Anticpating budgetary drift
January 9, 2012 10:25 AM   Subscribe

Do I disclose my actual budget to my architect/designer for a major renovation?

We are embarking on a much-needed, rather extensive home renovation. Because I am catastrophically inept, a wonderful, inspired architect/designer, a friend of friends, has offered to take on the project and see it through to completion. We have never undertaken anything on this scale before and what for us is a huge sum of money, for him is a fairly modest budget.
My question is this:
Do we disclose our full budget or do we tell him, say, 80% of our real budget, in anticipation of budgetary drift?
Your first question is, how well do I know this guy? And your second is, what is his track-record and reputation? The answers are, I trust his vision and his integrity but friends tell me his vision can be expensive. (Not quite an answer, I know.)
Other factors: It is a unique and fabulous space that he - the designer - loves and wants to see rehabilitated. And he acknowledges that we are not in the same tax bracket as his regular clients.
So while it is largely a matter of mutual understanding between individuals, I am also asking about standard practices and personal experience. (In general, one doesn’t hear about projects that come in on budget.)
(And since I wish to remain anonymous, let me thank you in advance for your insights.)
posted by anonymous to Home & Garden (11 answers total) 6 users marked this as a favorite
You should ask the architect to budget the project out for something like 50-60% of the money that you actually have available. Your architect's proposal is going to be a perfect-world scenario; it's important that you reserve enough money to see the project through the decidedly-less-than-perfect circumstances that you're actually going to encounter. ESPECIALLY in a scenario where you have a tight budget, it's important to keep a financial buffer. At stake: your peace of mind & financial stability.

I have seen repair and renovations projects in a wide variety of locations and budgets, and I have never, ever, EVER seen such a project come in on time or on budget. Assume that you're going to face higher-than-expected labor costs, materials costs, unexpected auxiliary costs (for instance, the need to stay in a hotel for a week), and a bunch of unpredictable problems both large and small (for instance: "Oh hey, now that we've opened up the wall, we can see that it's full of mold!" or "Oh hey, we didn't realize that this beam was a structural support!" or "Oh hey, these tiles won't ship from California in time!" or any number of other things) that will make the project more expensive.
posted by ourobouros at 10:42 AM on January 9, 2012 [1 favorite]

You can explain to him that you have budgeted x amount (x= 80% of budget) and you can go as high as y amount (y = budget) but that if anything goes higher than that, you literally will not be able to pay the bill. you understand this is a low budget so you are particularly thrilled that he is a genius and can hopefully do something fantastic with that.
posted by saraindc at 10:43 AM on January 9, 2012

We engaged a construction manager/designer for similar work. Gutted and redesigned half our downstairs, including the kitchen, bathroom and laundry room. I had similar misgivings about revealing the real budget (as in, beyond this point, we have no more money).

Never having done this before, i said, "We can't spend more than XXX." Well, the project cost somewhere in the neigbhorhood of (XXX+$100). They came ridiculously close to the exact number we gave them.

So -- are they really good at watching a budget and keeping the project on track? Or, do they know how to spend, spend, spend, right up to the limit? It's still a mystery, but they've earned the benefit of the doubt. The work went well and we love the results.

I think if you give them the lower number, they will budget to your lower number. I don't know if there is contractual language you can employ to make there be consequences for cost overruns.

On the other hand, let's say you want certain features or materials that you could actually keep within your "real" budget, but not within your "safe" budget. Those are tradeoffs you'll have to consider.

TL/DL: If they are responsible, they will keep it within the bounds of your stated budget, as long as you make clear that you can't go over that amount -- so the budget must INCLUDE contingencies.
posted by Buffaload at 10:45 AM on January 9, 2012

You should give the architect some idea of a budget, and honestly, if the guy you're working with is doing well enough that he's still pulling in projects that have much larger budgets than yours, he's doing better than most of the field right now, who'll take just about any job to help pay the bills.

What budget you actually disclose will depend on how well the architect is able to adjust his normal standards to meet your requirements. Keep in mind though, that a lot of budget creep happens during construction and is as much due to the contractor as the architect, or finding conditions while remodelling the house that necessitate revisioning of certain things you'd planned. Also, a good way to keep budgets in hand is to be effective at making decisions as early as possible and sticking with them - changes to the design, no matter how simple or minor, inflate the costs for both the architect and the contractor. A lof of projects I've worked on where there were major budget increases came about because of client changes (although, sometimes at the architect's instigation) than because of the actions of other parties.

I have worked with clients who did put language into their contracts with the contractor that had a risk/reward clause for coming in under budget and on schedule, so that's doable, but I don't know if an architect would accept something like that since so much of the final project budget will depend on the contractor, and you won't be able to get anything more than an educated estimate on the part of the architect for the budget until contractor bids come in.

In the end, I'd think your 80% figure would probably work out pretty well, as long as all parties inolved stick to what you're trying to do initially. The architect should, no matter what his normal project type, be able to take that figure and tell if you what you're trying to do is possible within the budget you've laid out, hopefully accounting for some creep in his estimation at the outset.
posted by LionIndex at 11:10 AM on January 9, 2012 [1 favorite]

Having been the owner in several commercial and residential projects involving architects, my experience is that architects are at least one, and arguably two, steps too far removed from the world of real construction to have realistic estimates of what things actually cost. I like the 50-60% mentioned above.

Don't get me wrong, I love having architects involved. Cost estimating is just not their forte.
posted by webhund at 11:29 AM on January 9, 2012 [1 favorite]

Having been the owner in several commercial and residential projects involving architects, my experience is that architects are at least one, and arguably two, steps too far removed from the world of real construction to have realistic estimates of what things actually cost. I like the 50-60% mentioned above.

Don't get me wrong, I love having architects involved. Cost estimating is just not their forte.

I think this is a fair point, and it could be more relevant depending on the experiences of the architect in question. When I've worked for high-end residential architecture firms, the budget generally was not the greatest concern (this might be true of your architect's more standard client), since they were more just designers - kind of like amped-up interior designers, and the client was willing to pay to get exactly what they wanted. If the architect here has a practice that gets more into the nuts and bolts of construction detailing, it could alleviate that concern to a degree.
posted by LionIndex at 11:48 AM on January 9, 2012

We told our contractor we had exactly 25K, and spent exactly 25K.
posted by DarlingBri at 11:57 AM on January 9, 2012

You can have something called "alts." When we bid out a renovation project for our local schools, we have a main project that the contractors bid on, but we also have the architects prepare "alts" which are extra bits that we'll do if the bids come in low enough. So, without any idea what you're redesigning, you might say, "okay, repainting, redoing the wiring, adding overhead lighting, and completely renovating the kitchens MUST happen; things we'd like to see if it comes in on the budget are a renovated bathroom, adding a built-in to the master bedroom, repairing this stained glass ..."

You can work with the architect to decide what are the main things and what are the "alts" for when you bid it out, and try to set as "alts" projects that you can separate and do in the future. Like, maybe any built-ins HAVE to be done now, but the crown molding on the second floor can be put in in five years when you've got the money for it.

Also your contract should include both the cost estimate and the allowable "drift" and what change orders will cost and so forth. You should be able to protect yourself to stay within your budget.

(On a smaller scale, we got bids on some repainting last year, and we asked the contractors we interviewed for bids on both the stuff we KNEW we were doing indoors before the baby arrived, and some stuff we would LIKE to do outdoors but there were time/money/weather issues. We were clear which our priority was, what our deadline was, and when we were looking at the secondary work. They all happily gave us bids on both. Fall ended up unusually wet and didn't work out for outdoor painting, but we're going to call one back this spring to do the outdoor stuff. Of course the bid wasn't guaranteed for 8 months later, but we at least have a ballpark for what it ought to cost.)
posted by Eyebrows McGee at 12:17 PM on January 9, 2012

Please note when evaluating the answers above that many of the people with awesome experiences were dealing with contractors, not architects. A contractor is NOT an architect. An architect is several steps removed from the nuts-and-bolts of the work that will be done; I find in general that contractor estimates are more likely to be accurate (though, even if you were talking directly to a contractor, I would still advise you to keep some budget in reserve in case you run into unexpected problems once you start demolition).
posted by ourobouros at 1:20 PM on January 9, 2012

We paid our architect a pre-agreed upon hourly fee and found a builder who could create that vision to our budget. We told them both what our budget was. It went over. But not by terribly much, but there were a few unexpected surveyors fees.

Our builder also quoted our reno and our kitchen separately. He broke it down and told us the things we would have to source separately. Then he helped us find them at good prices. eBay!

Our architect had "Grand Designs", but our builder was very budget conscious. He pulled me back from spending silly money far too frequently. Actually, I'm really grateful. I got a bit carried away with the frills.

I agree with the 60% ballpark. But bring your builder to meetings with the architect. You all need to sit together and, very literally, be on the same page.
posted by taff at 2:50 PM on January 9, 2012

Short answer: this depends on the architect, and you are allowed to take references.
I just finished a renovation which came out cheaper than the budget, because I was worried that the client would want a lot of extras (which she did, but the extras turned out to be cheaper than I thought). But I am an architect who likes to work with the budget as a creative tool, and I am not an idealist, in the sense that I calibrate the level of perfection to the clients level of perception. If I am payed to do perfect, I will. But I can do nice, too.

Somewhat longer answer: the architect is the person who makes the design, and after that makes sure that your contractor supplies *exactly* what was specified in the design. In the bidding process, there is a negotiation between the contractor, you and the architect about the specifications, because there will always be aspects of the design which can be solved in different ways. In the case mentioned above, I had specified solid oak for the kitchen counter, and the contractor delivered laminated oak. Realizing that the client would be just as happy with the very nice laminated wood, I told the contractor he had made a mistake, and that I expected my tolerance to be met with a gesture in kind when we (inevitably) found I'd made a mistake somewhere else. This is the life of construction.
If you want a perfect design, you should pay extra for the design process, so there is less negotiation about the details. If you want a good design and a smooth process, you should spend some time finding an architect you has a reputation for good management as well as good architecture. These come in all shapes and sizes: I've heard the Gehry office are excellent at project management, while some small offices who should know better don't bother to learn it. And of course there are countless examples of the opposite: often small local businesses are better at handling costs and management because they deal with a local reputation. This is important to you. Don't take it lightly.
It seems that your space is special, and that might cause unexpected costs. Some time ago, I renovated a listed property which ended being a very expensive job, because we had to adhere to very strict limitations, and it turned out there were structural and health problems. I never made a budget for that, because I had a sense this could end in a very wrong way and it did. I was honest about this from the start, and the clients are still happy. They wanted this house above everything else, and they managed to find the money over time.

When you negotiate with the architect, you should go through the budget in detail, and make sure he/she understands completely where your limits go, and that they are real limits. But don't play games. Maybe the architect can see a solution that helps you save on fittings, but spends a bit more on panels (ok, totally random guess here).

Ideally, the architect is your guide through a difficult process. I know these ideal architects are rare, but they exist, and you should find them. Maybe you already have.
posted by mumimor at 3:00 PM on January 9, 2012 [2 favorites]

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