How to Overcome Construction Cost Increases in Senior Living Projects

by Jeff Shaw

General contractors in the senior living space have faced tough challenges in the wake of COVID. Construction material costs have fluctuated wildly, while hiring good employees has proven difficult, slowing down timelines.

Seniors Housing Business spoke with Richard Lara, president of RAAM Construction Inc., about the challenges builders face in the senior living sector.

SHB: Tell us a bit about your business and how much work you’ve done in the seniors housing space.

Lara: RAAM Construction is a general building contracting firm specializing in multi-unit construction projects throughout California. In our nearly two decades as a general contracting company, we have completed 440 units within the seniors housing sector and have 603 units underway. In addition to our work in the seniors housing sector, we have also partnered with developers, owners and architects, among others, to deliver the highest quality of work in the multifamily sector.

We have partnered with several developers throughout our more than 27 years in business to continue to provide budget-friendly housing in regions throughout California where it is needed most. For example, over the years we have partnered with Meta Housing Corp., a developer of affordable housing communities for families and seniors, to deliver high-quality senior living projects throughout California.

SHB: What are some of the more unique senior living projects you’ve worked on?

Lara: One of the senior living projects I am proudest of is our most recent senior housing project, Arboleda Apartments. The 71,499-square-foot property consists of 74 apartment units in two conjoined, four-story, wood-frame buildings in La Puente, California, a low-income area where budget-friendly housing for seniors is scarce.

The most unique aspect of this project was the circumstances in which we had to work — a global health and economic crisis that involved a highly transmissible disease — to bring the project to the finish line on time and in a cost-effective manner. We worked with Meta Housing early on in project development to create a realistic budget for the design to ensure there were no delays in construction.

As the project broke ground in January 2019, prior to the pandemic, we could have never predicted the challenges that we would face during construction, including keeping our team and everyone around the project safe and healthy and combatting increased materials costs caused by the pandemic. These challenges forced us to come up with creative solutions to problems that arose.

One of the biggest challenges for general contractors has been keeping their teams safe from viral transmission while completing construction projects, which require numerous hands-on, in-person and collaborative procedures.

In order to reduce the risk of our team contracting the virus while on the job, RAAM Construction introduced new safety protocols that supported social distancing. Fortunately, in addition to promoting the health of our team and partners we were working with during the pandemic, several of these protocols have also been effective at moving projects forward in a timely and cost-conscious manner.

SHB: How have the unprecedented materials costs affected the projects in your pipeline?

Lara: We are certainly experiencing rising material costs, as most are across the country. However, we have been extremely proactive and innovative in our approach to keep projects moving forward.

For example, during a project’s design phase, RAAM provides the developer with pre-construction services to ensure that the design is in line with the budget. We make it a point to go over every detail of the scope of work and carefully review and understand the site plans from the earliest stages to craft an accurate project schedule and budget.

In addition, early on in the process, we determine the materials needed to ensure that our manufacturers can get us all project materials on time. By utilizing our deep vendor relationships, we can work to source materials that are aligned with the developer’s goals and budget.

SHB: Have the labor issues we’ve heard so much about affected you as well?

Lara: We have seen labor shortages in the market for several years, and the pandemic only exacerbated that already shrinking labor pool. However, we have a strong team of tenured professionals in place who have been with us for many years. The longevity in our team is something we are extremely proud of and speaks to the strength of our firm. We are also always actively recruiting, which is important as our team continues to grow and labor becomes more difficult to source.

SHB: Were there other effects on your business due to the COVID-19 pandemic?

Lara: COVID-19 has definitely required general contractors to be more creative in completing projects while keeping team members, vendors, tenants and clients safe and healthy. RAAM has employed several strategies to accomplish this over the last year, including:

  • utilizing drone technology to obtain measurements, assist in quality control and mark construction changes that affect project design;
  • adopting GPS staff-tracking apps like ExakTime, which takes photos of workers on site as they sign in and out of construction jobs in order to document which team member worked on which part of a project and for how long;
  • and using project-tracking apps like Procore, a construction management software that improves efficiency by connecting field and office for real-time visibility, which enables superintendents to post daily photos and video logs of a building’s progression.

Additionally, the Procore app allows users to manage accurate project budgets with reliable data drawn from the field. This technology has been invaluable in getting projects done on time and safely during the pandemic, and we continue to explore new technology that will help us deliver for our clients after this crisis is over.

SHB: In what ways has your approach to building seniors housing shifted over the years? What does the future look like in this sector?

Lara: Seniors housing is an asset class that has continued to perform throughout the pandemic. Seniors are less likely impacted by unemployment rates as many are no longer in the workforce and instead are living on retirement savings and other resources. Additionally, the baby boomer generation is expected to all be 65 by 2030, ultimately downsizing into senior living communities and driving tremendous demand.

Baby boomers are looking for communities that are affordable, walkable and offer amenities that we see in other communities that are typically geared toward younger generations such as social programming and active outdoor amenities.

Because seniors are generally looking to spend less time driving and more convenience, mixed-use affordable projects also hold a lot of promise for the future. Examples of this trend in projects we have worked on include Oakland 34 in Oakland, California, which we completed in 2014, and Lincoln Orange Grove in Pasadena, California, which is slated to be complete by the end of 2022. For the latter, after carefully reviewing site plans and specs, we recommended modifications to the structural design with material substitutions that yielded the developer cost savings of approximately $700,000 and improved the schedule by 45 days. Originally, the project had an expected budget shortfall of $1.5 million, so these cost efficiencies were extremely helpful.

Because of these demand drivers and solutions to developers’ pain points, we believe the seniors housing sector will continue to flourish in the coming months and years.


Richard Lara is founder and president of RAAM Construction Inc., a general building construction firm specializing in multifamily and historic preservation projects throughout California.

You may also like