In Association with
Thanks to everyone who took part:
Laura Bellamy, Project Leader, MCM / Zoe Smeeth, Project Director, JAC Group / Melanie Woolcott, Workplace Director, Orbit Architects /
Colin Wood, Director, Cost Management, Turner & Townsend / Zoe Moss, Divisional Director, Charles Edward Ltd / Jerry Williams, Founding Director, REPS Ltd / Martin Kellett, Director of Cost Management, AECOM / Ciaran O’Hagan, Managing Director, Specialist Joinery Group
Together with our friends from Specialist Joinery Group, we’ve brought together a crack panel of industry experts to talk about the subject of ‘Price is what you pay, value is what you get – the difficult conversations on workplace sector costs’.
Neil Usher, formerly Workplace Director at Sky, refers to the tension in delivering commercial projects: ‘It is amazing how antagonistic some property professionals are towards those in positions of financial responsibility…the ability of workplace over the past two to three decades to be commercial has made much of our progress possible’. For some, it is easy to blame the designer for getting carried away and, for others, the project manager for lacking the creativity. Increasingly, the message seems to be that these two groups need to work together, to do so better and perhaps a little earlier in the process. Here we take a good honest look at the potential area of tension often referred to glibly as ‘value engineering’ – but worthy of a much more serious place at the discussion table.
We start by asking about the thorny issue of cost – and, more specifically, why so many end user clients find it so difficult to stick to agreed budgets.
Melanie: Clients’ expectations are different to the budget – so the briefing process is often not aligned with the client’s expectations. They want the ‘gold’ solution but they’ve only budgeted for the ‘bronze’. Also, particularly in today’s workplace, there are things missing – you might have a fit-out project where you’re asked if furniture is included – invariably it’s not. Then you have change management, wellbeing…all these things not being allowed for within the cost plan.
Zoe M: Do you think that designers design with cost in mind?
Melanie: I would invariably say we do – although it can be quite tricky to do so because we don’t necessarily know, 100%, how much everything costs. If you look at joinery, for example, it can be a bit of an unknown quantity and it can be difficult to know exactly what the ultimate cost is going to be.
Jerry: What you do see, invariably, is a client with an expectation, a designer with some great ideas – and they are not joined up at all. We were involved with a recent project where we were told right from the start that there was only so much money – and that was it. So when we appointed the architect, the QS and so on, we made sure that, when they were appointed, they knew exactly what they were in for! We made sure that there weren’t going to be any arguments afterwards and that all parties came in right on the money – and it looked fantastic.
Zoe S: How did you get to that original budget in the first place?
Jerry: We got told – which was slightly unusual, I must admit. We knew the client was getting a landlord contribution of ‘X’ and we were then told that we could spend ‘Y’ on top of that. Because we set the tone really early, the team that came on board worked around that budget and knew the expectations.
Colin: Having an educated client is important. I think that more educated clients do appreciate the difference between cost and value and see the workplace as an asset. Traditionally, the budget may have been set by the CFO – who only sees the workplace as an overhead or a capital cost. If you look at the technology firms today – and we all know who they are – they don’t so much see their workplaces as an asset but instead as an enabler for their people to do the great things they do. So they are willing to invest sensible amounts of money and I think they expect the QS to be part of that creative process and to come up with sensible solutions – to be part of that driving force.
Melanie: I’ve never seen a client who has said to me, ‘This wonderful design is now going to save me ‘X’ amount on staff retention and attraction because my staff reduction has gone down from 12% to 7% – we never had that fed back to us.
Zoe M: Frameworks do permit that – but these are not one-off projects. We’ve been working on a particular major framework where there was a big focus (around securing a place on that) on the ‘why’ – why are they doing this exercise in the first place? The client, no doubt facilitated by professionals in the market, worked out what the cost of losing their staff and the potential savings that a great working environment would bring in terms of staff being happier and staying with them that much longer.
Martin: Staff retention is all worthy stuff to talk about – and it is real and it has been proven to be real – but I’m not sure how much it enters the argument when you’re looking at capital costs. I’m not sure how much clients look at ‘whole life costs’ even in this day and age. It’s been around for years but I don’t think many put the effort into work out those whole life costs. There is more of a focus now upon operational costs, so clients will take a decision about replacing a major piece of plant, for example.
Jerry: Interestingly, the client I alluded to earlier was actually someone we’d worked with previously – so we’d already been through the process and had all those discussions. When we worked with them for the second time, even though the budget was a lot tighter than it was the first time we worked with them, they now understood the value. We were able to say to them, ‘We think this will make a big impact on your working environment’ – and they were far more willing to buy into what we were telling them.
We ask the slightly thorny question of whether there is a tension between designers and the people responsible for costs?
Laura: I don’t think so. To be honest, we – as designers – can’t work without them. We need parameters to work within, we need a budget to work to. We need strict parameters – otherwise, what are we going to design? We could end up designing something that is a million miles away from the client’s realistic expectations.
Zoe M: I certainly wouldn’t say that it was commonplace, but I have seen examples of budgets being wildly out – and have then forced not ‘value engineering’ but scope-chopping, which is not the same thing. There is a difference between value engineering and simply getting rid of things!
Colin: There is also a difference between a cost manager and a cost estimator. A traditional QS will tell you that you can’t afford something at the end of a process, whereas a cost manager is now a key part of the design team. They are about setting the commercial guardrails for a project – giving the designers the commercial parameters to work within and, quite often, when it comes to elements such as joinery, we will now show images rather than spreadsheets and say, ‘This is the kind of thing you can afford for that sort of money’, I think that adds more value.
Zoe M: That’s the kind of situation that really gives people the hump – when the client thinks they’re going to get some beautiful specialist joinery and ends up with something out of a catalogue.
Melanie: A good cost manager will look at the structure and fittings, help reduce the costs – and therefore help save the client some money – but will then allow the designer to look at other elements that might be a little more expensive but really are the ‘cherry on the cake’ that will make the project work. It’s about finding that balance – not about taking a knife and cutting a little bit off everything.
Ciaran: We encounter this in virtually every job we’re involved in – this is what we want and this is our budget…and the two are invariably miles apart. My own opinion is that this comes from the designer and the client not being absolutely clear from day one. I do think that, a lot of the time, designers are put in a tricky position, where they are given unrealistic parameters. I don’t think that’s fair on the designers and I think that this usually comes down to poor communication from the start. We’ve just adopted a new manufacturing facility in Maghera, Northern Ireland. We had a budget of £4 million. It couldn’t be £5 million – it couldn’t even be £4.1 million. We couldn’t afford it. We work in a highly populated manufacturing area and we wanted to know how we can keep our people, keep them fresh and keep them empowered. We wanted to retain all our good people and attract quality new staff. We made sure that we communicated everything right from the start and we will probably come in under that original budget – but not by slashing anything. By managing the entire project, by being smart about what we’ve specified.
Jerry: A huge part of that initial briefing process has to be about where the client wants to go – but also about what they are doing now, what they are currently doing and whether they think it is good, bad or indifferent. From there, you can start establishing how they are going to improve those areas. It’s about establishing the baseline with the client and discovering exactly what it is that they want to get out of this process. Do they really want to embrace the change?
Ciaran: What do you really want? How much do you have to spend? If these questions were asked up front, it would make everybody’s job easier.
Martin: The brief might well change for a workplace as a client gets to understand new ways of working or activity-based working. But if the brief is set and the brief is understood, then, from a cost management point of view, it is the same as building a power station. The key is to make sure you follow the project governance, you set your brief and you set your budget, and at every single stage you go back and you make sure that you’re still answering that brief – whether that be cost or specification. Adherence to the project governance, I think, is where projects go wrong.
Zoe S: The most successful office relocation projects have a clear and comprehensive brief. I often meet clients who believe they have a brief; it quickly becomes clear that this usually consists of how many people they want to seat and little else! It’s imperative for a client to have adequate guidance whilst setting their project brief and therefore their project and construction budget. Programme and timeline are always key to a project, so being able to allow adequate time for the development of the scope is sometimes a luxury but one that greatly benefits a project and the PM/designer relationship. There will always be challenges but with honesty and great communication, there isn’t a challenge that can’t be overcome.
Laura: Projects are often fast-paced and the brief can change rapidly. Tensions can arise when there is not enough time to align the cost plan to the design, or there is constant change – again, it’s all about communicating effectively and working together.
Conclusion: As with so much in life, never mind work and the workplace, it all comes down to communication. Whether working directly with the end user client or through a project manager, designers need as tight and detailed a brief as possible. Furthermore, as Martin said a little earlier, it is key that everyone involved comes together at every stage of the project and ensures that they are still answering the brief. This way, any sudden changes can be covered without the need for the dreaded cost engineering to raise its ugly head towards the end of the process.