“The bitterness of poor quality remains long after the sweetness of low price is forgotten”
Benjamin Franklin
Cost in any commercial development are always a key issue to which a developer must manage to ensure the viability of the project. ROOT Architecture, as a general principle of practice, works with developers to assess and manage costs during the planning stages.
Before we begin I thought it might be best to add in a few definitions:
- Cost is the amount of inputs incurred in producing a product. Price And Costs Are Calculated In Numerical Terms. Price And Costs Are The Same For All The Customers.
- Value is what goods or services pay you with i,e. worth. Value Can Never Be Calculated In Numbers. Value Varies From Customer To Customer.
Therefore we can safely state that Higher Value = Higher Cost.
We can see for the above that cost can be seen as the investment whereas value can be seen as the return on that investment. As pointed out above, that return usually cannot be measured in Numbers but rather in ‘úsefulness’. Usefulness – As The Term Sounds – Is A Bit Of A Lofty Idea. In Relation To Property Development, It Suggests That The Use Of The Product/Service In Question Will Be Mostly Utilised By The Buyer And Therefore Has No implications for the developer – thats where you go wrong.
Developers need to understand what their clients are looking for. As the property market in Cape Town starts to heat up, buyers will become increasingly aware of the value propositions of the different properties that they view. The sweet spot that developers should aim for is the balance between cost and value – where the cost is easily justifiable because of the perceived value that is gained.
Let’s look at a hypothetical situation in which a developer is deciding whether to install premium double glazing to the facade of the proposed building. While there may be a cost premium to installing double glazing to a facade, there is definitely a long term financial saving that can be passed onto the potential client – the thing here is to be aware that the end-user will be willing to pay for this saving! Note here that the developer is paying more for the double glazing and in turn the end user is paying more for the unit – the developer must understand what the end user will value at the time of sale.
In contrast to the example above, the addition of a study nook located in the lounge area of the hypothetical building above may not be seen as a value add in the end-users eyes. The cost of the additional cabinetry, power points, and data connection may be lost in the development fo this project. People don’t want to mix home and work. Evidence of this can be seen in the number of people on their laptops at the coffee shop around the corner – we’ve all seen them.
customer Value Table
The table below highlights some of the customer and the things these customers value in a development.
| Customer Type | What Value does this type of customer seek |
| Buy to Live in | Safety + Comfort + Aesthetics + Long Term Maintenance + Precinct Future Proof |
| Buy to Rent out | Safety + Comfort + Aesthetics + Long Term Maintenance + Precinct Future Proof |
| Renter | Safety + Comfort + Aesthetics |
One way to understand this concept is to understand the psychology of who you are selling to. Take a look at the people in your office – what drives them? Are they younger/older? Sustainability conscious? Cost concious?
Whatever the situation may be, the developer should build a profile of who they are targetting and work backwards. Every decision in the design process should stem from that decision and you can be assured that the people you build for will be genuinely interested in your development.