Detailed and Conservative Estimating: When I prepare bids on a project, I use a very detailed Item List in my Quickbooks Accounting software to ensure that all costs are captured. Fixed quotes are also obtained for all significant scopes of work. My process ensures a thorough and conservative estimate up-front. When I was an Engineer at McGuire Nuclear Station, our mantra was “conservative decision making and a questioning attitude”. This guidance has served me well in my business as well as in my personal life.
Holding vendors to their quotes: In building custom projects, issues always emerge by doing something that has never been done before. The risk of “cost creep” is always present as issues are faced that were not anticipated up front. My contracts with my trades require them to obtain written approval for any job scope changes before the work is done. One of my cardinal rules is to never allow any vendor to assume that they have a blank check. To paraphrase the words of Warren Buffet: Always get it in writing up front – when you have the most leverage.
Responsible management of change orders: In the event that deviations from the plans and specifications are desired, change orders are used to track such changes and to reset the budget. Change orders can increase – and can also decrease – the budget. My goal is to get a detailed estimate of the cost of such changes up front (again while my leverage is the greatest), and present the change order to the clients before the work is done. That way, there are no unpleasant surprises that are so often faced by Owners in the custom home building process.
Tracking actual costs against estimated costs: With my Quickbooks Accounting software, I can easily generate reports to track in detail actual costs against the original budget.
I run these reports periodically and share them with clients upon request to help ensure that we stay under budget.
My commitment to hold to the budget is tenacious. One reason is because I was conditioned that way when I built my first home which was my own. Naturally, I was not happy whenever I felt that was going over budget, and I still respond that way. On my last project, I was so determined to keep the budget that I performed some of the work myself. It is always a happy occasion to report to my clients that that we are under budget, and I intent to always keep it that way.
