Projects

What is the budget?

And is it sensible?  – Essential Questions

Now, this question above might sound like a pretty basic question. But try it out on your client. You might find they have some trouble giving an answer!

However, it is the most important step in getting a project started, heading in the right direction, and giving you some size, quality and cost targets to aim for.

And in most projects it is the driving force behind where the job is heading.

When we (cost planners that is!) go to meetings, we find that the clients are very happy with the design, they usually don’t question too much, they are confident the architect is doing their job well and has got everything right…

But we do end up talking at length about how much it is going to cost, where the money is coming from, who is paying for it and how much we have to cut out of it to get back to budget.

So talk to your client, ask them up front “What is the budget for this project?”  Have a think about it:

  • Is it a sensible budget?
  • Where did the number come from?
  • Are they thinking about some job that is not even similar … that was built maybe five years?
  • Is it some advice from their brother-in-law who apparently built some house for an unlikely $1,200 a square metre?
  • Or have they only built warehouses before and this time it’s a complex office & laboratory?

Get the budget right … or as close to right as you can!

Some clients have the quantity surveyor involved before the budget has been set and the funds applied for. Our job is to help establish a sensible budget and scope of works. The funding can then be applied for, and so the project is heading in the right direction from day one.

I was involved in a $5m job where the funding had already been approved. But when we came on board, the client really wanted a $20m building. That’s hard work, and you’ve got to compromise the design, chop it in half, seek more funds; it takes some time and quite often these things just don’t get built.

But if a client has no budget or can’t commit to a budget, I would question whether they are committed to the project or are they just getting the architect doing some drawings out of curiosity.

On all projects, I always ask what the budget is, and, if it’s not sensible, I don’t spend much time doing detailed cost planning work … I go back to the basics and check the budget.

Looking back at some of the jobs that didn’t get built, or ended badly, or fees weren’t paid, or clients went elsewhere, many of the clients either didn’t have a budget or had an absurd budget, you know ‘We’d like to spend maybe $300,000’, when what they really wanted was a $800,000 house.

So, one of the tell-tale signs, or something that should ring bells for you, is when a client says, “Oh, there’s no budget, you tell me what it is going to cost.”

Our role, is not to tell clients what their budget is; the budget should come from them; we tell them what it is likely to cost and how to review both cost and budget to get them both more in alignment.

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