Pre-Construction costs money because it takes time. But here’s the thing, ultimately it saves money. Effectively, paying for Pre-Construction doesn’t cost anything because in the end it will save Owners more than they initially paid the Contractor for their planning efforts.

At Oslo, our Pre-Construction services agreement is a basic retainer agreement where we bill for our services by the hour and if we don’t use up the retainer amount during the planning phase we will apply it towards the Construction contract. We spend a lot of hours on Pre-Construction, but because planning a project does not require expensive insurance or incur material or delivery costs, it often amounts to 1-2% of the overall project cost and is well worth both our time and our clients’ time. Taking the time to do a thorough review of the plans and the site allows us to do an accurate estimate and to get a real sense of the Owner’s needs, minimizing the number of changes and delays that arise later in the process.  I have done projects where the Owner was on a budget but was in too much of a rush to spend time on planning, and change orders increased the original cost by more than 20%.  On other projects, where we took the time to plan well, additive change orders amounted to less than 5% of the overall cost.

Why would I pay for Pre-Construction when my architect can do a budget and I can get free bids from Contractors?

At Oslo, we are glad to offer new clients a number of hours on a complimentary basis for projects that don’t require much planning or cost-engineering. But in the renovation business it is rare for an Owner and Architect to come to us with a plan that is complete enough for us to do a truly accurate bid in a reasonable amount of time. I would say the average bid set is approximately 70% complete, sometimes less. Generally, if there are gaps in the plans or project documents contractors are going to compensate for this by increasing their bid amounts to lower their risk.

Keep in mind, free bids also take time and therefore cost money. Free bids increase overhead costs, which concurrently increases markups for clients to do end up signing contracts. The effect being that those free estimates aren’t really free.

Most architects, even highly-trained and experienced designers, are not Construction managers. Some are, most are not. The role of an architect requires knowledge of an extremely wide range of disciplines. Most Architects can give a homeowner a good, general idea of what their project might cost, but Architectural design and Construction Management are two different animals, and Construction estimating in particular is a highly specialized skill which requires experience, training, and takes time to do properly. I think Owners often rely too much on their Architects to supply cost estimates. Architects, especially less experienced Architects, often aren’t clear enough about delineation of roles, i.e. they spend time getting quotes on windows and doors (Contractor’s responsibility) instead of solving design problems (Architect’s responsibility). This results in a redundant and inefficient process. It’s important to have some overlap in responsibilities within a team, so that nothing slips through the cracks, but too much overlap can be detrimental to a project’s success. The best way to avoid this is to treat the Contractor as part of the team, bring them in as early as possible, and be clear about what each team member’s responsibilities are.