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Developing Your Project Budget & Timeline
The Project Process…
ALL 3 HAVE A ROLE IN THE COST AND TIME OF YOUR PROJECT
PLAN
TIME
$$$
DESIGN
ARCHITECTS
ENGINEERS
INTERIORS
TIME
$$$
BUILD
CONTRACTORS
TIME
$$$
PLANNING
BUSINESS PLANNINGTIME CONSTRAINTSLOCATION, LOCATION,LOCATIONSELECTING YOUR TEAM
0
10
20
30
401/5/20YY
1/6/20YY
1/7/20YY1/8/20YY
1/9/20YY
My Chart TitleSeries 1 Series 2
HARD COSTS LAND
LEASE
BUILDING COSTS
SOFT COSTSA & ESITE REPORTSEQUIPMENTFURNITURE & ARTSIGNAGELEGALFINANCING
$$ = 30% - 35%
EXAMPLE COSTS OF A PROJECT
Leased Space Interior Upfit
2,500 sqft @ $150 sqft = $375,000
Soft Cost @ 35% = $131,250
Total Project Estimate $506,250
New Construction
Land Cost Estimate $600,000
5,000 sqft @ $275 sqft = $1,375,000
Soft Cost @ 30% = $412,000
Total Project Estimate $2,387,500
PRE - DESIGN
REZONINGARCHITECTURAL DESIGN REVIEWGEOTECH & PHASE 1 PHASE II REPORTSURVEYS / EASEMENTSUTILITIESSITE PLAN APPROVALDOT REVIEW
DESIGNFEESTIME
Leased Space Interior Upfit
Needs Assessment
2-3 weeks
Schematic Design + Review
3-4 weeks
Design Development + Review
3-4 weeks
Construction Documents + Review
4-6 weeks
New Construction
Needs Assessment
2-3 weeks
Schematic Design + Review
4-6 weeks
Design Development + Review
4-6 weeks
Construction Documents + Review
6-8 weeks or more
CONSTRUCTION COST ESTIMATING
3-4 weeks
PERMITTING 3-6 weeks
BUILD Upfit 4-6 Months
New 8-12 Months
MOVING DAY IS FINALLY HERE!!
SUMMARY
PLANNING IS IMPORTANT
TAKE YOUR TIME
DESIGN IS IMPORTANT
HIRE SMART
CONSTRUCTION IS IMPORTANT
STICK TO YOUR BUDGET
Thank [email protected]
NY VET 2019 Roger Layman, AIA RLArchitecture, pllc Developing a Realistic Budget & Timeline… can it be done? ** Title Slide Good Afternoon, my name is Roger Layman, I am an Architect and the managing principle of
RLArchitecture. I have been involved with veterinary projects for over 10 years now and love
the design challenges and clients and helping them serve their customers better.
I do hope this conversation on Developing a Realistic Budget and Timeline is helpful. I’d like to
make this as interactive as possible, and we will have time for questions. My goal is to make
this informative and fun. So, Let’s start with the expectation that if you develop a realistic
Budget and Timeline, it can be built for that amount of money, and in the time frame that you
plan for it to be built. So, how will you know if you have a realistic Budget and Timeline? I think
if you follow the guidelines and suggestions outlined here today you will be well on your way.
** Questions….
How many here are just beginning to think about a new practice? How many have started the
process for a leased storefront space? Anyone thinking about new construction? Has anyone
already started construction? Anyone brave enough to be working on a second or third
location?
** PROJECT PROCESS SLIDE
The first step in any successful project is Planning followed closely by Budgeting…
I will attempt to address both and go into some detail with each of these two important
subjects. There are entire seminars and classes on both subjects, so this will be a high-level
overview. All projects have a process they follow, it has been said anything with more than one
step is a project. The planning, design and construction of a Veterinary Hospital is a complex
project with multiple steps and many people involved. The time you spend thinking and
planning about your project will be well spent.
Today we will discuss some of your responsibilities along with the team of consultants for the
project. We will review the design process and its phases and finally the selection of a
construction team to build and bring to life your project.
** Planning Slide
There are multiple resources to assist you in the financial planning for your business and a
construction project, several are here at the conference. Without the finances in place the
project just won’t move forward. It’s ok to wait. We designed a dream project for a client, she
then waited patiently and worked very hard for a year and a half until she could afford to start
the construction. She moved in this past spring and is growing, just like the area she chose to
build in.
What are your time constraints? Does your lease expire soon? Is the DOT taking your prime
corner property for a road expansion? Is it just time to start your own practice? These are
questions only you can answer.
Then you must find a location…. Where is the competition? Do the demographics support
another hospital? Do you buy that prime piece of land or lease a space? What will the landlord
provide? Is it a new space or an old warehouse in an up and coming location? You all know the
saying “Location, Location, Location” you cannot change the location, once the project is built
and you’ve invested a potential of several million dollars and perhaps a few years, it’s the one
constant you cannot change. Once you’ve gotten over the shock of the initial cost of the land,
or leasehold rent, there are many other factors to consider. But once you find that perfect
location, the time it will take to negotiate a deal can vary. Find a good commercial broker to
help you negotiate the terms of any deal.
Take the time to find the right consultants for you. I highly recommend hiring for experience
and personality. You will be entrusting your vision and dream with the team you select and
spending your hard-earned money on them.
** Slide of Hard Costs
Hard Costs and Soft Costs – what are they?
You may have heard these terms before, your project will have what is commonly called hard
costs and soft costs. Hard costs include your land cost and building construction costs. For
those of you thinking of an interior upfit or remodel, you just saved a lot of money in the hard
cost category, but just wait, the landlord incurred those costs and they want to get paid for
their services and expenses too. This will be built into your lease rate; you just get to pay it
over time.
Land Cost will vary and there are no rules of thumb to guide you here. What can you afford in
the location you want to be? Your earlier planning will guide the budget and priority of this
expense to the project. The Contractors fees and profits are built into the hard cost of
construction.
** Slide of Soft Costs
The soft costs are the non-construction related expenses that it will take to get your project
completed. These costs include the professional fees for architects and engineers, this can
vary, but a good budget number is 8%-10% of the building or upfit cost. Other soft costs
include your furnishings and equipment @ 12%-15% of construction cost, plan an additional
5% for inflation and other contingencies, plus permits, legal fees and 8%-10% for closing costs.
Financing costs can vary, there are excellent bankers here that also understand your business
and cash flow of a typical practice that can help you. Fees for financing can run 8-10% of the
loan value to close. A good estimate for your soft costs is 30% - 35% of the construction cost.
Signage requirements and allowances – does the town or development have signage
requirements that will limit the amount or dictate the style? Some signage types cost more
than others. Often this is a separate permit from the site and building permits. This client
chose to do a lot with their signage, both as part of their logo but also part of their branding
image. While I don’t pretend to understand the Instagram culture, it is real and it is effective.
Are their opportunities to take advantage of this with your location and signage? This
particular art, sculpture, Instagram opportunity and sign cost approx. $3500.
Equipment Costs :
Is this a brand new start up clinic? Will you buy all new? Do you have some equipment to
bring with you from an existing storefront you’ve outgrown? How much lab equipment do you
really need to start? I am sure your local sales reps can assist you with these questions and cost
estimates to help you set your budget. The type a practice will determine the equipment you
want and need to do your job well. I think I am fairly handy around the house when I have the
right tools for the job, Otherwise it can be a very frustrating little project. Often equipment
purchases can be planed over time, be sure to tell your architect of future equipment plans so
they can accommodate the space or utility requirements from the beginning. Also, if you
decide to purchase the equipment yourself, be sure to coordinate the timing of delivery with
your contractor. It will cost you time and cause frustration if your cabinets show up before the
drywall is up.
Technology, Computers & Software :
So many choices…. Do you want a giant electronic white board with photos of the day’s clients
in the treatment room or do you still love paper files?
Furniture & Art :
This can be elaborate or minimalistic but should be accounted and planned for. You really don’t
want to end up at IKEA or Staples the day before opening, wondering how you’re going to get
20 of those $45 chairs in your car along with the trash cans and cool table lamp you couldn’t
pass up, and putting it all on your personal credit card. A good interior designer can help plan
and budget these purchases, unify and simplify your space and create the brand image you
desire, along with some fear free tactics early in the design phase. A good budget for this
category is 1% -2% . This can vary greatly depending on your brand and image from a few
hundred per exam room to several thousand dollars in the reception areas. Do you want
forever teak benches or simple resinous chairs? Or Is everything to be built in? Your interior
designer can work closely with you and your architect to make sure everything is coordinated,
both colors, style and image and fits your budget. This is often part of the architects team and
included in their fee for services.
** Slide of Sample Costs
So, your next question is probably…. how much does it cost to build something? Excellent
question. While it will vary from region to region across the country, we are seeing new
construction averages in the $250 to $300 sqft range and interior upfits in the $125 to $175
ranges. Many factors go into the variation in the range of costs, think of it in terms of good,
better and best, choices you will have to make a lot of to keep within your financial ability.
So, let’s do some simple math with mid-level costs:
Interior Upfit
2500 sqft x $150 = $375,000
Soft Costs @ 35% = $131,250 ( this could vary with equipment costs )
Total estimate for an interior lease upfit = $506,250
New construction
Land cost estimate $600,000
5000 sqft x $275 = $1,375,000
Soft costs @ 30% = $412,500
Total estimated cost = $2,387,500
** The disclaimer is that these are just estimates based on historical and current costs, your
project will vary with each one of these expenses.
** SLIDE FOR PRE-DESIGN
Rezoning - 6 months or more
Can you put your hospital there? Before you buy or lease the building or land, this question
must be answered …. A re-zoning may be simple or complex, be sure to ask the local town
zoning board for a timeline. It will tell you a lot about the simplicity or complexity. A good local
attorney and civil engineer can assist with the rezoning, some may require architectural
renderings of the proposed building prior to a rezoning. This is a cost and time factor to be
accounted for in your planning and in the negotiations for your closing date. An urban rezoning
can be costly and time consuming. Attorneys, engineering plans and architectural renderings
will need to part of your budget. A minimal time for this process would be 4-6 months,
planning for a year would be good, however, large municipalities and highly regulated states
can take much longer. Public hearings, traffic impact studies, urban forestry analysis all take
time and cost money. If you decide to pursue a rezoning in an urban and/or highly regulated
location you should plan for a minimum of $25,000 for the process and fees, this is just a
budget number. It can be less but most likely it will be higher. This is where the location value
comes into focus. Is this the site you really have to have? Do the demographics, traffic counts
and rooftops allow the growth you want and need to justify the time and expense? Even if
you’re thinking of a redevelopment location, perhaps a hip warehouse district, you may still
need a re-zoning just for the interior renovation.
Architectural Design Review - 3 Months or more
Will there be an architectural review process? Are there design guidelines in place that must be
followed that could add to the cost? Small towns often have an architectural review to
maintain the charm that drew you in to begin with. As far as the timeline, this process can
often be completed in conjunction with the rezoning. You would be wise to have a very good
positive feel for the rezoning being favorable before engaging and spending money on plans
and renderings. The rezoning may require some level or architectural effort, but I would limit
your exposure until you get a positive inclination or actual approval. This does lead to another
cost vs time risk decision you’ll need to make. Most closing dates are made to be dependent
upon rezoning and the seller will want to close asap after rezoning is complete, however, you
will also want to begin construction asap after closing, so having permit ready plans at closing
means you’ve engaged the architect and engineers prior to final approval of the rezoning….
Having a good team in place can help you make this decision.
Geotech / Surveys + 4 - 6 weeks
Are there any easements, deed restrictions (be careful near a Wal-Mart, they may have deed
restrictions on adjoining property). What are the building setbacks, and parking requirements?
What are the water quality and storm water detention requirements? How much of the
property is left to build on and can you fit the building you want on what is left? These are
questions your architect and engineer can help you answer before you close on the property,
even if you do not have to have a rezoning. A quick architectural site plan can be well done in
about 2 weeks. Another item to consider before closing is What type of soil is on site and will it
be adequate to support your building. It doesn’t take much to change the cost of the project
$25,000 or more if the dirt must be remediated. The soil investigation can be concurrent with
the rest of the due diligence process. Plan for at least 6 weeks for the full report. Your
architect and/or contractor can assist with the coordination of this report and the phase one
environmental report. Do you know the history of the site? A phase I environmental report is
always a good idea, your bank may also require it. If they discover something about the
property or a nearby property that contains a hazardous material or manufacturing, you will
want to request a phase II environmental report. A phase I report may cost $2000 or more
depending on the location. A phase II report may cost $5000 or more, again, depending on the
location and what was discovered in the phase I report. Again, this can be a concurrent
process, but it will take 4 weeks or so for the phase one report, longer for a phase two.
Public or Private Utilities
Does the site have public utilities on site or close by that are accessible? What will be the tap
fees to connect to water and sewer? The size of the water line to your building will determine
the tap fee, most freestanding Veterinary projects will require at least a 1.5” water line. Any
project with extensive boarding areas may require a larger line to provide the pressure and
volume needed. Most interior storefront locations will have a 1” water line, this is usually
adequate. The final design will help determine this cost. These can range from a few hundred
dollars to tens of thousands to connect. If the utilities are on the other side of railroad tracks or
a gas company right of way you may want to reconsider the site or be prepared for a long wait
for approval. I have a current client that spent a year negotiating an easement with a property
owner and then more time with the local utility company just to bring water and sewer to the
site. He has owned the site for over 3 years now. He is very confident in the location being the
right location for his practice and the wait will be worth the effort and cost. While I do not
know the cost of the easement he negotiated, the tap fees for the water and sewer will be
about $15k. He still has the expense of getting the water and sewer to the building as part of
the project approx. 1000 feet to the building. If you have a rural site with a well and septic,
you’ll need to get the local health department involved. Some locales have a staff that will
assist with the layout of the field and others will simply tell you to hire the engineer to
determine the layout. A veterinary hospital is water use intensive and the septic field will be
significantly larger than a residential user.
How many of you are now ready to just do an interior upfit for your practice? For a new start-
up practice, it is a very good option. I have another client that I’ve known for about 3 years
that has patiently waited for the right location. She’s looked and several new sites and other
remodels in which to put her growing practice. She had a good outlook that something was out
there for her, and said “if it doesn’t feel right, you don’t have to move forward”. A few months
ago the property right next door became available and she closes on it next week. It will be
large enough to build everything she ever dreamed of for her practice and more.
Site plan Approval
Urban vs Rural time will vary greatly….
Department of Transportation – timeframe unknown…. They move at their own pace, however
These folks keep our streets in order and work with the local utility companies to make sure
people and traffic and the stuff we need can get to us, and may require sidewalks and street
improvements to be made, this would be good to know and have an estimate for before
purchasing the property. Make an appointment with them or make sure your consultants meet
with them to ask what may be required. A turn lane addition to access your property will be an
expense you’ll want to know early and can vary greatly. $50k to $150k would not be out of the
question. It would be somewhat unusual for a veterinary hospital to merit a turn lane, except
in a high growth area where the road infrastructure has not kept up with demand….so, I would
expect to see this become more common as more neighborhoods are being developed in rural
areas and the DOT has the opportunity to require that you fund the infrastructure as part of
your project. But this is also the growth you a looking for and may be the land cost that fits
your budget. Again, you’ll have to weigh the risk of the cost against the value of the location.
** DESIGN SLIDE
Finally, the good stuff…! Let’s go ahead and talk about the timeline for the design plans. First,
Hire an experienced architect. I know this sounds self-serving, but, It will save you time and
provide value because we have spent time learning how a veterinary hospital operates,
protocols and codes along with spatial relationships that allow us to work efficiently and you to
not have to educate your design team. Yes, it is a building or interior upfit, but the flow and
materials and building systems have been studied and the value of hiring and experience team
will come out in the final construction project and space. And, even though we have a good
understanding of how a hospital operates, every owner is unique, every location is different,
and this is what keeps us as designers challenged and excited. While in my past experience as
an architect, I’ve done my share of “prototypes”, however, every hospital owner I’ve worked
with has a unique perspective on their workflow and it is our job to listen carefully and capture
this in the design. This takes time. This time is well spent and critical for you to really
understand the floor plan and know your needs vs wants. 2-3 weeks for the needs assessment,
also called the program, and the floor plan for an interior upfit is a good allowance of time. For
new construction this may take a little longer, I would allow 4-6 weeks to get it to where you
like it. Do not be afraid to make changes in this phase, its all paper, we really do care about
getting it right for you. We won’t let you violate any building codes, but If it doesn’t feel right,
don’t move forward to the next phase until it does. You really have one shot at getting the flow
and rooms sizes right for you and your practice. Plan for the future. Will you add another
associate or two? Do you want to add services you don’t currently offer? Will you be AHAA
certified and/or Fear Free Certified? These certifications have building design implications for
you to consider now. The next phase gets into more details and is what we call the design
development phase. This is the time we get into the details of the lab and cabinets, reception
areas, and layout other equipment like laundry areas and specific locations of wet and dry
tables. This timeline for this phase in both interior and new construction projects can be
completed in 2-3-4 weeks. This phase is also the time to really think about your interiors,
flooring, colors, finishes, and furniture. The next phase is what we call the construction
documents phase and is where we provide the details of construction and specifications to the
contractors, this is where the good, better and best part gets communicated to the Contract
and provides them the details of what to build. You may be left wondering why your architect
is not talking to you as much during this phase, that is because they are working on the details
and it may or may not require as much input on design decisions, I can assure you they are
working to complete the documents diligently. They are coordinating with the civil engineer,
building structural engineer and the plumbing and mechanical engineers along with their own
details they are responsible for. While no set of plans is perfect, we strive to communicate in
2 dimensions ( and often time 3 dimensions) the design intent and quality expectations. At the
end of each phase a review of your budget should be done against the plans. The timeline for
each phase will vary with the complexity and scope and will depend a lot on your decision-
making ability. Yes, some of the timeline depends on you. It can move quickly or slowly.
To summarize, A good timeline for an interior upfit is 3-4 months, a new building will take
longer, plan for 5-6 months and even longer for a larger, more complex project. This timeline
does NOT include time for the rezoning and permit reviews.
Fees for professional services are part of the ‘soft costs’ . The consultants you hire are
professionals who are good at their job just like you are and should be paid a fair fee for their
expertise. You may have 6 or 7 consultants, you may only need one or two. A new building will
require more consultants than a leasehold improvement. A remodel of an older building or
former warehouse may need them all, even if the project is limited to the interior. A typical
breakdown of professional fees with a disclaimer, these fees are not set by any organization,
each firm is free to set their own fee structure for services they provide, these are simply an
estimate for professional services: These are a typically estimated to be approx. 8% - 11% of
the overall construction cost depending on what services are included in the contract.
I have found that the complexity and time it will take to design and prepare a set of plans is
correlated to the cost of the project. It is not our goal to drive up the cost to make a higher fee,
we really do want the project to come in at your budget. For leasehold upfits, some may
charge a percentage, others may charge a square foot rate that is probably tied to a percentage
of the estimated cost.
Pre-design services may or may not be included as part of the overall basic services fees. These
services can be provided as an hourly design fee or a fixed fee. Sometimes the initial scope of
the project is not really known, especially if the project is a re-use of an older building, so the
hourly design fee allows for the true scope of the project to be understood.
** CONSTRUCTION SLIDE Cost estimating by the General Contractor
3-4 weeks
PERMMITTING
3-6 weeks (site plan approval may take longer)
BUILD
Upfit 4-6 months
New 8-12 Months
Okay, now the building is finally complete, parking lot is paved, and the signage is hung. The
lights are on and the contractor has moved out of your new space. Now what? Unless this is a
new practice, you have a lot of stuff to move. Even for a new practice, you have supplies to
unpack and find a home for, Computers and equipment need to be set up and certified and
tested along with phone lines and TV’s. And while the builders cleaning crew did a good job,
the hospital needs a deep clean from top to bottom. Give yourself a good week or two if
possible, to make sure everything is up and running and clean before opening day.
Closing Slide and Summary…
Planning is important, take your time, ask questions, talk to your banker, architect, town
planners, builders, other doctors in your network. Attend design conferences like this one. It
will be time well spent.
Hire a passionate design team, with experience and that care about what you do every day.
Build the best you can afford, you will live with it every day, stick to your budget and hire
experienced contractors.
Thank You.