Costs and Benefits of Engaging in Pre-Development

Pre-D work is an investment for the long-term sustainability of your project and will, ultimately, reduce project costs later.

What is the average Pre-D cost an organization can expect?

It depends on many factors. During our years of managing the Pre-Development Program at Foraker, we have worked with hundreds of organizations exploring new construction, renovation, or remodel capital projects with the goal of enhancing the mission and delivery of services within each unique community. These projects included small libraries, food banks, senior centers, community centers, homeless shelters, transitional housing, domestic violence shelters, museums, and more. The Pre-D costs ranged from a couple thousand dollars to several hundred thousand dollars. The average was $30,000-$100,000 for approximately 90% of the participating projects. Below are some tips to help gauge the costs of Pre-D for your organization.

Typical cost milestones for technical assistance

1. Board facilitation
2. Building committee and capital campaign cabinet preparation
3. Technical evaluation of a proposed site for a new structure
4. Code and condition survey of an existing structure for a renovation or remodel
5. Architectural programming
6. Conceptual plan development (This is typically about 10% of the estimated cost of the project.)
7. Cost estimate

Elements that help to control costs

• Commitment from a group of leaders (board, staff, volunteers, etc.) who will see the project through from start to finish
• Commitment to foster and maintain strong leadership within the organization and externally with all the stakeholders
• Site ownership
• A project manager familiar with best practices for a sustainable capital project (Nonprofit agencies typically work with lean budgets and many will experience a steep learning curve about project development).
• An architect familiar with sustainable capital projects (Note that the process for sustainable capital projects is not prescriptive or a standard service for most architectural firms.)
• Additionally, professional support from a willing team (A firm that can donate or offer services at a reduced market rate can be a big help during the Pre-D stage and beyond.)

Elements influencing cost

• The capabilities of the nonprofit leadership team (board & staff). Importantly, most staff will be concurrently working day-to-day on mission as well as the capital project.
• The complexity of the architectural project. A higher degree of design complexity, special equipment, or other unique needs will increase the costs.
• The location of the project. The more remote, the more the project will necessitate project manager and architect travel, which incurs costs. Additionally, site assessment is more difficult and communication requires greater effort and collaboration that may take longer.
• The need to establish a site. It takes time to develop criteria, identify sites, and hire engineers to evaluate soils and utilities.
• The degree of community presentations necessary to gather public and/or city and borough comments, both for funding as well as zoning and building permit processes. Note that association with controversial community issues will require more time. Part of the Pre-D process is ensuring that the project meets a documented need and is consistent with strategic and community plans. Depending on the unique factors, more community outreach may be required.
• An experienced project manager who can navigate project acceptance and who has experience with nonprofit capital projects
• Knowing whether special studies such as a market study or feasibility study will be necessary to validate the project
• Bringing in extra consultants and specialists beyond the project manager and architect. For example, library, museum, or housing project specialists contribute critical information beyond typical building projects and engineer evaluators may be necessary for existing buildings.

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Capital Project Major Phases

Project costs vary based on many factors. In addition to Pre-D, each design and construction project phase requires different levels of work from your design team (architect and engineers). Design fees typically range between 6-20% of the estimated building construction costs.

As an approximate rule of thumb, the overall design fees are further broken down into percentages. This can be useful when planning your design budget and evaluating design proposals.

Design fees = 6-20% of estimated building construction cost	Approximate amount used per design phase
Total Project Design Fees	Conceptual Design: ~10% Schematic Design: ~15% Design Development: ~25% Construction Documents: ~40% Bidding and negotiation (if needed): ~2-3% Construction Administration: ~10%