Today’s Builder: Truth in budgeting
By Stephanie Rota
By Stephanie Rota
Most major financial decisions centre around a budget. They are first driven by our wants and needs, but the fiscally disciplined will drive their decision-making with a budget. I have yet to work with a client who didn’t have a budget, although I have worked with clients who withheld their true budget. “Why do this?” I’ve wondered.
The obvious reason is the client doesn’t want you to know how much money they have to spend so they can keep the pressure on you to deliver the lowest price. But this doesn’t usually work out the way the client thinks it will.
Any custom project is a huge financial undertaking and the builder/client relationship should be based upon trust. Arguably, this is the foundation for any great relationship, right? So, in order to successfully leverage this working relationship, let’s talk about some reasons why client transparency with their budgets yields the best outcome for both renovations and new builds.
If the shoe fits, wear it
A true budget number will guide project owners in the search to find the right contractor to partner with. There are all types of different contractors and our specialities range in scale and scope. Some builders have very large operations and maybe can’t give a smaller project the time and attention the client would like. Or maybe the project has complexities requiring a certain builder that’s positioned well to handle those intricacies. Clients need to match their projected spend with the services being offered. When they are coy about the true budget, we lose the chance to say, “Hey, we’re not really right for this project.” That’s something a homeowner should want to hear right off the bat, if it’s true, and most of us are not shy about saying it.
Sometimes clients can overthink a situation and overanalyze, leaving them unable to move forward. We know clients are cagey about budgets out of fear of being ripped off or overcharged. What they often don’t understand is that opening up about their budget can be the best way to avoid this. When they are honest about their budget the builder can share ideas for areas to allocate funds that will maximize the items that are most important. We can help guide and re-direct funds away from items that are less important to spend money on. Transparency is key to helping our customers achieve the house of their dreams.
Not revealing the true budget can stop clients from ending up with the product they actually want. Yes, some clients think every project goes over budget anyways, so they start out with a smaller number to end up where they want to be. But planning for how much money will be spent starts from the beginning. Due to current market conditions, it appears that homeowners are generally moving in and out of houses less these days. So their large renovation project or new build could possibly be their forever home. Making decisions today that will impact them in the future needs to be factored into the budget. Once it’s built, it’s done. It would be crying shame to invest all that time and money only for them to regret things they wish they had included.
So, there are at least three ways that concealing the true budget number can derail a job. When we sense that a client is avoiding giving us this information, we should look for ways to gently communicate these pitfalls and encourage them to open up the lines of communication. Building the trust required to do this can be challenging, but it’s a skill we’ve all had to develop. Professional quoting practices and transparency about costs and margins from our end can only help. At the end of the day, a relationship of mistrust between a contractor and a client is rarely going to work well. As a builder, I can say the happiest clients with the best projects were the ones who were honest from the outset. They found the right balance between making logical decisions and making emotional ones.
Stephanie Rota is co-owner of Carmelin Design + Build in Toronto.