National and global companies that expand their real estate footprint frequently and follow well-established standards are familiar with the true costs of implementing technology systems. They are willing to spend this money without a second thought.
Companies building projects less frequently or for the first time often will not develop a detailed technology budget, presuming that the electrical budget addresses these costs. Many are quite surprised to learn that little or no money is assigned to technology in the electrical budget. Owners will also equate a technology budget to the cost of equipment as seen online. Many experience sticker shock when told the full cost to actually implement the technology systems they envision for their facility. We have seen clients bend over backwards to try to fit the reality to their expectations.
Project delays and costly changes transpire as a result of initial misconceptions about realistic technology budgets. In this article, we will highlight what can go wrong when a constructible budget is not established in the early stages of a project, and how TEECOM can help prevent this.
What Can Go Wrong
One or more of the following scenarios often plays out, negatively impacting project budgets and schedules.
- Missing Systems: Owners turn to a design-build contractor who quotes a low price per square foot. Only late in the construction process do they learn this price does not include security, telecom, and audiovisual (AV). The Owner then attempts to add these systems after the fact, and the cost may exceed the entire project contingency budget.
- Safety and Security: Owners build a project at the original budget that functions to a degree. In terms of security, however, it may not meet the industry standard of care and may create risk to the organization by providing inconsistent protection.
- Operational Risks: Having reviewed an accurate cost estimate, a stakeholder tries to split the difference from their original budget; for instance, deciding to spend $200,000 when their original budget was $50,000 and the estimate is $400,000. The result is that they spend more money than they wanted to without achieving their desired functionality.
- Lack of Standardization: A national or global organization building in different resource pools tries to deliver the lowest-cost project in each location. They may achieve the desired functionality, and they may save some money. But by not standardizing their systems, they have an operational nightmare, and they have pushed the costs of managing and maintaining those systems down into the local offices.
- Change Orders: The original budget is used to start building, resulting in change orders that ultimately make the implementation costlier, slower, and more disruptive than necessary.
- Add-Services: Owners build a project at the original budget that does not function as anticipated. Expensive and disruptive add-service work is required after the space is occupied.
TEECOM Can Help
Implementing a successful project from inception to closeout includes costs for everything from training, to as-built drawings, to software warranties, to retro-commissioning. Even professional cost estimators lack the tools to accurately assess all of these costs. As technology consultants—who select appropriate equipment, design these complex, integrated systems, and project-manage their implementation—we are intimately familiar with all of the costs involved.
At minimum, a budgeting conversation with TEECOM can prevent a project from running into the difficulties described above. This conversation can address the following.
- The standard of care in the industry: what a company’s peers are providing that a company will be measured against.
- What functionality a company desires from its technology systems and the most cost-effective ways to achieve that functionality.
- A company’s growth plans and what will prove most cost-effective over space and time. Especially for national and global organizations, having a budget and standards and centralizing administrative costs not only smooths operations but also generates buying power. A company can have dedicated support from the manufacturer and train that team.
TEECOM can provide an Opinion of Probable Construction Costs (OPCC), sometimes called an engineer’s estimate. We provide initial OPCCs typically accurate within 30 percent. As projects progress and additional information becomes known, we update our OPCCs to come within a few percentage points, and even tighter in the case of audiovisual (AV) systems. If retained for design and project management services, TEECOM can help hold contractors accountable to stay within that budget and schedule. Even without retaining TEECOM, the initial conversation and OPCC can set the project on a more defined path to success.
A truly constructible budget is invaluable. It is the first stake in the ground from which many lines are drawn and future revisions measured. If that stake is in the wrong place, those lines are easily crossed. Having presented an initial budget to leadership, no one is eager to go back and say the actual budget is many times more than originally identified. However, when armed with subject matter experts who can provide a reliable OPCC and deliver the project if desired, this conversation will ensure a predictable outcome.