Project Budgeting

Dear Billy and Alexis*,

What does a bag of groceries cost? How much do your homes cost per square foot? These questions are analogous. Where are you shopping, Whole Foods or Food Lion? Are you in the cereal aisle or the wine cellar? We build custom projects and our clients make choices that range far and wide. We say yes. If you want a sink that is custom made on Mount Kilimanjaro, we'll make it happen. If you want a $50 sink from a big box store, we'll make that happen.

We do provide a preliminary range of costs early in the process using cost data from recent projects. This preliminary project estimate is based on an early description of program requirements or conceptual designs only, without completed plans and specifications. The purpose of this preliminary estimate is limited to evaluating the ballpark match between project scope and project budget.

Costs (for the same scope of work) can change in the months between the presentation of the preliminary project estimate and preparation of a detailed project budget (that is based on design documents and specifications). We have seen costs drop between the preliminary project estimate and generation of a detailed budget, but this is rare. In periods of high inflation, cost increases can be significant.

The scope of work can and will change over the course of the design process. Scope changes are driven by the owner's choices, by the architect's design choices, by local jurisdiction permit requirements, and by site conditions. We occasionally see our clients make choices that reduce scope, but this is also rare. More commonly, we see the scope of work increase. Increased scope yields higher costs.

We are sharing these observations so that you walk into this process with your eyes fully open. Before you make an investment in design, it is good to have an understanding of the budgeting process and the current building environment. It is important that you are comfortable with a range of costs for your project and that you have a contingency plan. It is vital to know the limits of the range where it makes sense for you to pursue your project. If it makes sense to re-set and reduce the scope of work, it is always better to do that sooner rather than later.


Randall Lanou
Company Lead


P.S. You had it right in 1978 with the release of "Honesty." This is the honest truth about budgeting!

*Full disclosure: not only have we never worked for Billy Joel and Alexis Roderick, we've never actually met them. Indeed, I'm not sure we've ever been in the same city at the same time. They seem like fun people, though, and we would be happy to build a home for them. If any of you are close friends with them, we would be grateful for an introduction!