Tag Archives: BUDGET

THE ROLLER COASTER OF ARCHITECTURE

March 15, 2024

Apartment Complex, Redlands, California, by Poon Design

If you ask an architect, “How are things in architecture?”—you will typically hear about the ups and downs. Few architects will boast about how things are super great. The industry is often a roller coaster of highs and lows, climbs and falls, and exhilaration and fear.

Roller coaster (photo by Matt Bowden on Unsplash)

Once a dentist has a client, he will return for a check-up regularly. Once an accountant has a client, she will return annually to have her taxes filed. But in architecture, once the project is completed, the client has no more need for design services. Unlike dentistry, an architectural client doesn’t usually return with new buildings to design every six months.

Colby Residence, Los Angeles, by Poon Design (photo by Hunter Kerhart)

If an architect doesn’t have a new project to start on the tails of a completed project, this architect experiences the lows of the profession, e.g., loss of income, underutilized staff, lays off, etc. When the architect gets a new project, you have the highs, e.g., a new endeavor, signed contract and retainer, excited client, etc.

And if the architect gets a new project while working on current projects, she experiences both a high and a low, sometimes referred to as “a good problem.” This circumstance of winning too much work might be exhilarating, but also challenging, as in not enough architects in the firm to do the work. The quality of work might go down, overtime is required, management is stressed thin.

Traffic light (photo by almani on Unsplash)

During the life of a roller coaster project, the pace starts and stops. A client might decide quickly on the proposed design, such as instantly in a meeting, or take months to think things over with colleagues, friends, and family. If the client moves quickly, we have work to do, but if not, we wait twiddling our thumbs. Architecture is a customer-service industry, and every customer, good or bad, is a unique twist or turn of the adventure.

When the project is submitted to the city agencies (here and here) for approvals, the Plan Check process can take a few months for a small project and a few years for a large one. Within this Kafka-esque process and red tape, city codes have become frustrating moving targets, with updates every year, even every month—where the city staff themselves don’t know what they are enforcing.

Jurupa K-8 School, Jurupa Unified School District, Riverside, California, by Anthony Poon (w/ A4E)

Architecture relies on the economy and the world. Confidence in the market sparks architectural activity which in turns keeps the construction industry active. If interest rates are too high for example, clients are hesitant to move a project forward, whether borrowing money to add onto one’s house or leveraging capital to build a performing arts center. Consider the national and global challenges of the recent years that have impacted the business of architecture: pandemic, labor shortage, shipping crisis, fuel costs, market instability, elections—even two wars.

Wall Street (photo by Daniel Lloyd Blunk-Fernández on Unsplash)

The project budget is no doubt part of the roller coaster. Why might a project go over budget? Lots of reasons.

Add to all this the ongoing changes in technology, construction, and methodology, from AI to modular to 3D printing. Don’t forget recent movements such as biophiliaresilience, and sustainability, as well as best practices, diversity, equity, and inclusion.

Escena Horizon Residence, Palm Springs, California, by Poon Design and Andrew Adler (photo by Lance Gerber)

Most design businesses—small and entrepreneurial or large and corporate—want a well-oiled machine, but the reality may be closer to juggling a season of smooth sailing vs. being on the brink of financial disaster. Alongside this balancing act comes the joys of a ribbon cutting, happy client, industry honor, or public endorsement and applause.

The nature of our industry comprises the delight and elation of an amusement park ride. Creativity drives architecture, and the process, more often circular than linear, defines architecture.

COST OVERRUNS: WTF?

February 18, 2022

Ten key accounting calculator, (photo by StellrWeb, Unsplash)

I have heard clients tell each other, “After you have your project budget, plan to spend double!”

Architecture and construction projects are indeed notorious for costing much more than originally planned. Whether a house or a museum, how is it possible that costs could be off by so much from when the project started vs. finally completed?

This isn’t always the case of course. Many architects and builders are capable of bringing in your projects on budget. But client frustrations and cost overruns are more than apparent. So why?

Tesla Model 3 (photo by Vlad Tchompalov, Unsplash)

1. IN THE BEGINNING
Let’s start at the beginning. Is the budget really realistic? Frankly, a lot of times, it just isn’t. For example, if you want to buy a new Tesla Model 3 for $20,000, sorry, you will be way over budget when it comes time to pay. It should be an architect’s responsibility to tell their clients, as much as it might disappoint, when a budget is unrealistic. And clients need to listen to their professionals.

Robbins Elementary School, Trenton Public Schools, Trenton, New Jersey, by Poon Design (rendering by Amaya)

2. PROJECT SCOPE
Did the project scope change? If you started with the idea of designing a ten-classroom school building, but later added a two more classrooms, then your initial budget will need to increase. If you started with a 4,000-square-foot, four-bedroom house, but later, you decide you want 5,000 square feet and five bedrooms, well, you get the idea.

Master bedroom of Linea Residence L, Palm Springs, California, by Poon Design, Andrew Adler, and Interior Illusions (photo by David Blank)

3. CHANGES!
One simple word: changes. Regardless of who makes them, changes cost money. And changes during construction are ten times more expensive than when the project is only abstract lines in an architect’s computer. The two biggest culprits of changes are the city and the client. The city inspector might require you to upgrade your electrical system, and that will cost unexpected money. But it is typically client changes, whether during the design process or construction, that will rack up dollars.

4. PREDICTION
No architect has a crystal ball. Even the best minds can’t predict the economy, labor market, or costs of materials. With today’s economy swinging in all directions—pandemic and vaccine, politics, and U-, V-, or K-recoveries—who can anticipate the cost of concrete or steel? The project budget today might not be relevant to economic trends when the project is nearing completion years later.

Crystal ball (photo by Brad Switzer, Unsplash)

5. THE UNKNOWN
Known as “unforeseen conditions,” such things cost money. You will rarely open up an existing wall of a house to find a bag of gold. More likely, you will find asbestos or mold, and the cost of remediation was probably not anticipated. Acts of God are also unforeseen. An earthquake or labor strike can cause financial hardships. For example, past cataclysmic fires have destroyed our forests, resulting in the cost of lumber increasing.

Forest fire (photo by skeeze, Pixabay)

6. TIME
Need I say it, “time is money.” Slow city approvals, an inefficient contractor, or again, client changes, will slow down the project, and yes, cost more money. Just consider the simple things on site during construction like a rented dumpster, portable toilet, and security fencing. For every month of delay, there are increasing rental costs.

Watch by WoodWelt (photo by Anthony Poon)

7. SOFT COSTS
When a client establishes the project budget, there should be line items for hard costs and soft costs. The hard costs are typically known as the cost of construction, which includes the contractor’s overhead and profit. Please ensure to include the long list of soft costs, such as professional fees for architect, engineers, and consultants, agency fees, inspections and testing, contingencies, reproduction expenses, attorney fees, taxes and bank costs, and so on. For a restaurant, there are also appliances, china/glassware/flatware, furniture, art/décor, marketing, website, printing menus, inventory, training, move in, and other miscellaneous startup costs.

Wood mock up for five arched steel doors (photo by unknown)

8. GENERAL CONTRACTOR
Who is your builder? Did you competitively bid between qualified contractors? Did you negotiate the appropriate cost and contract template, i.e. time and materials, stipulated sum, guaranteed maximum price, etc. One builder might be more expensive but faster. The other might be more affordable but has six extra months to the timeline—and lower quality.

9. HUMAN ERROR
Lastly, and hopefully this doesn’t happen often, but your architect, engineer or builder might have made an error during the process. We are all human after all. If a drawing had the wrong dimension, for example, that could be an expensive problem.

Buddha Pavilion, Natural Bridge, Virginia, by Poon Design (photo by Mark Ballogg)

There are countless other reasons that a project might exceed the original expectations. Suffice it to say, the best solution is a combination of reality, decision-making, adaptability, and rationality. Basically, be smart and be part of the solution, not a finger pointer.

PODCAST PART 2: MODERN FOR THE MASSES, REVISITED

March 8, 2019

Escena Residence I-3, Palm Springs, California, by Poon Design (photo by Chris Miller)

Continuing with my interview for Josh Cooperman’s podcast, Convo By Design, we discussed how affordable Modern homes were created for the general home buying audience. With 225 built (and sold) homes by Poon Design within only the past few years, I think I know what I am talking about.

Excerpts below. YouTube clip here. Audio podcast here. Also, please read this recent feature by Michael Webb, Anthony Poon Delivers Modernism to Tract Housing.

Residences at Alta Verde Escena, Palm Springs, California, by Poon Design (photo from Google Earth)
Linea Residence T, Palm Springs, California, by Poon Design and Andrew Adler (photo by Hunter Kerhart)

Josh Cooperman: What is “Modern for the Masses”? Modern is an idea that you have embraced wholeheartedly and the idea of creating it for the masses is simply a . . . How do you jive those two and what’s the idea behind it?

Escena Garden Residence, Palm Springs, California, by Poon Design and Interior Illusions (photo by Lance Gerber)

Anthony Poon: Our thesis, Modern for the Masses came out of a study of a lot of homes in LA—the ones that we see in the magazines, the glossy pictures, the websites, the homes that we love in the Hollywood Hills that sell for 10 million dollars. The challenge was this: How can we create these beautiful modern homes for a fraction of the price? Build them at production level, a mass production level, and sell them.

We teamed with a developer/designer, Andrew Adler, who found distressed properties in Palm Springs. We designed a few prototypes, very Modern, not at all what you see in tract housing. Not the cheap Spanish style homes with the small windows, the fat trim, the fake tile roofs, and the wedding cake décor.

Our Modern homes are very strictly Modern. Lots of glass, open space, very sleek. To date, in the last four years, we’ve completed over 200 homes. And they’ve all been built, they’re all sold, they’ve been published extensively, and we’ve been awarded over two dozen national and regional design awards. It’s a program that has not been accomplished, as far as I know, by any other architecture studio other than Mid-Century Modern, and we’re talking about going back over 60 years.

Linea Residence G, Palm Springs, California, by Poon Design and Andrew Adler (photo by James Butchart)

 

Linea Residence L, Palm Springs, California, by Poon Design and Andrew Adler (photo by James Butchart)

Josh: Your theory has been tested and it appears to have passed. Why?

Anthony: Because there is a demographic out there that has not been served. These tract housing companies that build communities of 100 homes—they rubber stamp these homes out. They’re not selling. People aren’t interested in these homes.

Our imagined home buyer is someone that wants the modern lifestyle, someone that believes in technology, iPhone, iPad, completely connected all the time. Also, someone who has a concern for sustainability, for being green. Those three things were critical to us and of course, all of these things needed to be done on a budget that was about one-fourth what you would see most homes in California being built for. That was our perfect storm. Our homes have outsold all competing developers in Palm Springs because we have a product that everyone’s been dying for.

Escena Arcadia Residence, Palm Springs, California, by Poon Design (photo by Lance Gerber)
Escena Arcadia Residence, Palm Springs, California, by Poon Design (photo by Lance Gerber)

Josh: There has to be some things that are limited or cut out. There has to be. What is it? What is being removed?

Anthony: There is nothing being removed. In fact, what we’re adding is a certain kind of value that makes a home better and happens to save money in construction dollars. I wouldn’t say we’re cutting or reducing anything. It’s just the way we’re rethinking architecture.

For a typical traditional house in Beverly Hills, there’s the entry, there’s the foyer, the hallway, the powder room, the niches. What do we need all that for? It’s not even what people want, and it’s what’s driving up construction costs, like framing 20 different ceilings heights throughout a house.

Escena Panorama Residence, Palm Springs, California, by Poon Design and Interior Illusions (photo by Lance Gerber)
Linea Residence T, Palm Springs, California, by Poon Design, Andrew Adler and Interior Illusions (photo by Hunter Kerhart)

Josh: In fact, you’re just using what you have for the greatest effect.

Anthony: It’s similar to the approach that Minimal art can have a few brush strokes and still be dramatic and impactful for the composition. In that way, you could say that we’ve cut out pieces of architecture. I’m saying we actually added to the essence of a house.

Coral Mountain Residence Z, La Quinta, California, by Poon Design (photo by George Guttenberg)

Josh: The concept of the traditional tract home—I’m wondering why it doesn’t work. What is it going to take for your idea to expand to a general market?

Anthony: I think tract housing is failing because these companies are large. They’re money-driven. They’re stuck in old ideas. It takes a lot to turn a company around and look towards the future.

I think of the example of Tower Records. If you recall, a decade ago, MP3 players came out, iPods. Tower Records claimed that it was just a fad that they would hold onto their LPs and their albums. And look what happened to them. Tower Records is gone. iTunes has taken over the world.

So, these tract home companies that we compete with and that we beat out month to month, they’re stuck in these old ideas, these weird big Mediterranean homes, these things I call ‘Taco Bell Homes’—no one wants them anymore.

The community of Alta Verde Escena, Palm Springs, California, by Poon Design (photo by Anthony Poon)
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