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Dos and Don’ts of the Pricing Process
We see all the time how a good and thorough Schematic Pricing set helps us avoid the pitfalls of waiting too long to get an official pricing estimate. Still, we understand how the process can be overwhelming and confusing for clients. We’ve got your back with a list of our dos and don’ts for sailing through pricing like a pro.
January 28, 2021
Over the years, we have found a robust Schematic Pricing set done early in a project means we set ourselves on a solid footing for success. It’s the culmination of our process for getting pricing early in a project. Plus, it serves as a budget reality check to help move the project in a direction that makes sense for the client and their budget.
It’s also one of the most stressful times in a project.
So, what can you do to get through it? The answer is simple but needs a little explanation. (Would you expect any less from us at this point?) Here, we break down our recommendations on how to think about and approach pricing for your project.
The numbers don’t lie.
By far, the most common concern that comes up is that the numbers are too conservative. It’s easy to assume numbers from the pre-design process are doom and gloom or, even worse, not real.
We get it. This initial pricing can look shocking, especially when put up against your original budget. (Even to us, who see these numbers every day, construction costs seem really high.) It’s natural to want to believe they’re incorrect. But time and time again we see these numbers coming in close to real costs.
What You Can Do
Don’t assume the numbers are wrong just because they don’t align with your budget or wish list.
Do use the information to go into future decisions with your eyes open.
Avoid comparisons if you can.
In the architecture and design industry, we hear hundreds of stories about friends of friends hiring someone to construct their project on the cheap. And, yes, we understand how seeing a construction cost of $500 per square foot can be alarming when you’ve only heard of people’s projects being built for $100 per square foot.
Now is the time to break free from that narrative. Your design, materials, needs, market, etc. are all different from those friends of friends. Trust us when we tell you there is always a reason for a contractor’s pricing. With an established network of contractors we work with and trust (and who want to continue doing business with us and our clients), believe the numbers you’re getting are honest and accurate.
What You Can Do
Don’t let anecdotes from your family and friends influence your expectations for pricing.
Do ask questions to help your contractor and designer help you understand why prices came in where they did.
Your contractor isn’t trying to trick you.
It’s a tale as old as time. You go through the interview process with a set of contractors, select one based on your designer’s recommendation and your gut feeling, then get numbers back from them. You feel tricked, betrayed, and taken advantage of. You either fire them on the spot or you seek out another estimate from another contractor without the input of your team. When the new estimate comes to light the team is shaken, and everyone has lost some confidence.
On one hand, we totally understand why this happens and the reasons behind it. On the other hand, situations like this can deflate everyone on a team, client and designer included.
The issue here comes down to communication and knowledge sharing. It isn’t a huge deal if you want to see pricing from another contractor — shopping around sometimes makes sense. But the original contractor had the benefit of working with us directly from the start. That means they were able to ask clarifying questions to give them a more comprehensive view of the project. While the new contractor might come back with lower numbers, they weren’t able to ask those questions and likely are missing important information. That’s the most common reason their pricing comes in lower — they just didn’t have all the information they needed.
In this situation, when things move forward, and as questions start being asked, those lower numbers start to creep back up to the original estimate. Sometimes, during construction, the fee exceeds the original number and the project takes longer. It’s deeply unpleasant.
The point of this story isn’t to scare or shame anyone. It just illustrates what can become a flaw in the process. It’s important to be on the lookout for those feelings of betrayal and frustration when they come up so you can take them to your team and come up with a plan.
What You Can Do
Don’t seek out pricing without the help of your design team. We really do want to help you get what you need from the process.
Do trust us enough to be honest about your fears. We’re your advocate. We want you to feel confident and happy with the process, if possible. It is much better to have an honest discussion with the professionals you’ve hired than to go down the path described above alone.
Trust your team.
Have we drilled this one in yet? Trust us, trust your contractor, trust the process. But also, try to bring together a team that trusts each other. If possible, use a contractor your design team knows and trusts.
At this point, Board & Vellum has an extensive network of wonderful contractors we work with regularly and trust – both in the quality of their work and the accuracy of their fees. They all go to great lengths to provide honest and quality service to our clients. Yes, we refer work to them, and they want us to continue doing so. But they’re also good people and honest business owners. If they aren’t, we stop working with them. Simple as that.
When you sign with a contractor without input or knowledge from your design team, it isn’t always the end of the world. But your design team is going to have some pull in selecting a great team and they should be involved in selecting a construction partner.
What You Can Do
Don’t select a contractor without discussing it with your design team first. It’s okay if you want to go with someone we haven’t worked with before, but let us help you vet them just in case.
Do try to select someone from your design team’s network of contractors. The relationships your contractor and design team have built are invaluable when things get stressful.
Plan a contingency.
As a practice, a contractor will (and should) have a contingency built into the budget. The contingency covers costs they may have missed. In your own project budget, you should carry a contingency, as well, to cover unknowns that come up along the way. Things like additional construction costs, design fees associated with surprises during construction, surprising soil conditions, etc. It’s wise and always better to be prepared.
What You Can Do
Don’t assume every part of construction will go smoothly. There’s literally always something that comes up.
Do prepare financially for the potential surprises and unknowns that inevitably come.
It’s a painful truth, but nothing in pricing is certain. You won’t know the final cost until it’s all over. The right team and the right mindset can make the process a little less scary.