Particularly in the last few years since the financial crisis, project budgets have become more and more of an issue for clients and interior design teams alike.  There are some interior designers out there who believe that managing the construction costs is not an interior designers role – that it is the job of the project manager or quantity surveyor.  There are also some clients who believe it is better not to tell the interior designer what the budget is for fear that they will spend it all.  I disagree with both of these views.  It is the job of all team members to have some level of understanding of the budget and what impacts that could have on their discipline.  Is the job on a tight budget where every cent will count, or is the client more concerned with the level of quality?  Whichever the case, the client almost always has a budget constraint (I think we would all agree that an unlimited budget project would be the exception).  Clients – please tell your interior designers the budget.  We are not out to spend every cent.  If we don’t know and understand your budget we can’t use our skills to help you.

By understanding the clients budget and by the client placing trust in the design team to work to their budget, the design team are better able to present and discuss options with the client which achieve better design outcomes, meet client expectations and are realistic within the budgetary framework.  This cannot be achieved by a quantity surveyor alone as they usually do not fully understand the project design objectives and criteria, and nor is it their job to.  No one team member be they interior designer, quantity surveyor or project manager can usually understand the full scope of the clients detailed design and performance expectations.  Designers need to be involved in the discussion of overall design quality, fittings, furniture and the like and engineers frequently need to provide further more detailed breakdowns of what they are costing and specifying.  It is only through discussion of particular scope areas or disciplines can the design team leader make informed recommendations to the client, to allow the client to make an informed decision (in the end it is their money).  This is real value management, rather than value management as a term which these days has often come to mean cost cutting.

My key tips for value management and cost planning for interior designers are as follows:

1. If a client wants a cost estimate that is more detailed that a mere dollars/sqm rate use a quantity surveyor (QS).  Interior designers should understand what the dollars/square meter rates in their area of specialisation will actually buy/the level of fitout quality that can be expected/the average costs.  Be able to compare your previous projects.
2. Brief the QS.  I find that frequently the QS will start out costing a very basic level of fitout and needs further direction.  Room data sheets can be a useful tool to brief the QS on more detailed items such as whiteboards and pinboards that might otherwise be forgotten (look out for another blog post soon on Room Data Sheets).  Ask the QS to include allowances for things like feature finishes, ceilings or specialist joinery that you haven’t yet fully thought out but you know you are planning to include.
3. Understand the cost of large or propriety items within the interiors package.  Get quotes for operable walls, workstations, furniture or major equipment items.  Talk to the QS about your expectations of what allowances should be made for these items.  You should understand what you intend to specify and the quality expected for the project.  I’ve just lately started looking at how this can be managed inside of the Revit model too.
4. Understand the engineering estimates.  When you work with engineers who are good at explaining and value managing their components of the works learn as much as you can. On a future project you are then better able to question and discuss options with another engineer who might be prone to overdesign. (I know you engineers really want the client to have that super duper new blade server – but really do their management know what they are paying for?)
5. Review the QS cost plan, preferably before it goes to the client (though that is usually only practical if you have engaged the QS).  Sometimes even with a good briefing they misunderstand your design intent or simply miscount (or maybe there are errors in your room data sheets).  If the cost plan is way over budget at this point maybe their are opportunities to pull back in a few areas before the client sees this version.  Conversely if the project is well under budget (does this ever happen?) maybe you can add more allowances in.  Make sure that the cost plan includes both design contingency and construction contingency.  Most of all I think its important to make sure the cost plan is a true reflection of the clients expectations regarding quality.
6. Update the cost plan periodically throughout the project, continue to discuss and make value management decisions as you design in conjunction with the other design team members.  For the size projects I usually deal with (mostly in the $1 million – $5 million construction cost range), I find 3 to 4 iterations of the cost plan about right.  One at concept stage where a lot of issues are still fuzzy and perhaps some significant design options are being investigated, one at around 60% stage where the details are more developed and a pre-tender cost plan.  For a larger project this would be a more ongoing basis and the QS might even be present at weekly project meetings.
7. Keep the client informed.  The biggest problems occur when either the client does not understand a mismatch between their budget and quality expectations or when costs go up from the original cost plan and the client hasn’t been kept informed.  It does seem obvious that if they add scope (eg double the amount of major signage/graphics) that this would add cost, but I find that it’s best for someone (which could be the PM or the interior designer depending on the team structure) to make sure of this.  I have had these scenarios occur and it led to some difficult meetings (and in one case legal action – surprisingly by us and not the client).