One of the most common sequences in residential design is also one of the least disciplined: design the project first, then find out what it costs.
A client engages an architect. The program is developed. Plans take shape. The design progresses. Months later, a contractor or estimator prices the work, and everyone discovers whether the project that's been designed bears any relationship to the investment available to build it.
When it doesn't, the project moves backward. Rooms are removed. Area is reduced. Materials and assemblies are reconsidered. Details that took real time to develop are simplified or eliminated. Sometimes the project is redesigned substantially. The problem is usually described as a construction-cost problem.
It isn't. It's a project-definition problem. The financial conditions of the project were never adequately established before the design began.
A project budget is more than a construction budget
For a custom home, addition or substantial renovation, the cost of construction is only one component of the total investment required to realize the project. The project budget also needs to account for professional services, engineering and consultants, surveys and investigations, approvals and permitting, testing, owner-provided items, contingency, and escalation.
A client with $1.5 million available for the entire project does not necessarily have $1.5 million available for construction.
If $1.5M is treated as the construction budget, and non-construction project costs equal roughly 25% of construction cost, the total project investment is approximately $1.875M.
If $1.5M is instead the total available project investment, and non-construction project costs are assumed at roughly 25% of construction cost, the resulting construction allowance is approximately $1.2M.
That's a $300,000 difference in the amount available for construction depending on what the original $1.5M actually represents — and the actual proportion varies by project. The total project investment needs to be understood first. Only then can an appropriate construction budget be established.
Budget and estimate aren't the same thing
What you're prepared to commit to realizing the project, in total.
How that investment is allocated among construction, professional services, approvals, investigations, contingency and other project costs.
The portion reasonably available for the physical work.
Testing the developing design against that construction budget.
And that testing shouldn't happen once. As the project develops and more information becomes available, estimating should become progressively more informed — allowing scope, area, systems, assemblies and priorities to respond while they're still being designed, not after.
Why does cost still arrive so late?
Because conventional project delivery often separates the people designing the project from the people responsible for determining what it will cost and how it will be built. The architect designs. The contractor prices. Preconstruction becomes the point at which estimating, procurement, constructability, scheduling and trade knowledge finally enter the conversation in a serious way.
By then, much of the project has already been decided.
That sequence may be common. It doesn't make it good project development. Cost is not information that belongs exclusively to construction. It's one of the conditions design needs to respond to.
The project budget isn't a constraint imposed on design after the fact. It's one of the conditions design should be responding to from the start.
Value engineering shouldn't mean fixing a budget problem after design
True value engineering is about examining function and value intelligently. But the term is frequently used to describe something much less sophisticated: reducing cost after a project has already been designed beyond its budget.
That's not where the greatest opportunity lies. The better opportunity is to use cost information while the project is still being defined and designed — when changing area, scope, systems, assemblies or priorities doesn't require undoing completed work.
Professional design requires financial definition
Establishing a project budget before design doesn't mean knowing exactly what an unbuilt project will cost. That isn't possible. It means refusing to design in a financial vacuum.
Define the investment. Establish what needs to be carried outside construction. Determine a reasonable construction budget. Then progressively test the developing project against it. When the numbers and the design begin to diverge, respond while the decisions are still information — not after they've become a completed design someone has already fallen in love with.
That's not a limitation on design. It's part of designing responsibly.