Page 253 - TCDB combined Book

230 The Complete DESIGN BUILDER

Budgets:

Preparing budgets prior to proceeding with a proposal preparation is always advisable.
During the qualifying process questions regarding the project budget or expected dollar volume
should be discussed. The client expecting to complete a project for a budget price of $50.00 per
square foot will be disappointed when the actual amount turns out to be $60.00 per square foot.
The client may not have proceeded with the request for a proposal had there been a realistic
budget amount at the outset. The format for preparing budget estimates should include an
itemized checklist, based on a recognized industry standard. Your historical data, job costing
reports and published construction cost figures will be helpful when arriving at a total budget
amount. Budget quotations should always be submitted as a variable amount, being stated with a
low to high expectation. The total budget of $1,011,300. as follows, for the sample project,
ACME Manufacturing, could be stated as variable from $1.0 to $1.1 million.

Major subcontractors should be contacted when necessary for input on budgets at this
early stage, to not only validate your budget amount, but to avoid an estimating miscalculation,
due to a hastily prepared budget. Due to the importance of budget quotations, they should be
prepared by an experienced staff member based on accurate internal cost accounting information
and factual historical data. The following Budget Estimate is based on the sample ACME
Manufacturing project. Cost figures indicated are not actual or recommended costs for any of the
individual items and are presented for illustration purposes only.