Do the Math. If my building layout is inefficient and it cost me say, just 2% of my labor costs, over time my mistake will easily exceed the cost of my architect, my contractor’s fee and maybe a large chunk of my building. Suppose my building cost $10M, my direct labor costs are $5M annually and I plan to be in the building for 20 years. If my floor plan makes me 2% inefficient, then over 20 years I have wasted $2M. Now consider the cost of the guy who designed the building. Maybe I chose a less qualified firm to save 1 percentage point of the cost of the project, or $100,000. Oh lets be generous and say I found a fella that would undercut everyone else by 2 percent and I saved $200,000. What I saved in fees I wasted in labor costs…ten times in fact! I would have been better off to pay the extra 2 percent and hire the firm that knew what it was doing.

Project Costs

I once worked in an office that placed the copy machine as far away from the employees as possible. The result was a worn path in the carpet and a lot of wasted money in professional time. A simple choice during the planning of a facility can result in thousands of man-hours wasted…or saved. A municipality chose a less expensive site for their DPW facility. The problem was that the downtown was clear on the other side of the community. Over the life of the building, the wasted time in transporting staff will far exceed the savings on the property. Design choices are like compounded interest. If such choices are made wisely, they can be your best friend. Conversely, a cheap choice can cost you enormous expenses over time.

Project Costs

On an $80 million project, the board questioned the cost of a tree survey that was quoted for $1,000 or whether they should pay any kind of mark-up on print paper. Organizational leaders quibble about the cost of silt fence, thinking that they will impact the budget by such scrutiny. This is misplaced energy! When we think of facility costs we should be thinking performance. We should think of life cycle costs. You will spend much more on employee labor, maintenance and operations than you will on any one component of the building construction budget. “What does employee labor have to do with a building project?” you ask. Everything!

Project Costs

How can a City Manager or DPW director be sure he is getting the most for his money when it comes to buildings? You want the most for your buck: the guy who gives you your paycheck wants the most for your buck…and he insists on it.
So what really are the costs of a building? Is it just the cost of the ‘bricks and sticks’? Or should you look deeper? Absolutely! It is too easy to get sidetracked by small expenses that seem questionable when the real money is spent on obvious big-ticket items that can make or break your budget. In this series, I will discuss what really matters when spending money on a building.