The foundation for any successful project is a detailed schedule and budget. stok’s Project Managers first shared tips for creating an accurate Master Schedule. Now on the financial side, the Project Manager should work closely with the Client on the conceptual budget at project inception. This budget will evolve into a Master Budget as the site is selected and more information is known about the scope of the project.
In addition to typical budget items, we want to know what might be unique to your Client and what they specifically want to track in the project cost report. Don’t forget these critical items for consideration when putting together your project’s Master Budget:
1. Include all project team members in Professional Fees or “soft costs”.
This includes the architect, design engineers, project manager, and all other consultants such as Acoustical, AV, IT, Structural, Food Service, Code, Permit Expediter, Graphics / Signage, Commissioning Agent, and so on.
2. Review the lease to see if Third Party review of drawings or Landlord oversight is the responsibility of your Client.
If so, it belongs in the budget! Read the lease carefully to see if it states that a Third Party project manager or architect will review the drawings on the landlord’s behalf. If so, there will be a stated cost to the tenant as a percent of total project costs or lump sum.
3. Check the architect’s contract to see if costs for presentation material are an added fee.
Presentation materials like high-resolution renderings can be a critical addition to your project. If these are desired by your Client, they need to be accounted for financially.
4. If your client uses outside counsel for legal review of lease and contracts, request a fee estimate to include in your budget.
For a medium to large sized corporate client, legal review may be in-house in which case there is no cost to the project. However, if a Third Party counsel handles real estate matters and contracts, the project may need to carry the cost. Determine with your client which contracts will go through legal and request an estimate of hours and rate.
5. Your GC can and should provide an initial estimate in the Design Development phase of the project. In addition to the typical items in the estimate, a thorough Project Manager will ask if some less obvious costs need to be accounted for. The ability to catch these costs early and add them to the budget saves from unwelcomed surprises and painful overages later on. They may include:
a. Scanning of slab if required by building rules and regulations
b. Overtime and weekend for certain trades if required by building rules and regulations
c. Permitting allowance
d. Accessibility upgrades if not covered by landlord as outlined in the lease
e. Cost for building engineer or landlord security during after hours work
f. Cost for cleaning if work is required in a tenant’s space
g. Special inspections allowance
6. Present selections from your Furniture vendor using a high / medium / low approach so that clients can prioritize where they spend their money.
This means 2-3 options are provided for each piece of furniture ranging in price from high to low. A client may choose to make high end selections in the public or client facing areas such as lobby or board room. These costs can be balanced by lower cost selections in private or less utilized areas.
7. Similar to the Construction Estimate, there are items which your vendor may inadvertently leave off the budget. When reviewing the furniture budget, make sure it includes:
a. Furniture dealer’s design & project management fee
b. Cost for testing and treatment of materials if not approved for municipality fire code
c. Cost for mock-ups
d. Cost for printer stands, workstation signage, and markerboards if desired by the Client
8. While miscellaneous costs will vary by client and project, there are a few key areas to consider:
a. Signage – this may include wayfinding signs, meeting room signs, lobby signs, and monument signs
b. Branding – consider meeting with the Client’s marketing team to understand how they will brand the space and how they may want to leverage your consultants and contractors
c. Technology – determine who procures and installs all IT equipment, cabling, racks, and AV equipment
The approach can include internal client teams & personnel, consultants, landlord vendors, and the contractor’s subcontractors. Planning and coordination in this area are key. stok project managers use a responsibility matrix to navigate the various components and players.
9. Always include an Owner’s Contingency.
These are funds in the master budget set aside to cover risk and uncertainly. Should unpredictable changes to scope arise, the cost should be discussed with the owner, and decision made to use contingency. The availability of these funds within the project budget will allow for quick allocation rather than timely funding requests to approvers. For this reason, we recommend owners never remove contingency from a budget. Unforeseen items even in the best planned projects always occur. We recommend a 10% owner’s contingency on total project costs until GC bids are received. After the GC contract is signed, the contingency can be reduced to 5%. Note that unused contingency is always returned to the owner as savings at the end of the project.
Want to discuss project management with an expert? Get in touch with stok’s team.