Here’s a question for you: what’s the most important element of a successful homebuilding project? Is it the lot? Architect? Builder, materials? Contractors? Nope, none of these things are the MOST important element of the project. If you’re about to hire a builder or architect, ask them this question and then hope for this answer: Nothing is more important than a good budget. A good budget is the roadmap to success… a bad budget a sure course to failure. A budget is more important to the project than the skill of the architect or builder, or the beauty of the design, or the building site. Let me say that again. Nothing is more important to the successful outcome of a project than a properly prepared, accurate budget.
The Good Budget
What is a home building budget? It’s the A to Z dollar amount of everything, and I mean every thing, that will go into the production of the home. It starts with Architecture and Design. The final line item might be the cost of the construction clean. Or, depending on the project, it may also include stereo equipment for the media room, or the costs of furnishing the house. But the budget always considers the costs of design and construction.
Budgeting the costs of the home MUST begin during the design process. Unfortunately, because it is not their job nor their experience to build homes, the project architect is not a reliable source of costs and should not prepare the construction budget. It takes years of experience dealing with project costs and conditions to have the background necessary to prepare a project budget. So if not the architect, who should begin the budget during the design phase? One of the biggest mistakes home owners make is to wait to hire a builder until after the home is designed. Why? Because a builder should be aboard during the design phase so as to advise the architect and the client as to the projected costs of the project. One advantage of the Design and Build approach to project management is that because the Design Builder hires all members of the design and build team, including the architect, the Design Builder is intimate with all costs. At Trilogy Partners we operate as a Design and Build constructor. On every project we supervise every line item in every project budget. After having done this for more than a decade, we are better qualified than most to assemble and monitor a project budget. In fact, one of the most heard compliments from our clients is how accurate and detailed our budgets are. Before contracting, we furnish sample budgets to every potential client so they know just how serious we are about project numbers.
Bad Budget, Bad!
So, what are the consequences of a bad budget. Well, cost overruns will very likely strain the relationship between Owner, Architect and Builder. But worse still, cost overruns could financially imperil the owner, and thus the project. Can you imagine thinking it would cost X to build your house, only to find out as the project went along that it was going to cost X plus 50%? It happens more frequently than the industry would like to admit. The biggest complaint heard in the construction industry doesn’t concern construction quality but rather, poor cost estimating and financial management. So let me ask again, “What’s the most important element of a successful project?” It’s the budget. And a good budget is the best friend, the closest buddy, you will have on any project. So make sure that who ever you hire to supervise your project prepares a project friendly budget. Or else.
