On Process: Managing Budgets
Most of our clients are everyday people - typically young parents or empty nesters, facing a somewhat interesting or tricky brief and wanting a high level of design and care. This means that compared to peers who focus on higher-end work, our projects are often more price sensitive - requiring careful value managing as we step through the project process. The skills and processes we’ve developed has been foundational to our work in this time of pricing turmoil and escalations.
When we see glossy magazines and design websites feature houses that have a yellow Porsche or some other classic car in the driveway, we always remark how our clients tend to drive Mazdas and Toyotas - and that’s totally fine! Our studio has been on a somewhat countercultural path ever since our beginning - unafraid to step into mid-range price points, seeing these projects as fertile ground for creative expression while developing a grasp of structural and construction efficiency. We’ve always seen that this space is even more difficult than the high end work: instead of the freedom of dreaming good things and focussing on their delivery, in the mid-range every intervention needs to count for something, and we’re often trying to create something special out of more cost effective means. It’s a challenge, but one that we relish taking on every time: we firmly believe that people with less resources actually need good design more.
These skills, then, allow us to translate our work upwards - delivering bang-for-buck for higher-end work, and larger building typologies like boutique commercial, church and multi-residential projects.
Starting on Solid Ground
Most clients already have a budget in mind when they begin talking to us. As we go through our Briefing process, our first goal is to ground their budget and brief expectations. In other words, are the numbers realistic for what they are trying to achieve - not only in terms of the quantifable aspects of the house (rooms, sizes) but also achieving your qualitative aspirations?
As we write today, the media is full of gloomy articles about the housing downturn; yet in South-East Queensland construction prices have grown 44% over the past five years, and there is still an expectation of consistent increases in construction costs year-on-year as the Olympics draws near. In these uncertain times, we simply do not want to any client down a pathway that they can’t afford to build. Being prepared and disciplined is key.
For some clients, the Budget is an absolute limit. Others are a bit more flexible - “we want to spend this much, but show us an alternative within reason if you think it delivers better value-for-money.” Others are open - not in the money-is-limitless sense, but just genuinely curious what can be achieved on a given site, and what it would cost.
The Return Brief process allows us to make sure that what you are after, and what you want to spend, is realistic in the current environment. There’s often a degree of to-and-fro: can the Cost of Works stretch? Could we reduce the scope of built work? Would you consider overlapping uses within spaces? What are the key values that underpin the project, and how will it affect potential pricing?
We want to agree on a direction and price range before we begin any Concept design work.
Obtaining Cost Feedback
As we step through the project process with you, we leverage the skillset of either a Builder or Quantity Surveyor to obtain Cost Estimates at key milestones to assist with value-management decisions. Think of the drawing package as being made up of layers and layers of information. It’s much quicker to deal with big-picture changes (removing rooms, changing materiality, for example) early on; to do so when the drawing package is fully developed would involve reworking multiple drawings and potentially external consultants. This is why we want Opinion of Cost input as early as possible. Otherwise, if we were only dealing with Value Management at the end of the project, unless the client agrees to a costly reworking process we often are limited to cosmetic changes (downspeccing finishes and fixtures, or removing cabinetry, for example). In this scenario it’s hard work to cut even 7-8% from the Cost of Works, and in compromising the outcome we’re all left a bit disappointed - the excitement of the built work is tinged with memories of what it could have been.
We have therefore designed our Project Process to include multiple points of Cost Feedback, whether through a Builder’s ECI (Early Contractor Involvement) or the engagement of a specialist QS (Quantity Surveyor).
Firstly, at the end of Concept stage. Like the Return Brief, we want to make sure that budget and scope align. This time we’re testing this with a set of plans and indicative Perspectives which better describes what we’re trying to achieve, and obtaining the Opinion of Cost from a thid party. We want the confidence to push ahead into Design Development; perhaps with some value-management changes included as we do so. As the level of detail is relatively low, the Builder or Quantity Surveyor will be building in a level of assumption. We would expect there to be around 15% margin for variance in this early Opinion of Cost Estimate exercise.
Second Cost Estimate at the end of Design Development stage. Design Development, forming the bulk of the project process, is about describing the project scope accurately. This second Cost Estimate will be more reliable, as the Contractor (or QS) would have a more thorough documentation package (Core Plans, Internal Elevations showing cabinetry and tiling extents, early Schedule). Consultants would usually have provided some high level documentation (structural member sizes, for example) which will help firm up the pricing. Again, the price update is intended to allow us to value-manage the project before it becomes fully detailed.
Final Costing at the end of Documentation stage. This will be an accurate final price as all selections are locked in, construction details are finalised, and specialist Consultant documentation is also complete.
It’s about reducing risk
Unfortunately, there’s no magic potion to make the value managing process problem-free. What we can do is to reduce risk. By cross-checking and obtaining updated Cost of Work opinions as we step through a project in four steps (the initial Return Brief, then Concept, Design Development and Final Costings), we reduce our clients’ exposure to the potential of cost over-runs and unforeseen escalations.
The times out may be tough out there - and more than ever, there’s a need for architectural solutions to be effective and efficient with limited resources. In this environment, we’re confident that we have the right skillset and process to help deliver more with less.
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This article was written by Billy Lam, Architect, Founder and Director of Ever Architects. Over the first decade of Ever Architects he has overseen a range of new build, renovation, extension and residential fitout projects throughout Brisbane and South-East Queensland, from the mid-range to the high-end. Across budgets and sectors, he seeks to create spaces that are marked by a sense of peace derived through connection to nature.
Today Billy leads Ever Architects and works as an all-rounder overseeing our studio.
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