Many years ago we had some customers, a very nice, middle aged couple, who were building their retirement home in an upscale, mountainous region of Colorado and wanted an very energy efficient house designed. From the very beginning, whenever we brought up the issue of budget they would start to squirm. They were vague. They were unsure of their numbers. While they might not have been forthcoming, they did assure us that they had their financial arrangements under control. We discussed the size, style and quality level of finishes and appliances they could expect for the general budget they gave us. We had enough realistic (although vague) budget information to begin.
From the first moment, they started adding things. They wanted more space and more rooms. They wanted more windows ...MANY more LARGE, custom-sized windows. They decided to add fancy, professional quality appliances, then a large hot tub, and a greenhouse to put it in. Each time they added something we calculated the additional cost which brought them quickly over their budget. We had meetings with them, explained what was happening and showed them the numbers and the calculations. They continued to be vague.
They did not seem concerned, but we were! We sent them letters confirming these costs. We did not want them to have a rude wake-up call when they started to build their home. We could not get a reaction from them other than they wanted to proceed. They insisted on going ahead with these additional expenses with no further explanation.
Was the Budget Really the Budget?
This type of situation was new to us, but finally it became clear that the original budget was not really their budget at all.... and we had no idea what it really was. It was a nerve-wracking feeling for us. It's very difficult for your arrow to hit the bulls eye when you cannot see the target.
They built the house with all the extras and it cost a LOT more than the budget they originally gave us. Luckily this story has a happy ending. Money issues never came up and they were happy through the whole construction process. This was because they had expected it and planned for it all along. Their budget was "whatever it took to get what they wanted" but we designed their project with blindfolds on.
Through this process we got to know these folks fairly well and developed quite an affection for them. After it was all said and done, the man confessed that he had been warned never to reveal his true budget because he was told, "they will spend every last dime of it." He was told that if you give a lower budget number, your final costs will be less. He admitted to following that advice, but said, in retrospect, that it was counterproductive to the project.... and was totally unnecessary. We agreed. We much prefer a clear and true target.
Another Example
Just recently, a prospective client came into our office for a meeting. He had considered us before, but chose to work with another architect on his project. He told us that he had said there was "no budget" on the project. After a lot of money and time spent developing this grand, energy efficient house design, it was put out to bid and cost half again as much as he wanted to pay. He admitted in the meeting that he should have been upfront about the budget from the beginning. We had to agree.
Why You Need to be Clear about Budget
As your designer, we have enough moving targets anticipating labor and materials costs in various parts of the country. Costs fluctuate depending on time of year, supply and demand, local building climate. If you decide to become a Sunlight client, please consider us to be your partner in this project. If we all communicate honestly, effectively and in a timely manner and do what we say we are going to do, the project will have all of the necessary ingredients for success. We will appreciate your candor.
The Might-As-Wells
When you get into designing your new home and ideas start to flow, it's easy to think that you might-as-well add this or might-as-well enlarge or upgrade that. When you get into the construction phase, the same thing can happen. Might-as-wells can be great ideas that save countless hours or dollars in the future, or add to the functionality or beauty of your home. They can add up fast, however and can increase the cost of your home significantly.
Managing your might-as-wells can be difficult sometimes. They are seductive. A home is comprised of very many smaller components. An upgrade to one of these components might only cost a couple hundred dollars and the difference in quality can be significant. It’s true that a couple hundred, or even a thousand dollar upgrade will not break a budget, but multiply that times the 50 or 100 other equally enticing upgrades and you can see the budget really start to grow. We will do our best to help guide you through this in design as there are some upgrades that might pay for themselves over time, while others might be a money pit. A good builder with a good budget spread sheet will also help keep you on track.
During design we give our customers "budget alerts" if the evolving design begins to creep up in price. Beware of the might-as-wells if you are working on a tight budget!
The Cushion
We recommend that you reserve some money as a "cushion" to cover unplanned costs during the construction of your new home. We have been in the business for a long time and we have seen it all. Some of our customers end up deciding on materials that cost more than they originally planned. Sometimes changes in labor or material costs impact a project. Sometimes unexpected extra fees appear. Sometimes there are irresistible might-as-wells. It's nice to have a cushion that gives you some flexibility. This is not a tract home that has been built hundreds of times before. A custom home, by its nature, is a prototype so being prepared for the unexpected is always a good idea.