Project budgets: you’re doomed if you aim too low, and you lose deals when you go way too high. Even the industry's best will often find themselves succumbing to the consequences of out-of-control budgets. Poor estimating, lack of visibility, and too many change requests will ultimately run your bill.
But we’re not here to cry over spilled milk. Instead, we want to go back to basics and re-learn the foundations of building accurate and manageable budgets.
It’s not rocket science: Any project will run more smoothly and efficiently if you know how to plan ahead of time. Establishing reasonable and realistic budgets is a crucial step to establishing the foundation your project is built on.
1. Set a ballpark figure
For many designers and project managers, master plans can be a great tool for creating budget proposals, but they just don't tell the whole story.
Instead, build your budget around your project requirements and brand standards. Think about it: the spine of any hospitality project ever made is its brand bible. Wouldn’t it just make sense to extract your cost assumptions from it? Nothing that isn't brand-approved can make its way into the actual project.
For most designers, spreadsheets are still the way to go. But this takes too long and has too many steps that it doesn’t justify all the effort in trying to come up with a high-level budget.
The solution? A high-level budget analysis tool.
When you need to plan a hotel, you cut it down into different areas to make each part of the project more manageable. Each of those areas needs certain brand-approved FF&E and OS&E to be deemed ready for operation. Specify everything needed for each room or area type, and multiply it according to the number of rooms you need.
The great thing about this? You have a cost analysis section where you can see a more accurate breakdown of cost per room.
You don’t need to spend hours trying to compute your ballpark. Set yourself up for success in creating better-educated decisions by combining your brand standards with an efficient cost analysis tool that does the work for you.
2. Always know when it’s time to sub.
While some of your specifications are a perfect fit for the brand standards, they aren’t always price-friendly. This is a totally common occurrence during the preliminary stages of specification writing. The designer specifies an amazing and high-quality material, but it just doesn't fit the budget. When this happens, you now have to spend hours looking for the perfect brand-approved alternative- which isn’t always easy.
Don’t let that take the wind off your sails, instead, avoid the stress of scouring through your materials spreadsheet for the perfect price-friendly sub and have alternatives ready. With your digital materials library, create a dashboard of your favorite brand-approved materials.
This way, finding alternative materials becomes ten times easier and faster because now all you’ve got to do is find the best possible alternative within your list of already approved materials.
But if your specification of choice isn’t within your brand-approved material lists, you can also opt to talk to your suppliers and have them provide you with better options.
Value engineering is all about striking the right balance between having a great eye and finding the right workarounds.
3. Build your safety nets.
There are just too many risks that can lead to your project spiraling out of control. Too many change requests, unexpected delays, procurement delays, etc. The list goes on.
Our suggestion? play it safe. Being too optimistic and overpromising clients on getting projects done with stringent budgets is a magnet for losses for both parties.
Instead, build a safety net. Creating room for variance in your budget can serve as a shock absorber for any unexpected risks and changes. In technical speak, that would be your budget contingencies.
With Fohlio, you can build custom formulas and set a contingency for your specifications. Contingencies usually make up 5-10% of the price, depending on how big you want your safety net to be.
You can even get a clear understanding of how much goes where when you toggle price factors on and off in your cost analysis sheet.
Having visibility over pricing and having multiple options for workarounds can expedite your budgeting process.
Learn how to:
- Save days of work with faster specification
- Create firm-wide design standards
- Automate and centralize procurement
- Keep your whole team on the same Page
- Manage product data
- Track budget against cost in real time.
- Prepare for asset valuation
Published Oct 20, 2022
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