How much will my project cost?

May 1, 2009
How about ...$485,333.12? For those of you just looking for a number, this could be a legitimate answer ...

by Jeff Carter, DDS, Pat Carter, IIDA, and Dave Fazio, AIA

For more on this topic, go to www.dentaleconomics.com and search using the following key words: office design, Dr. Jeff Carter, Pat Carter, Dave Fazio, project cost, decisions.

How about ... $485,333.12? For those of you just looking for a number, this could be a legitimate answer; however, most of you realize this answer is probably fallacious and irrelevant. It is fallacious because we dared to answer your question without any understanding of your project. It is irrelevant unless you are the client who built the four-operatory general practice office in a lease space, with a design level II esthetic, a $50,000 finish-out allowance, no cash in the project while reusing some existing equipment for this total project cost.

And yet, when asked, you will get responses to your question of cost. Unfortunately, as demonstrated, they may not be pertinent to your project. This is the challenge because the answers you hear may be based on the “last dental project they did” (which may not be the office you want), “the number they think you want to hear,” or an “overly optimistic quotation” in order to secure your business.

So what is the right answer to one of the most important questions every dentist should ask before launching into a project? Consider your response to the patient who calls and asks, “How much will you charge to fix my tooth?” Immediately, you grasp the naivety of the question and the complexity of an appropriate response.

You know your patient deserves an answer, yet professionally you understand any immediate response is presumptive and potentially misleading. You also know that given the chance to ask the right questions, the answer will become obvious and appropriate based on pertinent diagnostic verification.

Your diagnosis and quote may include a discussion of treatment options, consideration of budget constraints, dental outcome expectations, and implications of the patient's current dental health. You understand all of this. But your patient just wants to know, “How much will it cost for you to fix my tooth?” So, too, is our response to a dentist's question, “What will my project cost?”

To deliver the answer, there are “right questions.” We suggest you answer these questions as your first step to identifying what your project will cost:

  • Project ownership vs. lease — Do you want to own a building on a piece of property (or condominium), or do you prefer to lease a space?
  • Dental design criteria — How many operatories do you want?
  • Project size — What is your best estimate of the square footage you will need? And why?
  • Location — Have you identified the area where you will build your new office? (Specific locations translate to costs per square foot for land or leasing rental rates that factor into your project's cost.)
  • Cash in your project — Will you be injecting any cash into your project? This not only affects lending rates and the long-term “cost” of your project, but it may drive the project options (new building vs. lease space) you can realistically consider.
  • Finish-out allowance — Is your building owner offering a “tenant finish-out allowance?” (To attract viable lease candidates, building owners will defray some of the build-out cost as part of the lease agreement.)
  • Existing vs. new purchase furnishings and equipment — What existing equipment will you reinstall, and what new equipment will be purchased for your new office?
  • Office esthetic — What is your expectation for the appearance of your new office? Assuming you want your office to function well, is your expectation a basic clinical esthetic, more upscale, or a “design award winner”? The answer affects your project's cost (less than you think, by the way).
  • Site project costs — Are there any site-specific (land or lease space) implications that will add cost to your project? For example, are there extensive site grading or landscaping requirements, zoning variances, detention ponds, etc., for a property site, or additional HVAC or utility requirements you will have to add as a dental tenant to a “generic” lease space?

Answers to questions such as these have associated costs ... leading to an “informed” project cost specific to you and your project. You need to ask the question and hear an appropriate answer. But any response that isn't based on your expectations or your project's parameters is an assumption and should be followed with a second question, “What does that ‘cost' include?” Project cost declarations based on limited understanding can be as misleading as any immediate and uninformed response you might have given that patient over the phone.

Next month: “Understanding Project Cost — a Breakdown.”

Jeff Carter, DDS, Pat Carter, IIDA, and Dave Fazio, AIA, are owners of PDGFazio Design Group. Located in Austin, Texas, PDGFazio offers a full range of architectural, interior design, and consulting services to dentists nationwide. For more information, call (800) 511-7110 or visit www.pdgfazio.com.

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