The Biggest Investment of Their Life
When an owner invests in the construction of a building this is likely the largest expenditure they will ever make. An architect must be empathetic to this situation. These are extremely large sums of money and there is a lot of risk involved.
Although every project is different, you will likely encounter these 5 budget challenges on each project:
#1. The Tight Budget
Everybody wants a deal and will have a ‘tight’ budget. Just because a client is very successful and wealthy does not mean that they want to be frivolous with their expenditures. I have never heard a client say, “Cost is not an option.”
#2. Lack of Transparency
Many clients are reluctant to reveal their actual budget. Sometimes the client shares a lower false budget. Sometimes they will not reveal the budget. There are many possible reasons for this lack of transparency:
- The client might no know their budget.
- The client wants you to tell them what the budget should be.
- The client is telling you a lower budget assuming you will overshoot it.
- Or maybe the client hopes that they don’t need to reveal the budget and that it will just magically come in below their actual target.
Unfortunately, these strategies rarely work as most clients want:
#3. The Cadillac
Most clients want more than their ‘original’ budget will allow. “She wants a Cadillac on a Kia Budget,” we might say. I know this first hand, as I have been my own client on our multiple home renovations. I have designed two extensive renovations to our home and hired a contractor to complete the work. On each occasion I thought the construction cost would be about half of the actual cost. I realize now that I did not have a realistic expectation of construction costs. I think it is human nature to want more than you can afford. As a result, Architecture projects commonly come in:
#4. Over Budget
You might think you are a bad architect for overshooting your client’s budget. I can tell you that I always feel like I have failed when I see budget busting construction estimate. It sucks. Managing the budget might be the most important skill for an architect. Unfortunately, budget shortfalls are the norm with construction projects. Especially in the post-recession era construction costs have inflated at a rapid clip. Many contractors left the profession during the recession leading to a major labor shortage.
Construction Labor Shortage = Higher Construction Costs = Project Budget Challenges.
Projects over budget lead to:
#5. The Dreaded VE
Architects commonly refer to Value Engineering as De-Value Engineering. VE is the painful exercise of reducing building scope to lower the building cost. Common VE changes include:
a. Reducing The Building Size: “Maybe we don’t need that garage.”
b. Changing Building Materials: “We want brick but red stucco is half the price!”
c. Reducing the ‘Building Bling.’ “Say goodbye to that 3 story glass curtain wall!”
d. Changing Building Systems: “Do we really need LED lighting?”
e. Removing Sustainable Features: “We don’t actually need that green roof or to be LEED rated. We will just add a couple of bike racks.”
f. Reduction in Landscaping: “Trees….they are so damn expensive!”
I am having a little fun with these descriptions but VE is serious business and it is always very painful. VE meetings involve the owner, contractor and design team sitting in a room for hours discussing millions of dollars of potential savings only to find out that most of the cost-savings options are not feasible. It sucks.
What were the budgets on your architecture school projects?
Oh, that is right. They did not have budgets. Welcome to the real world!
Budget challenges are major obstacles that I wish I knew about earlier in my career. You need to be aware that every line you draw has an associated cost.
Managing your client’s budget is imperative and if you are aware of the five obstacles listed above then you can be better prepared to serve your client.
If your client wants the Cadillac, don’t say no. Tell them that the Cadillac is a fine car and there are other more cost effective solutions with the same features. Chances are that they will still want the Cadillac.