Budget Checklist: 10 Costs to Consider before you Build or Renovate

If it were only as easy as using magic to produce the much needed capital to ensure a project….

The reality of the design and construction industry is that ‘the budget’ is a daily force to be reckoned with.

All of our clients have fiduciary responsibilities, we have yet to experience a budget-free project or client. (I know, right?). And while some of our clients are well versed in costing out projects (universities, colleges, healthcare institutions, and larger corporations), many of our clients are one-timers or first-timers. Regardless, a budget clarification discussion is at the top of the project kick-off meeting agenda.

Although our clients have limited amounts of money to spend, misunderstandings about the budget are quite possible. The biggest confusion comes when the terms ‘project costs’ and ‘construction costs’ are used synonymously. In reality, they are two very different concepts.

No two projects are exactly the same but let’s take a look at many of the considerations of a project budget (note that the construction budget is only one portion of the overall project budget).

1. LAND ACQUISITION (cost of property, real estate agent fees, attorney fees)

2. PRELIMINARY PROFESSIONAL SERVICES (required for new construction or an addition to existing building):

  • Civil Engineering to survey the property and create a boundary and topographic survey for use by the design team
  • Geotechnical Engineering to perform a subsurface investigation that will enable a structural engineer to design the proper structure for soils the building will sit on
  • Environmental Site Assessment (ESA’s) to determine if and to what degree there are environmental contaminants at the property. There are three different phases of ESA’s contingent on likelihood of exposure. Let’s face it, a former gas station property is more likely to have contaminants than a greenfield site!

3. PROFESSIONAL DESIGN SERVICES (often times these services are included in the owner’s contract with the Architect, but not always):

  • Architecture to design the building, addition or renovation and lead the rest of the design team for a coordinated project
  • Civil Engineering to design the site
  • Mechanical/Electrical/Plumbing Engineering to design the electrical, HVAC and plumbing systems
  • Structural Engineering to design the structure of the building
  • Other specialty consultants (acoustics, landscape, etc.)

4. CONSTRUCTION COST or CONSTRUCTION BUDGET (the contractor’s bid amount based on the design and drawings created by the professionals listed in item 3, above).

5. CONSTRUCTION DOCUMENT REPRODUCTION (mass production of the ‘blue prints’ for use by the contractor and his subcontractors to bid and build the project

6. BUILDING PERMITTING (through the City, County or other Authority Having Jurisdiction).

7. FURNITURE, FIXTURES & EQUIPMENT (FFE)

8. IT NETWORK, COMMUNICATIONS & SECURITY SYSTEMS (design, equipment and implementation).

9. TEMPORARY SPACE for office/storage (important for renovation projects where the construction work will render the current space uninhabitable for a period of time).

10. MOVING COSTS

While this list is not exhaustive, it gives a good indication of additional considerations that businesses and organizations must consider as they set their project budget. For simple projects, the project costs may be in the range of 15-25% of the Construction Costs. When evaluating larger, more complex projects, take a healthcare project with an MRI, the additional project costs may actually exceed the construction costs.

To look more specifically at the budget for a project you are considering, reach out to SOA and we will help you put the pieces together!

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