fellow project managers.. budget help

[cyr0n_k0r]

My organization is building a new facility.

I am the organizations internal project manager for the IT and special systems of the new construction.

After getting bids finalized I have all SS ready to go.
I have intercom paging, fire evac, A/V, cabling, fiber, switches, UPS's, phones, security cameras, and access control spec'd at
$516k

Overall budget for facility is $6.2mil. I'm getting pushback from the budget committee saying that my side of the project is too expensive.
The entirety of IT for this building start to finish is only 8.32% of the overall budget. I'm being told I need to shave off $200k !!!

I don't know where I'm going to find that amount of shaving.

Is my 8.32% typical of other projects of this size? (keep in mind I've already submitted a very lean budget. I don't over engineer more than about 5-10%, so when I submit a proposal I've already gone back and forth with the vendor several times reducing costs and pulling things out that aren't essential)

 

[goodcooper]

that's like 40%, lol... they didn't give you a budget to start with? that's dumb...

 

[NoOther]

I mean you are asking a question that is a little hard to answer. Not all organizations run the same. Some organizations need much larger IT departments than others. I think you would need to provide at least some more information on what type of industry, facility, etc. is involved. But for a brand new building, I would say an 8% budget for IT is a little suspect. A good portion of the cost for a new building is its infrastructure. And that infrastructure is not a recurring cost, its a one-time cost, so comparing a recurring cost for IT to a the cost of building a new facility seems like a bad idea.

Also is this the first time you have had to engineer a full facility solution? Could be some others here might have advice in some of the areas that could save some money.

 

[goodcooper]

is your intercom paging system built in to the phone system? might be able to save some money there...

any leeway in equipment you're buying? how many security cameras? if you have 200 of them and you could shave 100 bucks off them that's 20g

 

[cyr0n_k0r]

that's like 40%, lol... they didn't give you a budget to start with? that's dumb...

Nope. They wanted to see where I fell before giving me any guidance.

I mean you are asking a question that is a little hard to answer. Not all organizations run the same. Some organizations need much larger IT departments than others. I think you would need to provide at least some more information on what type of industry, facility, etc. is involved. But for a brand new building, I would say an 8% budget for IT is a little suspect. A good portion of the cost for a new building is its infrastructure. And that infrastructure is not a recurring cost, its a one-time cost, so comparing a recurring cost for IT to a the cost of building a new facility seems like a bad idea.

Also is this the first time you have had to engineer a full facility solution? Could be some others here might have advice in some of the areas that could save some money.

This is for a public school system so a lot of the "corporate" SOP's don't always apply 1:1.
Why is an 8% IT budget suspect?
This IS infrastructure. I'm not responsible for filling up the facility with desktops. I'm responsible for getting the facility SS online. That includes cable pulls, fiber, wireless, phones, security cameras, etc.
And I'm not comparing a recurring cost to the cost of a building. I think you read my post wrong.

is your intercom paging system built in to the phone system? might be able to save some money there...

any leeway in equipment you're buying? how many security cameras? if you have 200 of them and you could shave 100 bucks off them that's 20g

Our intercom paging CAN be used over the phones (and in offices and small areas that's exactly what we're doing), but for large common areas I have to sound amplify. I also have to override any kids yelling when our facility might go into lockdown.

Cameras are only 30k of my portion of the budget. I'm already running security cameras pretty lean.

 

[NoOther]

Nope. They wanted to see where I fell before giving me any guidance.


This is for a public school system so a lot of the "corporate" SOP's don't always apply 1:1.
Why is an 8% IT budget suspect?
This IS infrastructure. I'm not responsible for filling up the facility with desktops. I'm responsible for getting the facility SS online. That includes cable pulls, fiber, wireless, phones, security cameras, etc.
And I'm not comparing a recurring cost to the cost of a building. I think you read my post wrong.

I think you read my response wrong or I did not clarify it enough. My reason for believing the 8% is suspect is that for a new building I believe it should be higher. Since the 8% seems to be based off a recurring sustainment of IT activities, while in this case you are building a new facility. The new facility requires new IT infrastructure. That new infrastructure has a large upfront cost, but a low sustainment cost. Basically I am saying if they are using 8% as a figure because your budget to maintain IT services is 8%, that seems to be faulty logic to use when building a brand new facility. It should be much higher.

 

[Dogs]

Overall budget for facility is $6.2mil. I'm getting pushback from the budget committee saying that my side of the project is too expensive.

The entirety of IT for this building start to finish is only 8.32% of the overall budget. I'm being told I need to shave off $200k !!!

I don't know where I'm going to find that amount of shaving.

I think this is a situation where you might need to push back yourself. You mentioned that this is for a public school system, and people in charge of public schools are not always sound, capable decision makers. They come up with budgets in a relatively arbitrary way and usually have little to no actual knowledge behind their decisions. In many cases it's fair to say some of these decision makers are completely incompetent.

This sounds, to me, like the typical school district runaround....Any number they're given, they're going to try to fight and cut down because that's what they're used to having to do and that's what makes them feel productive. It's a public job, so they're probably used to being told numbers that are far too large, and having little trouble telling people to drop 30% of the cost. Maybe they're not even expecting you to shave off $200,000. Maybe they're telling you to shave off $200,000 in hopes that you'll shave off $80,000.

Obviously you can't do the impossible...if you need the budget you wrote up, you're just going to have to explain to them the breakdown of the budget and why it isn't possible to bring it down by $200,000. Don't let them bully you into making severe compromises to keep the budget down, because when that makes the quality of the infrastructure you put in place poor, they're not going to be able to grasp the fact that it was a consequence of their budget requirements and they're going to blame you. Don't let them push you below the level of quality you feel is necessary for their needs.

Maybe you know some contractors who do this type of stuff. Ask them what estimates for similarly sized projects have come out to. I don't think the 'percent of budget' figure is going to be constant. For some projects, infrastructure will be a larger or smaller percentage of the budget just because that's how it works....different building geometry, different business needs, etc.

 

[goodcooper]

yea just be like "so if you guys don't want the intercom system or the security camera system i guess we could cut those"

THINK OF THE CHILDREN!

 

[gangolfus]

I don't over engineer more than about 5-10%, so when I submit a proposal I've already gone back and forth with the vendor several times reducing costs and pulling things out that aren't essential)

This is likely your problem. You didn't add the "government fudge factor." Seeing as they didn't give you a budget to begin with, they were probably going ask you to reduce your budget by 40% no matter if you had come back at $100k or $1m. Since you submitted a realistic and reasonable proposal, you now have the difficult task of actually defending your numbers rather than simply fudging the numbers back down.

EDIT:
Strategies for defense: Do you have any preliminary estimates or original costs from vendors that you can show the budget committee to prove that you have already done cost lowering? Or what about a list of things you already considered but removed? I would think concrete proof of cost cuts you've already performed is likely to get you further than anecdotal evidence from some guy on the internet who said 8% was too little to spend on new building IT. I would concentrate on why your budget is sound and what you've done to get the best deal rather than arguing the merits of 8% of budget.

 

[cyr0n_k0r]

Update:
Welp, just finished my budget committee meeting. Apparently the GC (general contractor) is using a pretty weird formula for calculating the special systems budget. I don't think they are used to dealing with a district where everything is IP based.

Either way, our finance director did the smart thing and made it clear during the meeting that the GC and the architect need to shift focus away from the SS budget and over to the adjacent ways, masonry, and interior lighting to try and find some cost savings.
I've now been tasked to reduce my SS budget down only $30k. A very productive meeting!

 

[shade91]

Update:
Welp, just finished my budget committee meeting. Apparently the GC (general contractor) is using a pretty weird formula for calculating the special systems budget. I don't think they are used to dealing with a district where everything is IP based.

Either way, our finance director did the smart thing and made it clear during the meeting that the GC and the architect need to shift focus away from the SS budget and over to the adjacent ways, masonry, and interior lighting to try and find some cost savings.
I've now been tasked to reduce my SS budget down only $30k. A very productive meeting!

Your GC may have done what some of my prior bosses have done: cost per square foot applied to IT's portion of the project. They may use a formula or come up with an arbitrary sum of something like $0.63/sqft (That too is arbitrary). Take your facility (lets assume 60k sqft) and do 60k * 0.63 and you get $37,800. They would tentatively budget that amount on the project until they received feedback from IT. This is where you would set expectations with the project team on your IT costs. You support your project costs by receiving multiple bids as well as developing a system where facility expansions become turn-key in nature by using a standard spreadsheet which show items which are typically fixed vs. variable. The multiple bids also keeps your vendor of choice honest. They won't like this but they will understand as you are held accountable for costs on your part of the project.

Everyone arguing "x% of total project cost is normal" has likely never done an expansion of business in to a new facility or just doesn't have much experience doing it. These projects have fixed and variable costs. The variable costs have a huge impact depending on the size of the facility you're moving in to. Your "percentage of total project" estimate will almost always fail due to that.

Never, ever let someone who isn't IT tell you what your IT costs should be. This is your domain and you should set expectations accordingly, even if it means stepping on toes. I'm sure they wouldn't like you telling them how to do their job. Also, don't use the GC's cabler, it is likely an electrician who moonlights as a data and voice cabler. No offense to electricians, but they have NO business sticking their nose in to that arena. The training for structured data cabling is hugely different from electrical wiring. Use only your approved vendors that YOU manage. I've done over 30 facility expansions and contractions in my career with the largest facility ever built out was 1.3MM square feet. If anything out of my skill set, I've nailed facility expansions and contractions down to a science.

 

[cyr0n_k0r]

@shade91, how would I use the cost per sq foot formula if I have the following.

Total budget of building = $6.2mil
total sq foot of facility = ?? not sure but I can find this out by asking our facilities director
total IT cost = $460k

 

[NoOther]

@shade91, how would I use the cost per sq foot formula if I have the following.

Total budget of building = $6.2mil
total sq foot of facility = ?? not sure but I can find this out by asking our facilities director
total IT cost = $460k

The way contractors figure out cost per square foot is usually through programs designed for this. You put in the all the materials being used, give the dimensions and layout of the facility and then it calculates all the little details for you. The problem is that does not usually account for the additional wiring and equipment needed for IT. For instance, you would need to figure out the average cost of a wiring closet. For that you would figure out what switches are going in there, what cables go in, power, etc. Then you take all those costs and divide by the total square footage. And whammy, you have cost per square foot. If you develop a standard format for that, you can have a turnkey system that will allow you to quickly give them that kind of estimate for various rooms. Such as labs, wiring closets, data centers, telecom room, etc. Then on new projects you just adjust that cost slightly by the addition or subtraction of items.

The square footage of the facility should be listed on the cover page of their construction plans. You should just be able to simply request the total square footage, or request the square footage they have listed for you.

 

[cyr0n_k0r]

I misspoke. I'm not looking to try and do cost per sq foot per room, just overall.
My SS total cost for the whole facility is 460k, and the budget is 6mil.
The total facility sq foot is 38,000 sq ft.

So with those 3 numbers, what math do I need to do to get a total SS cost per sq foot for the overall building.

 

[Dogs]

Everyone arguing "x% of total project cost is normal" has likely never done an expansion of business in to a new facility or just doesn't have much experience doing it. These projects have fixed and variable costs. The variable costs have a huge impact depending on the size of the facility you're moving in to. Your "percentage of total project" estimate will almost always fail due to that.

Right. It just doesn't make sense. Different buildings have different needs. Different buildings have different sizes, shapes, numbers of rooms, etc. which all change the needs. An office building with 3 floors of offices and cubicles is likely going to need a larger budget for networking/telecomm budget than a super market building of the same dimensions. The idea that something should always represent a fixed percentage is an oversimplification that just doesn't make sense.

I misspoke. I'm not looking to try and do cost per sq foot per room, just overall.
My SS total cost for the whole facility is 460k, and the budget is 6mil.
The total facility sq foot is 38,000 sq ft.

So with those 3 numbers, what math do I need to do to get a total SS cost per sq foot for the overall building.

Cost per square foot? Take cost and divide by square feet.

$460,000 / 38,000 sq ft = ~$12.11/sq ft.

Or with the numbers from shade91's example:
$37,800/ 60,000 sq ft = $0.63/sq ft, which is the same arbitrary number he started with.

 

[shade91]

@shade91, how would I use the cost per sq foot formula if I have the following.

Total budget of building = $6.2mil
total sq foot of facility = ?? not sure but I can find this out by asking our facilities director
total IT cost = $460k

I'm advocating NOT using such a method. Trying to determine a project budget by using a cost per square foot method will always fail since the needs of the building are never going to be the same. Some items will be fixed however a large amount of the costs will be variable. Some industrial engineers/GCs try to use this method because for every other part of their project it works (costs for steel, sheet rocking, doors, misc hardware, simple electrical and distribution, etc). For IT it never works or if it does, they simply got lucky.

Right. It just doesn't make sense. Different buildings have different needs. Different buildings have different sizes, shapes, numbers of rooms, etc. which all change the needs. An office building with 3 floors of offices and cubicles is likely going to need a larger budget for networking/telecomm budget than a super market building of the same dimensions. The idea that something should always represent a fixed percentage is an oversimplification that just doesn't make sense.

Precisely why I'm against GCs/Industrial Engineers and their methods applying to IT. If anything, OP just needs to understand that he needs to set these expectations, support them with bids, and to provide a separate IT project plan to be compiled with the GC's master project plan as the business has specific core services that IT provides with certain enabling services that the GC simply isn't an expert in.

 

[cyr0n_k0r]

I'm advocating NOT using such a method. Trying to determine a project budget by using a cost per square foot method will always fail since the needs of the building are never going to be the same. ......... For IT it never works or if it does, they simply got lucky.

After more meetings with the GC I'm discovering this is exactly on the money.

 

[Redleader]

Unless this is a strange instance. Usually the Architect/Engineers provide all the information needed for what kind of infrastructure is going into the building and provide it to the GC to price. The GC will obtain quotes from subcontractors and then provide these quotes to the Owner/Architect with a recommendation for whom they would choose. Low voltage infrastructure should be fairly cut and dry so I dont see why their would be confusion. Also why would an Owner be pricing for the pulls if they are not doing it themselves?

 

[cyr0n_k0r]

Unless this is a strange instance. Usually the Architect/Engineers provide all the information needed for what kind of infrastructure is going into the building and provide it to the GC to price. The GC will obtain quotes from subcontractors and then provide these quotes to the Owner/Architect with a recommendation for whom they would choose. Low voltage infrastructure should be fairly cut and dry so I dont see why their would be confusion. Also why would an Owner be pricing for the pulls if they are not doing it themselves?

Because the Architect builds buildings.
I build networks. And I am more qualified to know what kind of infrastructure I want in my own building.
My district and my IT department is not a typical "yeah, just tell us how things will be and we will accept it".
We're more of a "this is how we want it and that's exactly how you're going to build it"

 

[Redleader]

Because the Architect builds buildings.
I build networks. And I am more qualified to know what kind of infrastructure I want in my own building.
My district and my IT department is not a typical "yeah, just tell us how things will be and we will accept it".
We're more of a "this is how we want it and that's exactly how you're going to build it"

Architects design buildings. General Contractors build them. You hire an Architect that in turn hires an Engineering firm who is qualified to know what infrastructure is required to meet certain needs. The Architect then holds meetings with the Owner and has the Engineering firm present to determine what is required for the building. The Engineer designs it and the owner reviews it and approves, then the plans and specifications and sent to the GC for bid. The GC then sends these bids to the Architect/Owner for approval. This is where the Owner can review again for a third time what is being installed and make comments. It then goes back to the GC and he makes sure what was approved is installed. This is in general how it works.

 

[cyr0n_k0r]

closing.