Fourth-quarter planning: getting next year's build ready to start

Every December we get the same call from an owner whose board just approved a project for the coming year, and the question is always whether it can break ground in the spring. The honest answer depends on what was done in October. The owners who used the fall to get a real scope and a real number in front of their board are the ones whose projects start when the budget opens.

The budget meeting comes before the year does

Most companies, hotel ownership groups, franchisees and property owners set next year's capital spending in the fourth quarter. A project that shows up in that meeting with a square-foot guess competes badly against one that shows up with a scope narrative, a planning range built from quantities, a permit path and a target opening day. We spend a lot of the fall doing exactly that work for owners: walking the property, reading the brand's PIP letter or the lease criteria, pricing the scope in current-year numbers, and writing a one-page summary an owner can hand to a lender or a board. The number is labeled as a planning range and it says which year it was priced in, because next year's number will move.

Money that has to be spent in its year

Some budgets do not roll over. If the funds are approved for the coming year and the project is still gathering drawings in July, the spending slips and the funding may go with it. The way to protect that is to have the design started, the jurisdiction's requirements known and the contractor engaged before the approval lands, so the day the money is released the permit application can go in. On a hotel PIP with a brand deadline, the same logic applies with a penalty attached: the brand's date does not care about the fiscal calendar.

Getting in line early

Spring is when everyone starts. Trade partners, material suppliers and city plan reviewers all get busier as the weather warms, and a project that enters the queue in January is ahead of the one that enters in April. Our own crews (framing, drywall, millwork, tile, paint, concrete, excavation) give us some control over that pressure, but the specialty trades and the long-lead equipment still price and schedule by demand. An owner who commits in the fourth quarter gets a schedule built in the slow season and a crew that is planned for, not one squeezed in.

What we do in the fall

For a project that will start next year, the fall is preconstruction. We walk the site or the existing building with the owner and, where it is a renovation, the general manager. We identify what the design needs to include and where the code or the brand will push back. We build a schedule backward from the opening date that matters: the reopening of the rooms, the lease start, the first customer. And we hand the owner a packet that is ready for the budget conversation. None of that commits you to building. It commits you to knowing.

The date is the point

A budget approved in December and a building open in November of the following year is a good outcome. A budget approved in December and a building still in permitting the following December is the common one. The difference is whether the planning happened before the approval. A principal of the company does that planning with you, and the same person will be on the site when the work begins and in the building on the day it opens.

If a project is on your list for next year, send the drawings, the PIP letter or the lease criteria now, and we will put a planning number and a date next to them before the budget meeting.