Assembling a Project Budget January 26, 2017 IMPORTANT NOTICE: This document contains confidential information proprietary to Gilbane Building Company, including but not limited to trade secrets and/or copyrighted material. Any unauthorized disclosure, duplication, or use – in whole or in part – of such confidential information for any purpose is strictly prohibited. All rights reserved by Gilbane Building Company.

Learning Objectives Conceptual Budgeting Methods Evaluate various methodologies for conceptual estimating Understand the procedures required to establish realistic and achievable project budget at the initial programming stage of design Escalate and regionalize historical data to suit a particular time and place Review the accuracy of ‘soft costs’ such as furniture and technology

Outline Conceptual Budgeting Methods Review of traditional methods of creating conceptual budgets and soft costs Common issues with these approaches Solutions for issues and optimal conceptual budgeting process

Information may be limited to: Introduction Conceptual Budgeting is usually done when available information is very limited. Information may be limited to: An idea of the square footage A space program Number of units, such as the number of beds in a residence hall An existing building needs renovation

Number of Common Units x Cost per Unit Ways to Create Conceptual Construction Budgets Number of Common Units x Cost per Unit Examples: Area: square footage x $ / SF of building School: # of students x $ / student Science Building: # of labs x $ / lab Residence Hall or Hotel: # of beds x $ / bed Cafeteria or Theater: # of seats x $ / seat Site Development: # of acres x $ / acre Road Development: length of road x $ / linear feet Power: # of kilowatts x $ / KW

Using data from previous projects Ways to Create Conceptual Construction Budgets Using data from previous projects “The last one we did cost this much…” “My peer built one and it cost $ xxx per SF, and I want what he got so my cost should be the same”

Premiums added to projects at a conceptual level for: Ways to Create Conceptual Construction Budgets Premiums added to projects at a conceptual level for: LEED or sustainable design – premium added as a % of total Environmental issues in the building (hazardous materials) Site development costs related to peculiar circumstances: Rock Water Unsuitable soils Grade variances Level of accuracy of this can vary widely

Percentage of Construction Ways to Develop Conceptual Soft Costs Percentage of Construction A/E Fees Consultant Fees Permits (or other various methods) Contingencies Escalation Other?

Cost per square footage or per common unit Ways to Develop Conceptual Soft Costs Cost per square footage or per common unit Furniture, Fixtures and Equipment (FF&E): per student or SF Science Building: per lab Residence Hall/Hotel: per bed Cafeteria or Theater: per seat Technology: per student (user) or per SF Other?

Simple Lump Sums Ways to Develop Conceptual Soft Costs Specific systems or equipment Medical equipment Power sub station Septic system or sewer connection Geothermal wells Other?

Escalation not always applied correctly Problems with Traditional Approaches Escalation not always applied correctly Adjust cost for inflation of a slump in the economy Job location costs vary greatly Boston vs. Columbus – 15% at least SF costs to not account for program variances Example: One school had a large technical education component, the other had more performing art spaces

SF/unit costs do not address differing building configurations Problems with Traditional Approaches SF/unit costs do not address differing building configurations Tall and skinny vs. short and wide More windows, less windows A building in the South vs. Wisconsin

SF costs to do not address the differences in every site Problems with Traditional Approaches SF costs to do not address the differences in every site Urban sites Brown fields Demolition of existing? Utility availability Roads, fields, wetlands

Often not escalated properly Items missed: Problems with Calculating Soft Costs Often not escalated properly Items missed: Specialty Consultants not in A/E base services Peculiar local fees Moving buildings Utility service charges Other?

What varies between buildings of a certain type? Project Variables What varies between buildings of a certain type? Program Footprint/configuration Exterior skin Structure Site conditions

Use historical data for the programmatic pieces of the buildings Solutions to the Program Variable Use historical data for the programmatic pieces of the buildings How much does a recovery room cost? How much does a music room cost? How much does a typical dorm room cost? How much does a toilet/shower room cost? How much does a tiered classroom cost?

Make thoughtful decisions about the site Solutions to the Site Condition Variable Make thoughtful decisions about the site Size (acreage) Roads, parking, etc. Utilities Soils Building demolition Price in a conceptual way based on the local market

Solutions to the Soft Cost Variable Develop checklists of all potential soft costs Apply appropriate costs based on local market and the specifics known

Questions? IMPORTANT NOTICE: This document contains confidential information proprietary to Gilbane Building Company, including but not limited to trade secrets and/or copyrighted material. Any unauthorized disclosure, duplication, or use – in whole or in part – of such confidential information for any purpose is strictly prohibited. All rights reserved by Gilbane Building Company.