Early on, when you ask your architect or project manager, “What will my project cost?” you may get a lot of discussion, but the answer often boils down to, “There isn’t enough information to produce a reliable budget. We need to do more work, sometimes a lot more work (i.e. spend a lot of your money), before we can give you any number.”
They know that the first budget is never forgotten or forgiven and they strenuously resist committing to a specific number.
While that is almost certainly true, it’s never the right answer. That’s because an owner really does need some guidance and it’s the project manager’s job to define some financial parameters, avoid optimism and carefully qualify the answer.
My answer, to an owner, is usually something like this. “ At this stage, I can give you my best guess at your budget. The more time we have, the more reliable the number will be and the less contingency I will build into my guess. I carefully use the word guess. Whatever the budget estimate is and no matter how big a contingency I include, this, at least, gives the owner some indication of what their financial exposure might be. Most importantly it creates a roadmap for further investigation.
For common things such as multi-family housing, office buildings, classroom buildings or commercial interiors there’s limited variability. Most professionals have access to data, past projects and rules-of-thumb that, when applied judiciously, can lead them to reasonably reliable answers, though differences in sites, infrastructure, and quality must be carefully weighed.
It’s the unusual project, a building project with no easy equivalents or a complex renovation or rehabilitation that are the challenge.
In the case of renovation or rehabilitation, especially of an occupied building, it’s nearly impossible to determine just what needs to be done. The problems are concealed. The term of art is “destructive investigation.” You have to take the building apart, even dig up foundations, to figure out what needs to be done. And with an occupied building, actions are more limited. Preparing early estimates in these cases require a higher level of effort.
And finally, a qualification statement should be prominently displayed on any budget, particularly an early budget, giving context to what the budget is based on and highlighting any issues. For example, the qualification for a very early budget might read something like this.
Qualification: This is a very initial budget using preliminary estimates and allowances based on very early conceptual design documents that only generally describe the project. There has not been sufficient examination of the condition of existing buildings or site infrastructure to reliably understand the associated scope of work. Substantial additional investigation and design work must be done before the budget will repsent a reliable statement of likely project costs.”
It’s an important part of setting realistic expectations.
And in any case you have to account for a surprising array of costs.
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