Unintended Consequences (And How to Avoid Them!)

Martin Brooks is the Project Director of MBA Projects. In this article, he talks about managing client budgets and expectations for high-end residential projects.

From systems that can learn our preferences to those that make life more convenient and comfortable, today’s prime residential trends are more integrated, more intelligent and more stylish and expensive than ever. Connected entertainment? Tick. Complex and personalised security? Tick. Climate systems, smart lighting, a virtual reality home fitness centre? Oh, yes please, and those are just a few of the benchmarks that high-specification residences require. “Smart” has become synonymous with luxury, and those looking to buy in the prime residential market expect it. This, in turn, raises questions around budget and expectation for many of us who work in project management and juggle budgets and expectations.

But here’s the thing. In the past ten years or so the percentage of overall cost has changed, but have we taken the reality of this into account for budgets? As a rule of thumb back in the day, construction made up 65% of a budget and mechanical and electrical 35% (give or take), but now the cost has shifted to an equal ratio of 50% each. Managing client expectations and budgets for residential high-end projects has the potential to get complicated when there is a lack of understanding and reality around cost and, in some instances, designers ploughing ahead with schemes to meet client expectation, with no real idea of the cost implications. All of this risks delays, disappointment and unaccounted costs.

Let’s examine why the change to cost centres have emerged through an example:

Then: 
For IT and AV – Cat five cabling and a simple lighting system was normally allowed for.

Now:
The requirement is for:
-Audio visual racks
-Home monitoring systems
-Lutron lighting systems
-CCTV and alarm systems 

All of which have become far more complicated and expensive.

Air-conditioning or comfort cooling particularly raises the possibility for problems, as discerning and well-travelled clients who have experienced superior air conditioning in other countries come home to find that here, in the UK, we can’t obtain and install the same systems and maintain it.

Ten years ago, A/C was only allowed for in the very high-end super prime residential projects, but now it is expected in the principal rooms of most residential developments at the very least, and so costs must be properly calculated and expectations met before costs are submitted and installation begins.
Staying on top of emerging smart home and prime residential trends and costs, sidestepping budget pitfalls and embracing proactive communication can determine a project’s ultimate success. As skilled project managers, our role is to properly assess budget against expectation, and then when the two don’t meet, our most vital role is to be experts at delivering bad news! 

Our job is to focus on planning and controlling and managing cost and risk by defining the fundamentals from the outset. I hate to say this, but clients can be a part of the problem where unrealistic budgets are concerned! The project scope must be defined correctly from the first draft so that expectations can be managed not only from the client side but from the PM, the designer, and the construction team, too.

Then, everyone’s happy.