen expenses, helping cover unexpected costs without straining the primary budget.
Improve Cost Estimating: Real-time forecasting tools and construction management software enable more precise budgeting, reducing the chance of cost overruns by providing data-driven insights throughout the project.
Encourage Early Collaboration: Engaging multifamily contractors and engineers early allows for coordinated planning that aligns with site conditions and prevents costly adjustments down the line.
Manage Change Orders Effectively: A structured change order process helps ensure that design changes – especially client upgrades – are carefully evaluated for impact, minimizing their effect on the budget.
Secure Materials Early: Diversify material sourcing and lock in prices through early procurement can protect against sudden price increases for essential materials like steel, concrete and lumber, keeping costs more predictable.
Adopt Advanced Technologies: Using Building Information Modeling (BIM) and digital twins helps identify design adjustments early, reducing rework and keeping the project on track despite upfront costs.

Together, stakeholders can implement measures to strengthen risk management and focus on areas that will secure the project’s budget, even when external elements threaten to push things off track.

Scheduling with minimal slowdowns

Scheduling can be one of the steepest uphill battles with multifamily construction, largely because so many delays – like weather setbacks, supply chain issues and labor shortages – are beyond anyone’s control. At ETI, we have a track record of completing projects an average of 15% faster than local competitors, an advantage that allows us to tackle these unpredictable factors with greater agility and maintain project timelines.

To meet hard deadlines, especially when developers are committed to selling or renting by a specific date, market realities require longer lead times for certain materials affected by supply chain setbacks. It’s important to build into the multifamily project adequate buffer time to cushion sourcing and unplanned delays to protect potential income streams from avoidable setbacks.

Predictive scheduling tools embedded in our project management portal can also help leverage real-time analytics to forecast and resolve any issues that may impact scheduling. By predicting material, labor and weather-related issues, these tools allow project managers to reallocate resources or adjust schedules early, keeping projects on track and minimizing costly disruptions.

Reduce rework with collaboration and quality control

Overcoming challenges in rework can be a frustrating part of the project. Many times, these issues stem from various factors, including design revisions, incorrect measurements, lack of quality control or rushed execution. On average, construction industry data shows that rework accounts for 5% of total project costs, with roughly 70% of this rework stemming from necessary design adjustments or specification changes.

While certain factors are inevitable as needs evolve in multifamily projects, stakeholders can still take steps to mitigate these added costs. Regular coordination meetings between key stakeholders in the early design stages or using advanced technology can reveal red flags early on, such as limited ceiling space for HVAC systems or conflicts with electrical conduits.

Integrate communication tools to increase ROI in multifamily projects

As with any business, unclear or fragmented communication can lead to performance breakdowns. In construction – where multiple stakeholders are involved – these breakdowns can have a big impact on project outcomes.

To address this, work with a multifamily contractor who integrates a project management information system (PMIS) to streamline communication across teams. A recent report found that integrated PMIS are topping the list of technologies with the potential to deliver the greatest overall ROI, underscoring their impact on efficiency and profitability.

With over 25 years as a multifamily contractor, experience has shown that our project management portal reduces discrepancies between design and execution, provides real-time project tracking and brings transparent access to financial and project data, which minimizes misunderstandings and room for errors and delays.

Looking Ahead

The reality is, every construction project brings its fair share of dotted lines where unexpected challenges will arise. But being ready for them is what sets the top players apart.

Collaborating with a forward-thinking, relationship-focused multifamily contractor with a proven track record in risk management can make all the difference. Our expertise in anticipating and addressing these obstacles enables us to complete projects faster than the competition in and around Chicago.