America’s Construction Crisis: Why Projects Go Over Budget — Barry LePatner on RFP 65
In this episode of The Real Finds Podcast, host Gordon Lamphere sits down with Barry LePatner, a construction attorney, author, and industry reformer, to unpack one of the biggest risks in commercial real estate: the broken business model behind American construction. Over the course of their wide-ranging conversation, LePatner exposes why most real estate developments run over budget, why America’s infrastructure is crumbling despite massive funding, and what owners and investors must do to protect their capital.
The Myth of the Guaranteed Maximum Price
“Giant shrimp and guaranteed maximum price contracts have one thing in common,” says LePatner. “They’re both myths.”
Most real estate developers rely on GMP contracts to provide a sense of financial certainty. But LePatner makes it clear: unless the design documents are 100% complete and coordinated, that “guaranteed” price is anything but. Contractors routinely build in contract clauses that allow for price increases due to drawing errors, omissions, or scope clarification—issues that are nearly inevitable when plans are rushed.
The fix? Owners must insist on fully coordinated documents before construction begins. That means Level 400 BIM coordination, not the standard (and inadequate) Level 300 most architects produce. Rushing into the ground to satisfy lenders or political deadlines, says LePatner, is a surefire way to invite delays and change orders.
Construction’s Biggest Problem: Incomplete Design
According to LePatner, the number one driver of cost overruns is bad design documentation. Architects, structural engineers, MEP teams, and inspectors rarely coordinate their work thoroughly. When plans don’t align, contractors can’t bid with confidence—and they know it.
Without that alignment, owners are flying blind.
“If those documents aren’t right, there is no way to fix the problems that follow,” says LePatner. “Everything else—GMPs, tech platforms, even contractor selection—is secondary.”
In fact, he says most owners and LPs don’t even know how incomplete their drawings are. And worse, many architects themselves aren’t trained in how to produce truly coordinated construction documents. That knowledge gap is costing the industry billions.
Tariffs, Labor, and the Future of Cost Uncertainty
If bad design is the spark, today’s macroeconomic conditions are the gasoline. LePatner explains that 30% of many construction components—from elevators to HVAC to backup generators—depend on global supply chains, much of it routed through or originating in China.
New rounds of tariffs and 40% cuts in trans-Pacific container capacity are introducing severe uncertainty into pricing. Contractors now include “allowances” for critical materials, and refuse to lock in pricing until goods are actually on the boat.
Add in the U.S. construction labor shortage—currently 439,000 skilled workers short, and expected to hit 740,000 by decade’s end and you have a near-impossible bidding environment for owners seeking fixed pricing.
Infrastructure: Funding Without Results
Even more staggering is LePatner’s critique of America’s infrastructure. Despite the Biden administration’s $1 trillion infrastructure bill, little has been repaired. The reasons? Regulatory delays, lack of political capital for unglamorous repairs, and fragmented oversight between states and federal agencies.
LePatner estimates that over 8,000 bridges in the U.S. are at risk of collapse, and many have been flagged as “fracture critical” for years. The collapse of the Baltimore bridge, he says, was entirely predictable. And now, we’re seeing the economic consequences ripple through ports, logistics, and national security.
“The system’s designed to stall progress,” LePatner explains. “Until we reward good development and strip back counterproductive regulation, this won’t change.”
Advice for Developers and Investors
What can commercial real estate professionals do? According to LePatner:
Control the design process. Don’t delegate blindly to architects or contractors. Demand coordination and verify it independently.
Hire a skilled project manager. Someone who knows the games, the gaps, and how to close them.
Be patient up front. The four months you spend getting plans right will save you 12 months and millions of dollars down the road.
Watch the macro signs. Tariffs, labor shifts, and shipping volatility now shape project feasibility more than ever before.
The Books That Shaped His Thinking
LePatner also shared three books that influenced his outlook on business, leadership, and risk:
How to Win Friends and Influence People by Dale Carnegie — “Nobody teaches you how to ask for what you want. This book does.”
Timing Is Everything by Denis Waitley — “All business is seasonal. Know where you are in the cycle.”
War and Peace by Leo Tolstoy — “The best education in how the world works.”
Final Thoughts
The construction industry may be deeply flawed, but it’s also deeply important. As Barry LePatner reminds us, it makes up 5% of U.S. GDP and is foundational to the real estate economy. Whether you’re a developer, LP, or policymaker, ignoring its inefficiencies means exposing yourself to risk.
