Getting What You Want on a Budget Is Possible

A 10-step checklist can keep a development’s costs within the planned scope.

By Chad Ulman and Kevin Madalinski

Compromise and sacrifice don’t have to be your constant companions when implementing a construction project. 

Once the budget has been established for your project, staying within it is a reasonable expectation. This can be accomplished by clearly identifying and documenting the scope of work for each aspect of the project in the early stages. 

The following 10 steps, when followed throughout the project process, will ensure that your project excels within your budget.

1. Address an appetite — It’s commonplace to have numerous appeals for additional programs and features that were not identified prior to the budget. Staff may get the impression that the dollars are flowing from a fountain and now’s the time to implement a pet project. 

A clear picture of success should be established early in the design process, and your team should evaluate and filter requests carefully based on how well they match your goals or achieve your vision. These requests need to be challenged. Capitalize on the opportunity to clarify the direction and vision for your facility as you evaluate the requests to determine their merit.

2. Consider constructability — Square footage isn’t the only driver in determining costs. Additionally, the time it takes to construct your senior living campus will have significant and widespread implications; therefore, time will also impact your budget. 

On one occasion, we recommended a modular construction system that dramatically decreased the construction schedule, thus reducing labor costs without compromising the integrity of the building at all. Because modular building facilities are assembled in controlled environments (sheltered from the elements) and then brought to the site, the building process is even less wasteful. 

3. Value trading — Value trading is the art and science of making design choices that provide greater value, while “paying” for those by changing or eliminating design features or elements. This collaborative process keeps costs within budget while improving the design and performance of a building. 

In one case, we found that energy modeling revealed a suggested chiller might be larger than necessary for the size of the facility. After scrutiny, we determined that the larger chiller would be used only in extremely infrequent and unlikely circumstances. Further analyses confirmed that the temperature might increase a mere 2 degrees Fahrenheit above optimum temperature in those infrequent and irregular situations. 

As a result, we recommended a smaller chiller, which not only provided initial cost savings but limited future utility costs. Value trading allowed the developer to invest in other more valuable items. 

4. Discuss deviations — It’s imperative to consistently track any deviations to the scope of the work and regularly deliberate both the short- and long-term cost consequences. Then you can determine what adjustments should be made to allow for any cost increases and prepare accordingly. 

5. Study finishes — Finishes (interior and exterior) can have a substantial influence on both initial costs and ongoing maintenance. They should be thoroughly discussed and evaluated to maximize the value of each choice. 

For one facility, our project team realized a 40 percent reduction in brick costs by forgoing a conventional clay brick for a local concrete brick product. The concrete brick achieved the aesthetic goals completely. This is the kind of creative decision that impacts value, cost and satisfaction.

6. Partner up for savings — Subcontractors who regularly bid, install and service equipment can offer valuable insights on cost savings. Mechanical, plumbing and electrical engineers are sometimes unaware that the cost of systems and fixtures might be much higher than equally effective alternatives. 

By taking advantage of a multi-disciplinary team of engineering, design, and construction professionals alongside expert consultants, you’ll benefit from a unified approach. Through the team’s combined knowledge and information exchange you’ll be more likely to realize a design that is cost-effective while meeting or exceeding quality and performance expectations.

7. Look into the future — Be certain not to eliminate imperative items that can’t be added later. Instead, create a base project with alternate bids to enhance space, finishes and building amenities. Alternative bids should consist of items where scope is clearly defined through drawings and/or specifications that are not included in the base project. Pricing is obtained at the time of bidding to ensure greater competitiveness. In the event that the base project comes in below budget, some of the alternate items can be selected for inclusion. 

This is a more cost-effective tactic than eliminating an option that will be impossible or cost-prohibitive to add at a later date. For instance, it would be wise and less expensive to “shell out” future rooms (installing floors, walls, and roof) if you believe that you will need more bed space or administrative areas in the near future. Even if you can’t afford to finish them out, it makes sense to do a little more construction now rather than start a completely new project later.

8. Compare budget to reality — A constant comparison of actual expenses to the original budget is crucial and should include site design, selections of materials and systems, and constructability. As the building design develops more clearly, the initial cost estimates in the conceptual and schematic design phases are replaced by more comprehensive quantity estimates of materials and systems. Obtaining up-to-date pricing from subcontractors is vital during the design process. 

9. Think seasonal timing — The timing of construction can have an immense impact on costs. Rainy seasons and winter weather can make a sizable difference. Preferably, the vast majority of the exterior work should be carried out and the building fully enclosed before inclement weather is likely to impact project schedules. Unexpected delays can be expensive. 

In addition, bidding out a project in the winter months can result in more competitive bids since subcontractors are trying to prepare for the upcoming spring and summer. Long lead times for items such as steel, custom fixtures or equipment should also be considered to eliminate paying a premium to have them expedited and/or to avoid costly schedule delays.

10. Stay centered on the target — An experienced estimator should work closely with the design team to enable adjustments while keeping the design near the center of the targeted budget. If bids come in above budget, avoid indiscriminately cutting the scope in order to keep the project in budget. This can taint the final deliverable, forcing compromises of function, aesthetics, and operations. 

By following these 10 steps, you’ll have a comprehensive strategy for maximizing your money, controlling costs and delivering a project that meets the needs of your customers and staff.

Chad Ulman is vice president of architecture and Kevin Madalinski is vice president of construction for Hoffman Planning, Design & Construction. They each have more than 20 years’ experience in construction and design.