Written by Ducon Contractors and Homes on Sep 1, 2014.
Posted in Commercial Construction, Home Building,
In any relationship, the most difficult discussions to have are those involving money. Yet, when starting on a construction project, the need to discuss frankly your available budget and the required investment is crucial. Whether you’re renovating a kitchen or bathroom, building a custom home, or commissioning a new office or manufacturing facility, it’s important for you to reach a clear understanding with your contractor about budgeting as this can affect the scale, scope and timelines of what can be accomplished.
It’s all about trust and communications
For every project there are two budgets at play. The first is what the contractor has developed from the initial design build vision and the second budget is what the client knows they can afford to spend.
The most valuable information a client can give us is what their maximum budget is, so it’s important that they trust us enough to do so. When a client shares with us how much they are prepared to spend, our budget planning can determine whether the project is feasible in its current state or if it needs to be reworked to reduce the costs. In such cases, we can do a budget review to identify priorities, recognize where trade-offs can be made, do a cost/benefit analysis and then revise the project accordingly. When we know the parameters we have to work within we can help our client stay within their budget.
We respect that people initially are very concerned about cost so our first estimate is usually conservative. It’s important to understand that a budget evolves as a project progresses. This is not to say that costs will balloon; sometimes they may even go down. But often during the life of a construction project decisions are made in the form of change orders that affect the final price.
A detailed cost breakdown can take up to two weeks of office work, crosschecking prices, and getting quotes. That’s a lot of billable hours and not practical at the estimating stage unless the client has already agreed to go forward with the work.
The three step budgeting process
Construction project budgets really begin to take shape at the design stage.
At Ducon, our process begins with a 2-3 hr consultation where we review our client’s needs. From this conversation we can offer a rough construction budget range based in part on knowledge gained from previous similar projects. If this price range meets a client’s expectations we then go forward and work up a preliminary budget based on project design drawings.
Next we prepare a budget based on exterior concepts and floor plans using the known costs of square footage and general construction materials.
The final detailed construction budget is developed after all other details have been determined.
Small details can quickly add up
Residential projects are often the most difficult to estimate as most clients either haven’t considered their own budget limits or are reluctant to share them. They also don’t have a strong sense of the actual costs involved in building and the variations in price that can impact every decision. Something as minor as a can of paint can range in price from $15-$45 and the decision to use six different colours instead of three will radically alter that expense item.
Even on commercial construction projects, clients often don’t consider cost factors. For example, every time we bring in an excavator and a dump truck, it can cost a couple of thousand dollars a day. Every truckload that arrives on the worksite may be carrying $450-$750 worth of material and every man on site is costing $45-$65 an hour.
In any building project there are other budgeting considerations beyond the actual construction. As builders we understand the most up-to-date building concepts and can help our clients determine their spending priorities. Putting in a more expensive mechanical system will increase initial construction costs but may substantially lower the ongoing operational and maintenance costs of a building.
Special considerations for commercial buildings
When constructing or renovating commercial buildings, the key element for an owner is time. Every day their business is shut down, they are losing money. Estimating the amount of time the work will take is as important as pinning down the cost of materials. Renovation projects can be the most difficult to predict as undetected problems come to light when the walls are torn down affecting a project in terms of both time and money.
Remember, a budget is a living document. It may shift up or down, but it should always be under the client’s control. The more involvement you, the client, have in decision-making the better. To ensure this is the case, at Ducon we strive to make certain every change order is discussed and its cost understood and approved. You will use the new space every day so it is your decision as to which upgrades are important. We’ll make recommendations and advise you on where cost cutting is feasible, but each choice is yours to make.
Please get in touch to learn more about how Ducon can help you in getting your next renovation or project started.