The Good Owner ... Better Budgeting

Posted By: Jere Smith Education, News,

Long-range weather forecasting here in the southeast is generally straightforward, especially in the summer ... “hot and humid with a chance of afternoon thunder showers” pretty much covers it most of the time. Without even looking at the maps or the radar, you probably have at least a 50% chance on any given day of being right. Those forecasts can become much clearer and more reliable, as you get closer to the day in question, examine the indicators, the trends and the approaching fronts. There are some interesting parallels that can be examined between predicting the weather and the likely cost of a construction project.


Deliberate, pragmatic, eyes-wide-open budgeting can make your project, making your customers happy and to keeping those you are accountable to in your court. Construction, especially today, can be an uncertain dynamic environment. A three-fold strategy to consider might consist of 1) take the necessary steps and time to determine what you really want, 2) research what will it take logistically to get it and 3) calculate what the open market will truly charge.


Of course, you can take shortcuts in time, due diligence, and market testing ... and most times you will have to accelerate certain actions to finally get your project going. But the more you compress early efforts, the more flexible you must be down the road and the larger contingencies must be to maintain the integrity of your project. Often, this mindset is not quick; it may not seem to be efficient; and it certainly is not automated. In the end, though, you probably will maintain more control and satisfactory results.  


First, allow the time for visioning and exploration to get confident with what you really want the project to be. Create sufficient narratives, preliminary construction documents, and other programmatic information to define your choices. Determine your organization’s and customer’s expectations and clarify the difference needs and wants. Ask yourself, how can I expect to accurately know what a project may cost before I know what I really want?


This often requires, especially in the case of a renovation project, more than a high-level description like, “replace the HVAC and windows, build a new parking lot, and upgrade the finishes”. This type of description along with some unit costs per square foot can provide an order-of-magnitude idea of cost, but a more detailed scope of work and estimate of quantities will typically result in a more accurate picture of project costs.


Next, build your project virtually and quantify major hurdles, risks, and challenges. Maybe you really do just want a new HVAC system and a new parking lot, but initial investigation and conceptual design efforts reveal that the existing building will require major structural modifications; electrical switchgear will have to be replaced to accommodate the new HVAC system; and local watershed authorities will require the time-consuming, costly construction of a complex stormwater management system due to the new parking lot.  


These types of impacts can wreck a budget. The planning it takes to uncover these issues must be done, not by a portfolio of projects, but by getting into the weeds on a project-by-project level, since each job is unique and will have its own set of trials to be overcome. Complete this depth of discovery and programing, preferably early and often since it takes time for some issues to rise to the surface and for their impact on cost and schedule to be understood. Investigate and assess the risks, especially with renovations, which are often ripe with costly and time-consuming unknowns.


Merging vintage existing building conditions with modern MEP, IT, and fire protection systems may present unique challenges. Seek feedback from design and systems commissioning professionals. Do it first internally (as the Owner only) with your stakeholders, customers, and project team ... then reach out to service and material / equipment providers as they join the game. This work is both healthy and fundamental to creating a comprehensive and accurate budget.


Finally, test the market and find out what your project is likely to cost out there in the real world. This is not a time to be shy. Engage (pay for if necessary) real contractors or construction managers to provide cost and/or schedule input. It does not matter how good you are, the experience of your cost consultant, the depth of your database, or the power of your project management information system (PMIS). You, those consultants, and those systems are not going to build the project.


A builder, trade contractors, and suppliers will actually make the project happen and they will have to be compensated accordingly for it. Understand funding limitations, and scope priorities to make those inevitable tough decisions and adjustments as the budgeting and contracting processes advance.


All of this can be a substantial commitment of time, energy, and resources. Still, those expenditures are minimal compared to the risk and exposure of attempting to launch a building project not fully defined, vetted, and budgeted. It is difficult to imagine where to get better value in placing your pre-construction focus.


Construction budgeting is, in many respects, similar to weather forecasting.  The closer to the time, the nearer source, and the deeper you investigate ... the better your prediction is likely to be. No system is perfect, so when in doubt, always carry a jacket and umbrella.


Jere Smith is a COAA National Board Member, Past-President of COAA-GA, an Atlanta native, an architect and a lifelong builder. A graduate of Southern Polytechnic State University and Clemson University, he is currently the Executive Director of Capital Programs for the Atlanta Public Schools. For more information he can be reached at