As owners cope with capital budgets hit by cost-cutting and consolidation, the halcyon days of open-ended construction contracts are fast drawing to a close. "There are very few owners who say we dont care what it costs, just get our product to market," says Les Sturgeon, divisional vice president of global facilities engineering for Abbott Laboratories. "There are no more blank checks. Every owner is looking for optimization of their capital dollars."
This pressure to control costs is rampant in the owner community. "As the utility industry moves more into the competitive markets, costs are becoming a greater issue than ever," says Larry Wargo, consultant, construction services for FirstEnergy. "Were seeing materials prices escalate and increases in labor costs just at the time when the pressure is on us to reduce costs. Its a perfect storm."