Design or Budget First?

Which comes first, the design or the budget? How do you know what to design if you don't know what it's going to cost? Many projects have remained on the drawing board when the owners discover that the cost to build is over their budget. Designing to a budget is an effective way to ensure that a design gets built. So how do you create a budget before a home is designed?

Understanding the budget goals of the project requires a good understanding of construction costs, something that many designers are not qualified to do. Conceptual preliminary estimates should be performed before and during the design process to prevent surprises and manage the design so that it meets the budget.

Note: Do not select a builder based on a conceptual or preliminary estimate. It's very likely that the total cost will change substantially before construction is ready to begin.

Conceptual - A conceptual estimate is often needed for the purpose of planning a project. Accurate cost information is necessary to determine whether a project is viable. Cost-per-square-foot is the most common technique but can be misleading and inaccurate. Unit cost comparisons from completed project records are the best format. A conceptual estimate should include adequate detail to show everything that is included and that which is not. This step is often necessary prior to committing to design or professional services fees. A good conceptual estimate should provide enough information for the owner to have a clear understanding of how much home they can purchase for their money.

Preliminary - As the design of a home commences and a scaled floor plan is available, preliminary cost estimates can be started. The accuracy of the estimate is dependent on the level of detail available. It’s not uncommon to produce several preliminary estimates as the design progresses and decisions are made regarding finishes and features of the home. Unit cost pricing, consultation with trade partners and historical records are beneficial for providing information, and can be used to help the owner establish a reasonably accurate budget during the design phase. The estimator assembles bids along with his own calculations to produce an accurate cost to build.

We're working on a collection of articles called "20 Steps to Your Dream Home" that features ideas of suggestions ranging from property evaluation and choosing a designer to contracts and supervision. Please let us know if you'd like a copy of our current draft.