Developing Your Project Budget & Timeline

The Project Process…

ALL 3 HAVE A ROLE IN THE COST AND TIME OF YOUR PROJECT

PLAN

TIME

$$$

DESIGN

ARCHITECTS

ENGINEERS

INTERIORS

TIME

$$$

BUILD

CONTRACTORS

TIME

$$$

PLANNING

BUSINESS PLANNINGTIME CONSTRAINTSLOCATION, LOCATION,LOCATIONSELECTING YOUR TEAM

0

10

20

30

401/5/20YY

1/6/20YY

1/7/20YY1/8/20YY

1/9/20YY

My Chart TitleSeries 1 Series 2

HARD COSTS LAND

LEASE

BUILDING COSTS

SOFT COSTSA & ESITE REPORTSEQUIPMENTFURNITURE & ARTSIGNAGELEGALFINANCING

$$ = 30% - 35%

EXAMPLE COSTS OF A PROJECT

Leased Space Interior Upfit

2,500 sqft @ $150 sqft = $375,000

Soft Cost @ 35% = $131,250

Total Project Estimate $506,250

New Construction

Land Cost Estimate $600,000

5,000 sqft @ $275 sqft = $1,375,000

Soft Cost @ 30% = $412,000

Total Project Estimate $2,387,500

PRE - DESIGN

REZONINGARCHITECTURAL DESIGN REVIEWGEOTECH & PHASE 1 PHASE II REPORTSURVEYS / EASEMENTSUTILITIESSITE PLAN APPROVALDOT REVIEW

DESIGNFEESTIME

Leased Space Interior Upfit

Needs Assessment

2-3 weeks

Schematic Design + Review

3-4 weeks

Design Development + Review

3-4 weeks

Construction Documents + Review

4-6 weeks

New Construction

Needs Assessment

2-3 weeks

Schematic Design + Review

4-6 weeks

Design Development + Review

4-6 weeks

Construction Documents + Review

6-8 weeks or more

CONSTRUCTION COST ESTIMATING

3-4 weeks

PERMITTING 3-6 weeks

BUILD Upfit 4-6 Months

New 8-12 Months

MOVING DAY IS FINALLY HERE!!

SUMMARY

PLANNING IS IMPORTANT

TAKE YOUR TIME

DESIGN IS IMPORTANT

HIRE SMART

CONSTRUCTION IS IMPORTANT

STICK TO YOUR BUDGET

Thank youRoger@RLArchitecture.com

NY VET 2019 Roger Layman, AIA RLArchitecture, pllc Developing a Realistic Budget & Timeline… can it be done? ** Title Slide Good Afternoon, my name is Roger Layman, I am an Architect and the managing principle of

RLArchitecture. I have been involved with veterinary projects for over 10 years now and love

the design challenges and clients and helping them serve their customers better.

I do hope this conversation on Developing a Realistic Budget and Timeline is helpful. I’d like to

make this as interactive as possible, and we will have time for questions. My goal is to make

this informative and fun. So, Let’s start with the expectation that if you develop a realistic

Budget and Timeline, it can be built for that amount of money, and in the time frame that you

plan for it to be built. So, how will you know if you have a realistic Budget and Timeline? I think

if you follow the guidelines and suggestions outlined here today you will be well on your way.

** Questions….

How many here are just beginning to think about a new practice? How many have started the

process for a leased storefront space? Anyone thinking about new construction? Has anyone

already started construction? Anyone brave enough to be working on a second or third

location?

** PROJECT PROCESS SLIDE

The first step in any successful project is Planning followed closely by Budgeting…

I will attempt to address both and go into some detail with each of these two important

subjects. There are entire seminars and classes on both subjects, so this will be a high-level

overview. All projects have a process they follow, it has been said anything with more than one

step is a project. The planning, design and construction of a Veterinary Hospital is a complex

project with multiple steps and many people involved. The time you spend thinking and

planning about your project will be well spent.

Today we will discuss some of your responsibilities along with the team of consultants for the

project. We will review the design process and its phases and finally the selection of a

construction team to build and bring to life your project.

** Planning Slide

There are multiple resources to assist you in the financial planning for your business and a

construction project, several are here at the conference. Without the finances in place the

project just won’t move forward. It’s ok to wait. We designed a dream project for a client, she

then waited patiently and worked very hard for a year and a half until she could afford to start

the construction. She moved in this past spring and is growing, just like the area she chose to

build in.

What are your time constraints? Does your lease expire soon? Is the DOT taking your prime

corner property for a road expansion? Is it just time to start your own practice? These are

questions only you can answer.

Then you must find a location…. Where is the competition? Do the demographics support

another hospital? Do you buy that prime piece of land or lease a space? What will the landlord

provide? Is it a new space or an old warehouse in an up and coming location? You all know the

saying “Location, Location, Location” you cannot change the location, once the project is built

and you’ve invested a potential of several million dollars and perhaps a few years, it’s the one

constant you cannot change. Once you’ve gotten over the shock of the initial cost of the land,

or leasehold rent, there are many other factors to consider. But once you find that perfect

location, the time it will take to negotiate a deal can vary. Find a good commercial broker to

help you negotiate the terms of any deal.

Take the time to find the right consultants for you. I highly recommend hiring for experience

and personality. You will be entrusting your vision and dream with the team you select and

spending your hard-earned money on them.

** Slide of Hard Costs

Hard Costs and Soft Costs – what are they?

You may have heard these terms before, your project will have what is commonly called hard

costs and soft costs. Hard costs include your land cost and building construction costs. For

those of you thinking of an interior upfit or remodel, you just saved a lot of money in the hard

cost category, but just wait, the landlord incurred those costs and they want to get paid for

their services and expenses too. This will be built into your lease rate; you just get to pay it

over time.

Land Cost will vary and there are no rules of thumb to guide you here. What can you afford in

the location you want to be? Your earlier planning will guide the budget and priority of this

expense to the project. The Contractors fees and profits are built into the hard cost of

construction.

** Slide of Soft Costs

The soft costs are the non-construction related expenses that it will take to get your project

completed. These costs include the professional fees for architects and engineers, this can

vary, but a good budget number is 8%-10% of the building or upfit cost. Other soft costs

include your furnishings and equipment @ 12%-15% of construction cost, plan an additional

5% for inflation and other contingencies, plus permits, legal fees and 8%-10% for closing costs.

Financing costs can vary, there are excellent bankers here that also understand your business

and cash flow of a typical practice that can help you. Fees for financing can run 8-10% of the

loan value to close. A good estimate for your soft costs is 30% - 35% of the construction cost.

Signage requirements and allowances – does the town or development have signage

requirements that will limit the amount or dictate the style? Some signage types cost more

than others. Often this is a separate permit from the site and building permits. This client

chose to do a lot with their signage, both as part of their logo but also part of their branding

image. While I don’t pretend to understand the Instagram culture, it is real and it is effective.

Are their opportunities to take advantage of this with your location and signage? This

particular art, sculpture, Instagram opportunity and sign cost approx. $3500.

Equipment Costs :

Is this a brand new start up clinic? Will you buy all new? Do you have some equipment to

bring with you from an existing storefront you’ve outgrown? How much lab equipment do you

really need to start? I am sure your local sales reps can assist you with these questions and cost

estimates to help you set your budget. The type a practice will determine the equipment you

want and need to do your job well. I think I am fairly handy around the house when I have the

right tools for the job, Otherwise it can be a very frustrating little project. Often equipment

purchases can be planed over time, be sure to tell your architect of future equipment plans so

they can accommodate the space or utility requirements from the beginning. Also, if you

decide to purchase the equipment yourself, be sure to coordinate the timing of delivery with

your contractor. It will cost you time and cause frustration if your cabinets show up before the

drywall is up.

Technology, Computers & Software :

So many choices…. Do you want a giant electronic white board with photos of the day’s clients

in the treatment room or do you still love paper files?

Furniture & Art :

This can be elaborate or minimalistic but should be accounted and planned for. You really don’t

want to end up at IKEA or Staples the day before opening, wondering how you’re going to get

20 of those $45 chairs in your car along with the trash cans and cool table lamp you couldn’t

pass up, and putting it all on your personal credit card. A good interior designer can help plan

and budget these purchases, unify and simplify your space and create the brand image you

desire, along with some fear free tactics early in the design phase. A good budget for this

category is 1% -2% . This can vary greatly depending on your brand and image from a few

hundred per exam room to several thousand dollars in the reception areas. Do you want

forever teak benches or simple resinous chairs? Or Is everything to be built in? Your interior

designer can work closely with you and your architect to make sure everything is coordinated,

both colors, style and image and fits your budget. This is often part of the architects team and

included in their fee for services.

** Slide of Sample Costs

So, your next question is probably…. how much does it cost to build something? Excellent

question. While it will vary from region to region across the country, we are seeing new

construction averages in the $250 to $300 sqft range and interior upfits in the $125 to $175

ranges. Many factors go into the variation in the range of costs, think of it in terms of good,

better and best, choices you will have to make a lot of to keep within your financial ability.

So, let’s do some simple math with mid-level costs:

Interior Upfit

2500 sqft x $150 = $375,000

Soft Costs @ 35% = $131,250 ( this could vary with equipment costs )

Total estimate for an interior lease upfit = $506,250

New construction

Land cost estimate $600,000

5000 sqft x $275 = $1,375,000

Soft costs @ 30% = $412,500

Total estimated cost = $2,387,500

** The disclaimer is that these are just estimates based on historical and current costs, your

project will vary with each one of these expenses.

** SLIDE FOR PRE-DESIGN

Rezoning - 6 months or more

Can you put your hospital there? Before you buy or lease the building or land, this question

must be answered …. A re-zoning may be simple or complex, be sure to ask the local town

zoning board for a timeline. It will tell you a lot about the simplicity or complexity. A good local

attorney and civil engineer can assist with the rezoning, some may require architectural

renderings of the proposed building prior to a rezoning. This is a cost and time factor to be

accounted for in your planning and in the negotiations for your closing date. An urban rezoning

can be costly and time consuming. Attorneys, engineering plans and architectural renderings

will need to part of your budget. A minimal time for this process would be 4-6 months,

planning for a year would be good, however, large municipalities and highly regulated states

can take much longer. Public hearings, traffic impact studies, urban forestry analysis all take

time and cost money. If you decide to pursue a rezoning in an urban and/or highly regulated

location you should plan for a minimum of $25,000 for the process and fees, this is just a

budget number. It can be less but most likely it will be higher. This is where the location value

comes into focus. Is this the site you really have to have? Do the demographics, traffic counts

and rooftops allow the growth you want and need to justify the time and expense? Even if

you’re thinking of a redevelopment location, perhaps a hip warehouse district, you may still

need a re-zoning just for the interior renovation.

Architectural Design Review - 3 Months or more

Will there be an architectural review process? Are there design guidelines in place that must be

followed that could add to the cost? Small towns often have an architectural review to

maintain the charm that drew you in to begin with. As far as the timeline, this process can

often be completed in conjunction with the rezoning. You would be wise to have a very good

positive feel for the rezoning being favorable before engaging and spending money on plans

and renderings. The rezoning may require some level or architectural effort, but I would limit

your exposure until you get a positive inclination or actual approval. This does lead to another

cost vs time risk decision you’ll need to make. Most closing dates are made to be dependent

upon rezoning and the seller will want to close asap after rezoning is complete, however, you

will also want to begin construction asap after closing, so having permit ready plans at closing

means you’ve engaged the architect and engineers prior to final approval of the rezoning….

Having a good team in place can help you make this decision.

Geotech / Surveys + 4 - 6 weeks

Are there any easements, deed restrictions (be careful near a Wal-Mart, they may have deed

restrictions on adjoining property). What are the building setbacks, and parking requirements?

What are the water quality and storm water detention requirements? How much of the

property is left to build on and can you fit the building you want on what is left? These are

questions your architect and engineer can help you answer before you close on the property,

even if you do not have to have a rezoning. A quick architectural site plan can be well done in

about 2 weeks. Another item to consider before closing is What type of soil is on site and will it

be adequate to support your building. It doesn’t take much to change the cost of the project

$25,000 or more if the dirt must be remediated. The soil investigation can be concurrent with

the rest of the due diligence process. Plan for at least 6 weeks for the full report. Your

architect and/or contractor can assist with the coordination of this report and the phase one

environmental report. Do you know the history of the site? A phase I environmental report is

always a good idea, your bank may also require it. If they discover something about the

property or a nearby property that contains a hazardous material or manufacturing, you will

want to request a phase II environmental report. A phase I report may cost $2000 or more

depending on the location. A phase II report may cost $5000 or more, again, depending on the

location and what was discovered in the phase I report. Again, this can be a concurrent

process, but it will take 4 weeks or so for the phase one report, longer for a phase two.

Public or Private Utilities

Does the site have public utilities on site or close by that are accessible? What will be the tap

fees to connect to water and sewer? The size of the water line to your building will determine

the tap fee, most freestanding Veterinary projects will require at least a 1.5” water line. Any

project with extensive boarding areas may require a larger line to provide the pressure and

volume needed. Most interior storefront locations will have a 1” water line, this is usually

adequate. The final design will help determine this cost. These can range from a few hundred

dollars to tens of thousands to connect. If the utilities are on the other side of railroad tracks or

a gas company right of way you may want to reconsider the site or be prepared for a long wait

for approval. I have a current client that spent a year negotiating an easement with a property

owner and then more time with the local utility company just to bring water and sewer to the

site. He has owned the site for over 3 years now. He is very confident in the location being the

right location for his practice and the wait will be worth the effort and cost. While I do not

know the cost of the easement he negotiated, the tap fees for the water and sewer will be

about $15k. He still has the expense of getting the water and sewer to the building as part of

the project approx. 1000 feet to the building. If you have a rural site with a well and septic,

you’ll need to get the local health department involved. Some locales have a staff that will

assist with the layout of the field and others will simply tell you to hire the engineer to

determine the layout. A veterinary hospital is water use intensive and the septic field will be

significantly larger than a residential user.

How many of you are now ready to just do an interior upfit for your practice? For a new start-

up practice, it is a very good option. I have another client that I’ve known for about 3 years

that has patiently waited for the right location. She’s looked and several new sites and other

remodels in which to put her growing practice. She had a good outlook that something was out

there for her, and said “if it doesn’t feel right, you don’t have to move forward”. A few months

ago the property right next door became available and she closes on it next week. It will be

large enough to build everything she ever dreamed of for her practice and more.

Site plan Approval

Urban vs Rural time will vary greatly….

Department of Transportation – timeframe unknown…. They move at their own pace, however

These folks keep our streets in order and work with the local utility companies to make sure

people and traffic and the stuff we need can get to us, and may require sidewalks and street

improvements to be made, this would be good to know and have an estimate for before

purchasing the property. Make an appointment with them or make sure your consultants meet

with them to ask what may be required. A turn lane addition to access your property will be an

expense you’ll want to know early and can vary greatly. $50k to $150k would not be out of the

question. It would be somewhat unusual for a veterinary hospital to merit a turn lane, except

in a high growth area where the road infrastructure has not kept up with demand….so, I would

expect to see this become more common as more neighborhoods are being developed in rural

areas and the DOT has the opportunity to require that you fund the infrastructure as part of

your project. But this is also the growth you a looking for and may be the land cost that fits

your budget. Again, you’ll have to weigh the risk of the cost against the value of the location.

** DESIGN SLIDE

Finally, the good stuff…! Let’s go ahead and talk about the timeline for the design plans. First,

Hire an experienced architect. I know this sounds self-serving, but, It will save you time and

provide value because we have spent time learning how a veterinary hospital operates,

protocols and codes along with spatial relationships that allow us to work efficiently and you to

not have to educate your design team. Yes, it is a building or interior upfit, but the flow and

materials and building systems have been studied and the value of hiring and experience team

will come out in the final construction project and space. And, even though we have a good

understanding of how a hospital operates, every owner is unique, every location is different,

and this is what keeps us as designers challenged and excited. While in my past experience as

an architect, I’ve done my share of “prototypes”, however, every hospital owner I’ve worked

with has a unique perspective on their workflow and it is our job to listen carefully and capture

this in the design. This takes time. This time is well spent and critical for you to really

understand the floor plan and know your needs vs wants. 2-3 weeks for the needs assessment,

also called the program, and the floor plan for an interior upfit is a good allowance of time. For

new construction this may take a little longer, I would allow 4-6 weeks to get it to where you

like it. Do not be afraid to make changes in this phase, its all paper, we really do care about

getting it right for you. We won’t let you violate any building codes, but If it doesn’t feel right,

don’t move forward to the next phase until it does. You really have one shot at getting the flow

and rooms sizes right for you and your practice. Plan for the future. Will you add another

associate or two? Do you want to add services you don’t currently offer? Will you be AHAA

certified and/or Fear Free Certified? These certifications have building design implications for

you to consider now. The next phase gets into more details and is what we call the design

development phase. This is the time we get into the details of the lab and cabinets, reception

areas, and layout other equipment like laundry areas and specific locations of wet and dry

tables. This timeline for this phase in both interior and new construction projects can be

completed in 2-3-4 weeks. This phase is also the time to really think about your interiors,

flooring, colors, finishes, and furniture. The next phase is what we call the construction

documents phase and is where we provide the details of construction and specifications to the

contractors, this is where the good, better and best part gets communicated to the Contract

and provides them the details of what to build. You may be left wondering why your architect

is not talking to you as much during this phase, that is because they are working on the details

and it may or may not require as much input on design decisions, I can assure you they are

working to complete the documents diligently. They are coordinating with the civil engineer,

building structural engineer and the plumbing and mechanical engineers along with their own

details they are responsible for. While no set of plans is perfect, we strive to communicate in

2 dimensions ( and often time 3 dimensions) the design intent and quality expectations. At the

end of each phase a review of your budget should be done against the plans. The timeline for

each phase will vary with the complexity and scope and will depend a lot on your decision-

making ability. Yes, some of the timeline depends on you. It can move quickly or slowly.

To summarize, A good timeline for an interior upfit is 3-4 months, a new building will take

longer, plan for 5-6 months and even longer for a larger, more complex project. This timeline

does NOT include time for the rezoning and permit reviews.

Fees for professional services are part of the ‘soft costs’ . The consultants you hire are

professionals who are good at their job just like you are and should be paid a fair fee for their

expertise. You may have 6 or 7 consultants, you may only need one or two. A new building will

require more consultants than a leasehold improvement. A remodel of an older building or

former warehouse may need them all, even if the project is limited to the interior. A typical

breakdown of professional fees with a disclaimer, these fees are not set by any organization,

each firm is free to set their own fee structure for services they provide, these are simply an

estimate for professional services: These are a typically estimated to be approx. 8% - 11% of

the overall construction cost depending on what services are included in the contract.

I have found that the complexity and time it will take to design and prepare a set of plans is

correlated to the cost of the project. It is not our goal to drive up the cost to make a higher fee,

we really do want the project to come in at your budget. For leasehold upfits, some may

charge a percentage, others may charge a square foot rate that is probably tied to a percentage

of the estimated cost.

Pre-design services may or may not be included as part of the overall basic services fees. These

services can be provided as an hourly design fee or a fixed fee. Sometimes the initial scope of

the project is not really known, especially if the project is a re-use of an older building, so the

hourly design fee allows for the true scope of the project to be understood.

** CONSTRUCTION SLIDE Cost estimating by the General Contractor

3-4 weeks

PERMMITTING

3-6 weeks (site plan approval may take longer)

BUILD

Upfit 4-6 months

New 8-12 Months

Okay, now the building is finally complete, parking lot is paved, and the signage is hung. The

lights are on and the contractor has moved out of your new space. Now what? Unless this is a

new practice, you have a lot of stuff to move. Even for a new practice, you have supplies to

unpack and find a home for, Computers and equipment need to be set up and certified and

tested along with phone lines and TV’s. And while the builders cleaning crew did a good job,

the hospital needs a deep clean from top to bottom. Give yourself a good week or two if

possible, to make sure everything is up and running and clean before opening day.

Closing Slide and Summary…

Planning is important, take your time, ask questions, talk to your banker, architect, town

planners, builders, other doctors in your network. Attend design conferences like this one. It

will be time well spent.

Hire a passionate design team, with experience and that care about what you do every day.

Build the best you can afford, you will live with it every day, stick to your budget and hire

experienced contractors.

Thank You.