The majority of multifamily projects begin with healthy profit expectations. However, by the time construction is completed, many owners and contractors discover that actual margins are significantly lower than anticipated.
Industry studies consistently show that productivity losses, schedule overruns, rework, and poor project controls are among the primary causes of margin erosion.
The Most Common Margin Killers
1. Productivity Losses
Labor productivity is often the largest hidden cost in multifamily construction. Common causes include: poor workface planning, material shortages, excessive crew waiting time, lack of coordination between trades, and frequent design revisions.
A seemingly small productivity loss of 10% can result in hundreds of thousands of dollars in additional labor costs.
2. Schedule Delays
Every additional week added to a project increases: general conditions costs, equipment expenses, supervision costs, financing expenses, and opportunity costs.
Many projects lose profitability simply because delays were not identified early enough.
3. Rework
Rework is one of the most expensive forms of waste in construction. Typical sources include: incomplete drawings, coordination issues, quality defects, and installation errors.
Industry benchmarks suggest rework can represent between 5% and 15% of total project costs.
4. Change Order Management
Untracked or poorly documented changes often result in: lost revenue, unrecoverable labor costs, and schedule impacts.
A robust change management process is essential to protect margins.
5. Lack of Project Controls
Many projects focus on reporting past performance rather than predicting future outcomes.
Without proactive controls, management teams often discover problems when corrective actions are already too late.
How GMCi Helps
GMCi helps multifamily developers and contractors maximize project profitability through: Project Controls, Productivity Intelligence, Predictive Analytics, Schedule Recovery, Margin Recovery Programs, and Executive Performance Dashboards.
Our objective is simple: identify problems before they become financial losses.