Shopping around......

One of the critical aspects of any project is managing your budget and ensuring you get the best "bang for buck". I get it, it makes all the difference to your pocket at the end of the day.

It is a fine line though, of course. What should things cost? When you have a "one off" project, how do you know what the price should be?

Well, for one thing, you should always get multiple quotes. Sometimes this can be difficult because professionals and builders don't always have time to quote a project so they will give you an estimate. These estimates can vary greatly depending on how the supplier interprets your brief, what you might be like to work with as a client (more on this a bit later) and what the possible issues might be as they work through a project. This is usually assessed on a time basis. The breakdown of projects can fundamentally be broken down to "how much time will this take?". Therefore,

time x hourly rate = cost of service\labour.

In this case, the cost of service becomes an "estimate". By transferring the cost of service variable above and adding the other business costs, the equation then becomes;

cost of service + (materials\overheads) + profit margin + taxes = quote.

And the quote is critical, because it defines a scope of works and contractually assigns roles and responsibilities and a value for service. On acceptance by the client, this becomes the contract value.

Now, architecture companies may have a slightly different calcution as they often put the profit margin and taxes component into the hourly rate at the start. They provide a drafting figure of $100/hr for standard drafting, or $130 for mid-level design technicians and higher hourly rate for senior staff which incorporates the staff wages, company overheads and profits

They seek to simplify the equation for the customer, but the outcome is always the same.

cost + profit = professional fees.

Now, why have I gone all the way back to rudimentary mathematics to show how professional construction businesses price work? Well, quite simply, you now have a more clear understanding of why the price varies depending on who you ask. Why does this drafting firm cost 20% more than the other one.

well, either they are spending more time on the project, or they have more overheads, or they have a higher profit margin or tax responsibility. Some of these are controllable, some aren't.

Now, I said I'd come back to how the client can have an impact on the quote.

Clients have all sorts of capabilities and limitations. Some clients ask hundreds of questions and some don't. Some clients like to micromanage and some are very "hands off" and let the professionals do what they need to do and only ask questions when they need to. This is all project time that needs to be assessed at the start of the project and given reasonable consideration as part of the fees and process. Time is money. We are all aware of this. The last thing you need as a client is to pay the cheapest fees and find the professional won't answer your calls or address you later in the project because this time is costing them money.

It happens. A LOT!!!! So therefore acknowledge as the client where you fit in the spectrum and be prepared to pay more for the service because the professional cannot spend any more time than they have allocated to your project. They will start to ghost you.

For me, a good client is somewhere in the middle. I have many clients who will ask the really important questions and I set about time at milestones throughout the process for these queries to be addressed. If a professional provides you a fee, but gives you no clear understanding of the scope and how much time they have allocated to discuss the project with you, this is a big "red flag" because it shows that they have not understood you as a client. I have 2 old sayings that are really pertinent for this blog.

"The bitterness of quality issues are present long after the sweet taste of a cheap price has disappated". This is especially present in construction. I would be a rich guy if I had a dollar for all the red faces I've seen with regards to clients taking the cheapest price and realising after the fact how bad a decision that was.

"You get what you pay for". If your sole driver is to do things for as cheap as possible, don't then think it's ok to come on any sort of platform and complain about the result.

I see videos all over social media of people who complain but took the cheapest price only to lose significant sums of money with the mistake. You should only go for the cheapest price when you are an expert in the field and know how to control the outcome within the scope of works. Shopping around is important. It's important to understand what things should cost, but if you find yourself gleefully telling people about the great price you got on some that seemed too good to be true, it probably is, and you will likely learn an expensive lesson.

It's not all bad though......there are still some really good operators out there who will do a really great job. You just have to accept that it will cost a little more. If you want a mercedes, don't pay for a hyundai.

Value engineering is a key aspect of any design process. A good designer will save you significantly more money than their fee and have time in the project to be able to test options and find the best "bang for buck". It's what we all want, value for money, above all.

Keep spreadsheets of pricing. Buy when plug-in products are on sale and nominate these key items as client supply in your build contract. Big ticket appliances are a prime example. Engage your consultant early and select a builder and undertake an ECI process. This is a process whereby the designer, builder and client sit down and really nut out the detail of a job and put in place value engineering at the start of the project before breaking ground. Its important and will continue to be a critical process in maintaining value in a project but keeping costs down. Let the experts in their field, be experts, and as the client make decisions effectively.

Signing off...

Revell