The Most Common Client Budget Problems and How to Solve Them
Three professionals share what they’ve learned
Kate Burt
18 September 2020
Houzz UK. I'm a journalist and editor, previously for the Independent, Guardian and various magazines. I'm now excited to part of the editorial team at Houzz UK & Ireland, bringing the best of British and Irish design, interiors and architecture to Houzz.com.
Houzz UK. I'm a journalist and editor, previously for the Independent, Guardian and... More
Budget is at the heart of every project you take on for your clients, but what are the stumbling blocks around it that homeowners hit time and again, and what are the best ways to resolve them?
Contributing professionals: Terry Vinn of Totus Construction; Jessica Spencer of My Bespoke Room; Cat Hoad of Absolute Project Management
Contributing professionals: Terry Vinn of Totus Construction; Jessica Spencer of My Bespoke Room; Cat Hoad of Absolute Project Management
Problem 1: Budget uncertainty
“In our experience, clients are often unsure about budgets and want our advice,” Jessica Spencer of My Bespoke Room says. “However, this is such a ‘how long is a piece of string’ question.”
The solution: “Giving them options is the best way to put the final decision back in their hands,” Jessica says. “We try to give them a choice of pieces for each element of the design at different price points. This way, the client can choose themselves where to spend and where to save.”
“In our experience, clients are often unsure about budgets and want our advice,” Jessica Spencer of My Bespoke Room says. “However, this is such a ‘how long is a piece of string’ question.”
The solution: “Giving them options is the best way to put the final decision back in their hands,” Jessica says. “We try to give them a choice of pieces for each element of the design at different price points. This way, the client can choose themselves where to spend and where to save.”
Problem 2: Unrealistic expectations
“There will always be a handful of clients who want more than their budget will allow,” Jessica says.
Terry Vinn of Totus Construction says he finds clients can be influenced by television renovation shows. “This can result in a costly mistake,” he says, “as clients have often already paid fees for an architect’s drawings or planning, but when it comes to tender, they realise they’re way off in terms of their budget.”
Cat Hoad of Absolute Project Management agrees, saying she often finds a budget is too low for the client’s aspirations in terms of scope and finish.
The solution: “Showing clients the best options and the reality of these costs is the best we can do to inform their choices,” Jessica says. “We always let our clients know they can purchase suggested items over time to spread the cost, too.”
Encouraging clients to consider phasing the work is another option – tackling phase one now with the initial budget, then phase two a year or so later when the budget has recovered.
Terry underlines the value of getting clients to engage with the builder at the concept stage of the project. “Builders can explain the cost differences between various design options, preventing the need to go back to the drawing board at a later stage, which would equal additional architect’s fees,” he says.
Cat agrees with starting the conversation early. “One of the first bits of paid work is to set up an outline budget,” she says. Her outline will have headings including the approximate cost for the various professionals involved and estimated costs for each part of the second fix.
“The total can, of course, change dramatically,” she says, “but it’s a means for the client to see clearly how their money is likely to be spent, and it helps them to make decisions and prioritise accordingly.”
“There will always be a handful of clients who want more than their budget will allow,” Jessica says.
Terry Vinn of Totus Construction says he finds clients can be influenced by television renovation shows. “This can result in a costly mistake,” he says, “as clients have often already paid fees for an architect’s drawings or planning, but when it comes to tender, they realise they’re way off in terms of their budget.”
Cat Hoad of Absolute Project Management agrees, saying she often finds a budget is too low for the client’s aspirations in terms of scope and finish.
The solution: “Showing clients the best options and the reality of these costs is the best we can do to inform their choices,” Jessica says. “We always let our clients know they can purchase suggested items over time to spread the cost, too.”
Encouraging clients to consider phasing the work is another option – tackling phase one now with the initial budget, then phase two a year or so later when the budget has recovered.
Terry underlines the value of getting clients to engage with the builder at the concept stage of the project. “Builders can explain the cost differences between various design options, preventing the need to go back to the drawing board at a later stage, which would equal additional architect’s fees,” he says.
Cat agrees with starting the conversation early. “One of the first bits of paid work is to set up an outline budget,” she says. Her outline will have headings including the approximate cost for the various professionals involved and estimated costs for each part of the second fix.
“The total can, of course, change dramatically,” she says, “but it’s a means for the client to see clearly how their money is likely to be spent, and it helps them to make decisions and prioritise accordingly.”
Problem 3: Project creep
This is where various additional pieces of work are added by the client as the project progresses, meaning the scope extends and costs go up. “We all know how quickly costs can add up on a project,” Jessica says.
Terry illustrates the issue with an example. “Very often, our initial quote is, for example, £250,000. The client says the budget is £200,000, so we work together on value engineering to bring it down to £200,000. In the middle of the project, clients understand this is the house they want to enjoy for many years to come, so they increase the scope and the final spend goes up to 300,000.”
The solution: “Naturally, we want our homes to be finished to the highest standard,” Terry says. “That said, the same look can often be achieved by cleverly combining alternative products.” He advises clients to show a contractor what they have in mind and ask for ideas on how this can be sourced, produced or installed in a more cost-efficient manner.
Cat adds, “We try to avoid the costs of project creep coming as a surprise by ensuring each additional element is quoted for as it arises and that the client thinks about it in the context of the entire project.”
Renovation pros can also use Houzz Pro business management software to track change orders, share proposals and send them to clients for approval.
This is where various additional pieces of work are added by the client as the project progresses, meaning the scope extends and costs go up. “We all know how quickly costs can add up on a project,” Jessica says.
Terry illustrates the issue with an example. “Very often, our initial quote is, for example, £250,000. The client says the budget is £200,000, so we work together on value engineering to bring it down to £200,000. In the middle of the project, clients understand this is the house they want to enjoy for many years to come, so they increase the scope and the final spend goes up to 300,000.”
The solution: “Naturally, we want our homes to be finished to the highest standard,” Terry says. “That said, the same look can often be achieved by cleverly combining alternative products.” He advises clients to show a contractor what they have in mind and ask for ideas on how this can be sourced, produced or installed in a more cost-efficient manner.
Cat adds, “We try to avoid the costs of project creep coming as a surprise by ensuring each additional element is quoted for as it arises and that the client thinks about it in the context of the entire project.”
Renovation pros can also use Houzz Pro business management software to track change orders, share proposals and send them to clients for approval.
Problem 4: Unforeseen discoveries mid-project
“This can be painful,” Terry says, citing some examples from his own experience, including a hidden well that needed to be filled and concreted over; properties having inconsistent foundations requiring underpinning, and old structural works done incorrectly. “I’d say it happens in about 10% to 15% of our projects, especially when working on very old properties,” he says.
The solution: Terry advises doing as much research as possible – and making full use of trial pits and wall cut-outs, for example.
Cat says she ensures each additional issue is priced for as it arises. She’ll then look at a range of solutions with different costs – where possible – for each issue. “Ideally, the project has a contingency built in for exactly this sort of situation,” she adds.
“This can be painful,” Terry says, citing some examples from his own experience, including a hidden well that needed to be filled and concreted over; properties having inconsistent foundations requiring underpinning, and old structural works done incorrectly. “I’d say it happens in about 10% to 15% of our projects, especially when working on very old properties,” he says.
The solution: Terry advises doing as much research as possible – and making full use of trial pits and wall cut-outs, for example.
Cat says she ensures each additional issue is priced for as it arises. She’ll then look at a range of solutions with different costs – where possible – for each issue. “Ideally, the project has a contingency built in for exactly this sort of situation,” she adds.
Problem 5: Changes to the design during works
“Changes during the build are often more costly than if they were originally in the plans, as it may take builders more time to incorporate them, and time equals money,” Terry says.
The solution: Terry advises clients they should try to finalise the design as much as possible before the build begins.
Cat adds, “We’d work with the client to prioritise which items to retain and which to reconsider, remove or swap for a lower-cost option, and think of attractive design solutions.” She gives the example of the tiling in a bathroom and says she’d potentially suggest to the client that, rather than doing the whole room with very expensive tiles, they choose instead to feature them in a smaller area and use nice but less expensive tiles elsewhere.
Tell us…
What are your top tips for resolving clients’ budget issues? Share your thoughts and ideas in the Comments.
“Changes during the build are often more costly than if they were originally in the plans, as it may take builders more time to incorporate them, and time equals money,” Terry says.
The solution: Terry advises clients they should try to finalise the design as much as possible before the build begins.
Cat adds, “We’d work with the client to prioritise which items to retain and which to reconsider, remove or swap for a lower-cost option, and think of attractive design solutions.” She gives the example of the tiling in a bathroom and says she’d potentially suggest to the client that, rather than doing the whole room with very expensive tiles, they choose instead to feature them in a smaller area and use nice but less expensive tiles elsewhere.
Tell us…
What are your top tips for resolving clients’ budget issues? Share your thoughts and ideas in the Comments.
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I agree with Des wholeheartedly, the time taken to document everything is time well spent and cannot be underestimated. Managing client's expectations is difficult but key in keeping the relationship on track.
This is so true!
I've been the head of a design-build firm for over 20 years. Kate Burt, you wrote a really good step by step article that outlines the budget minefield and how to best manuver through it. I happily shared it on our Facebook page.
What I would like to add, is that since Covid induced material shortages that lead to rapid spikes in pricing for labor and materials, all precautionary measures fell shot. When project pricing saw increases of 30% or more, all our experience in planning was not enough.
In the last couple of months, our market seems to be moving into a more stable cycle.
The most important thing (that Kate mentioned), that can really give clients on strict budgets some insurance is the contingency line item in our budgets. Not only for hedging against unforseen discoveries, but also against market instability,
Thank you for including this in your tips Kate.