"Thoughts and Observations on Architecture and You"

3
Coping with Costs!

One of the least favorite subjects with which an architect and his client must deal on any building project is its cost. This uncomfortable situation arises for several reasons: the initial shock of seeing cost figures of a magnitude greatly exceeding that of other expenses we deal with on a daily basis; the related need to face a new debt and give up even more of our financial independence; the difficulty fully understanding and appreciating each of the myriad of services and tasks for which we must pay to have the work done properly; and the suspicion that we may be treated in a financially unfair way by people whose design and technical knowledge exceeds our own.

To this list can be added yet another reason why facing design fees and construction costs can be so difficult, one often not considered. Most of us bring to building cost discussions a set of cost attitudes, perceptions, expectations, and methods of control that may be inappropriate for the “purchase” of building services.

We have developed these cost ideas through our consumer buying experiences for the products that we find in stores — items that have been factory produced in a repetitive and highly controlled manner. We see the finished product before us, examine it carefully, look at the price, decide if it is a good value, and then make the purchase decision. Other than knowing how well the item will hold up in continued use, this purchasing sequence is characterized by known pieces of information, thereby minimizing our financial risk. Even this risk is largely mollified by the relative ease with which many products can and will be replaced by the seller or the manufacturer.

Contrast this purchase situation with that for building services. The first obvious difference is that there is no specific “product” already in existence for us to examine and price. Nor can the architect or contractor, despite having extensive building experience, pinpoint precisely the quantity and duration ($$) of the services and tasks that may be needed to design and build a structure that has yet to be conceived! Further, it is a construction fact of life that small variations in exactly what and how things get built, as well as when they are built, can cause large cost fluctuations. One must keep in mind that since no two building projects and sites are the same, the knowledge gained from production repetition, as in manufacturing, is limited in building design and construction work.

Faced with all of these unknowns, clients should consider their approach to contracting for building services a bit differently than that for the purchase of products or other services. A number of personal characteristics can be helpful when trying to intelligently evaluate design fees and construction costs: flexibility, prudence, perspective, and courage.

Flexibility is vital because the design and building processes are dynamic events — conditions continually change, unexpected things happen, and opportunities arise as the design evolves and as the building is constructed. The building effort will begin to acquire its own momentum and a client should strive to get into its flow, helping to control its direction without stifling its pace. Learning to feel comfortable with rough estimates and wide ranges of figures instead of single set prices is key, particularly in the early stages of the work when there is little specific design or construction information on which they have been based.

Financial prudence is clearly advisable to avoid the stress that comes with knowing that one has gotten in over one’s head (momentarily). Establishing an absolute expense limit makes sense when changes (usually reductions) in the project scope of work are acceptable. Once such a limit is set, a working project budget of perhaps 75–85% of this total should be established to set aside the remaining funds as a contingency to cover unforeseen costs. Today, unfortunately, construction cost overruns of 25–35% are not uncommon, and a prudent owner includes this possibility in his financial planning.

Perspective is a desirable attribute to avoid being “penny wise and pound foolish” when making decisions involving significant design value for additional dollar expenditures. A unified building design expresses a certain clear character with each part of the design contributing in some way toward achieving this character. Indiscriminate changes to individual design features during cost-cutting efforts (“value engineering”) can easily alter the balance of a design and emasculate its character. From a client’s viewpoint, it seems foolish to have spent a large sum of money on project design and have an undistinguished building result to show for it, particularly when a slightly greater expenditure of funds might have led to a building result that achieved an owner’s original goals and hopes. Early, prudent budgeting can often lessen the likelihood of being in such a situation.

Finally, a client must possess the courage needed to make cost decisions based upon limited information and, often, on intuition alone. As the design and building work proceeds, many decisions will have to be made rapidly while thinking on one’s feet, and may involve thousands of dollars. In such situations, continually second guessing oneself or worrying about whether every decision was the best one is not productive and can disrupt the flow of work. It also takes courage to face the fact that every design and construction problem must eventually be dealt with, and that problems left unattended in the project’s planning stage will ultimately surface and cost more to solve during construction. Generally, the greater the time given to your design professionals to uncover and address project issues in the design process, the fewer the problems that will develop later. It is time well spent.

John McLean AIA
San Francisco
(415) 777-9767