Sometimes Going Forward Takes Compromise

In my experience, owners have different reasons for wanting to get something built. Sometimes there is a disconnect between what they want to build and what they can afford to build.

Recently a friend was working on a project where the owner’s design committee stated the budget on the project was up to 20 million dollars.

Monopoly housesThe project was well into the design development phase of the pre-construction process and the design team had put together a beautiful looking project. The cost of construction was estimated to be about 18.3 million dollars, including all hard and soft costs and contingencies. The team felt great! They had successfully designed a beautiful looking project the owner loved well within budget limit, or so they thought.

Then, literally an hour before the team went to present the project to the city board, the finance committee, which in this case was a singular donor, told the team they only had five million budgeted for the entire project.

My friend asked me to help him figure out how they could get the entire project down to five million, so we spent the weekend in a demi-charette, crunching numbers. The following Monday, we presented the list of suggested cuts, which included reducing square footage and ceiling heights, re-positioning buildings, combining spaces, using different materials, and the like. To say that the owner was not at all happy with the suggested cuts is an understatement.

Realistically, the owner can get all of the necessary project functions into a project that will cost five million, but taking any project from 18 to 5 million will drastically change the project size, scope, and quality. In the end, it may change so much that they don’t build anything at all. The worst part is that now they have a design that they cannot use, have purchased land they may not use, and have spent upwards of one million dollars on everything to date.

When I talk to owners, they often want to trod forward on the assumption that they will be able to find donors to help pay for the project; but the current economy is making it difficult for organizations to raise money. In every project, it is of utmost importance that the people responsible for the design and the people responsible for the funding are on the same page. In this case, the design committee never wanted to have the donor involved or informed, and had no other relevant donors. They were setting themselves up for a failure and didn’t even realize it.

In truth, it didn’t have to happen this way. If the design committee really wants to build their project, they need to come to the realization that they must compromise on the project size, scope and quality. If not, they will have wasted a million dollars on a plan they cannot afford to build and property they cannot use.

© 2016, RCartright. All rights reserved.

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