Cost planning 101

budget craps

What was it?

Part two of an all-day seminar we attended late last month, presented by quantity surveyor Geoffrey Moyle. With the tagline, Under control or over budget?, the seminar provided strategies for effectively managing the cost planning of residential projects. In addition to broad commentary, Moyle discussed the results of analysis he undertook on eighteen recent projects he has costed for Melbourne architects (see below). We discussed part one of the seminar, Marketing 101 presented by marketing guru Winston Marsh, yesterday.

Despite having worked with Moyle on a number of projects, this was our first face-to-face meeting. With long hair, black T-shirt, jeans and boots, his appearance was more suited to a rock guitarist than a quantity surveyor. Perhaps we shouldn’t have been surprised though: in our dealings with him, he has always been self-aware, passionate about architecture, and interested in thinking outside the box. He is as far from a bean counter as one can get, which is why we like working with him.

What was discussed?

Moyle began his presentation by defining cost planning as “monitoring, managing and maintaining a project’s cost, relative to a budget.” This is a critical distinction, as it identifies a client’s budget and her project’s cost as two separate questions, a statement that pleasingly ratifies our article from last year, Why your budget is not your brief. It is also important to adhere to the first part of the definition: a cost plan is not something done once and forgotten, it is something to continue developing alongside design and documentation.

Moyle noted that fuzzy project cost planning is common but dangerous. He recommended instead beginning an objective and transparent planning process as early as possible. This is not as simple as it might sound though. Indeed, it’s an issue with which we have been grappling ever since we started our architecture practice. Like it or not, the early days of a new project are a delicate balance between the truth and trust: deliver a client bad news before trust is established and she might walk; wait too long to deliver it and she might feel feel betrayed.

Early on in our practice, we were honest and upfront with clients about their budgets even before they had formally engaged us. This regularly led to commissions going elsewhere, we imagine to architects more willing to delay the cost planning discussion until deeper into the project. So we changed our approach, accepting clients’ budgets at face value but designing to their briefs. We then used a professionally prepared cost estimate as a gauntlet through which we had to pass before submitting a town planning application. Unfortunately, this led to one notable disaster, where our and our clients’ budget expectations were revealed to be grossly out of sync with each other and we lost the commission.

When we raised this complex balancing act with Moyle, he introduced the analogy of the mechanic.

The analogy of the mechanic

engine block

A young mechanic discusses his new business with an older, more experienced colleague. He complains about the cost of training new staff, “Why should I waste time and money training my new staff, when most of them leave within twelve months?” His colleague considers for a moment, then answers, “You might waste money training staff that leave, but what if you don’t and they stay?”

In other words, while being upfront with a client about the cost of her project may risk losing it, avoiding the truth may result in an over-budget project proceeding far beyond where it should have.

So by trial and error, and reflecting on the ideas raised in Moyle’s seminar, we have arrived at our current strategy. We accept our client’s budget, but prior to starting sketch design we map out a number of rough layout options for comparison, each accompanied by a simple estimate of its cost. This is essentially a design-driven feasibility study, one with three key benefits:

  1. It involves our client in the design process from a very early stage, empowering her to choose her preferred design direction.
  2. It educates our client about the relationship between scope and cost.
  3. It allows us to interpret our client’s brief, often reducing it in size, prior to attaching costs.

Once we have balanced the budget and brief, often via compromise of both, we finalise the sketch design and obtain a professionally prepared cost estimate. Though retaining the services of a quantity surveyor for the duration of a project can get expensive (at least relative to the small renovations for which we are regularly approached), our preference is to do so up to and including a pre-tender estimate. Thus the cost plan develops alongside the design plan, always in sync.

rippleside house option 1Rippleside House option 1, 180sqm

rippleside house option 2Rippleside House option 2, 208sqm

rippleside house option 3Rippleside House option 3, 221sqm

rippleside house option 4
Rippleside House option 4, 221sqm

rippleside house option 5
Rippleside House option 5, 221sqm

rippleside house option 6Rippleside House option 6, 221sqm

What did we learn?

There was strong agreement between attendees that Moyle’s recommendation of a staged strategy is the best way to approach cost planning. He advised we begin every project with a simple good egg / bad egg test to know whether or not its budget and cost are reconcilable. To do this, he armed us with construction cost averages based on eighteen recent projects on which he has worked:

  • The projects ranged in cost from $430,000 to $4,580,000.
  • They ranged in size from 130sqm to 540sqm.
  • They ranged in cost per square metre from $2,640/sqm to $7,420/sqm[1]. The lower end of the spectrum was still for architect-designed prototypes, but with simple forms, economic building components and basic finishes.

From his analysis, Moyle offered the following observations:

  • The size of a project is not necessarily tied to its construction rate. He had expected that larger projects would be slightly cheaper per square metre due to their economy of scale, but found no such indication. Indeed, the most expensive project per square metre was close to average in size.
  • The form of a project is also not necessarily tied to its construction rate. Most relevant is the complexity of its detailing: a rectilinear box might be simple in form but still have extremely fine detailing and be expensive metre by metre.
  • The average project cost was $1,790,000.
  • The average project size was 344sqm.
  • The average cost per square metre was $4,970/sqm.[2][3]

These were, for us, eye-opening figures. It was only recently that we were telling clients that $3,000/sqm is a generous construction rate at which to aim. But according to Moyle, this is only just over the minimum and will not allow for the design content we know from experience costs more. Yet, for a profession that has surrendered vast swathes of its responsibilities in recent decades (engineering, project management, environmental design etc.), Moyle’s figures are also empowering.

Construction rates are not our own, they are the construction industry’s: we can tweak but not reconfigure them. We need to be less emotionally encumbered by how much a building costs and more objective in communicating with our clients. If a client wants to add a roof deck to her project, it’s okay to be excited by the prospect of designing it while simultaneously informing her how much it’s going to cost. This dual perspective should not be alien to us: architects are, after all, jacks of all trades, skilled at synthesising conflicting agendas into cohesive outcomes.

If we are truly to monitor, manage and maintain a project’s cost, we must do so continuously, all the way up to (and during) construction. This is part of our role as architects, and by mastering this process we can only serve our clients better. No sheepishness, no discomfort, just integrity and hard numbers. There are too many stories of fanciful architects forgetting to check the budget, of projects that finish at twice the cost of where they started. It’s about time we get better at opening up the design process to acknowledge and incorporate cost. Understanding what it costs to build gives us a great deal of control over how a project proceeds or, to extend Moyle’s succinct analogy, whether the mechanic that stays is a joy or a burden.

We encourage you to attend the next instalment of Cost Planning 101 yourself, particularly if you’re interested in learning about the reams of additional advice not covered here. Moyle and Marsh are planning new seminars for 2014. They will repeat those discussed here, plus add Marketing 102 to continue the discussion and address topics not already covered. Once confirmed, details can be found on Moyle‘s website.


Footnotes:

[1] These figures are for new building works and include 15% external works, 5% contingency and 10% GST. The nett range of construction rates excluding these items is $2,030/sqm to $5,710/sqm.
[2] This figure is for new building works and includes external works, contingency and GST. The nett average construction rate is $3,820/sqm.
[3] For renovation works to existing buildings, Moyle suggested reducing the construction rate to 50 – 100% of the new building works rate depending on extent of renovation. For elevated decks, he suggested reducing the rate to 30 – 40%.

Image sources:

  1. Budget craps, Geoffrey Moyle, Cost Planner. Cartoon by John Allison.
  2. Engine block, Automotive Training Centre. Photographer unknown.
  3. Rippleside House option 1, Mihaly Slocombe. Author’s own image.
  4. Rippleside House option 2Mihaly Slocombe. Author’s own image.
  5. Rippleside House option 3Mihaly Slocombe. Author’s own image.
  6. Rippleside House option 4Mihaly Slocombe. Author’s own image.
  7. Rippleside House option 5Mihaly Slocombe. Author’s own image.
  8. Rippleside House option 6Mihaly Slocombe. Author’s own image.

Marketing 101

marketing magic

What was it?

Part one of an all-day seminar we attended late last month, presented by marketing guru Winston Marsh and held at the State Library for a group of 20 – 30 architects, mostly small practitioners. Beginning with the plain-spoken promise that good marketing will help us earn lots and lots of money, the seminar provided a series of challenging ideas for connecting with new clients. We will discuss part two of the seminar, Cost Planning 101 presented by quantity surveyor Geoffrey Moyle, tomorrow.

Marsh was an entertaining as well as informative public speaker. He dangled alluring tales of explosive business success, the pots of gold tantalisingly real, then dissected the marketing strategies that underpinned them. He advocated a significant paradigm shift from the way architectural services are typically sold, his entire presentation underpinned by a single concept:

Marketing is not about you, it’s about your client.

What was discussed?

Marsh introduced the concept of the loyalty ladder, a marketing tool invented by Neil and Murray Raphel in 1995 that identifies the importance of relationships in the growth of a business. It recognises that any stranger thinking about commencing a building project has the potential to develop into a client, or even better, an evangelist who works to seek out further clients on our behalf:

Everyone

Suspect

Prospect

Client

Advocate

Evangelist

The purpose of marketing is not just to attract new clients, but to assist in the advancement from any and to any rung of the ladder. Marsh distilled this process into the three devices we’ll need to create, maintain and improve relationships with our clients:

three devices

A device to generate an endless supply of prospects

Let’s say we do most of our work within a particular municipality. In the City of Yarra there are around 80,000 residents or 30,000 households[1]. Based on our empirical observations from living and working in Carlton North, we would say that 1 in 100 of these are at any given time building or renovating. This means there are 300 suspects within spitting distance of our studio who might benefit from our input.

Thus the first task of marketing is to turn suspects into qualified prospects, that is, people who want what we do, have the authority to make decisions and the money to spend on our services. As Marsh pointed out, the biggest impediment to achieving this transition is awareness: most people don’t know who we are. Having marketing material like a website, business cards, site banners, advertisements etc. is not enough, we need to target them. To unravel how we might go about doing this, we should start by asking ourselves three key questions:

Who are our ideal clients?

Why should they choose us, rather than choose our competitors, do it themselves or do nothing?

How can they find out about us?

Understanding the characteristics of our ideal client is essential. Marsh encouraged us to be specific: gender, age, family situation, car ownership, business position, personal wealth, location. The more we know about our target audience (or suspects), the better we’ll be at focussing our efforts on their specific situation. Here Marsh introduced the principles of AIDA:

Attention
Interest
Desire
Action

If we were to analyse the way most architects structure their marketing material, we would quickly discover that they ignore at least three of these principles. Marsh furnished examples that were instead driven by them, including advertisements in local papers, websites and business cards. All demonstrated the ability to:

Grab a suspect’s attention. Marsh suggested we use a headline that speaks about our target suspects, not us, for instance, Thinking about renovating? or If you need help designing your dream home, you’ve come to the right place!

Develop the suspect’s interest. In an advertisement, this might be three or four paragraphs that amplify the headline. They should tell a story, be written like we talk and, again, be about our audience, not us.

Create desire. This could be images of our work, sexy spaces that make the suspect want one of their own. They key here is to understand that like breeds like: we shouldn’t use images of libraries to win cafe projects.

Establish a direct course of action. Here, Marsh advised that we “offer something of compelling interest and value”, for example, Call now for The 5 Biggest Mistakes People Make When Renovating.

A device to make and maximise the sale

Once we have a suspect on the phone, they’re officially a prospect and we must now begin the delicate work of advancing them yet further up the ladder into a client. Marsh made a few phlegmatic recommendations, things like having a script to follow and a checklist of information to obtain. More instructively though, this is where understanding both our strengths and weaknesses, and being able to articulate the answer to, Why should our ideal client choose us? is critical.

Once again, Marsh encouraged client-focussed specificity. Instead of,

We’re great designers.

We’re award winning architects.

We should say things like,

We are a small design studio that listens to our clients. You will always be able to get one of the principals on the line.

We have many years experience in the Carlton North area and know everything there is to know about its town planning requirements.

We need to go a step beyond grabbing the attention of the prospect, we need to provide “meaningful propositions and specific examples.”

As important as understanding our virtues is to understand our weaknesses. Here Marsh asked us to consider negative aspects of the architectural profession’s collective reputation, perceptions like how expensive we are, or how our building projects run over time. Instead of ignoring this herd of elephants in the room, Marsh endorsed facing it head on:

Prospect: Your fee proposal is very expensive. We’ve received a much cheaper price from a draftsperson.

Architect: Is cheap [pause] important to you?

Prospect: Well… I just don’t understand how you can be so expensive.

Architect: Of course, you get what you pay for, so let me explain what our service includes.

The message here was clear: there are many options for a prospect to consider as an alternative to engaging our services. We are competing against builders, building designers and draftspeople. We are also competing against the prospect taking the project on herself or, most commonly, deciding that it’s all too difficult and not doing anything at all.

Luckily, when someone wants something, she becomes “a ferret for facts and conscious of detail.” It’s our job therefore to educate, inform, explain and lead: in effect, craft our message so in the eyes of the prospect, we are not just a service provider, but an expert in our field. We need to communicate the benefits of using an architect, the value a client receives by deciding to engage us, the expert. We can do this via offers of compelling interest and value, addressing the elephant in the room and the use of testimonials.

A device to maintain and build the lifetime relationship

The final step of Marsh’s marketing strategy relates to how we engage with our clients once their projects are underway and / or complete. We’re not sure where he obtained the figure, but Marsh noted that 92% of any professional’s clients come via word of mouth, making it important we push those we have up the final one or two rungs of the loyalty ladder, into advocate or evangelist territory.

Essentially, this means maintaining a database and staying contact. A newsletter that shows past and potential clients what we’re up to, updates on new content added to our website, and Christmas cards are all good examples of nurturing the lifetime relationship. Marsh discussed a few ways that generating referrals can be achieved:

Ask a client for a referral

Offer a reward e.g. a discount on future services

Make the client say, Wow!

Marsh suggested getting in contact every couple of months, a piece of advice echoed by Moyle, who maintains that the more often someone receives an invitation or piece of information, the more likely they are to act on it.

What did we learn?

In short, a great deal. We took pages of notes during Marsh’s presentation, and have only been able to capture a fraction of it here. Marsh made a number of challenging suggestions, many of which will require considerable effort to execute. His appeal to the attendees was that we undertake at least one of them, make at least one change. Reflecting on his list of suggested actions, we hope to achieve at least a few, including new site banners, business cards, a newsletter and a database.

It’s important to acknowledge that the examples of Marsh’s recommendations were not pretty. They might have been suitable for a local plumber in the days of the Yellow Pages, but for design-literate architects in the information age, they were cheesy and unappealing. According to Marsh however, they were extremely effective. He noted that slick and stripped-back websites are fine if what we’re after is a bit of professional masturbation, but if what we want is to win clients and earn money, we need to change gear. His marketing strategies talk to, not at, the people who might be thinking about paying us to work for them. For residential clients in particular, who have typically never worked with an architect before, this conversation must be framed in language with which they can identify. By definition, it will be language far removed from the sort we use with one another.

Thus we arrived at the following epiphany:

How we think about our work and how we sell our work are two separate issues.

We encourage you to attend the next instalment of Marketing 101 yourself, particularly if you’re interested in learning about the reams of additional advice not covered here. Moyle and Marsh are planning new seminars for 2014. They will repeat those discussed here, plus add Marketing 102 to continue the discussion and address topics not already covered. Once confirmed, details can be found on Moyle‘s website.


Footnotes:

[1] Based on research we recently completed for an unsolicited urban design project we’re undertaking, Streets Without Cars, which found the average household size in Carlton North to be 2.8 people.

Image sources:

  1. The magic of marketing, Winston Marsh’s Ideas Emporium. Author unknown
  2. Three devices for good marketing. Author’s own image

Richard Leplastrier

richard leplastrier

In the early 1960s, during construction of the Sydney Opera House, Jørn Utzon and his office designed and documented his own house in Bayview, 30km north of Sydney (1965, unbuilt). Utzon agonised over the extent of windows facing a particularly beautiful view. Should the wall be fully glazed or only partially?

After many weeks of indecision, he summoned his staff into the bush and down onto the beach. Utzon had them sit between two large sand dunes, facing towards the water. Their entire field of view comprised the straight line of the sea and curving lines of the dunes. “Watch and wait,” they were instructed. Presently, a seagull flew into sight from behind one dune, across their view corridor, and disappeared behind the other.

Utzon turned to his staff and said, “Only show a part, never show it all. The imagination can fill out the picture more powerfully than reality ever could.”

palm garden house#1

palm garden house#2

palm garden house#3
Palm Garden House, 1976

Who is he?

One of Australia’s most important architects, and also one of the most private, Leplastrier graduated from Sydney University in 1963 and worked with Jørn Utzon then Kenzo Tange prior to establishing his own practice in 1970. He works from his house and studio in Lovett Bay on small, intensely crafted projects. He draws by hand and builds 1:20 scale models detailed enough to be the blueprints off which his designs are built. He is a national treasure who was awarded the Australian Institute of Architects Gold Medal in 1999 and made an Officer of the Order of Australia in 2011.

Leplastrier presented the final lecture of the Zeitgeist series at Walsh Street last week, a collaboration between the Robin Boyd Foundation and Centre for Cultural Materials Preservation. The series sought to understand the consequences of making and conserving works of architecture, and to what extent their physical fabric is a measure of design intent. I discussed the first lecture of the series, given by Brian Donovan in February, here.

To wind down the last of the early evening light, Leplastrier began his talk without slides, reflecting on half a century in architecture. He spoke of his university years and the lasting influence of Lloyd Rees, with whom he and his fellow students drew and painted every Wednesday afternoon for five years. He spoke of his apprenticeship in Utzon’s office, still proud that he worked on the Opera House, if only for three weeks, and still disgusted that Utzon was exiled from the project and the country. He discussed his time in Japan, and life lessons learned under Tomoya Masuda, the subtlety of that culture mingling with the brashness of his own middle-class Australian upbringing.

When afternoon eventually graduated to dusk, Leplastrier segued into his visual presentation, beginning with photos of the people by whom he has been most influenced: Rees, Utzon and Masuda principle among them. Then, a selection of slides from around the world that are to him archetypes of sustainability, beauty and cultural value: the Grundtvig Church in Copenhagen, a masterpiece in brickwork so perfect that no brick was cut in its construction; the Ise Naikū Shrine in Japan, that has been rebuilt every twenty years for almost two millennia; and the Stick Shed on the Wimmera, an enduring legacy of Australian wartime ingenuity.

grundtvig church

ise shrine

stick shed

What do I think?

Leplastrier structured his presentation around four projects: his own house and studio, and three houses for private clients spanning forty years. This was a fascinating way of revealing the development in his philosophy of architecture, from the intricate and expensive detailing of Palm Garden House (Sydney, 1976) through to the humble forms of Cloudy Bay Retreat (Bruny Island, 1996) and a recent cottage for an elderly couple, the name of which I have forgotten. Unlike many architects, whose budgets and design ambition expand as their reputations grow, Leplastrier seems to have achieved the reverse. His projects are simpler now, more modest, more direct in their crafting.

I can only speculate, but I imagine this trajectory is reflected in his fees and the cost of his buildings also: they are made from fine materials, but they are small and assembled with a deeply efficient understanding of structure and construction. Leplastrier is not interested in architecture for the money (though as previously discussed, who amongst us are?). Instead, he works for remarkable clients with remarkable briefs on remarkable sites. They all have their own stories, cultural capital from which Leplastrier draws his inspiration. The relationships with the people around him and the land his designs touch, these are the things he cherishes.

Leplastrier is not the sort of architect to whom one goes for a quick bathroom renovation or back verandah extension. To him, architecture is “symphonic, every part crucial to the completeness of the whole. It is more than building, realised through a thorough understanding of place, space, light and structure. Launched into life, such works do not need owners but custodians.” Leplastrier’s clients are his patrons, passionate about the natural environments they inhabit and his vision for their dwellings. He spoke of his first visit to the Palm Garden House site, a piece of land covered end to end by a tropical profusion of palm trees. His future client asked what he had in mind for  the house, to which he answered, “You already have the house, it’s here under the canopy of these trees.” His client said, “I think we can work together.”

He built many of his early projects himself, Palm Garden House and Lovett Bay amongst them, though readily defers to the abilities of master craftsmen. It was clear from his slides that some of his oldest and closest friends are the builders with whom he has worked. Growing up around boats, and the “great boat builders of southern Tasmania,” Leplastrier developed a lasting passion for timber. Synthetic materials, he explained, are remarkable in their own way, but no other material can match the versatility and beauty of timber. He still marvels at the diversity of this naturally-grown material, each species with its own qualities and purposes.

cloudy bay retreat#2

cloudy bay retreat#3Cloudy Bay Retreat, 1996

What did I learn?

Much in keeping with Leplastrier’s approach to architecture, he does not have a website. Printed publications of Leplastrier’s work are also scarce: there is only one that I have come across, in honour of the 2004 Spirit of Nature Wood Architecture Award, and it has been out of print for years. A small selection of his work can be viewed on the Architecture Foundation Australia website: hopefully this will lead the way in the near future to a much-needed monograph.

The AFA is an organisation that, among other activities, runs annual Student Summer Schools on the Pittwater north of Sydney, a masterclass I was fortunate to attend in early 2008. Leplastrier, together with fellow architects, Peter Stutchbury, Lindsay Johnston and Glenn Murcutt, acted as guide, mentor and critic during an indelible week of collaborative design, drawing, thinking and making.

Even in that setting, surrounded by architects of extraordinary integrity, Leplastrier stood out. His approach to architecture is legendary: he camps for days or weeks on a site prior to commencing design work; his understanding of timber and its characteristics is unparalleled; he eschews fixed price contracts and the detailed documentation they require, working instead within cost plus frameworks and resolving most of his detailing on site; he does not work with ordinary builders, but master craftsmen; he is, and has been for forty-three years, a sole practitioner. Leplastrier is as close to the architectural version of the Bush Tucker Man we have.

Despite not having seen him for five years, Leplastrier recognised me when I greeted him prior to the Zeitgeist lecture, commenting that the audience (whose tickets were all purchased within a day of going on sale) comprised many of his past students. It came as no surprise that the devotion Leplastrier pays to his craft was returned with such enthusiasm. He is a wonderful man and a powerful reminder that architecture can offer something beyond building contracts, marketing and office systems: he is the embodiment of that oft-cited but rarely equalled claim of Frank Lloyd Wright, that architecture is the mother art, without which our civilisation has no soul.

lovett bay#1

lovett bay#2

lovett bay#3

lovett bay#4Lovett Bay House, 1994


Image sources:

  1. Richard Leplastrier, author’s own image with permission of subject
  2. Palm Garden House living roomArchitecture Foundation Australia. Photography for this and subsequent Palm Garden House photos by Michael Wee, source: Karen McCartney; 70 | 80 | 90 Iconic Australian Houses; Murdoch Books; Sydney; 2011
  3. Palm Garden House contextArchitecture Foundation Australia
  4. Palm Garden House drawingsArchitecture Foundation Australia
  5. Grundtvig ChurchJust Talk About Art. Photography by Soy José Antonio Agramunt
  6. Ise Naikū Shrine, John W. Bennett. Photography by John W. Bennett
  7. Murtoa Stick Shed, Culture Victoria. Photography by Heritage Victoria
  8. Cloudy Bay Retreat context, Architecture Foundation Australia. Photography for this and subsequent Cloudy Bay Retreat and Lovett Bay House images by Leigh Wooley and others
  9. Cloudy Bay Retreat drawingArchitecture Foundation Australia
  10. Lovett Bay House living deck, Architecture Foundation Australia
  11. Lovett Bay House contextArchitecture Foundation Australia
  12. Lovett Bay House canopyArchitecture Foundation Australia
  13. Lovett Bay House interiorArchitecture Foundation Australia