Some time ago I was chatting with one of my favorite builders when she blurted out: “oh, clients lie about money all the time!”. It really resonated. We were struggling to find a general contractor for a potentially wonderful client. But I knew for sure that their project would not and could not be built for the stated budget. So, it would be challenging to frame the conversation to attract the right construction talent, and to assure them that it would be a good job. Spoiler alert: it turned out great; everyone walked away happy and the house is beautiful.
But here’s how it started. Let’s call them David and Joan. Like many recent San Francisco homebuyers, they paid a lot for an older, un-remodeled home with an unsatisfactory floor plan. Although they cleaned it up enough to live in during the long design-and-entitlement process, the house, as purchased, was in far from what a realtor would call “move-in condition.” It needed everything. Both David, a project manager in tech, and his partner Joan are highly-articulate and were very clear with us about their expectations. But the stated budget was never quite in line with the scope or quality that they requested of us.
There was a lot of back-and-forth: At every design presentation I would provide an assessment of probable costs. No matter what was discussed, David would almost always cite his maximum budget. I’d offer a reduction of scope to meet the budget, and he’d say “no, I want that.” And so it went until they signed with a builder and construction began. The final cost was more than twice the original budget—more or less where I advised them it would wind up. It turns out that they spent what was necessary to achieve the outcome they desired, and never appeared angry or unduly stressed about where the money went.
This was not surprising. I started my firm in San Francisco in the early ‘90s and had seen this movie before. In the early years, we had another otherwise-terrific client who had proposed a ridiculous budget. I was young and unsure of myself but by offering to fix the fee at a proportion of construction cost, I was protected from not being able to bill for the inevitable expanded scope. He was a seasoned businessman – a venture-capital investor, with a vineyard property in Napa. Over the course of the project, the real numbers finally aligned with the work to be accomplished and we went on to do a second job for him and another substantial project many years later for his son and daughter-in-law. By then I knew how to set my fees.
Isn’t it time to put an end to the “secrets and lies” routine that make a project more difficult – and potentially more expensive – for all involved?
Clearly this “deception” is a negotiating position. In the second case, Mr. Napa wanted to limit the fees by keeping me in the dark about his real budget. (I’ve learned how to deal with this, too!) In the first case, David was probably thinking that if he disclosed what he was really capable of spending, I, the architect, would “think bigger,” driving the project well beyond his means, abetted by general contractor malfeasance. This is a common misconception for clients, fueled by a combination of actual market realities and unfounded fears of an architect’s potential creative overreach.
And let’s face it, the real costs of a construction project, including fees for design services, engineering, permits and contingencies can be shocking if you aren’t in the field. For younger and inexperienced clients who’ve been raised on mass media imagery---where a TV police officer lives in sprawling apartment with waterfront views—a very high level of luxury appears more accessible than it is in real life.
Clients would be better served if they would come clean about the money. You need to trust your design professional, as you might trust your lawyer or investment consultant when you ask them for solutions that fit your needs. It is our job to analyze and advise on the options, and the limitations, of a given project—spatial, legal, zoning and budgetary– so we can actually design the best outcome.
When I called around to my preferred general contractors to solicit interest in the project that opens this story, I never shared with them the clients’ proposed budget. Instead, I did something I had never done before: I lied. Had I given them the clients’ “real” number, no one would have bothered to schedule an interview. Instead, I increased the stated budget by two-thirds, and while everyone said it was tight, we were able to get a handful of excellent general contractors to look at the job. The one who built it came highly recommended by one of my favorite builders—a company I knew would never take on the project, but they sent me Kevin, who had worked for them and gone off on his own. For Kevin, it was an opportunity, and he did a beautiful job. And I had been a successful advocate for my clients.
Maybe this is what David and Joan had in mind all along, and fortunately it all worked out. But this positive outcome notwithstanding, isn’t it time to put an end to the “secrets and lies” routine that make a project more difficult – and potentially more expensive – for all involved? The best way for all parties to get the desired results is transparency. The clearer the communication, the better the outcome. You wouldn’t mislead a consultant you’ve hired to assist with other important decisions. Why not help your architect to design and build you the best possible home?