Project Budgeting

Project budgetingThe following items typically appear in Total Project Cost estimates for new construction and renovation projects: 

  • Soft costs: These costs are associated with project implementation, including consultant services, surveys, testing, printing costs, and miscellaneous reimbursable costs. The largest components of these costs are typically the architect and engineers fees and other professional consultants. Depending on the project specifics, soft costs may include land surveys, soil testing, and specialty consultants such as lab planners, wind tunnel experts, and acoustical engineers. In developing a project budget, FM relies on the knowledge base of past projects of similar size and scope to create an estimate for soft costs.
  • Construction costs: Construction costs include labor, material, equipment, general requirements, contractor's overhead, and mark-up. Projects are typically submitted to a competitive pool of pre-qualified contractors for a lump sum bid. Construction costs also may include temporary utilities, fencing, temporary partitions, and other items required by to ensure safety and minimize occupant disruptions.
  • Other owner contracted work: Depending on the project specifics, FM may award separate contracts for temporary relocations, demolition, abatement, and utility relocations required prior to the start of construction.
  • Furniture & equipment: Furniture is typically not included in the general contractor's bid. Furniture is purchased through furniture dealers or direct from the manufacturer. Specialty and A/V equipment may be included in the general contractor's contract if it requires permanent connections to the building infrastructure (e.g., fume hoods). Loose equipment is purchased separately from the construction contract.
  • Moving & storage: Moving costs for offices and labs associated with renovations, new construction, and temporary relocations are included in the project budget. In rare circumstances, project budgets will include the cost of temporary storage of furniture or equipment during renovations.
  • Permit fees: Building permit fees and other regulatory fees are included in the project budget. The cost of regulatory fees is unknown until calculated by a specific regulatory agency at the time of permit issuance. The City of Evanston will increase the permit fees at the end of construction to reflect any change orders issued to the general contractor. The final costs are determined long after building occupancy. FM projects fees within the budget based on experience. 
  • NUIT charges: NU Information Technology charges activation fees on all projects for data/voice and new phone service per their scheduled rates.
  • Facilities Management Operations charges: FMO charges include the costs of any time or materials spent by the FM Operations shops in conjunction with the project. These costs range from cutting keys, providing access to equipment rooms, assisting in utility shut downs, and reviewing design drawings for conformance with University standards.
  • Project management fees: FM assesses a graduated fee to cover project management expenses and FM overhead on all projects. The fee is determined by the overall project budget size; it ranges from 2 percent for projects over $50 million to 5 percent for projects under $500,000. Learn more about project management fees here.
  • Contingency: There is no way that every risk can be fully calculated or anticipated. A contingency amount is added to a project budget as an insurance policy to cover the two types of risks: accuracy of estimating against the current market conditions and unforeseen conditions or requirements.

Examples of elements

  • Design change: Changes in the design can be due to things such as alternate construction methods, product substitutions, unanticipated code revisions, and contractor proposed cost savings.
  • Unknown condition: Conditions that couldn't have been identified during the design of the project, such as concealed conditions on a renovation project, sub-surface conditions, unknown hazardous materials such as lead or asbestos, and changes related to abnormal weather conditions. Changes as a result of unit prices that were included on the bid in anticipation of unknown conditions would also be included.
  • Design deficiency: These are often items of change that are considered errors or omissions on the part of the architect or his consultants. This would include lack of coordination between various disciplines in the documents, design elements which do not comply with University standards, inadequate detail on the documents, and failure to comply with codes.
  • Institutional request: These changes are a result of items required in order to accommodate the operations and policies of the University and not a request by the client. This would include items caused by a change in the University's construction standards, new technology in areas such as telecommunications, requests by Risk Management, Research Safety, or University Police.

Total project contingency is tracked as a separate line item and may be used to cover budget overages in any of the separate budget object codes caused by unforeseen conditions. At the end of a project, all unused contingency and project funds are returned to the funding source. The Facilities Management project manager handles the project contingency.

The project contingency is not intended to be used to fund client-requested program scope changes. These changes must be funded through separately identified funding or approved budget increases.

  • Change requests - Cost proposals forwarded by the contractor in response to change requests are typically itemized to into the following categories: unit price and unit quantity for materials, equipment, man hours, and hourly rate for labor. Once the submitted pricing is accepted, it is then approved. Multiple change requests are accumulated and combined into contract change orders. On large projects, change requests are typically allowed to accumulate up to a dollar value between $25,000 and $50,000 before they are included in a contract change order. This process is standard in the industry and reduces project paperwork. Learn more about client-requested scope changes and change requests here.