30 Jul Budget a Design or Design to a Budget
When starting a construction program owners will take one or two completely different approaches to create the project budget. Each approach has its hurdles and obstacles. Without discipline the approach selected by the development team can have significant impact on the project costs.
When a design team’s focus is on the program needs, they often including additional “like to have” ideas as part of the design. The design team will also include an artistic flair to set the project apart from others. After the presentation of the concept, the owner will ask “what is the cost?” The answer is then developed by the cost consultant or contractor where they develop a budget based on the design. When presented the cost, the owner’s reaction is often that is over the amount I want to spend – we need to reduce the cost. The reasons behind the overage may be due to an increase in program square footage, a unique architectural features or some other design item that an owner has difficulty removing from the project. Very often these cost reductions are challenging to identify and eliminate.
I am reminded of the story of a museum’s design. When completed, the contractor’s estimate was 20% more than the budget. The museum board asked the contractor and designer to work on some value engineering. The star architect’s response was raise more money because I am not changing the design.
A second approach often used on projects with repeatable designs is the approach of “Design to a Budget.” Repeatable designs are business hotels, office buildings and public buildings where the design program and budget are set. Controls are in place throughout the design to assure the design meets the program and budget at interim steps along the way. This provides a predictable outcome when the design is completed.
Design to a Budget can also be used for unique projects. Sol Kerzner would use this approach used to maximize the WOW factor and control the “Design to a Budget.” He would create a guest experience vision with the design team. The Design team would creative and develop a design that would meet or exceed his vision. His cost consulting team would price the project design. If the team had exceeded the budget, he directed the team to evaluate all of the design aspects and eliminate the marginal WOW items reducing the costs to the stipulated budgets. Next he would challenge the team with ideas and concepts to increase the guest experience and the team would again develop a design solution, keeping the core elements and adding additional guest experience elements. The pricing exercise would be repeated and the culling of the marginal items would be repeated until achieving the desired outcome.
The success of this approach can be seen at Sun City in South Africa, Atlantis in the Bahamas and Dubai which are must see vacation destinations.
The owner should clearly communicate the established budget at the outset of the project along with the project criteria. Challenge the design team meet the budget and expectations.
Stay focused on the core project needs and consider only those extras that add project value.
Challenge every program area addition and validate it is necessary for the project.