Budget Led Design
House Designs That Work Within A Budget
“Here’s a sad fact, over 35% of Architectural Plans (often Consented) do not get built. The client paid for these plans but found that they could not proceed, and the primary reason was that when all the quotes came in, they exceeded their budget.
Now compare that with 99.9% of plans that are Budget Led that actually go ahead and get constructed. The logic for this is simple. The design team, this includes the architect, the different engineers and consultants have no direct experience with costs. They are never paying the bills so they don’t know what the cost impact of their recommendations will be. The decisions that they make often have a compounding affect layering cost upon cost, but they have no idea.
When the owner goes to the builder for a price and the full price comes in, everyone is surprised, and the stakeholders are left with Sophies Choice. Abandon the job or pay to have the changes that are required to bring it back within budget. It is not uncommon to see this double take add an additional $100,000 in costs to the second iteration. All of this could have been avoided. The current model that leaves out the cost responsibilities until the end, leaves the owners and the builders utterly frustrated. Yet this could have been easily avoided 100% of the time”
Many homeowners engage with an architect first, which seems logical, as they are the ones who will design your home for you. But complications can arise when you wait before you engage the builder in a home building project if the house design doesn’t end up matching the budget, which can often put the project in jeopardy.
In this blog, we explain the concept of “budget-led design”, what homeowners are currently doing and the issues it is causing, and why it’s important to work with a builder from the very beginning of your home building journey.
What is currently happening?
As a homeowner starts thinking about the design vision for their new home, including what spaces they want to create, the number of rooms, the layout/design and how much they want to spend, they want to get insight into what’s possible from a professional such as an architect or builder.
We've observed a common pattern among homeowners: they often begin by engaging with architects to develop their plans, spending a large amount of money to get their vision onto paper
This can be exacerbated by the introduction of other professionals such as interior designers, engineers, Geotech reports etc., and homeowners can end up investing sometimes tens or hundreds of thousands of dollars in plans that may never end up being built.
They then approach us with these plans, and together with our Quantity Surveyor (QS), we work to determine the cost estimate. Unfortunately, it's not uncommon for us to discover a mismatch between what the homeowner expects the project to cost and what they have budgeted for – in fact, this happens to 35% of projects in New Zealand. This often leads to disappointment as they realise their vision might not fit within their budget, and the architect may have to draw the plans again, leading to more costs being ticked up. In some cases, the homeowners have to cut back on the project's scope, and in more extreme situations, some have had to give up on the project altogether.
So, what’s happened while this is going on? The builder and all their subcontractors have done lots of free quoting on plans that won’t fit budget, so they end up wasting hours of time for projects that either don’t go ahead or face big delays. From an industry point of view, the homeowner ends up paying for all that inefficiency, as it must be loaded onto all other successful jobs for construction businesses to survive. And unfortunately, it is crippling the building industry in New Zealand. We are an outlier in respect to this inefficiency – other countries simply don’t tolerate it.
At Forfusa, we have had to help “cost-engineer” jobs for our clients. This is where builders (often with their QS) are joined at the hip with the Architect and the Design Team. This adds a slight cost to the design work, but ultimately it saves a lot of money as the downstream results are certain. The overall improvement in the efficiency of the project also means that the owners end up with more of the niceties in their homes for their money. The elimination of the inefficiencies leaves more money to spend.
At Forfusa, we encounter this situation with multiple potential clients every year. These homeowners come to us with designs, but unfortunately lack the necessary budget to bring these visions to life. Most homeowners facing this predicament either start from scratch or delay their building plans for several years, as they are exhausted by the design process and deflated by the unexpected cost escalation.
Why is this creating a problem?
When an architect works in isolation and begins the design process without involving a builder, it limits the influence that a builder can have on the overall process. Instead, the architect and builder should both sit down with the homeowner and discuss the project (i.e., what they want to do, how much they want to spend, the site/existing house, council conditions and any constraints).
Working together, the architect and builder can use their combined knowledge to look at past projects and come up with a rough idea of what something similar might cost in today’s market. At this stage, all parties can work together to figure out whether there needs to be a change to the brief or budget, which is all done before anything is physically drawn and costs begin to incur.
As soon as the architect begins drawing, the homeowner starts picturing themselves living in the new space and gets their heart set on their new design. Once these emotions kick in, it can be very difficult for the homeowner to accept that the project might not fit their budget and be told they have to pull back their scope. At this point, it can feel like they're compromising and giving up on things they really wanted.
So, what is the solution?
The best thing homeowners can do is make sure their architect is “joined at the hip” with a builder and QS, right from the start. Then, when the architect has finished drawing, there is a higher probability that the design will fit within the budget and won’t have to be redrawn. This means no massive delays in the build, which can sometimes take over a year, causing prices to go up again.
Other benefits a builder can bring
The role of an architect is to bring together their design vision, space planning and technical expertise to create detailed drawings, plans and specifications. The builder has two particularly important and crucial jobs, the first one is to advise you how much your build is going to cost and the second is to build it. They work closely with the architect to ensure that the design can be feasibly constructed and provide cost estimates and construction schedules.
Now, often the homeowner presents the plans to several builders, all of which price the job too high, going above and beyond the homeowner’s initial budget. Since the builder ultimately determines the cost of your build, why would you not get them involved earlier on in the picture to ensure you get to build your dream home suited to your budget?
A builder can also help you save money on your build earlier on in the design phase as they can suggest different ways of constructing certain aspects of the build. As the design unfolds, the builder can be on hand to question the price differential between different materials and fixtures, for example, stacker doors vs bifold doors or timber floorboards over polished concrete.
When engaged early and working in collaboration with the architect, your builder will be able to analyse your design in detail, pointing out elements that may not fit your budget and suggesting approaches and materials that may control costs. A reputable and trustworthy builder will have the experience to guide you through all permits, contracts and council approval necessary for your home build.
A new strategy: budget-led design
In short: If the design doesn’t match your budget, you are never going to initiate your build.
The pre-construction process is a crucial stage in a residential building project, as it lays the foundation for the entire project. To ensure the best outcome for homeowners, both architects and builders should be involved in the pre-construction process. Architects have no obligation to match the budget to the design, so the question is, who does?
Homeowners should be starting the design process in the most informed place possible, with the architect and builder using their expertise together at the very beginning to determine a design that meets their budget. Once the budget has been established, they should work in unison to make a collaborative decision about what the project can accommodate, including the brief, constraints, and council considerations.
Our hot tip for homeowners: Don’t wait until the concept design or, even worse, the Consented Plans are in place or until after the first briefing meeting to involve the builder. Either approach a builder who you will take to the Architect or ask your Architect to involve your builder in the design decisions. There will be better success for everyone involved if all parties are working together right from day one on the project's briefing, design objectives, and budget considerations.
“The Truth At Any Cost Lowers All Other Costs.” - Eddie Cooney at Luxor Homes
“By involving both the builder and the architect in the pre-construction process, clients can ensure that their project is well-planned, cost-effective, and is feasible to be built within budget.” - Ben Lewis at Lewis Build
“Everyone wants certainty and certainty of cost is their biggest wish” - Matt Saathof at Totara Construction
All of these builders will work collaboratively with the architect right at the very start of the process. Everyone can bring an architect and a QS to the initial consultation meeting if required, to help understand what is possible for your project and make sure the design and budget are aligned.
Conclusion
It is crucial that the builder is involved in the pre-construction stage to advise on cost and buildability, so the homeowner can work with an architect and a builder to ensure the design is being developed on budget and is adopting all efficiencies during construction.
However, we are finding this is not often the case, and it has been heartbreaking to see so many dream projects fall over as owners invest costs with architects at the start of the process and come to us with plans that are unrealistic and not achievable within their budget.
By taking a “budget-led design” approach to your project, you can get a realistic design for your house at the outset, saving a significant amount of money at all stages of your build. Not only do we work collaboratively with the designer right at the very start of the process, but we also bring a QS to the initial consultation meeting if required, to help understand what is possible for your project from a budget perspective.